|Attorneys - A Necessary Evil?|
Do I really need to see an attorney to prepare my estate plan?
I am constantly amazed to hear stories of otherwise intelligent, rationale and careful people who are willing to turn over some of the most important legal decisions of their lives to a person who not only is not a lawyer, but who probably couldn’t succeed as a securities salesman either.
I am aware that as you reach a certain age, you begin to attract telemarketers who want to send a “representative” to your home to tell you all about living trusts, and even prepare one for you. The trust salesman puts on a pretty good pitch, explaining that the legal documents to be prepared for you will be prepared by “our attorney in Encino” or some other place. Detailed confidential information is taken from you and a few weeks later, the salesman arrives with a stack of documents that certainly look like wills, trusts, powers of attorney, etc. After you sign them, the salesman, who has had an opportunity to review your investment portfolio, then explains that the investment counselors in his firm believe that you should put a substantial portion of your portfolio into investments that his firm handles, very often including one or more annuities. Annuities traditionally pay the highest commissions to salespersons, often resulting in a significant drop in the value of your portfolio just because of the commission.
What is wrong with this picture? What is wrong is that, in addition to being subject to highly inappropriate sales pitches based on improperly obtained confidential information regarding your investments, you are having important decisions made on your behalf, on issues that you may not fully understand, by someone who acts like he understands them, but doesn’t. Your odds of having a major error in the legal documents are pretty significant. In addition, you are not getting what the law says you are entitled to with respect to your estate plan, that is, private advice by a competent, licensed attorney and preparation of your legal documents by, or at least under the direct supervision of, a licensed attorney. Furthermore, it is at least unethical for someone to take advantage of a confidential relationship, gaining information about your investments under the guise of preparing legal documents, then use this misplaced trust to urge you to buy investments from him.
California law, as well as the laws of virtually every other state, says that only licensed attorneys may practice law. The law further states that giving advice on what kind of legal documents are needed, and then preparing documents on matters pertaining to an estate plan, such as wills and trusts, constitutes the practice of law. The scenario described above, therefore, where non-lawyers are advising you what type of trust you need, and then drafting the legal documents for you, clearly constitutes the illegal practice of law. This is true even if the trust is based on a document drafted by an “attorney in Fresno,” who, in most cases, at best, has only provided the master documents to the door-to-door sales company, and who certainly has never counseled directly with you.
But you say, these documents must be legal. The company has been in business for years. How could they continue to operate an illegal business? The answer is, unfortunately, that the appropriate law enforcement agencies, usually local district attorneys, are already overworked with what they perceive as, and what frequently may well be, more serious crimes involving drugs, physical violence, etc. In fact, however, law enforcement agencies have regularly shut down such illegal “trust mills,” but they just keep popping up, sort of like crab grass.
How can you be sure you are dealing with the right person? Well, first of all, you really should be dealing directly with a licensed attorney. Despite the lawyer jokes, most of us are kind, trustworthy, capable professionals. You should know that real lawyers will not be making unsolicited phone or sending sales people to your home, since such solicitation by non-lawyers is still quite illegal. Even if you are dealing with a lawyer, you should make certain that the lawyer is experienced in estate planning matters. It is a fair question to ask how much background the attorney has in estate planning. If the lawyer has been certified as a Specialist in Estate Planning by the State Bar, so much the better.
In addition, after hearing many horror stories from families of persons who have yielded to the enticings of these “trust mills,” I can tell you that the fees charged by the trust mills are very often as much as, if not greater than, those charged by licensed attorneys. Most lawyers offer a no-cost initial estate planning consultation, and many are able to make house calls or hospital visits without significant additional charge. You are not getting a bargain by dealing with a non-lawyer.
Can’t you legally prepare your own estate plan with do-it-yourself books or software? Yes, if you are very, very brave. But that doesn’t mean that just anybody can go around preparing living trusts for others. Preparing a document that looks, on the surface, like a living trust, is not very hard. When my youngest son was around 12 years old, I showed him how to enter data into my professional estate planning software. After a bit of practice, he could generate fine-looking legal documents that could easily pass for a real living trust. But would you want what may be the biggest legal project of your life prepared by a 12-year-old, or someone with about the same training as a 12-year-old? In fact, it is theoretically possible that a document prepared by my son (or by you using self-help books) might actually work. However, the chances of that happening are about the same as the chances of success with the documents prepared by the aggressive trust mills. And you will not find out if the plan works until after you are dead.
What an experienced, licensed attorney can provide for you is a carefully prepared plan, designed to meet your own personal objectives, taking into consideration income tax, estate taxes, probate and other legal issues. The consequences of a poorly prepared estate plan can be catastrophic. At best, you will not have all your personal wishes carried out. The wrong person may receive the inheritance. At worst, nothing will work and, at your death, it will be just the same as if you didn’t even have a will or a trust. Your family will not only have to pay an attorney to probate your estate, but may incur hundreds of thousands of dollars in avoidable estate and income taxes.As Mr. Goodwrench used to say in the television commercial, “You can pay us now or you can pay us later.”