Don’t be Fooled by Do-It-Yourself Online Estate Plans (Part 1 of 2)
When it comes to estate planning, don’t be fooled into thinking that inexpensive online estate plans will accomplish what you actually desire. In most cases, online estate plans are very simplistic, incomplete, and will not avoid the probate process. For something as important as your estate plan, you really shouldn’t do it yourself.
A Last Will and Testament estate plan generally offers a fairly standard set of documents: some form of Power of Attorney, a Living Will, some statement of preferred arrangements for your funeral and remains, and a Last Will and Testament. Several weeks ago, I received an offer from a do-it-yourself estate plan website. With their service, the customer only needs to enter basic information into a series of questions on the website. Their software will populate this information into a set of form documents to create estate plan documents that the customer then prints to sign, have witnessed, and have notarized.
I decided to give this website a try, paid the associated fee, and received the Premiere Will Plan for one person. This included a Will, Living Will and Power of Attorney. The website also had an estate plan for a married couple.
Using their program, I was able to step through the questions in under ten minutes. There were about nine screens with only a few questions on each screen. All the questions were in large print with graphics. This service bills itself as “Easier. Smarter. Affordable.” They don’t specify who or what they are comparing themselves to. Presumably, the comparison is to an actual attorney who would otherwise be preparing these documents for a client. If so, I have to agree that their process for compiling the information is easier than what we do in our office. It was easier to sit in front of my home computer for ten minutes than to do what we request from our estate planning clients — fill out a much more detailed form and then arrange a time to come into our office during business hours for an initial meeting. I also can’t disagree with their claim of being affordable. Their price is a fraction of what an estate planning attorney would charge. Where I disagree, however, is that using their service is smarter than going to see an estate planning attorney.
An estate planning attorney does far more than just gather information and plug it into a form. An estate planning attorney can explain factors and counsel a client through the difficult decisions that almost always crop up when dealing with intimate family decisions and assets. Using the online service, I received a Financial Power of Attorney that listed ten options of powers that I could choose to grant or deny my agent. But without an attorney, it was unclear just what those powers meant, the consequences of granting or denying them, or which might be preferable for my situation.
Similarly, a DIY plan lacks the information and ability to issue-spot that an attorney brings to the table. That plan won’t give you information on estate and income taxation or recommend how to carefully plan your estate so that it can realize the maximum tax savings. That plan does not address the importance of asset protection when making gifts in a will. The DIY plan does not review your assets and discuss how to handle those assets that will pass outside of probate (but which are still considered part of the taxable estate for estate tax purposes). That DIY plan won’t inform you of how a recent birth, death, marriage, divorce, or incapacity within the family could affect the desired disposition of an estate. That plan will not discuss tax implications of retirement account beneficiary designations. It won’t discuss special needs planning, same sex relationships, blended families, or assets located in another state or country.
Finally, using an online service rather than an attorney provides drastically less privacy for your personal information. When you speak with an attorney, you know that they will keep all your information confidential. Under the Colorado Rules of Professional Responsibility, the attorney has an ethical responsibility to keep your personal information private or they can be severely punished and even disbarred. (Rule 1.6). When you share information with an online service, they can give your information to “trusted third parties” who they believe “you may find useful or interesting, including newsletters, marketing or promotional materials and other information on services and products offered by them or third parties.” (Privacy Policy). That is not even a comparable level of respect for your personal information.
In next month’s article, I’ll discuss in more depth the specifics of the online documents I received and how they compare to an attorney’s services.
