“Estate Planning Lawyer for 33 Years: Lessons Learned”
01/11/17 By Matthew S. Dana
The biggest and most common mistake I see in estate planning is the failure to plan. Human nature is to put off planning because of a belief that death is not imminent or, maybe, the fear of discussing death. For whatever reason I have never seen a situation where the failure to plan was better than planning itself, even if the plan wasn't the perfect plan or the best plan for the client. Maybe the client hates paying legal fees, hates lawyers, hates the thought of discussing his personal family situation with someone else, etc., etc. These reasons seem ironic to me because lack of planning will probably drive legal fees to be five to 10 times larger than the fees for planning, and multiple lawyers will probably be involved instead of one. And, the family's issues and dirty laundry could likely end up in litigation, which may become a public record.
Generally I am of the belief that a trust is always better than a will. I can't recall a case where the client was worse off for doing a trust, but I have seen literally hundreds of cases where a client was worse off for not doing a trust. There are so many more planning options you can do in a trust. For example, dictating the timing of distributions to the kids, adding incentive provisions for life achievements, creating better tax planning strategies for the family, simplifying the administration, etc.
I believe that establishing a relationship with an estate planning lawyer while you are alive is much better than the surviving spouse or the children trying to pick a lawyer after you die. I love the estate planning profession and have a great amount of respect for most of my colleagues. However, as with any provision there are some bad apples in the barrel. I think it is better to choose a lawyer before you have the emotion and trauma added to the discussion dealing with the loss of a loved one. I believe that most clients want to create that relationship for themselves and their spouses so that it is known who the surviving spouse can work with and trust at the death of the first spouse.
I believe that online legal services have a place for some legal matters and for some people. However, I also believe that most people do not want to trust their entire life savings and legacy to a few hundred dollars they pay online. I also believe that most people want that relationship established for his or her spouse prior to death. I believe that you will continue to see more and more ways where lawyers and law firms embrace technology driving the price of legal fees down. But, I do believe that the two biggest lies in estate planning are: the lawyer saying that everything you see and get online is garbage; and the online legal services implying or insinuating that you will never need a lawyer. I believe that the sooner the two sides recognize the value in each other the better the clients and the public will be served with lower cost legal fees.
I believe that generally speaking, clients get what they pay for. Just like you could not expect to get a Mercedes for the price of a Chevrolet Monza (this shows my age because that was the car I had when I got married and it almost caused my wife not to marry me) you cannot expect to get a quality estate plan for a few hundred dollars. I think that a fair fee for a quality estate plan is in the $2,000 to $3,000 range. Once again, you are not paying for a stack of papers you are printing out online. You are paying for good advice, experience, a relationship, a human element, expertise, and, maybe, some family counsel.
I believe the client and his or her family is better served using independent fiduciaries such as executors and trustees rather than choosing a son, daughter, or other relative. You may have the smartest and the most talented kids in the world. (I know I do because we ended up with all five as college graduates, two of whom are lawyers) But, having a family member serve creates more problems than it solves. Families may believe it is cheaper to use a family member because they won't charge fees. I don't believe that money is saved by using a family member. If you pick your oldest son, he will probably need to hire a lawyer and a CPA to help administer and settle the estate plan. And, that advisor will probably advise your son to take a trustee fee to offset the liability that he has incurred. In the end, it is probably less expensive to hire a professional trustee or fiduciary whether you use a trust company, an attorney, or a CPA.
In my experience, some of the biggest family fights are over personal assets, family heirlooms, etc. At my dad's death, the family was deeply divided and fought over the water dipper that hung over the sink in the cabin for 30 years. Although similar water dippers could be bought for $15 or so, the fight was over the emotions and memories of that particular water dipper. These fights can be avoided if the parents take some time and prepare a "personal property list" and attach it to the Will. This list will specifically dispose of the "big ticket items" which tend to be family heirlooms. Another "big ticket item" that causes fights is jewelry, particularly the wedding rings or gold watches. Be sure and list these items and don't believe for a second that your kids will not fight over them.