What is Unauthorized Practice of Law?
There are certain activities that may only be done by an attorney or under an attorney’s supervision. These activities vary somewhat from state to state, but the general rule is that a non-attorney may not give advice on legal matters, or draft any legally binding contract, agreement, or document on behalf of a 3rd party. Doing so is considered Unauthorized Practice of Law (UPL), which may amount to a misdemeanor crime in some states.
In reality, UPL is very hard to define and is rarely enforced. After all, if I tell you “hey, you should sell your home”, would you selling your home have legal consequences? You bet it would. Is this UPL? Technically, yes, but no judge in actuality would consider it as such. Therefore, the term ‘legal advice’ is extremely nebulous and hard to define. At what point does giving advice on something that could have legal consequences (which is almost anything, since laws (over)regulate practically everything we do) cross the line and become UPL? No one really knows for sure.
Nonetheless, in regards to avoiding UPL it is safest for any asset protection program to be implemented under an attorney’s supervision, even if the attorney himself does very little or none of the document drafting or entity formation (and since most attorneys know very little about how to do asset protection, this will likely be the case). There are other benefits to this approach as well, such as the benefits of attaching attorney/client privilege and privileged work product to your plan.