The Die-Tomorrow Plan Versus the Die-Old Plan

Estate planning is a continuing process, or so we tell clients. But why do so many estate planners try to bypass the process, and create the ultimate estate plan, right out of the gate?

I was very lucky to have some transformative discussions with independent RIAs in the past month, on how we can do a better job collaborating to serve the estate planning needs of clients. 

One observation (which I have paraphrased here) struck me in particular:

It is easier for me to get clients to follow through on obtaining life insurance, than it is to get clients to follow up with estate planning attorneys. 

Now, I say this not to denigrate life insurance itself (which is an essential part of an estate plan) or insurance advisors.  My surprise stemmed from a more personal observations which hit too close to home. 

Another conversation, which predated another development below, involved an exploration of an in-house service model for delivering estate planning to clients.  I have long toyed with the fact that effective estate planning involves an education phase, an interview phase, a drafting phase, and an execution phase. 

Drafting has, and will always require, attorneys.  Now, I know there are services out there that utilize California and Arizona “document preparer” certifications to get around the attorney requirement, and I am not going to give them free clout or advertising here.  But, as I will note below, these services have evolved, and there are enough attorneys out there who want to sit in a back office and review documents all day (which isn’t a bad thing) that services like this will continue to evolve. 

However, non-attorneys have recognized that they can sometimes toe the line and perform the education, interview, and even the execution without the need for an attorney.  I have written about the growing “wealth strategist” role in a number of financial institutions (see my April 2021 article in Trusts & Estates) which adopts the function of estate planning education, interviews, and execution (on the titling and beneficiary designation side) while stopping short of specific recommendations and drafting.  Often, wealth strategists are non-practicing attorneys, and may also be (or are supervised by) non-attorneys. 

At the time, I recognized the marketing benefit of these service offerings, while questioning whether bringing these functions in-house would truly improve a client’s willingness to follow up with an estate planning attorney.  Ultimately, attorneys have the duty to exercise independent judgment, and they cannot just take the wealth strategist’s recommendations at their word when a client is referred. 

On the other end of the spectrum, my article observed the growing trend of independent RIAs bringing estate planning attorneys in-house.  This can work, but it can be an ethical trap depending on the economic arrangement and the appearance to the client.  Once again, the attorney’s duty of independent judgment is called into play, but conflicts of interest can also be inherent.  The attorney’s state-specific licensure can also be a challenge for out-of-state clients, especially in an increasingly-virtual world with nationwide remote practices. 

Since I wrote this article, two other developments have crossed my radar. 

One is the relaxation of ABA Model Rule 5.4, in Arizona and Utah.  While largely experimental, these changes are designed to allow non-attorney ownership of law firms (and, consequentially, fee-sharing).  The attorney’s duty of independent judgment is acknowledged and preserved, through the breadcrumb approach of saying an attorney must be “in charge” at all times, but time will tell whether this trend spreads to other states.  (Ironically, it appears that the change in Arizona was pushed and/or championed by a financial planning firm who wanted to bring an estate planning firm in-house.)

I have also recently become aware of a number of tech services which attempt to give financial advisors the power to bring the education, interview, and drafting functions in-house, without the need for a real-life attorney or wealth strategist.  Once again, following my rule of no free clout or advertising, I do find it astonishing to note these observations from the website of one such service:

“Advisors, stop referring clients out for estate planning.”

“Jargon, overly complicated legalese, and deep critical thinking keep people away from executing their estate plans.” 

“Our technology was created by advisors [not attorneys], for advisors.”

“Every estate plan is state-specific for all 50 states.” [Author note: This is a huge red flag].

“Every plan is reviewed by an Estate Planning specialist or an attorney…”

“If you have all the information before starting a plan, the inputs typically take between 15-20 minutes…”

“[B]uilt… specifically to serve advisors and avoid unauthorized practice of law.” [Author note: The service may avoid UPL, but does the advisor do so?]

These quotes speak for themselves. 

Now, I know I am an estate planning attorney, so practically anything I say against any service which removes estate planning from the hands of practicing attorneys is going to be deemed biased, anti-competitive, and against the interests of the client. 

But, not every attorney out there is greedy for profit, especially estate planners.  I could make way more money in other areas of law, a non-law career, or even creating a service like the one discussed above.  While there are bad actors in every profession, many estate planners do what they do because they love serving clients.  The ones who do not rarely last longer than a few years. 

Now, given this rambling screed, I am sure you are anxious for a point.  The point is one final discussion I had in a client interview with a financial advisor, where he emphasized the difference between the die-tomorrow plan and the die-old plan, while emphasizing that the client take action today to create the die-tomorrow plan.  Estate planning adapts to life phases, and there are many steps in reaching the die-old plan. 

What many of these services (like the one described above) are attempting to do is allow advisors to help clients to create the die-tomorrow plan.  Attorneys are still needed to create die-old plans.  However, it is in this very difference that more discussion is needed.  And, it is this difference which creates many of the sticking points for clients – cost, thinking about death, “deep critical thinking” about what they would want (noted above by an estate planning service as a bad thing to avoid), document complexity, etc.

And, on the estate planning side, malpractice risks and insurance costs are high for attorneys.  We love to serve clients, but there is a certain amount of covering your own butt which occurs.  Yet, I have seen few attorneys who are willing, and/or economically able, to create the die-tomorrow plan.  Instead, many attorneys attempt to push some sort of plan that falls in the middle between the die-tomorrow plan and the die-old plan. 

Much like advisors find themselves in an in-between phase of lacking a wealth strategist, but also not having the wherewithal to bring an estate planning attorney in-house on an exclusive basis, many attorneys find themselves in this in-between phase.  We try to be too many things to too many people.  When you have too much knowledge, or when you see too much of what can go wrong, you may feel like you are selling the client short if you recommend or draft the die-tomorrow plan.  Yet, it is hard to find a client who is willing to invest the time, money, or “deep critical thinking” needed to implement the die-old plan.  (And, as a side note, the unbundling trend for legal services makes it possible to cover your own butt by limiting scope of representation to create the die-tomorrow plan).

Ironically, estate planners tend to think long-term about the client’s needs without addressing short term needs, but do the opposite in their own practice – they react to short-term needs (especially business development) without thinking long-term.  It is not about the fees.  It is about meeting the client’s present and future needs.  Some clients would be served, right now, to just do something – to implement the die-tomorrow plan – but without the cost or complexity of the die-old plan.  (On which I want to call out some of the document assembly and form vendors for estate planning attorneys, because they do not do the client any favors on that front.)  But, if you truly serve that client’s needs as they exist today, then they are more likely to think about you tomorrow when their needs evolve. 

If you were a personal trainer, you wouldn’t tell a new client with no fitness background to run a marathon.  You also wouldn’t tell them that anything short of running a marathon is useless.  Yet, that is what many estate planners do – present an insurmountable obstacle, instead of incremental steps. 

We can be better.  And, until we do, services like the ones described above will continue to be created by non-attorneys who wish to exploit the public’s (and the financial planning community’s) lack of faith that we can change and be better.  And, due to this loss of faith and trust, our true and somewhat accurate criticisms of these services (that they do not serve the client’s interests) will continue to fall on deaf ears because, at the end of the day, the hard truth is that we do not always serve the client’s interests. 

Estate planners invest a lot of time addressing clients’ objections to estate planning.  Perhaps it is time that we, as estate planners, start addressing our own objections to the new reality that is happening around us.