Online Wills Are Risky
I came across this article by lawyer and journalist Deborah L .Jacobs, The Case Against Do-It-Yourself Wills, on Forbes.com today.
While I think the article sends an important message, I take issue with some of what Jacobs, and even nationally known attorney Jonathan Blattmachr have to say:
JACOBS' ARTICLE: Much as I dislike DIY wills because of all the problems they can cause, I think estate-planning lawyers are partly to blame for their proliferation. They've gotten into the habit of charging some pretty hefty fees for very routine services. It cost my husband and me $4,500 for a package of basic estate-planning documents--his-and-her wills, powers of attorney, living wills and life insurance trusts--prepared in 1997 after our son was born. By today's standards, we got ripped off. During the past 13 years, the same technology that has spurred the DIY movement has made it much easier for trust and estate lawyers to do their jobs. There's some spectacular software out there that they can now use to prepare clients' wills in minutes. But many lawyers are still charging as if it took them hours.
MY RESPONSE: $4,500 for two life insurance trusts (ILITs), wills, powers of attorney, and living wills is far from a "rip-off." Life insurance trusts are complex, irrevocable trusts designed to remove life insurance from one's taxable estate, and require substantial legal and tax expertise to draft correctly. A botched ILIT could cost hundreds of thousands of dollars in unnecessary taxes.
JACOBS' ARTICLE: "Lawyers have to lower their fees, or self-help products, which prepare a will for less than $100, will continue to lure clients who view wills as a commodity, says Jonathan G. Blattmachr, a retired partner of Milbank, Tweed, Hadley & McCloy, who founded the Melbourne, Fla., company, InterActive Legal, to provide estate-planning software to lawyers. Clients want "a competently prepared document done as quickly and as cost-efficiently as possible."
What's a reasonable price? After an initial learning curve, a lawyer can use the InterActive Legal software to do a simple will in three minutes or less and should spend another half hour re-reading it, Blattmachr says. That, plus counseling the client, should bring the total elapsed time on the matter (again, assuming no complexities) to about two hours. With fees for trust and estate lawyers running between $300 and $1,000 per hour, it should therefore be possible, paying on an hourly basis, to get an expertly drafted will and legal advice for $600 at the low end, he says.
MY RESPONSE: While it is certainly true that software makes an estate planning attorney's job easier, time is not all that is involved in setting fees. Fees also compensate for expertise, training, risk, expense of technology, value to the client, etc. Other professionals charge this way as well. Take laser surgery for eyes for example. Such surgery takes only a few minutes, but costs a couple of thousand dollars.
Furthermore, a simple will is only appropriate for persons with simple situations, not those in second marriages, with estates over $1 million, with disabled family members, etc. Also, durable powers of attorney, health care powers of attorney, living wills and HIPAA authorizations should be a part of every estate plan - in some cases they are more important than the will. Finally, a good estate planning attorney provides advice beyond the documents themselves - on how to title assets and name beneficiaries of life insurance and retirement accounts, etc.
All of that being said, I charge much less than $600 for a simple will alone, and just slightly more than that for a complete simple plan for a single person. However, the fees rise substantially as the complexity of the plan and the expertise required to properly implement it increase.
Apparently Jacobs and Blattmachr (both very well-known in Estate Planning circles) have hit a major nerve here. I think the bottom line is layers have to stopping pretending that every document, etc. they produce for clients is totally original work that they have spent hours and hours working on. While that may have been true at one time, it isn't any longer. Times are changing. And law firms billing and compensation models need to evolve as well.
RESPONSE: Blattmachr was able to retire by charging $100k fees to the ultra wealthy for work that took mere hours. That's not to say the work wasn't worth the fee, but he's being hypocritical in this context.
What Mr. Blattmachr doesn't say is that the cost of the software like his is $3 to $5 thousand per year, for a single attorney.
Yet, investment in education ($100,000), then the annual cost of the technology referenced in the article is punished under their theory, and expertise is of apparently no value.
Many estate planning attorneys do not charge $300 per hour where I live, yet may spend 3 to 5 hours on what are considered "simple" by his and Mrs. Jacob's standards.
How is the attorney supposed to recoup these costs?
I know a number of estate planning attorneys who have repeatedly tried to obtain more clients and do work for lower fees, but estate planning is not a volume business, despite thousands per year in marketing expense.
The reference to a Life Insurance Trust, is inappropriate in the context of simple estate planning, as well.
We don't get a percentage of what we save or have a big "score" down the road, like plaintiff's lawyers, and clients often only come back in once or twice per decade.
RESPONSE: Your comments are right on target - thanks.
Easy for Jonathan to say (especially since his pricey software can make it easy for you). As my professor once told me, "There is no such thing as a simple will, only simple people."
RESPONSE:, or I hate to say, simple lawyers.
Online Wills aren't risky. They are a perfect solution for people who require a simple Will for peace of mind.
RESPONSE: While online wills might be a solution for some who do not wish to pay a lawyer, I feel that they are never a perfect solution. Even with a "simple" will, there are too many opportunities for error or oversight.
Attorneys are going to "feel the pain" just like doctors, auto workers and the rest of us have. Since most of us can't afford these ridiculous prices we WILL do it ourselves. Greedy, greedy, greedy.