A do-it-yourself trust looks finished. There’s a document, there are signatures, there may even be a binder. Jason Gaudy, an estate planning and probate attorney at Gaudy Law in Upland, California, sees the other end of that story, usually years later, usually with the family in a courtroom, usually because of something nobody thought was part of the job.
“About as well as me doing surgery on myself”
Gaudy had a client, an experienced physician, in the middle of complex litigation who decided he’d take it from there himself. Gaudy’s response: “That’s going to go about as well as me doing surgery on myself.”
His point isn’t that the documents are unknowable. It’s that the process is unforgiving in ways that aren’t visible from outside it. He’s in these courts every day watching people who represent themselves get told they didn’t file something correctly. See you in four months, see you in six months.
What surprises him is how casual people are about it. He describes clients downloading what will be among the most important legal documents they ever sign, or handing the job to a paralegal who may or may not know what they’re doing, and then not following through on the instructions they were given. Those, he says, are the files that end up in litigation and in probate: people who were confident they’d handled it correctly and only found out otherwise much later.
The real failure point: the trust that was never funded
A trust only controls what it owns. Moving assets into it (retitling the deed, updating account registrations) is called funding, and Gaudy says this is where DIY plans most often break.
If the deed was never transferred into the trust, the trust doesn’t govern the house, no matter what the document says. That’s the reason those families end up in probate anyway, or in what California calls a Heggstad petition, a court request to confirm that an asset the person intended for the trust actually belongs to it. (That’s California’s name and procedure; other states handle the same problem differently.)
The same emptiness shows up with entities. Gaudy sees clients who formed an LLC online and never transferred anything into it, with no contracts in the LLC’s name. His assessment: “It’s useless. It’s just sitting there and making them feel good.”
He adds a practical note about the economics. Between the entity itself, a new tax ID number, and a new bank account, the online route stacks up service by service. By the time you’ve paid for all of them, he says it adds up fairly close to what you’d have paid an attorney. Not exactly, but close.
How a refinance quietly undoes a trust that was done right
This one catches people who did everything correctly the first time. A client does the trust with a lawyer, the property goes into the trust, the binder goes on the shelf. Then, a few years later, they refinance.
Gaudy says that in a lot of these transactions the property gets transferred out of the trust during the refi, and then never gets put back. He’s openly puzzled by the practice. In his opinion, most of these trusts would permit the loan while the property stayed in the trust in the first place.
Nobody notices, because nothing appears to change. It surfaces at death, when his office has to go tell a court that the person made a trust, named the property in it, and the title doesn’t reflect it. Please put it back. That’s the Heggstad petition, and he puts the cost at roughly $5,000 to $7,000 and three to four months in court. All of it avoidable by a deed that was never taken out, or was promptly returned.
His definition of a funded plan is worth keeping: the properties are actually listed in the trust, or, if the properties are held in an LLC, the LLC itself is titled in the trust.
Does AI change the calculation?
Gaudy isn’t hostile to the technology. He says his firm uses AI for research and other work and is embracing it. But his read on the outcome is unchanged: if the simple steps aren’t followed, attorneys make money and the courts stay full. His broader line on the whole category is that doing your own legal work is the best way to have your family spend money on lawyers later.
What this means if you’re planning a 1031 exchange
An exchange touches every one of the pressure points above. Replacement property has to be vested correctly on day one, and if there’s financing involved, the deed’s relationship to the trust is exactly the detail that gets lost at closing and stays lost for a decade. Investors weighing a passive replacement structure can read what a DST is and the honest version of the risks, fees, and downsides, but the titling question belongs with an attorney either way. For the underlying case for the document, see why almost everyone needs a revocable living trust; for what a stale plan costs, see why plans need revisiting.
Watch: Why DIY Online Trusts Often Backfire with Jason Gaudy, Gaudy Law
Educational only. Not legal, tax, or investment advice. Jason Gaudy is licensed in California; rules vary by state. Consult your own advisors.