Would you be interested in paying $1000 for a stack of paper called the “Smith Family Living Trust?”
That’s what some law firms charge for a Trust and it sounds like a good deal. Or is it?
I’m here to tell you that estate planning is so much more than a stack of paper. Let me help you make sense of it.
First of all, not all lawyers are the same! Seems obvious, right?
There are some estate planning firms that are referred to as “trust mills.” This means they charge very low prices and rely on huge volume (ie. cranking out tons of trusts each month) in order to make their profit. This is a certain type of business model, and one that many estate planning firms employ.
There are many, many problems with this model, however, that directly impact the estate plan you receive and whether or not it will actually *work* in the long run. So if you are looking for the cheapest trust in town, here are some of the crucial issues you should consider first:
1. Lifetime relationship
Trust mill law firms cannot afford to stay in touch with you, on any sort of regular basis. Yet this is critically important!
There are a lot of things that occur in life that could impact your estate plan. A birth or death, a marriage or divorce, even changes in the law can mean that you need to update your plan. If your attorney hasn’t opened the door to you, who will you turn to when you have questions about your plan? Who will be in touch with you if a law changes that will impact your plan? If the attorney doesn’t have a plan to stay in touch with you, your $1000 stack of paper can become totally worthless.
2. Guidance on titling assets
If you have a living trust it is absolutely critical that your assets are titled correctly. If your assets are not owned in the right way, you plan is going to fail. What do I mean by that? By fail, I mean there is going to be either a probate or an unintended result. If the law firm offers no guidance on how you should title each and every one of your assets, just step away!
3. No tax planning; or, worse yet, mandatory, inflexible tax planning
Do you need tax planning? Do you know? Most attorneys don’t discuss this and just assume what is best for you and give you their template form document. Please don’t assume that you don’t need tax planning. And, don’t assume that the trust mill is going to accomplish this with the standard form templates that they use for your trust. I have reviewed many estate plans done by trust mills over the years and they either do not include any tax planning or they include mandatory, inflexible tax planning. Both can cause huge problems.
4. No Kids Protection Planning
Most law firms, but especially trust mills, do not plan correctly for families with minor kids. Most law firms do not plan from a parent’s perspective, so their planning is inadequate to protect your kids physically and financially. Most commonly, I see huge mistakes in how guardians are named and problems with the way money is left to the kids. Huge.
What this means for you is that your kids are at risk. Period. Is it highly unlikely that something will happen necessitating a comprehensive family emergency plan? Probably. But the “odds” don’t really matter if your family happens to be that “one in a million.” The results of improper planning can be devastating, on so many levels, not the least of which is that your kids could end up in Child Protective Services. That is not OK. And risking it is totally unnecessary.
5. Hourly billing with questions
Most trust mills will charge you their hourly rate if you have questions after they complete your estate plan. What this means is that you won’t call and ask the questions you have because you won’t risk getting a big bill in the mail. If you don’t call, your question won’t get answered. You’ll guess at what you’re supposed to do. Chances are, you’ll guess wrong (or it won’t get done at all) and you’ll have a hole in your estate plan, which would mean that there is a risk of not working when your family needs it the most.
6. Inadequate office support
Most trust mills save money on office staff by using trust templates. The “search & replace” and “copy and paste” trust creation means that they need fewer staff which is a great deal for them, but a big loss for you. Because of this, you won’t get a call back in a timely manner and it may even impact your estate plan’s integrity.
7. Experience: legal, technical and personal
Many attorneys in trust mills have very little or no experience, which results in a poor quality document that won’t likely work. If you are going to pay good money, you should at least get a quality, customized estate plan. The standard template trusts are like a “one size fits all” t-shirt that doesn’t really quite fit anyone all that well.
If an attorney can’t get a job, (or recently lost their job) estate planning is one of the first practice areas that attorneys will turn to. Every attorney learns basic “Trust Law” in law school. So they will hang out a shingle, grab a standard template trust, and start doing “search & replace/copy & paste” trusts. Their draw to get clients is to be the cheapest game in town. That’s all they have to offer.
So if all you want is a “search and replace” trust, then you don’t need an attorney for that; if you can type, then you can do this on your own and really get a cheap trust! (More on “Do it Yourself” planning in another post). But for myself, a “search and replace” trust was not good enough for my family, and I suspect you feel the same.
The scariest part of all of this is that the consumer really has no way of knowing if their trust is a good one or not. It is really critical that you do your homework and feel free to take this article and discuss each point with any attorney that you are thinking of working with
The Dirty Little Secret of Trust Attorneys
I’ve had many people ask me, “Why do trust mill attorneys practice this way?” Well, here’s the dirty little secret: Attorneys make a lot more money when an estate plan fails, then when it actually works properly. Because of that, an attorney stands to make a lot more money in the long run doing a cheap trust (as a “loss leader”) when the attorney knows that many years from now, when something actually happens, the family will pick up the estate planning documents and call the attorney whose name is listed there. If it’s a probate, a conservatorship, litigation from families fighting, all of those are very expensive. The person who benefits the most? The attorney who drafted the trust.
Here at Morgan Law Group we work diligently to educate the community about what good, effective estate planning should be. Take a look at the experience shared by one of my family’s …
First of all, my husband and I would like to thank you for your detailed review of our existing trust. You were extremely thorough and tailored your comments to our personal circumstances.
As a young family, your plan seems expensive. But we learned the hard way how much peace of mind is worth. Before we knew about Morgan Law Group, we chose the less expensive route of a legal assistance firm. It cost around $1000 to create our first trust. These are all the ways our confidence in the process was undermined:
- We had to put money on the table before they would even talk to us.
- They prepared the trust and we caught some errors (some pretty major ones) – and then manually helped them make the changes and reorder the document. We’re talking 80 pages here! And more time for my husband away from work.
- As for advice, it was up to us to decide our fate – and the fate of our children after we die. We asked, “Do we need to put our bank account in the name of the trust?” The answer: “Only if you want to.” There was no guidance on how to fund the trust. Or how to list beneficiaries.
- Now it’s three months after the date on our trust and it is not funded correctly. If I die tomorrow, the trust will not protect all our assets.
Now we know there is an alternative and that it’s worth every cent we’d pay to Morgan Law Group. We loved that we could call your office and your very knowledgeable staff walked us through the entire process.
We did not know how easy estate planning could be until we visited your office. We’ve already referred my parents to you. If something should happen to them, we would rather have you walk us through a difficult time than anyone else. Thank you for providing this valuable service. You made a very important difference in our lives. We wish you every success in helping others just like us and look forward to meeting with you again.
-Warren and Michele Whiteaker, Laguna Hills, CA
This is just one example we have from a family that experienced a $1000 trust. Luckily nothing happened to them before we had a chance to create a plan for them that will actually work. But, my fear is that there are a lot of other families in Orange County that have those $1000 stacks of paper and the false confidence that their plan will work as they want it to. If you know a family, or are a family has or is considering one, please contact me for a free Family Wealth Planning Session. I will explain in detail how estate planning should really be done.