Sunday, April 10, 2011

Free Wills

The other day, a friend and colleague casually suggested to me that the market wants free wills.

I suspect that there are a large number of consumers in British Columbia who are not willing to pay very much to have their will prepared for them. Some don’t make a will. Others choose to try to write it themselves, perhaps using a form-will kit, or using an online service. Still others seek out quotes from lawyers and notaries public, and select the one with the lowest quote.

Historically, legal fees for drawing wills in British Columbia were lower than the fees charged by lawyers for most other types of legal work. When I started practicing law 22 years ago, another lawyer explained to me that lawyers charged little for a will in the expectation that someday after the client’s death, the lawyer would get to handle the more lucrative legal work for the client’s executor in applying for probate, for which lawyers were handsomely paid. This is not practice I endorse. For one thing, charging little for a will undervalues the importance of good estate planning. Fortunately, that practice has changed, and if lawyers are charging more for wills, fees for probate work have come down over the years. At least that’s my perception.

I like the fact that people have choices, including very inexpensive options for planning their estates. Competition is healthy. Our economy is built on it.

So why should you pay to see a lawyer who specializes in estate planning to make a will, when it is going to cost more than some of the alternatives? Do you really need a lawyer?

You might expect me to tell you about all of the things that can go wrong if you don’t use a lawyer. Well, I could give you anecdotes about things that have gone wrong in other cases. I have written about court decisions involving people who have drawn their own wills or trusts, including my posts entitled “The costs of not having a lawyer prepare your will,” and “ Do-it-yourself trust: Canada v. Rudolf.” On the other hand, that does not mean things will go wrong for you (or actually your heirs, because you won’t be around to find out). It is also true that lawyer-drawn wills are not infallible. I do think that there is a much greater risk of problems when someone who is not legally trained tries to write their own will, including using a kit or an online service, than if they see a lawyer. But to me that is a secondary consideration.

The main question is, does a lawyer, and in particular, one who specializes in wills, estates and trusts, add value over the alternatives? Is that value worth the additional expense?

What an estate-planning lawyer does is distill a vast amount of legal knowledge and practical experience and apply that knowledge and experience to his or her client’s particular circumstances. The estate-planning lawyer is first-and-foremost an adviser.

There are things you can learn about law on your own. There are good books out there, as well as articles, and now legal blogs. But estate-planning law is humongous. No book, article, or blog post is going to tell you everything that might be relevant to your will and estate planning. Not even a 1000 page text book. Browse through my blog, and see the number of issues I have written about, and I have barely scratched the surface. I learn new things about wills, estates and trusts all of the time, even after over 20 years of practice, much of it specializing in this field.

But book-knowledge is just a part of the equation. How does the law apply to you and your own unique circumstances?

To me, the most important meeting I have with an estate-planning client is the first meeting, when I get to know my new client. Who are your family? What are your financial circumstances? What are your estate planning goals? I ask a lot of very personal questions because I need to in order to apply that large body of law to my client’s circumstances.

It’s not just about what goes in the will. Many people have assets that go to their heirs outside of their will. For example, you can hold property with another in a joint tenancy such that title of the whole property passes to the survivor on the death of one joint owner. Or you can designate beneficiaries of your life insurance policy or Registered Retirement Savings Plans. Your beneficiary designations and how you hold property needs to be carefully coordinated with your will if you are going to have a coherent estate plan and minimize the risk of disputes.

When you meet with an estate-planning lawyer, you will also likely have questions. The questions will be based on your own unique circumstances. Here are some that sometimes come up:

  1. I am getting remarried, and I have children from my first marriage. I want to make sure that my new husband is provided for if I die before him, but I also want my children to eventually have an inheritance. How can I accomplish that?
  2. One of my children has a disability, cannot handle money well, and receives British Columbia disability benefits. How do I provide for him after my death, without him losing the money I leave him, or losing his disability benefits?
  3. I am estranged from one of my children and want to disinherit her. I have heard that she can challenge my will. What options do I have?
  4. I am concerned that my daughter’s marriage may break down, and I want to protect any inheritance she gets from me from any claims her spouse may make if it does. How can I protect her?
  5. I have heard that British Columbia has high probate fees? How can I save probate fees?
  6. Someone told me that it is a good idea to put my house into a joint tenancy with one of my children. Is it?
  7. I have three children, one of whom is working in the family business. I would like to leave the business to her. How can I accomplish that?
What if your circumstances are really simple? You and your spouse have been married to each other for 40 years, have two grown, healthy children with stable marriages, and you and your spouse want to leave everything to each other, and then equally to your children. Will a simple will do? Perhaps. But there may be estate-planning opportunities you will miss if you don’t get good advice. For example, it may be possible to reduce the tax burden of the survivor of you and your spouse, or of each of your children, through the use of trusts in your wills. In some cases the potential tax savings to your heirs will be thousands of dollars each year for the rest of their lives following your death. I doubt that you will be able to accomplish those tax savings for your heirs using a will-kit.

Does an estate-planning lawyer add value over the alternatives? Is that value worth the additional expense?

1 comment:

Nicole Garton-Jones said...

I wouldn't change one word of this post. Excellent summary of the value of proper estate planning from an experienced estate planning lawyer.