Wills call for pros, estate attorneys say

Jun 3, 2012 @ 12:01 am

By Liz Skinner

Do-it-yourself home improvement projects can be dangerous, but creating a will without professional help can cause harm even beyond the grave.

While some clients will always seek to save money, it can be a costly mistake to depend on a will or other estate-planning document that can be created online or through kits purchased at office supply stores, estate planners said.

“Computer-generated documents offer a false sense of security,” said Larry J. Ford, an estate-planning attorney at the Estate Planning Learning Center. “If someone has enough assets to have a financial adviser, they will have situations that typical online or preprinted forms can't handle.”

Among the benefits that professionals can provide that do-it-yourselfers can't: structuring inheritances to be paid out to children after certain milestones are met, taking care of a special-needs child, protecting assets from divorce and allocating assets to unborn children.

Attorneys also can guide clients through tough decisions, offer tax-planning strategies and explain to a court a deceased client's intentions.

The ramifications for descendants can be severe.

For example, one 70-year-old man brought Mr. Ford a will that he had drafted years earlier using an online service. It designated specific bank accounts to each of his children.

“He thought that he had done a great job, but he had since switched banks and no longer had some of these accounts,” Mr. Ford said.

ANNUAL REVIEW

The children due to receive the assets from those closed accounts would have inherited nothing, he said.

Instead, an estate-planning attorney would tell clients to review documents every year or so to ensure that nothing important had changed.

In another case, a couple left their assets to their children in their will, but the simple document had no provisions for how or when the assets were to be distributed, said Jeff Kolender, an estate-planning attorney with Paley Rothman.

“Give a couple million dollars to kids at 18, and those funds disappear pretty quickly,” he said.

An attorney could have created a trust, with a trustee, to watch over the funds until the children were mature enough to handle the money.

“Those types of wills don't give you the flexibility,” Mr. Kolender said of do-it-yourself estate documents.

They also don't allow for the specificity needed in wills.

For example, an online will may allow someone to leave $25,000 to a cousin, but it won't stipulate what should happen if the cousin predeceases the testator, or whether the estate taxes on that sum should be paid from the $25,000 or from other assets, Mr. Kolender said.

“Things typed up on a computer don't walk you through the various options,” he said.

A Consumer Reports analysis last July of three do-it-yourself estate document programs pointed out the shortcomings of such products but concluded that they are “better than nothing, if you have no will.”

The review said the do-it-yourself products provide value by getting people to think about various estate issues and assemble necessary information, thus saving them money if they then go to a lawyer charging an hourly fee.

In analyzing three popular electronic offerings, LegalZoom, Quicken WillMaker Plus and Rocket Lawyer, the review pointed out outdated information, insufficient customization, too little flexibility, incompleteness and an inability to handle certain tax issues.

LEGAL ADVICE

Rocket Lawyer Inc. founder Charley Moore said that do-it-yourself wills “are not for everyone” and that is why his firm makes professional legal advice available to its users “every step of the way” for as low as $19.95 a month.

In fact, access to the legal advice is what Rocket Lawyer charges for, as it is free to create a basic will at the site.

Mr. Moore argued that estate documents prepared through Rocket Lawyer are cheaper and more efficient for a client.

Because Rocket Lawyer produces 60,000 wills a month, its creators keep current on the latest trends in wills and ensure that there are questions that ask about modern concerns such as handling digital assets and whether special pet care trusts are needed, he said.

A representative of LegalZoom .com Inc. said the firm didn't have anyone available for an interview, and no one responded to a request for an interview with someone from Intuit Inc., which produces Quicken.

Financial adviser Barry Glassman of Glassman Wealth Services LLC, which manages about $525 million in assets, said that he warns clients who come in with estate documents that they or their commercial-litigator brother prepared that their requests may not survive them.

“Isn't it worth it to pay the cost for professional documents to make sure your wishes are followed upon your passing?” he asks them.

In addition to will preparation, expert attorneys should be used for crafting other documents that are typically paired with a will, namely a medical power of attorney and a durable financial power of attorney, Mr. Kolender said.

Another case illustrates the importance of having an attorney who recognizes what laws supersede a wish made through a will, namely titling of an asset, Mr. Ford said.

One childless client stipulated in his homemade will that he wanted his niece and three nephews to equally share his assets, which were in the form of certificates of deposit. However, he made the niece a joint owner of those CDs because he wanted her to be able to pay his bills as needed.

BENEFICIARY DESIGNATIONS

When he died, the CDs became hers because the titling outweighed the wishes stated in the will, Mr. Ford said.

“And she did not divide up the estate with the nephews,” he said.

A report from an American Bar Association task force on do-it-yourself estate planning concluded in October that a will can have little impact if most of the deceased's assets are governed by beneficiary designations or other arrangements.

An experienced estate-planning attorney, however, can guide a client and make sure that the “desired objectives comport with the structure of his assets,” the report said.

The Consumer Reports analysis concluded that the packages are useful in educating users and helping them to begin thinking about certain issues, such as who should be the alternative executor or who should receive the estate if the spouse and kids don't survive the testator. They also can be used to prepare inventory or asset lists.

These steps could save clients time — and thus money — if they are paying an attorney by the hour.

lskinner@investmentnews.com

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