Online Wills Are Risky

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.