Review of Do-it-yourself Estate Plans

I knew it was coming.  The dreaded question: “Can I use a will-maker software program rather than have an attorney draft my estate plan?”

My explanation of the risks and pitfalls does not always satisfy the friend or family member inquiring about why they cannot use the cheaper option for their extremely simple estate plan.

As an interested party, I sometimes struggle with a proper way to encourage people to pay me to draft their estate plan. So even though I do not support the notion of DIY estate planning, I am interested in the discussion.

The internet has a variety of articles on the pros and cons of do-it-yourself wills so rather than repeating the same arguments in my own words, I have highlighted a few points from the articles that I found to be informative.

Forbes.com

In “The Case Against Do It Yourself Wills,” Deborah L. Jacobs writes that having something in place is better than nothing but that the do-it-yourself programs are riddled with opportunities for hugely impactful mistakes. She blames the easily accessible online software programs coupled with the expensive costs associated with legal fees for the proliferation of do-it-yourself programs. Bottom line: If there is any doubt regarding the simplicity of your situation, seek assistance from an attorney.

Also on Forbes.com, Janet Novack writes for the other side, “The Case For Do-It-Yourself Wills.” Her article is not much of a plug for the software programs; instead she supports the theory that something is better than nothing. Novack writes that “using a lawyer is always better … but if you’ve got a healthy new baby, no will and no life insurance, and only $600 or $1000 to spend, don’t blow it all on a lawyer.” She advocates that new parents who do not have life insurance should spend the money on a simple term policy instead of legal fees.  Yet in the end, she encourages those same young couples to seek out an attorney as soon as they have the funds to pay for one.

New York Times

Tara Siegel Bernard compares four well-known will-maker programs. As evinced in the title of her article (In Using Software to Write a Will, a Lawyer Is Still Helpful), she concludes that a lawyer is still helpful in creating an effective Will.  From her experience using the programs and then consulting with an attorney, she reveals various pieces of the planning documents from the program were ineffective or unclear.

One issue that her attorney raised involves determining which assets should be used to pay estate taxes. A Will can dictate that certain beneficiaries do or do not pay taxes on inherited assets (apportionment) and the software programs either failed to clearly explain this issue or failed to provide her with options regarding the payment of estate taxes.

Ms. Bernard also struggled with clearly understanding who would receive her assets if she and her husband both died. A residuary clause defines who receives the assets if all beneficiaries predecease the individual creating the Will.  In most cases, those assets will go the person’s “heirs at law.” Heirs at law are defined by state statute and so depending upon which state you live in, your beneficiaries can vary.

Accounting for after-born children and ensuring that the documents are properly executed were additional issues with the will-maker programs. Although her documents could have been sufficient, meaning no disasters resulted in her use of the programs, she concludes with a quote shared by an attorney in Virginia whose client tried a software program and returned to say, “I don’t know what I don’t know.”

My $69 dollar will on Practicblawg.com

Well-respected, intelligent, and experience Minnesota attorney, Gregory Luce, reviews his experience using the Legal Zoom will-maker program. He admits that it was surprisingly easy to understand and complete the process; however, subsequent comments on his blog post illuminate a few seemingly minor mistakes that have very harmful implications.

For example, he accidentally failed to list one of his children as beneficiary of the trust that was created under his Will. The result would be a disaster because one child would be provided for and the other would not. In addition, his Will did not account for after-born or adopted children.

He does not mention whether the process of naming a guardian or guardians was explained in depth or if there was an option for naming a temporary guardian. Additionally, spendthrift provisions were missing, there was no Will contest clause, and the trustee provisions were lacking. These are all issues that are extremely important for parents with minor children.

Although Mr. Luce was able to address the issues raised in the comments to his blog post, most individuals who use these programs do not have an attorney to review and fix the mistakes. Maybe this is a fault of the legal community, where attorneys are doing a disservice by not encouraging potential clients to try the inexpensive software programs and then pay for an attorney’s time to review and explain the finished product. Especially since the review will often times lead to a new client. For the time being, Mr. Luce’s experiment is evidence that will-maker programs can be recommended for only the extremely simple estates, and those are few and far between.

HLO

Our very own Epilawger, Jamie Held, wrote an article on D-I-Y wills in June. She concisely outlines 10 shortfalls of the will-maker programs. This article is great because it gives individuals an idea of the various situations for which the advice of an attorney is absolutely necessary. I appreciate her summation of how the “peace of mind” promised by will-maker programs could very well be misleading.

Photo: rignes