As digital software solutions become more sophisticated (and new ones continue to roll out at breakneck speed), they may offer relief with what they offer but, at the same time, they may also introduce a burden for the user to vet and review the results to ensure that it actually provides the ‘correct’ output. When it comes to digital estate planning solutions tools, this particular burden is amplified not only because of the many clients who need an estate plan (with about 2/3 of Americans estimated to be without a will!), but also because advisors may be concerned that choosing the wrong estate planning solution could create a risk involving legal action, engagement in the unauthorized practice of law, and user error. That being said, advisors who understand how to review and use these tools well can leverage their features and provide considerable value to their clients.
As a starting point, it is important to know what digital estate planning solutions can actually do. Platforms generally help users in the following 3 areas: document creation (creating basic documents such as revocable trusts, powers of attorney, healthcare directives, and wills), document extraction (providing easy-to-read summaries of existing estate planning documents), and estate visualization (creating visual reports that detail the estate plan in a user-friendly matter). Today, services in each of these areas can be provided to users of software technology – without ever having to sit down with an attorney face-to-face.
For some advisors, implementing digital tools as part of their estate planning process can be daunting because they lack the reassuring expertise an actual attorney can provide. Furthermore, a stigma is sometimes associated with ‘boilerplate’ language or generic document templates. However, in most instances, advisors can help clients realize that boilerplate language can be legally valid, enforceable, and sometimes even preferable (and in many instances, estate planning attorneys themselves often use boilerplate documents anyway!). Accordingly, a digital solution can offer an alternative to the typical process of creating documents after physically meeting with an attorney. Certainly, in more complex situations – such as with ultra-high-net-worth clients, families with unique relationship dynamics, or disabled beneficiaries who need to preserve access to government benefits – an attorney may be required to draft customized estate planning documents or, at the very least, carefully review estate documents created by digital planning solutions. But for the vast majority of ‘typical’ clients, a digital solution could satisfy a client’s estate planning needs.
One particular concern for financial advisors involved in their clients’ estate planning needs is unintentionally engaging in the Unauthorized Practice of Law (UPL) by actually giving estate planning legal advice. While this can create particular liability issues for advisors, digital estate planning solutions can help advisors avoid UPL by providing guardrails that safeguard them from doing so, and by helping them frame their conversations with clients as education and guidance about the options available to them. For example, an advisor may be prompted by the software tool to tell their client: “It may be beneficial to look into whether a spousal lifetime access trust could make sense for you. Here’s what it is…”. This helps the advisor remain removed from implementing strategies and not risk crossing the line into UPL, but still being able to monitor the client to make sure that things get done.
Ultimately, the key point is that digital estate planning solutions can provide powerful tools that complement the roles both estate attorneys and advisors play for clients, especially for (the many) clients with less complex estate planning needs. With the help of software tools, advisors may find that initiating conversations and offering guidance around estate planning strategies for clients can be carried out much more efficiently and even add to the value they’re already providing!
