Trust Mills and Bad Estate Planning

/ February 13, 2014

Corporate TrusteeI recently read this article about a so-called “living-trust mill” that is being sued by the Minnesota Attorney General. According to the article, the Minnesota Attorney General is alleging that clients of Heritage Partners were sold “boilerplate documents” assembled by a gentleman in Arizona who is not licensed to practice law in Minnesota and paid a pretty penny for the privilege ($2,000 or more).

Although, this situation sounds particularly egregious, it is true that consumers of estate planning services are in a difficult position when choosing an estate planning professional.  The reason a consumer hires a lawyer in the first place is because documents are long, tedious to read, and often incomprehensible to the layman.  So what really differentiates a good estate plan from a bad estate plan?  And how can a consumer know the difference?

What is boilerplate anyway?

One criticism of legal services in general (and of estate planning in particular) is that it’s all about filling out forms – i.e. inserting a client’s name into a pre-prepared document.  There is some truth to this.  However, in my office, I work very hard and even collaborate with other attorneys to construct those “forms”.  What clauses are necessary in a particular Trust document?  What sections require better clarity?  What terms could cause problems if included (or excluded)?  As attorneys, we are continuously performing a close reading of our document’s text and asking a lot of very careful “what if …” questions.

Once we have a good “working copy” of a document, we can then customize it based on a client’s particular situation.  So while there is some “boilerplate” language is most documents, the process is never boilerplate.

Since attorneys use some sort of “form” document for Wills, Trusts, etc., it would be easy to suppose that you could just get the forms and skip the attorney (this concept could also be debated under the “Legal Zoom vs. Attorney” or “Machine vs. Human” heading).  If a client’s situation is extremely straight forward, then it’s possible that this kind of form sans attorney’s advice may be sufficient.  But as simple as one situation may appear, it is the very rare exception.

By hiring an attorney, a client is paying for thoughtful analysis and experience, not the forms.  As alluded to above, estate planning is almost never a “one size fits all” endeavor.  The value that an attorney adds is his or her knowledge and expertise to ask the right questions and then choose, modify and help execute the appropriate documents.  If a company is charging ~$2,000 for form preparation by a “legal document preparer” without any analysis by a licensed attorney, they are undoubtedly doing a disservice to clients, and quite possibly breaking the law.

The main problem with these estate planning documents is that they can easily make  situation worse than if there had been no estate plan in place at all. For example, a common reason for setting up a Trust is that it can help avoid probate, which may save money in the long run.  However, resolving problems caused by a poorly worded, inappropriately constructed, or improperly funded Trust can be extremely expensive.  If a client is going to pay for an estate plan, it must be right for that individual client in order for it to be effective.

So how is a consumer to know? Who can be trusted?

First of all, estate planning attorneys should never be high-pressure sales people.  Their role is to counsel a client on his or her various legal options.  Estate planing involves big decisions and should not be rushed if you have concerns about the attorney’s knowledge, character, or if the attorney’s approach to sensitive issues doesn’t sit well with you. And if that is the case, interview another attorney.  Don’t be afraid to say no or use the very Minnesotan phrase, “I’ll think about it.” Yet, keep in mind that the cost of procrastination can be a huge financial and emotional burden for surviving family members and beneficiaries.

Also, we all know that it is helpful to have a trusted referral, but don’t stop there.  Attorneys can be very nice regardless of whether they are qualified to practice in a certain area of law.  And nice people can win referrals regardless of the quality of their services.  So, ask questions and trust your instincts.  An attorney should be able to explain the mechanics of an estate plan in clear and concise terms, and even more importantly, how the key provisions and clauses work in real life situations.

Last, but not least, read the draft documents and ask questions before you meet to sign the documents.  Any estate planning attorney will agree, it is beneficial when clients take the time to carefully read and review the drafts before signing.  A Will or Trust is meant to address a variety of potential issues and you may not understand every legal term.  That said, if the arrangement created in your drafts is overly complicated, or if it isn’t congruent with the goals you communicated to the attorney, then something may be amiss.

Leave a Reply

Your email address will not be published. Required fields are marked *