I’m Not an Estate Planning Attorney, But I Do Play One on TV

Using an unqualified estate planner can be worse than doing nothing at all

I recently posted about the dangers of cheapskate estate planning–techniques like leaving an unrecorded deed with a family member. People usually try this type of thing to save a little in attorney’s fees, and often they spend much more in the end trying to clean up the mess.  Others don’t plan at all, often leading to the high cost of dying without an estate plan.

But I was reminded today that, as bad as cheapskate estate planning or no estate planning is, it’s not the worst thing you could do.  So what is worse than a do-it-yourself hack job that carries huge financial risks and tends to breed family conflict?  Paying an “estate planner” for a pre-packaged set of forms that leave you in the same place (if you’re lucky) but cost more than consultation with a qualified estate planning attorney.

Perhaps one of the messiest probate matters that I have had to clean up involved an estate plan that was prepared by a local Mississippi “estate planner.” He was a life insurance salesman by trade, but he had been turned on to the lucrative living trust market.  He advertised to elderly clients that he was a “notary public” and thus qualified to prepare estate plans.  What qualifies a Mississippi life insurance salesman and notary public to prepare estate plans? Absolutely nothing. It was just a title that he used to dupe older people into thinking he had some sort of qualifications for selling them over-priced trust forms.

The system that he had bought is published by the Estate Plan, a group that is sadly typical of the living trust promotion industry (their site allows folks to sign up as an “Independent Advisor”).  This company is not owned by an attorney, but by a salesman with a good story to tell (I saw the horrors of probate in my parents estate and want to help you avoid it).  These were horribly-drafted forms that didn’t fit the client’s asset profile at all.  They incorporated an unnecessary GST-trust (even though all of the assets were left to the spouse and children) and used convoluted language that was undoubtedly beyond the grasp of both the “estate planner” and the client.

Although the trust package was promoted with big promises of “probate avoidance” (with the usual exaggerations and scare tactics), it was not funded during the lifetime of the client and didn’t avoid probate at all.  In fact, it led to a costly probate proceeding that took several years to resolve.  The decedent’s spouse was not the mother of his children and wanted to keep all of the assets that she could.  The children claimed that the father intended to leave them everything.  The trust documents were so unclear that it was anyone’s guess as to what the father intended.  So this mess hit the court system, with attorneys on both sides charging hourly legal fees to straighten it out.

Perhaps worse of all is the fact that the decedent actually paid a good bit for this estate plan (if I recall correctly, more than he would have paid had he come to my office).  He did this thinking that he would avoid those costly attorney’s fees, but in the end the attorneys did get their bite at the apple.  The only difference was that he paid more attorney fees in addition to the amount that he had paid the “estate planner” to avoid those fees.

The “pay now or pay later” principle applies to estate planning: either you pay up front to plan your estate properly or you let others pay more to sort it out in the end.  I have had clients who were indifferent about what was required after their death to clean the mess up (for example, clients who didn’t have close family members).  So “pay later” can be a reasonable choice for some people.  But why would anyone choose to pay now and pay later?  That could be exactly what you are doing if you allow an unqualified individual to plan your estate.