When people hire an estate planning attorney, they’re trying to make things easier for their family. They want to avoid probate when possible, reduce court involvement, keep costs under control, and make sure the people they choose can carry out the plan without unnecessary delays or confusion. That is what estate planning is supposed to do.
Unfortunately, I regularly review estate plans that seem to have been designed with very little thought about what happens after the client dies. In some cases, the result is more probate, more paperwork, and more legal fees than necessary. In other cases, the documents are structured in a way that conveniently creates future work for the law firm that drafted them.
I don’t think these practices deserve a polite explanation. If an attorney routinely uses these techniques, then I believe one of two things is true: either the attorney understands the consequences and is doing it anyway, or the attorney has not thought far enough ahead to be calling himself or herself an estate planning attorney. Neither possibility should make a client feel comfortable.
Here are four of the most common sneaky lawyer tricks that can drain an estate.
1. Preparing a Revocable Living Trust Without Meaningful Funding Guidance
One of the biggest misconceptions in estate planning is that simply signing a Revocable Living Trust somehow causes probate to disappear. It doesn’t. A trust controls the assets that are titled in the trust, assigned to the trust, or otherwise properly coordinated with the trust through beneficiary designations or other planning techniques.
That means the attorney shouldn’t stop at preparing the trust document. The attorney should be thinking through the client’s house, bank accounts, investment accounts, business interests, vehicles, life insurance, retirement accounts, personal property, and other assets, and then provide actual guidance about what belongs in the trust, what should stay outside of it, and what beneficiary designations need to be changed.
Yet I continue to see people who paid thousands of dollars for a trust and received little more than a binder and a generic instruction to “fund the trust.” Sometimes they were handed a list. Sometimes they were told to call their financial advisor. Sometimes nobody followed up at all. Then, years later, the client dies, and the family discovers that most of the assets are still individually owned and now have to go through probate.
That isn’t a minor administrative mistake. That defeats one of the main reasons many people created the trust in the first place. If most of the assets never make it into the trust or are not otherwise coordinated with it, then the family may still end up in probate for the majority of the estate.
I have a hard time accepting the idea that an attorney who prepares Revocable Living Trusts doesn’t understand this. If the attorney understands trust funding and still doesn’t make meaningful funding guidance part of the planning process, then the client has been left with an incomplete plan. If the attorney doesn’t understand how important funding is, then I would question why that attorney is preparing trusts at all.
Estate planning isn’t document preparation. The attorney should be planning what happens to the assets, not simply preparing paperwork and hoping the client figures out the rest later.
2. Using a Regular Will Instead of a Pour-Over Will
When someone has a Revocable Living Trust, I want the trust to contain the detailed instructions about who receives the estate and how those beneficiaries receive it. The Will should normally serve as a backup document for assets that accidentally remain outside the trust at death.
That is what a Pour-Over Will is designed to do. Instead of naming all of the children, grandchildren, charities, or other ultimate beneficiaries directly in the Will, the Pour-Over Will directs the probate estate into the Revocable Living Trust. The Trustee then handles the property according to the terms of the trust.
That difference matters because probate involves paperwork. If a regular Will names several individual beneficiaries, then those beneficiaries may have to receive notices, sign receipts, execute waivers, approve documents, respond to accountings, or otherwise become directly involved in the probate administration. Depending on the estate, there may be several rounds of paperwork requiring signatures from every one of them.
Now compare that with a Pour-Over Will where the trust is effectively the only beneficiary of the probate estate. Instead of dealing directly with four children, six grandchildren, or some other group of ultimate beneficiaries, the probate estate is dealing with the Trustee. The property is transferred into the trust, and the Trustee then handles the distributions under the trust agreement.
That is cleaner and easier.
So when I see an estate plan containing a Revocable Living Trust but also a traditional Will that separately names all of the same ultimate beneficiaries, I have to wonder why the attorney created two parallel distribution systems. The trust was supposed to simplify the administration, yet the Will is now dragging all of the beneficiaries back into the probate paperwork.
To me, that shows either poor planning or a lack of concern about how much work the family will have to do after death. The trust should be the main estate plan. The Pour- Over Will should be the safety net.
3. Leaving Personal Property Outside the Trust and Saying, “That’s What the Will Is For”
This is one of the most ridiculous explanations I hear in estate planning. A client creates a Revocable Living Trust because the client wants to avoid probate. The attorney may deal with the home and some financial accounts, but then nobody does anything about the furniture, clothing, jewelry, appliances, tools, electronics, artwork, collectibles, household goods, and all of the other personal property that doesn’t have formal title paperwork.
When somebody asks what happens to those items, the answer is often, “That’s what the Will is for,” or, “That’s what the Pour-Over Will is for.”
That makes no sense.
The Pour-Over Will should be there as a backup in case something is accidentally left outside the trust. It shouldn’t be the excuse for intentionally leaving an entire category of property outside the trust from the beginning. If we knowingly leave property outside the trust and plan to use the Will to move it through probate later, then we are creating the very probate problem the trust was supposed to help avoid.
One simple way of addressing this problem is an Assignment of Personal Property. An assignment can transfer broad categories of ordinary non-titled personal property into the trust without requiring a separate transfer document for every couch, television, kitchen table, shirt, lawnmower, appliance, or piece of jewelry.
Obviously, some assets have titles, registrations, liens, or other special requirements, and those assets may need separate handling. But ordinary household and personal property doesn’t come with a formal certificate of title that can simply be changed into the name of the trust.
That is exactly why an assignment is useful.
When I see a trust plan that simply ignores personal property and relies on the Pour-Over Will to clean it up after death, I don’t consider that thoughtful estate planning. I consider it a failure to finish the job. The goal should be to keep assets out of probate when reasonably possible, not knowingly send them there and then point to the Will as the solution.
4. Naming the Law Firm as Trustee
If I review a Revocable Living Trust and discover that the drafting attorney or law firm has named itself as successor Trustee, I consider that an extreme red flag.
The reason is simple. The attorney has now written the attorney or the law firm into a future paying position. The same lawyer who was hired to create the estate plan has also created a mechanism for the law firm to be hired after the client’s death to administer the trust.
That should bother people.
One of the major reasons clients use Revocable Living Trusts is to reduce court involvement and avoid many of the costs associated with probate. But if the law firm becomes Trustee and then charges substantial fees for trust administration, the expense has not necessarily disappeared. It has simply been moved from probate into trust settlement.
In other words, the client may have been sold on avoiding probate costs, only to have the law firm arrange for itself to collect trust administration fees after death.
It is common to see attorneys and law firms charge percentage-based fees for handling trust settlement, and 5% of the assets isn’t an unusual number in the marketplace. The math becomes ugly very quickly. Five percent of a $500,000 trust is $25,000. Five percent of a $1 million trust is $50,000. Five percent of a $2 million trust is $100,000.
Now ask the obvious question: who decided the law firm needed to be Trustee?
If the family is dysfunctional, the beneficiaries are irresponsible, the assets are unusually complicated, or there is no competent and trustworthy individual available, then a professional Trustee may be appropriate. There are absolutely situations where paying a professional fiduciary makes sense.
That isn’t the problem.
The problem is when the drafting lawyer or law firm routinely names itself as Trustee as part of the firm’s normal planning model. At that point, the lawyer isn’t simply recommending professional administration. The lawyer is creating a future revenue stream for the lawyer’s own firm.
That is a major conflict warning in my book.
The attorney should be helping the client choose the best Trustee for the client and the family. The attorney shouldn’t be structuring the estate plan to make sure the law firm has a guaranteed paying job after the client dies.
Estate Planning Should Reduce Problems, Not Create Them
A good estate planning attorney should be thinking several moves ahead. The attorney should be asking what happens to the house, the bank accounts, the investment accounts, the personal property, the retirement accounts, the business interests, and everything else the client owns. The attorney should also be thinking about who has to sign paperwork, who controls the assets, who gets paid, and whether unnecessary probate or administrative costs can be avoided.
Those are not side issues. That is the estate plan.
If the attorney prepares a trust but doesn’t meaningfully help fund it, then probate may still be waiting for most of the assets. If the attorney uses a regular Will that directly names all of the ultimate beneficiaries, then the family may face unnecessary rounds of probate paperwork. If the attorney leaves personal property outside the trust and dismisses the problem by saying, “That’s what the Will is for,” then the attorney is intentionally preserving probate exposure that could have been avoided. If the attorney names the law firm as Trustee, then the firm may be creating a future source of fees for itself.
I don’t consider any of those practices harmless.
When you hire an estate planning attorney, you should expect someone to do more than prepare documents. You should expect someone to think through what happens when you die and to structure the plan so your family deals with as little unnecessary court involvement, paperwork, and expense as reasonably possible.
If the attorney’s plan creates more probate, more signatures, more administrative work, and more fees than necessary, then the problem isn’t that estate planning is complicated.
The problem may be the attorney.