There was an interesting article published last week in Forbes magazine entitled “Where Have All the Estate Planning Lawyers Gone?“. The premise of the article is that with inheritance tax thresholds increasing in most jurisdictions, many people feel that they would be paying for professional advice that would make little financial difference to their situation. In the US, the tax exempt part of an estate has increase almost every year for the last ten years and it now sits at $5 Million. This means that your estate will only be subject to Estate taxes on every dollar above the $5 million threshold which for many people, means that their estate will be passed on tax-free. According to the author, who is both an estate planning lawyer and an accountant
“High-end estate planning reminds me of my favorite nursery tale, Hans Christian Andersen’s The Emperor’s New Clothes: what matters is not whether the client is getting value, but whether he thinks he is getting value. Demand for estate planning has actually been declining for years. People are reluctant to pay fees for work that does not currently benefit them. They don’t see estate planning as a productive use of their funds.”
According to the article it seems that many people are questioning the value of professional estate planning advice. In the past the rationale was always that a fee of say, $1000, would easily be recovered by the estate by astute tax avoidance strategies. But with the exemption threshold now being raised to a level that makes it a non-issue for most families, many people are turning to preparing their own estate planning documents.
But it seems that the trend is Worldwide. A new survey coming out of the UK states that “Britons are shunning financial advisers and turning to the internet for advice on estate planning, according to research by Standard Life.” A whopping 48% of people are using the internet to figure out their estate planning needs rather than booking an appointment with a financial planner or solicitor. This is a massive and irreversible trend and the independent survey points out that
“Solicitors are still out in front with 54 per cent of the public turning to them for estate planning but this figure has significantly dropped in the past year, down from 74 per cent the year before.”
We’ve explained the reasons for this many times in our blog; the cost, the convenience, the privacy, the ability to keep documents updated. But it seems that Forbes have hit on an interesting nuance; it’s not just cost, it’s the perceived value for money.
Obviously, there are many situations that call for the advice of a legal professional, but many people are coming to realize that they can produce the exact same documents at a tenth the cost.