Online wills can save upfront legal fees, but they come with some serious limitations.
Most of us, especially those who have recently started our own families, realize that a will is a must-have document. But, many of us dread the thought of adding the cost of a legal consultation to our list of expenses. In order to address this fact, there have appeared a number of online services in recent years that allow for a do it yourself option in writing a will, one that purports to save money by avoiding legal fees.
Indeed, several relatively inexpensive online will options are available, including resources provided by LegalZoom, Nolo.com, RocketLawyer, and others. These services explicitly state that they allow their customers to circumvent hiring a lawyer in order to handle simple legal issues, such as completing a will or drafting a small business contract. (In their own legal fine print they also inform customers that they are not to be considered substitutes for the advice of an attorney.)
So, how do these do it yourself legal services – which feature downloadable templates of legal documents and software designed to walk customers through the process of filling them out – stack up?
In 2012, Consumer Reports tested the online services provided by the three above-mentioned companies. The article’s authors downloaded worksheets for a do it yourself will, a home lease, an auto bill of sale, and a promissory note, then filled out each of these using the accompanying software. The magazine then asked law professors with expertise in estate, contract, and commercial law to evaluate the results.
The initial verdict of the reviewers was not surprising at all. “Using any of the three services is generally better than drafting the documents yourself without legal training or not having them at all,” they found.
However, the reporters and their expert consultants went on to point out that unless the legal situation in question was among the most simple – they used the basic example of a person leaving the entirety of his or her modest estate to a living spouse – the downloadable documents can be inadequate. Many aren’t specific enough, noted one of the experts, Norman Silber of Hofstra and Yale, while adding that the language in some could produce “an unintended result” that failed to convey the wishes of the will’s drafter.
And, that’s not the only limitation. For instance, LegalZoom offers an editing feature on its will template, which though flexible could allow users to unwittingly introduce a clause that might contradict other elements of the document and render it open to dispute.
Overall, the legal experts told Consumer Reports that these services do offer reasonable, basic legal information that could save customers some money on document preparation. But, as Silber warns, users must be sure to obtain all necessary signatures when using them in order to protect their own rights and to avoid future disagreements. The article concludes by suggesting that because of the complexities of most real-life estate situations, however, “many consumers are better off consulting a lawyer.”
A similar article published by the New York Times compares four kinds of software used to generate wills. The author evaluates in detail the pros and cons of each, and points out some useful knowledge she gained in the process.
Firstly, she notes that it is important to take an inventory of all your financial instruments and to recognize which of these can be passed on by a will. For example, a 401(k), an IRA, and most insurance policies are not directly subject to a will. Instead, these pass on to the beneficiary listed on the policy in question. Thus, the author mentions that if she wanted to name her minor children as the beneficiaries of an insurance policy, she must first set up a trust for them in her will and then name that trust as the beneficiary of the policy.
After consulting a legal adviser, the author also learned that areas she had not explicitly addressed in her will – such as how her estate taxes would be paid – would still be left up to the state to decide in her absence.
The NY Times author, like the Consumer Reports reviewer, cautions that complicated situations can often test the limits of online wills. She relates the story of a San Francisco attorney, Kathryn Stebner, whose client had helped her uncle prepare a will and living trust using LegalZoom documents. Unfortunately, after the client’s uncle died of cancer his financial institutions refused to recognize any of the trust documentation and she was forced to take them to court.
The history of the case extends back to April 4, 2004 and Ms. Ann Aldrich’s writing of a will using an “E-Z Legal Form.” In the will, Ms. Aldrich declared how her property should be distributed among several recipients. But, because the will failed to specify what should be done with property acquired after she signed the will, problems arose. Ultimately, some assets that Ms. Aldrich appears to have wanted to give to her brother went to two of her nieces instead. And, because of this case’s complicated court history it generated far greater legal fees than it might otherwise have if Ms. Aldrich had consulted a lawyer when drafting the original document.
Additionally, the Davis Brown Law post offers another cautionary example. Execution of wills varies from state to state, it notes. For example, a particular state might impose inheritance tax on property distributed to specific beneficiaries differently than another. A trained estate lawyer, one familiar with the intricacies of his or her states’ laws, can assist in identifying such areas of potential confusion and resolve them.
The important thing to remember is that human beings are fallible and family situations are often very complex. In many cases, online wills are ill-suited to the complications of real life. While ease and simplicity are valued by everyone, an expertly crafted will can address unforeseen circumstances (such as an untimely death), contend with the peculiarities of the law, and help protect the financial futures of family and other loved ones.