Trusting Your Estate Plan to Software?

Over the past ten years, many individuals have looked for alternative means by which to plan their estate.  Allegedly seeking to forego the expense of an attorney, many people try to use “fill in the blank” documents from stationary stores and will kits.  As the usage of computers, and the internet in particular, has increased, so too has the number of software programs that purport to offer do-it-yourself wills and other estate planning documents.

The question is whether online estate planning or software programs are worth the initial cost savings.  Specifically, are software documents or online programs an adequate substitute for a consultation with a qualified attorney?  A survey, conducted by Elder Law Answers, found that while the documents these programs produce were adequate is some areas, each online service had significant limitations in the information gathering process that could lead to defects in the final product received.  This conclusion was the response to a review of three online estate planning services.

It appears that online estate planning could possible work for people who have little or no property, small savings or investments, and a very traditional family tree.  However, these programs do not take into account crucial differences in state laws or respond to many of the frequently complicated modern family arrangements.

Basically, Elder Law Answers reviewed three leading online estate planning programs:  Nolo’s Online Will, BuildaWill, and LegalZoom.  Wills were purchased from all three, as well as a living trust from LegalZoom.  All three programs seem to offer easy to use instructions, as well help via email or over the phone if a user runs into trouble preparing the documents.  Nolo and BuildaWill both allow users to download their documents from their websites instantly.  LegalZoom ships them in a personalized estate planning binder.  The cost of these programs ranges from $19.95 to $228.95.

According to Elder Law Answers, Nolo takes about 30 minutes to complete. Based on their experience, they found that Nolo has eight steps with multiple questions in each step that are designed to fill in a will.  The advantage is that once the will is saved, the user can go back and edit the will for up to a year after purchase.  Unfortunately, Nolo’s program does not address the legal implications of leaving all of a user’s property to a spouse under one of their simplified property distribution options.  Obviously, if a married couple has taxable estate, this can lead to unnecessary and avoidable estate tax incursion.  Moreover, the program does not provide any meaningful counsel regarding couples who have children from prior marriages, nor advice on distribution options for family members facing personal challenges.

According to Elder Law Answers, BuildaWill is was the simplest program to use.  It takes about 15 minutes to complete, as it appears to be one of the most basic programs in the online market.  Like Nolo, it ignores the ramifications of leaving all of one’s property to a surviving spouse.  Moreover, it does not appear to provide an option for a trust for minor children.  As such, if parents died, leaving their estate to their minor children, those children could obtain all of the money in their name outright, which certainly makes no sense.  Obviously, establishing a trust is a much better option.  A proper trust can provide for the needs of a minor while he or she is young, but wait to distribute outright until he or she reaches a mature age. BuildaWill also had a tendency to simplify complicated decisions, such as the manner in which an executor should be appointed.

Out of the three programs surveyed, LegalZoom was the most expensive option when a living trust was employed.  One advantage of their program is that it offers the tax planning trusts known as “AB” trusts, though it does not explain the pros and cons of having both trusts, nor does it discuss the implications and manner of funding the trust.

In essence, all of the programs can work to “fill in the blanks”.  However, they don’t provide advice.  They don’t ask questions or generate answers regarding significant issues which may be facing family members such as divorce, creditors, alienation or any other special needs and circumstances.  The programs also do not provide alternatives that may exist to maximize estate benefits for any individuals who have significant non-probate assets such as life insurance, annuities, retirement plans and IRA’s.  Most importantly, the programs do not address variations in state probate laws, mixed marriages, special needs children and taxation.

In all, as the old saying goes, you get what you pay for, and, considering the time and effort expended over many years to accumulate your assets, it is proper to say you deserve better than that.

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