The scourge of the online Will kit

Here’s the problem; everybody needs a Will, but lawyers are too expensive and inconvenient. As a result 65 percent of people don’t have a Will. To address this issue, countless “downloadable Will forms” proliferate across the internet. People use these forms and their loved ones end up with a mountain of trouble.

Let’s explore the evidence;

Are lawyers really too expensive or inconvenient? According to the customers who come to LegalWills, yes, absolutely. They are being quoted anything up to $1200 or £800 for a simple Last Will and Testament, but more commonly it is in the region of $600 or £400. The more significant problem is that updates are being charged anything up to $100 or £50 per change. There is also a gap between what lawyers think people can pay, and what people are prepared to pay. I read this recently on a legal blog, written by an estate planning lawyer

At least once a week I get a call from a potential client. The question is always the same: “How much does X document cost?” This is always a perplexing question. Usually the answer is “I don’t know.”

I know of an attorney who agrees to quote the client a price over the phone if they can answer one simple question: “What color tie am I wearing today?” …This lawyer knows that people will protest- “how can I know what color tie you are wearing if I am not there?” The lawyer then points out (if the client has not gotten it already) that both questions are similar.

So here’s the disconnect; the lawyer thinks he is clever and the client is a bit dim. The prospective client on the other hand wants to know whether they should include in their household budget some money to prepare a Last Will and Testament. In order to do this, they need to get a feel for how much it will cost. I cannot think of any other situation where you would blindly procure a service, hand over your wallet and ask the service provider to charge you whatever they want (veterinarians and dentists aside!).

So most people end up without a Last Will and Testament in place, and of those that do, most are not kept up to date. So we find service providers offering a “downloadable Will” sometimes free of charge. I saw a new one just last week – I have embedded a screenshot of the body of it here. Last Will and TestamentThey have tried to convey some authenticity with some calligraphy at the top and an impenetrable legal sentence to kick off the document

 

I JOHN DOE KNOW ALL PERSONS BY THESE PRESENTS:

 

But the meat of the document comes in article IV, where you are given space to explain how you would like your estate to be distributed. Personally, I feel that this document should be illegal; it is preying on people who don’t want to pay for legal advice and who are trusting this company to provide them with a legally binding document. But it is nothing short of impossible to complete a satisfactory Will using a blank page like this. You need to create alternate plans, trusts, Executor powers, residual plans and without these you end up with an estate like Ann Aldrich who used E-Z Legal Forms to prepare her Will. She listed out her possessions and instructed all of these things to go to her beneficiary. Unfortunately she didn’t explain what should happen to everything else. The result was a family battle over her estate and a judgement that included this warning “I therefore take this opportunity to highlight a cautionary tale of the potential dangers of utilizing pre-printed forms”

Fortunately, there is a very large middle ground between expensive lawyers and dangerous blank forms, and this is being filled by interactive services like the ones at LegalWills.ca, LegalWills.co.uk and USLegalWills.com. These services guide you through the process with a series of questions, and then verifies that you have covered all scenarios. It only allows you to do things that your jurisdiction permits, and double checks for things like minor children having guardians and trusts set up appropriately. Clearly some people still need expensive legal advice and custom clauses to be written, but services like this work for the vast majority. So much so, that when a recent study from Oxford University listed the most likely jobs to be replaced by technology, paralegals were 4th on the list with a 94% probability of being replaced by software. Most people who have a Will written by a legal professional have their information typed into software and their Will generated from templates (the staff in the office usually do it), but online services like LegalWills are granting access to those tools directly to the consumer.

People are not likely to use a lawyer who refuses to tell them how much they will charge. But we are hoping that we can steer people away from blank form kits.

 

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Documenting your assets; online or paper?

The single most challenging job for an Executor of a Last Will and Testament is to gather up the estate. The estate is made up of land or buildings, financial accounts and policies, “chattels” (stuff that you own), and now, increasingly online accounts. If the list of assets is not written down or stored anywhere it is an impossible task, and the Executor has no way of knowing when the task is completed. As a result, the BBC reports that there is £15B in dormant bank accounts, The Bank of Canada have posted that they are currently looking after 1.3 Million unclaimed bank accounts waiting for a claim. And in the US, CNN reports that there is $58B in unclaimed assets sitting in State treasuries.

Each jurisdiction has its own way of dealing with these accounts; Canada probably has the most straightforward search through the Bank of Canada, the UK has a service called MyLostAccount set up by the British Bankers Association (but it’s a tedious service to work with) and the US has allowed free enterprise to encourage a variety of different services, headed by the non-profit National Association of Unclaimed Property Administrators, with a service at unclaimed.org which allows you to search through different State treasuries.

Most of these unclaimed accounts are for people who have passed away, when the Executor knew nothing about them. The administration of the estate was completed without knowledge of those accounts, and the assets entered into an eternal limbo until the government claims them as their own. Given how widespread the issue is, and the billions of dollars at stake, what can be done to ensure that all of your assets reach your beneficiaries? There are, at a high level, two options;

Writing everything down on a piece of paper
The first point to note with this option is that under no circumstances should you describe details of all of your accounts in your Will. It would mean having to update your Will every time an asset changes including signing and witnessing the document, but more importantly, once probated, your Will is a public document so everybody will be able to read this detail. There have already been reports of scammers scouring probate records for login credentials written into Wills. What we therefore mean is writing everything down on a piece of paper and storing it with your Will; you can do this either on an ad-hoc basis or through a structured book like My LifeLocker.

The key advantage of this approach is that it is personal and confidential; you are not relying on any third party to store the information, so it is guaranteed to be safe. The disadvantage is that in keeping the document safe, it may never be found. Paper is not particularly durable either, so it may get lost in a house fire, flood or other natural disaster.

Using an online service
The alternative is to use an online service that offers to store your account information and passwords for you, and then release them at the appropriate time. Let me deal with the obvious disadvantages of this method first. You are handing all of your personal and financial details over to a third party. If somebody came to your front door and offered to look after your passwords for you, there is not a chance that you would take them up on the offer, so why would a website be any different? Some of these services are offered through overseas companies and you would quite frankly be insane to trust them. The company also has to last longer than you, which is this rapid world of startup booms and busts is statistically not likely. In our 14 years of operation we have seen companies offering this type of service come and go, and on the Digital Beyond blog they recently wrote about 26 companies that offered to keep your credentials safe for your loved ones (for a monthly fee) that have subsequently disappeared; AssetLock, E-Z-Safe, EstateLogic, Eternity Message, Futuristk, GreatGoodbye, if i die.org, Legacy Organiser, Life Document Storage, LifeStory.com, Lifestrand, Memorial Gardens, MemoValley, MentoMori, My Last Email, My Web Will, and MyInternetData.

But there are advantages to using a service like this. At LegalWills.ca, USLegalWills.com and LegalWills.co.uk we have teamed up with My LifeLocker to guide people through the process of documenting all of their assets including their online accounts, and then have tied this together with our proprietary Keyholder mechanism. You name a trusted keyholder who is given a unique securely generated key. They can then unlock your document at the appropriate time after going through the required security measures. The information is encrypted so it means that the right information gets in the right hands at the right time, and cannot be compromised. It is also easy to update by logging into your own secure account, the same account that you used to prepare your Last Will and Testament, Living Will and Power of Attorney.

So if you are going to use an online service, look firstly for one with longevity. Look for the usual industry seals like Better Business Bureau accreditation or maybe check out Ripoff reports at www.ripoffreport.com. Look for companies that are based in your home country and then check to see the type of security that they have in place. The recent Heartbleed Bug awakened many people to the risks of online accounts (we weren’t affected). Finally look at the actual mechanism for releasing the data; how is it guarded against unauthorized access.

Our Lifelocker service actually has the best of both worlds; you can print it and store the document on your bookshelf, and also have an online version available to your keyholders. Or just choose the one approach that works for your situation.

Aside

Keeping up to date with Estate Planning laws

This week in Canada, the Province of British Columbia enacted new laws for the preparation of Wills. The changes were described by some as “sweeping” and the “most significant update in the law for decades”. In reality though, there were only two meaningful changes for service providers like us. Firstly, it lowered the eligible age for preparing a Will from 19 to 16, and secondly it changed the law that automatically revoked a Will on marriage. I’m not quite sure why there was pressure to lower the eligible age; I know that the number of teenagers preparing a Will using our service is very, very low (we’ve had one this year according to our statistics). But the revoking on marriage certainly makes sense. Tragic as it may be, newlyweds can be involved in fatal accidents, and it doesn’t seem right that their Will would be voided because there hadn’t been an opportunity to make the update.Changes Coming

Many lawyers will cite changes in the law as a reason to avoid preparing your own Will, but of course, our services are always kept up-to-date. It does however make for an interesting challenge. Our service covers every State in the US (except Louisiana), every Province in Canada (except Quebec) and the UK (England and Wales only). This gives us over 60 different jurisdictions that have to be monitored. Most of the changes to estate planning law impact people who have not made a Will, and also the Execution of that Will. For example, the new BC law encourages the courts to try and figure out what the testator really meant in their Will, rather than have the estate tripped up on a technicality. The distribution of the estate for somebody who doesn’t have a Will was also changed in the new law, but we would hope that nobody would leave their estate distribution to the vagaries of intestate law and take the decisions into their own hands.

But it means that if you pick up a blank form kit in BC, there is a chance that it may now be invalidated because of the new law. Certainly, any help text associated with that kit would most likely be wrong. You also have to be very careful when using an online service and maybe even request information from the service provider on when they most recently had an update to the service. At LegalWills.ca, USLegalWills.com and LegalWills.co.uk we are diligent about monitoring estate planning laws across all jurisdictions, but other services may have gone online years ago and never been touched.

However, don’t let law changes scare you away from preparing your own Will, certainly at LegalWills.ca, USLegalWills.com and LegalWills.co.uk you can be assured that any change in the law will be reflected in our services on the day of the change.

 

 

Why common-law marriage is a myth

Often times we end up writing articles that try and explain the kind of mess you can get into if you don’t have a Will. So often, the complexities of the law can be avoided completely if you write a Last Will and Testament. Common-law marriage is a case in point.

According to some statistics, about one in six people co-habit without getting married; clearly there are many reasons for this which we won’t get into, but if ever there was a case for preparing a Will, a common-law marriage is it. I will now attempt to distill the vagaries of the law across different jurisdictions.

In the UK, the law is simple and unequivocal;  ‘common law marriage’ has no recognition in law and unless you have both made Wills neither of you will have any automatic rights to inherit from the other. The intestacy rules dictate what happens if you die without a valid Will and they make no provision whatsoever for a ‘partner’; it is only a ‘spouse’ who will automatically inherit. You may have co-habitated for 50 years, but in the eyes of the law, you are complete strangers if one of you dies without a Will (you may be able to make some claim based on a “dependency”, but this would require a challenge to the default distribution of the estate). Incidentally, if you do inherit money or property from an unmarried partner, you are not exempt from paying inheritance tax, as married couples are.

In Canada, it is slightly more complicated. British Columbia, Saskatchewan, Manitoba, and the Territories do recognize common-law relationships, however, Ontario, Alberta, New Brunswick, Nova Scotia, Newfoundland and Labrador, and PEI do not recognize common-law partnerships and surviving partners will face the same challenges as those described for the UK (above).

The US also has very complicated State specific laws which I can’t go into here. I have spent literally hours looking through State laws to find a good explanation that would fit into this blog, but it cannot be done. In summary there is a common misperception that if you live together for a certain length of time (seven years is what many people believe), you are common-law married. This is not true anywhere in the United States. There are 11 states that recognize the existence of a common-law marriage, and this allows the surviving partner to inherit if there is no Will. For the other States there is no protection for surviving common-law partners.

In short, if you are cohabiting, in a “domestic partnership”, living in a putative Marriage (one that is simply implied) or a common-law situation, you absolutely must write your Will to protect the rights of your surviving partner. You should also prepare a Power of Attorney and Living Will because depending on your jurisdiction, your common-law spouse may have no rights if you were ever to be incapacitated.

Fortunately, a Last Will and Testament, Financial Power of Attorney, Healthcare Power of Attorney, Living Will and Advance Directives can all be created through the online tools at www.legalwills.ca , www.uslegalwills.com and www.legalwills.co.uk. The whole process takes no more than a few minutes and can protect the rights of your partner. It is a serious issue that should not be put-off.