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FinCEN Updates its Beneficial Ownership Information FAQ Page

Elizabeth Q. Boehmcke Esq. Apr 25, 2024

On April 18, 2024, FinCEN updated its Beneficial Ownership Information Frequently Asked Questions page to include new questions concerning beneficial ownership through trusts, application of the rules to corporate trustees, and other topics. 

New Questions D.14-D.16 focus on beneficial ownership of reporting companies through trusts. 

Question D.14 confirms that beneficial owners can own or control a reporting company through trusts either by exercising substantial control over a reporting company through a “trust arrangement” or by owning or controlling ownership interests of a reporting company that are held in a trust.  This is not new, though practitioners should take note of the phrase “trust arrangement” as further indication of the broad scope of these regulations and FinCEN’s intent to include informal agreements and arrangements as well as formalized corporate and trust structures.

Question D.15 generally restates the regulations on who is considered a beneficial owner of a reporting company when an interest in the company is owned or controlled by a trust.  In articulating a facts and circumstances test as to which beneficiaries, grantors, trustees, and other individuals may be beneficial owners, FinCEN makes an unintentionally humorous statement:  “Trust arrangements vary.”  Too true, FinCEN.  Unfortunately, this FAQ does not provide any real clarity for analyzing a trust to determine beneficial owners beyond that already provided in the regulations.  At present, practitioners should likely interpret the scope of these regulations quite broadly and err towards over-reporting of individuals who have any control over a trust that owns or controls a reporting company.

Question D.16, on the other hand, gives additional information about how a reporting company reports beneficial ownership when there is a corporate trustee, and should be reviewed carefully.  Essentially, FinCEN is articulating a “look-through” rule in which the “reporting company should determine whether any of the corporate trustee’s individual beneficial owners indirectly own or control at least 25 percent of the ownership interests of the reporting company through their ownership interests in the corporate trustee.”  FinCEN provides some simple examples for how to determine if an individual owner of the corporate trustee has sufficient interest in the corporate trustee combined with the trust’s ownership or control of the reporting company to cause the individual to be a beneficial owner of the reporting company.  Assuming the combined ownership interests are sufficiently high, the individual owner of the corporate trustee is deemed to be a beneficial owner of the reporting company and the individual’s information must be reported.

However, there is an exception if (i) the corporate trustee is an entity that is exempt from the beneficial ownership reporting requirements, (ii) an individual beneficial owner of a reporting company is such only by virtue of ownership interests in the corporate trustee, and (iii) the individual beneficial owner does not exercise substantial control over the reporting company.  In the event that all three conditions are met with respect to a particular individual beneficial owner, then the reporting company can report the name of the corporate trustee in lieu of information about the individual beneficial owner.  This analysis would need to be undertaken with respect to each individual who has an ownership interest in the corporate trustee.

But note that this exception only applies to those who are individual beneficial owners only by reason of ownership interests in the corporate trustee and who have no substantial control over the reporting company (and then only if the corporate trustee is itself an entity exempt from the reporting company rules).  If an individual beneficial owner happens to also own interests in the reporting company in addition to their ownership interest in the corporate trustee, the exception may not apply because beneficial ownership is determined by aggregating ownership interests.  Moreover, to the extent owners of the corporate trustee or “individuals employed or engaged by the corporate trustee” exercise substantial control over the reporting company, their information seemingly must still be reported.  In cases where at least a majority of the reporting company is owned by a trust with a corporate trustee, it is likely that the broad definition of “substantial control” will ultimately identify individual trust officers and other corporate decision makers as beneficial owners who are not entitled to report the name of the corporate trustee, meaning their individual information must be reported.

You can read all of the Beneficial Ownership Information FAQs here. 

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Estate Planning Excellence: The ACE Roadmap to Success

Laura Cowan Esq. Apr 2, 2024

The list of things they teach you in law school is long. We know how to read a case, how to draft a brief, and how to craft an argument. We know how to issue spot. We know how to “think like a lawyer”. The list of things they don’t teach you in law school, however, is even longer. And this includes the practical side of practicing law. The nitty gritty of running a firm. And what I’ve found after 8 years of solo estate planning is that knowing the Rule Against Perpetuities isn’t enough. It’s necessary, but not sufficient. You also need to be able to attract a consistent flow of leads. You need to be able to close those leads at a fee you deserve. And you need to do the work. Put another way, you need to Attract, Close, and Execute. We call it ACE! Let’s look at each element:

Attract

Estate planning attorneys need to be able to generate a consistent flow of leads. Bonus points if you can do it without spending a lot on marketing. And while referrals and word of mouth are great, they ultimately rely on the goodness of others. You are putting the ball in someone else’s court, and this lack of control makes some lawyers a little nervous. I implement workshops in my own law firm to fill in the gaps. Each month I’ll present a webinar or seminar on estate planning to a local parents’ group. It’s a way for people to learn more about me, my firm, and estate planning – all in a no-pressure setting. There are benefits for the lawyer as well. Educated leads are much more likely to hire you. Also, it saves time. Estate planning consultations tend to be repetitive. I’d rather spend 1 hour educating 10 people than 10 hours educating 10 people. A basic presentation coupled with a strong call to action should be enough to get attendees to take the next step – booking a consultation!  

Close

It’s great getting people to show up at your workshop, but not if none of them end up hiring you! That’s why being able to convert at the consultation is so important. Here are a few tips for nailing the close. First, require a completed questionnaire before you meet. This ensures the prospect is putting some skin­­­­ in the game and you have enough information to help them. Second, if you are meeting with a couple, make sure both partners are in attendance. Third, don’t go longer than one hour. That is plenty of time to educate your prospects and review your fees. Finally, consider doing a calculation that shows how much probate and estate taxes could be without proper planning. If you can show people it’s going to be a lot more expensive for them NOT to hire you than to hire you, your close rate will skyrocket.

Execute

You’ve got a new client – congratulations! But is it really a celebration if you’re stuck at the office until 10pm? The work needs to be done, but does it all need to be done by the lawyer? Thankfully, the answer is no! Systems, automation, and delegating to the rescue. They can shave hours off your day. For example, appointment scheduling is a cinch using software like Calendly. Intake is a piece of cake with DecisionVault. Whether you do the drafting yourself, or outsource it to a paralegal, software like Interactive Legal will streamline the process and ensure you have a top-notch work product to present to your clients. This is all the “Execution” part of ACE, and most of it can and should be done by systems and staff, not the lawyer. This frees the lawyer up to generate more revenue.

Summary

Which letter do you need most help with? Attracting? Closing? Executing? Maybe all three?! Whichever letter it is, hopefully we agree that all three components are important. And the better you implement ACE, the closer you are to becoming a 2-Hour Lifestyle Lawyer™!  

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Always Learning

Teresa L. Bush Esq. Mar 20, 2024

I was new to estate planning in the early nineties, and I was reminded recently that even though it may seem like the nineties were ten years ago (and it truly does, to me), they were actually thirty years ago.  Some of you reading this were born in the nineties.  My reference is only to point out that I started working in estate planning all those decades ago without knowing what I was doing.  So, how did I learn? 

We learn some in law school, of course.  I can point to Professor Stanley Johanson’s Wills and Estates class as the starting point for my desire to work in the Trusts & Estates area.  And in law school we learn about concepts – a LOT of concepts.  But in my experience, I didn’t learn how to do the actual work of being an estate planner until I started doing the work – some things you have to learn by doing. 

Maybe that’s one reason why we refer to the “practice” of law.  We start out learning by doing, by practicing our craft.  Not unlike a medical doctor who starts with a residency.  However, lawyers don’t have the same type of program built in, where they are required to practice with a team of experienced professionals when starting out.  Maybe that’s not required because, in the past, it happened somewhat organically.   

In law school, we hoped to get a job working as a summer associate, where we would see lawyers actually being lawyers (and also playing lots of golf and going out to fancy lunches and dinners, at least back in the nineties).  Law students were able to see the work being done, and ideally, one of those summer jobs would turn into a position at a law firm where a new lawyer would work directly with at least one senior lawyer in their desired area of focus.  In a really large firm, you might take a tour through a few departments before selecting an area of focus, but in any event, there were seasoned lawyers introducing the new associates to how to do the work – a built-in program of mentorship and education.   

In the estate planning area, this might mean learning how to meet with a client to gather information, propose an estate plan, and get client approval to begin.  It includes learning to draft documents, deliver and explain the drafts to the client, and to make edits as needed.  And finally, it involves learning the ins and outs of meeting with the client to give a final summary, properly execute the documents, and deliver the completed estate plan.  Every firm can have variations on each part of the process, but how would a newly-minted lawyer know where to begin, if not for the mentoring?  

I remember many months of sitting silently in client meetings, because my job was to observe, learn the “script,” learn what questions to ask, learn the process.  And at the final meeting, my job was to do the same thing – be a (mostly) silent but literal witness to the signing ceremony so I could supervise them myself in the future.  Interestingly, drafting the documents was the first part of the process entrusted to me – at least for the first draft.  This was because my firm, like most, had a set of standard forms for estate planning documents, built in word processing, so I had a template to follow rather than starting with a blank page.  My initial drafting usually meant a set of documents being returned to me corrected and modified with plenty of red ink, even with the template of the firm forms – but I was learning by doing, with that experienced attorney essentially providing training wheels.  

There was always more to learn, of course, because some clients are wealthier or own more unique assets.  I had to learn to handle those cases too – dealing with retirement assets and 401(k) plans, addressing new forms of property ownership allowed by state legislative changes, figuring out when estate taxes and income taxes matter (hint:  sometimes for the former, always for the latter).  And once I got a handle on those things, it seemed like I might know all I needed to know – but no.  Even though the law seemed very settled when I started practicing, law changes are inevitable.  Today, we are still learning about SECURE, which is now in its fifth year, and we are learning about the brand-new Corporate Transparency Act.  The moral here is that we are always learning, but let’s go back to the beginning… 

For me, the question of “What does a Will (or Trust) actually look like?” was answered quickly by reviewing my firm’s standard forms.  The questions of what information to gather from clients and how to actually do the work of estate planning were answered by following the example of that experienced attorney.  However, a new estate planner today may not have access to a form library and may not know where to begin the drafting process or what questions to ask potential clients.  Many firms no longer have estate planning practices at all, and remote working has allowed more attorneys to work as solo practitioners, without that experienced attorney right down the hall.  Due to these factors and more, new estate planners may not have the same benefit of mentorship that my generation of attorneys was afforded.    

I have found a few tools that can help in this situation: 

1. State Bar continuing legal education.  Many states present educational programs for new attorneys, or not-so-new attorneys who may be expanding their practice into a new area.  For example, the Texas State Bar has programs on “Handling your First (or Next) Will,” “Handling your First (or Next) Trust,” and even “Handling your First (or Next) Medicaid or Elder Law Case.”  These all are designed to cover the basics and are great introductions to how to do the work.  Your state may vary, of course. 

2. Co-counseling with an experienced attorney to assist with the first estate plan of a particular type.  Online communities can provide connections to other attorneys in your area who are willing to partner in this way, review documents, answer questions, etc.  Examples include not only groups on Facebook and other platforms, but membership/subscriber organizations, such as the Estate Planning Discussion Forum and Practitioner Referral Network available through InterActive Legal. 

3. Other educational programs, such as the InterActive Legal Academy.  Each attorney with whom I now work daily was able to learn the basics of estate planning from one or more senior lawyers.  This is one of the reasons we launched InterActive Legal Academy in 2022 – to provide an introduction to estate planning and estate tax planning from attorneys experienced in the field in a way that replicates how we all learned when we were new.  Our Spring program will take place in April, covering estate planning basics.  In October, we will present our Fall program that covers estate, gift, and income tax planning concepts.  The faculty for both programs includes practicing attorneys and attorney members of the InterActive Legal content team with over 150 years of combined estate planning experience.   

The April Academy is an entry-level program, ideal for new attorneys or those who may be new to estate planning, and registration is open now.  We will be covering those basic concepts that I started learning over thirty years ago, as well as new laws enacted only recently – within the past 1-5 years.  Even as older attorneys, we are always learning, and one goal of the Academy is to replicate the type of education many of us found invaluable as young lawyers. 

If you have questions about InterActive Legal Academy, please let us know at [email protected]. 

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Take Steps Now to Harness AI for the Future

Vanessa L. Kanaga Esq. Feb 22, 2024

This article is being reprinted with permission from NAELA. It was originally published in NAELA NEWS, Volume 36, Issue 1, Jan/Feb/Mar 2024, pages 6-9.

I am not an expert on AI. Let me be upfront about that. I work for a legal technology company, so of course, it’s a topic of great interest to me. I would even venture to say that I know more about AI than the average estate planning attorney, but “I am not an AI expert.” It is a line I’ve repeated over the last several months, following a blog post I wrote for our company website on AI and the legal profession.¹  I have written blog posts and co-authored articles on important and timely topics ranging from SECURE to the estate tax marital deduction, but none have received as much attention as the blog post on AI.

I mention this at the outset for two reasons. The first is to set expectations. I am writing to share my ideas and recommendations based on my experience. Still, I would not want anyone reading this article to operate under the misconception that I have in-depth technical knowledge of the generative AI systems, such as ChatGPT, currently taking the world by storm. The second is to emphasize the importance of this topic within the estate planning and elder law community today. The interest that my short blog post garnered shows me that all of us in this space are interested in AI, concerned about what it means for us and the future of our practice, and hungry to learn more about it.

I am fortunate to be in a position that affords me access to other attorneys grappling with this subject and people with technical backgrounds who have a good understanding of current and developing AI technology. Although I am not an expert, I have experience in the area that other estate planning and elder law attorneys may not. Based on that experience, I offer my thoughts on the subject, hoping they will help others in the estate planning and elder law community. As attorneys, we do not need to become AI experts, but we do need to deal with the effects of AI on our profession. Here are some steps we can take to do that.

1. Don’t Fear AI, Embrace It

The legal profession has a lot of well-founded fears around AI. We fear for our livelihood. We fear for the integrity of our profession. We fear society will suffer due to AI-driven do-it-yourself legal solutions that produce less than adequate results. The best way to deal with these fears is to engage with AI so that we understand its potential and can harness that potential where feasible. It makes us consumers of AI solutions, giving us the market power to demand solutions that will enhance estate planning and elder law practice rather than working against it. It also lets us meet the demands of clients as they become increasingly used to AI-driven services. Whether using an AI-driven chat service to direct clients to resources on your website, an AI-based scheduling assistant, or an AI research tool, embracing AI tools can enable attorneys to operate more efficiently and provide a better client experience. Moreover, attorneys have an ethical duty to stay abreast of technological developments and to evaluate their relative risks and benefits. Investigating AI resources to use in law practice is not only a good idea; it is a requirement.²

2. Investigate Security and Privacy Issues

As mentioned above, attorneys have an ethical duty to stay current on technological developments that can benefit clients. Of course, the corollary to that duty is to evaluate the risks associated with that technology. Generative AI platforms are generally available to the public to use data entered into the platform to train the AI system further.³ Accordingly, such publicly available platforms collect and retain data in a way that likely will be unacceptable to most attorneys when considering their obligations to maintain client confidentiality and comply with state privacy laws. When evaluating AI-based technology, attorneys should look to platforms designed for businesses that segregate customer data and provide more privacy measures.⁴ Firms can develop proprietary solutions that limit access to and storage of firm data in ways that let the firm address these security and privacy concerns. This proprietary solution may be a good fit for larger firms with the budget to develop and maintain it, but it likely will not be a viable option for smaller firms. Solo practitioners and lawyers in smaller firms should stay attuned as commercial technology platforms continue incorporating AI technology into their products. Reputable legal software vendors take the necessary precautions to secure and segregate client data to the extent possible. They will, by necessity, address these concerns when developing AI components as part of their software. By staying current on commercial AI solutions as they grow, lawyers can fulfill their ethical obligation to find beneficial solutions and reduce risk.

3. Think of AI as a Tool

To preserve our profession’s integrity and ensure clients receive high-quality legal services, attorneys must think of AI as a tool to make legal work better and more efficient. In this way, AI is like any number of tools already used by attorneys, including research tools, practice management systems, word processors, and email. These tools let attorneys do their jobs more effectively but do not aim to usurp the attorney’s role. As a profession, we should be wary of any AI product that purports to accomplish tasks requiring the skill of an attorney, such as verifying or analyzing case law, performing legal analysis on a set of facts, or creating advice for a client. Not only are such solutions a threat to our livelihood, they are unlikely to perform as they claim.

4. Adopt AI Usage Policies

Firms should adopt AI usage policies as soon as possible and update them regularly. Policies should address whether and the extent to which attorneys and staff within the firm are allowed to use AI in performing their work and on firm-owned devices. If AI is permitted, the policy should address the entry of types of information into an AI-based platform and outline the process for approving particular AI platforms for use (e.g., by submitting requests to the IT department or firm technology committee). A list of approved AI platforms should be maintained and distributed to staff.

5. Advocate for Guidance and Restrictions

Whether we like it or not, those of us in professional service fields are on the front lines of the battle to harness the power of AI without sacrificing the human qualities, such as complex thought and compassion, that are essential to the services we provide. The federal government and our professional organizations are already engaged in evaluating the AI landscape and working to put guardrails in place regarding the use of AI.⁵ We should encourage these endeavors by participating in committees, submitting public comments where possible, advocating for other professional organizations to form AI committees, and adopting guidance where possible. As alluded to at the beginning, this article was not about how I became an AI expert, because I am not one. Instead, it offers suggestions from someone who hit a nerve by writing a short piece on AI that interested many attorneys who read it. Although most of us will never be AI experts, we can become experts at navigating AI and its use in the legal profession.

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¹ Why I Do Not Fear AI, available at https://interactivelegal.com/why-i-do-not-fear-ai/.

² See Model Rules of Pro. Conduct, 1.1, Comment [8] (Am. Bar Ass’n 2023), requiring attorneys to “keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.” Many states have adopted similar requirements in their rules governing legal ethics.

³ See Tatum Hunter, Why You Shouldn’t Tell ChatGPT Your Secrets, The Washington Post, April 27, 2023.

⁴ ChatGPT, for example, offers an enterprise solution and a “team” solution for smaller businesses, each with additional privacy protections. An overview of these solutions is available at https://openai.com/.

⁵ On October 30, 2023, President Biden signed an Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. Exec. Order 14110, 89 Fed. Reg. 75191 (Oct. 30, 2023). In February 2023, the American Bar Association adopted Resolution 604, urging developers and others deploying AI solutions to follow stated guidelines. See ABA House of Delegates, Res. 604 (2023).

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Viability of Using AI to Draft Wills

Introduction written by InterActive Legal

U.S. News & World Report recently interviewed InterActive Legal CEO, Vanessa Kanaga about the viability of using AI to draft Wills. Although current AI technology is impressive and can be put to beneficial use, the public should be wary of AI-generated Wills.  In addition to generating Wills that may not be valid, AI is also a one-dimensional approach that fails to take into consideration the needs of a client or other factors an attorney would take into account. 

Turns out, it’s complicated.

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This article is being reprinted with permission from U.S. News & World Report.
Originally published on September 13, 2023 at 
https://law.usnews.com/law-firms/advice/articles/can-you-use-ai-to-write-your-will.

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Can You Use AI to Write Your Will?

An AI-drafted will can be worse than not having a will – if it means someone believes they have a valid will when they don’t.

Written by Ashley Merryman, Edited by Susannah Snider, CFP, Reviewed by Tanza Loudenback, CFP

If you’re one of the millions of Americans without a will, you may wonder whether you can use a generative artificial intelligence program like ChatGPT to create one.

“Can AI draft a will? Absolutely. But the better question is: Should you use it?” says Vanessa L. Kanaga, an estate attorney and CEO of InterActive Legal, a company providing estate law software to law firms. “At this stage of AI, I would not recommend to anyone to rely on AI for their will.”

Kanaga qualifies her comment, saying that, for very simple cases, an AI-generated will might be better than nothing – as long as it’s valid.

Your AI-Created Will Might Not Be Enforceable

Many homeowners take on do-it-yourself projects, but at a certain point, they know when to call in a professional. “It’s the same thing with drafting a will,” Kanaga says. “It looks straightforward, but you don’t necessarily know all the pitfalls that could lead to the will being invalid or challenged or not doing what you intended for it to do.”

To protect estates from false claims, state laws set highly technical requirements in order for someone’s will to be valid. Just one mistake can mean that a court must invalidate a will, says Imaan Moughal, a trusts and estates associate at the New York law firm Manice, Budd & Baggett LLP and an adjunct professor of estate law at Hofstra University’s law school.

Getting the formalities right is so critical that full-time estate lawyers will routinely have other lawyers and paralegals check their work, Moughal says. But a nonlawyer using AI shoulders all the responsibility on their own. “My fear is that something could be quickly overlooked,” she says. That’s all it can take for a will to be thrown out.

What Happened When an Estate Attorney Used AI to Write Her Own Will

Kanaga recently experimented with having ChatGPT draft her own will to see exactly what it could deliver. As CEO of a company that provides estate law software to law firms, Kanaga understands both estate law and how attorneys already use software to generate wills and other estate documents. She was initially impressed.

“It was amazing what it can do,” Kanaga says. “Put in a simple request (or) question, and it will generate what purports to be a legal document.”

But the closer she looked, the more problems she identified.

She asked for multiple versions of the will, created under several states’ laws, but the drafts were largely the same. The New York version didn’t sufficiently reflect the state’s rules for the executor’s bond. And the signature clauses weren’t noticeably different when every state has its own requirements for the will-signing process. If that clause isn’t correct, a court might not accept a will for probate, she explained.

After reviewing the documents, Kanaga concluded that, in the future, AI might be a reliable way to prepare a will. But for now, she can’t even recommend using it for a first draft you’d give to an attorney.

If you did bring an AI draft to a lawyer, they’d likely ignore it and start over.

“Most attorneys have their own forms, or they use systems like ours, that they know are compliant with state law,” she says.

In other words, if an attorney relied on your untested AI draft rather than prepare a new document they knew would be legally sound, they’d arguably be committing malpractice.

Reasons Why a Human Attorney Should Draft Your Will

While an AI-created will is a one-sided exchange, solid estate planning begins with a meaningful dialogue between the client and attorney.

Clients come in asking for a will, but an attorney may realize they’d be better served with another estate tool, such as a trust, Kanaga says. With that one suggestion, the lawyer can help the heirs avoid extensive probate court proceedings and save thousands of dollars in legal bills.

Similarly, when clients first meet Moughal, they often say they have few assets and need a simple will. Then she begins a “fact-finding mission” and discovers they have a child with special needs who needs assistance. Or they own a business or have digital assets, such as credit card points, a random video game account and a stash of bitcoins. The child can be taken care of and the assets protected in a comprehensive estate plan – but only because she asked.

AI won’t know to ask any of that, but an attorney does.

An AI-Generated Will Is Riskier Than Other DIY Forms 

For those asking if there’s a difference between AI-generated documents and the many do-it-yourself form wills available, there is. The DIY forms are typically reviewed by attorneys. AI-generated documents may never get a legal review until a decedent’s will is submitted for probate, and then it’s too late to fix any mistakes.

When DIY wills are enforceable, these documents can still be so unclear or inaccurate that heirs challenge them in court. When Moughal reflects on all the times she’s seen heirs fighting in court, she estimates that half of those disputes involved online DIY wills. And she expects AI-generated documents to be more vulnerable to a challenge than those forms.

A Cheap Insta-Will May Defeat the Point of Having a Will  

Execution of an estate is complicated, emotional and time-consuming. Ultimately, the point of having a will is to protect your heirs’ assets and reduce their stress.

The idea that your loved ones would have to deal with an unenforceable will is “not a risk that you want to take,” Kanaga says.

Relying on a shortcut like AI to create a will might make things easier and cheaper for you, but if you make a mistake, it’s your heirs who pay the price.

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In the realm of Trusts & Estates, many lawyers often find themselves navigating the misconception that their primary offering is a tangible product, like wills or trusts. However, at the heart of this practice isn’t a product, but a promise – a commitment to leveraging one’s expertise to solve complex, personal challenges for clients. While testamentary documents play an undeniable role in crafting solutions, they represent just one piece of the puzzle. To truly serve clients and build lasting relationships, attorneys must look beyond paperwork and delve deep into the multifaceted layers of problem-solving.

Understanding the broader scope of a trusts & estates practice is essential to meet the nuanced needs of every client fully. Rather than viewing our role strictly as document drafters, we must recognize the various challenges our clients face and the myriad ways we can assist. Here’s a deeper dive into some often-overlooked aspects of our practice, underscoring the importance of holistic client engagement:

Common misconceptions of trusts and estates attorneys and how these can influence their relationships with clients:

1. Emotional Underestimation:
   • Planning & Administrative Phases: Estate planning carries deep emotional weight. Focusing solely on technicalities may make clients feel that their personal feelings and anxieties about family, legacy, and mortality are being sidelined.
   • Example: A client hesitates to distribute assets equally among their children due to a strained relationship with one of them. By not delving into these feelings, the attorney drafts a standard equal distribution plan.
   • Outcome: The client might feel unheard, and the will may exacerbate family tensions.
   • Malpractice Risk: If emotional factors are not considered and they lead to the creation of documents that don’t truly reflect the client’s wishes, beneficiaries may claim the attorney did not exercise due care in capturing the decedent’s intent.
   • Pro-Planning Tip: When speaking to a client about their family members, be sure to refer to them by their names, rather than relationship. Ex: “Let’s talk about how you want to distribute assets to Todd and Samantha,” rather than “Let’s discuss how you want to distribute assets to your children.” Referring to your clients’ family members by name makes a client feel like they are talking to someone on a more personal level.
2. Overemphasis on Testamentary Documents:
   • Planning Phase: Attorneys can sometimes place disproportionate emphasis on drafting wills and trusts, seeing them as the entirety of their work product. In doing so, they may underestimate or neglect crucial elements that activate these documents, like trust funding and naming beneficiaries on non-probate assets.
   • Administrative Phase: By not providing adequate administrative assistance post-document creation, clients may be left feeling unsupported when it matters most.
   • Example: An attorney spends hours perfecting a trust document but fails to educate the client on the nuances of funding it.
   • Outcome: The client may end up with a beautifully drafted, yet practically ineffective, trust.
   • Malpractice Risk: Solely focusing on drafting without considering broader estate planning aspects might result in an incomplete or ineffective plan, potentially exposing the attorney to claims of negligence.
   • Pro-Planning Tip: If you do not offer trust funding in-house, it is important to set trust funding goals for your clients. Trust funding can be an extremely overwhelming process to your client, and because it is unfamiliar to them, they often choose not to do it. Setting up micro-goals for each client will allow them to feel a sense of achievement as they tackle each task. Ex: Create micro-goals for a 30-day timeframe. ‘By Sept. 15, 2023, transfer your two investment accounts into your trust. By Oct. 15, 2023, update the beneficiaries on the life insurance policies to include your trust…etc’ Not only will this allow clients to address trust funding in a manageable way, but it also gives you the opportunity to check in as those deadlines are approaching to see if the tasks have been completed.
3. Neglecting Direct Involvement in Trust Funding:
   • Planning Phase: If the attorney doesn’t take a hands-on approach to trust funding, clients might feel that their estate planning lacks thoroughness and diligence.
   • Administrative Phase: Failing to handle trust funding directly can result in assets falling outside of the trust, creating both administrative complications and emotional distress for the client.
   • Example: Instead of taking the responsibility to directly ensure that assets are properly transferred into a trust, an attorney merely provides a brief overview of the process to the client and assumes it will be executed correctly.
   • Outcome: Essential assets may remain outside of the trust, which can lead to them being exposed to probate or causing the trust to not function as intended, potentially undermining the client’s goals and trust in the attorney.
   • Malpractice Risk: An attorney’s direct involvement in trust funding isn’t just about providing a full-service experience; it’s also about minimizing liability. Overlooking this critical step could expose the attorney to malpractice claims.
     • Let’s say an attorney establishes a revocable living trust for a client with the main objective being to avoid probate. The client possesses a substantial real estate property. However, the attorney doesn’t actively ensure that the property deed is transferred to the trust. The client passes away, and their family is then subjected to a lengthy and costly probate process for the property that should have been protected by the trust. Feeling that the primary purpose of the trust was defeated, the family could have grounds to sue the attorney for negligence.
   • Pro-Planning Tip: There are now tools to assist with trust funding so that you can offer this work in-house without impacting your current bandwidth.
4. Inadequate Asset Inventory Support:
   • Planning Phase: A thorough asset inventory ensures the estate plan’s comprehensiveness. Neglecting this leaves clients uncertain about the plan’s completeness.
   • Administrative Phase: Incomplete records can result in complications, heightening emotional and logistical challenges.
   • Example: While discussing a will, the attorney doesn’t ask about lesser-known assets or digital assets.
   • Outcome: Valuable or sentimentally significant assets might be left out of the estate plan.
   • Malpractice Risk: Omitting significant assets from the estate plan due to a lack of thorough inventorying can be a clear oversight, potentially leading to claims of negligence when beneficiaries feel they’ve been deprived.
5. Overlooking Personal and Family Dynamics:
   • Planning & Administrative Phases: Not fully grasping family relationships can produce estate plans misaligned with the client’s true intentions, leading to potential regrets.
   • Example: A client’s wish to leave a specific family heirloom to a grandchild is ignored because it’s of minimal monetary value.
   • Outcome: The heirloom might end up with someone who doesn’t value its sentimental importance, causing family rifts.
   • Malpractice Risk: Misunderstanding or ignoring family dynamics can lead to estate plans that exacerbate family tensions or disputes, possibly resulting in litigation where the attorney’s guidance is called into question.
6. Balanced Practice Perspective:
   • Planning & Administrative Phases: For a truly rewarding practice, attorneys need to understand that their role extends beyond mere transactions and document production. Being present for clients’ life events and changes, and seeing the practice as a lifelong relationship, can deeply enrich the attorney-client bond.
   • Example: An attorney finalizes an estate plan and then doesn’t engage with the client until contacted years later about an update.
   • Outcome: The client feels they are part of a transaction rather than a continuous relationship, possibly leading them to seek another attorney.
   • Malpractice Risk: While this point is more about client relations, an attorney’s neglect over time could be seen as a lack of diligence, especially if laws change or there are significant life changes that should prompt estate plan revisions.
   • Pro-Planning Tip: Don’t underestimate the power of a handwritten note or card to acknowledge a life event. Dropping a card in the mail to let someone know you remembered their birthday or anniversary goes a long way to creating a strong attorney-client bond.
7. Failure to Emphasize Ongoing Communication:
   • Planning & Administrative Phases: Emphasizing the importance of regular check-ins and reviews fosters a continuous and supportive relationship, showing clients they are valued beyond the initial transaction.
   • Example: After drafting a trust, the attorney doesn’t schedule periodic reviews or inform the client about relevant legal changes.
   • Outcome: The trust might become outdated, and the client may feel unsupported.
   • Malpractice Risk: Not keeping clients informed or updated, especially when there are legal changes that affect their estate plans, could be grounds for a negligence claim.
   • Pro-Planning Tip: Schedule an annual check-in with each client. Each year, most people meet with their accountant and primary care physician. Because of the routine nature of these check-ins, we often think of items to discuss throughout the year and make either a mental or physical note to bring it up during those scheduled times. Creating a routine check-in for your clients will encourage them to compile information over the year, similar to what they do for physicians and accountants.

A successful and fulfilling trusts and estate practice not only requires technical competence but also deep empathy, long-term commitment, and a recognition of the holistic needs of clients. Overlooking these aspects can strain the attorney-client relationship while embracing them can lead to a rewarding, lifelong partnership.

About the Authors

Leah Del Percio and Tara Faquir are the founders of Trustate. Trustate is one of the world’s fastest-growing estate and trust administration and trust funding platforms dedicated to saving trusts and estates professionals hours of unbillable time while increasing their bandwidth. Trustate currently serves over 800 law firms and trust companies nationwide. Since Trustate’s founding in 2020, Ms. Del Percio and Ms. Faquir have been involved in all aspects of the firm’s development and growth. Passionate about creating educational content in this space, Leah and Tara are consistent providers of CLE programming through various organizations such as; Lawline, National Federation of Paralegal Associations, Inc., Krause, and many more.

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