DIY-ing to e-Plan

That concern is especially justified since such 'Do-It-Yourself' ('DIY') estate planning can ruin an expensive, carefully crafted estate plan in which many hours and dollars have been invested. Trying to save a few dollars can make DIY-ing very expensive for the unwary, and for their heirs (and the savings may not be large ' many of these sites impose hefty fees).

e-State Planning Sites Are Common

But despite these risks, many firms now offer Web-based services to assist people arranging their affairs before they shuffle off this mortal coil. For example, because 'many of us have information about assets, financial accounts, and personal data that we would like to see passed on privately to our heirs that we may be hesitant to share before we have actually departed this world,' a Web site called iGoodbye.com (www.igoodbye.com) claims that it will 'hold your electronic documents in trust during your lifetime. Documents are released to the recipients you specify only after we verify that you have passed away.'

The Web site www.privatematters.com tries to solve the question: 'What would you want (your loved ones) to know?' by offering to create and deliver 'a special document that told them exactly what you want to happen, where everything they need could be found, and how to deal with your personal affairs, including 'stor(ing) e-mail messages for delivery up to a year after your death,' and the ability to 'build a lasting memory for someone special.” The service Living Wills and Trusts (www.lwandt.com) provides 'a Personal Journal database, Parcel Depositary and Delivery Service that offers its clients an unrivaled peace of mind in knowing their property is protected against destruction or theft,' because 'statistics show' that many 'individuals' bequeathal documents such as a completed Will, Trust or Estate Planning documentation could not be located.'

The 'Estate Vault' (www.estatevault.com) tries to 'give you and those closest to you peace of mind, especially when faced with unexpected events, 'by consolidating important information and documentation all in one place, so that you can provide your loved ones access to it at a moment's notice.' And SafeMe.com, 'your secure online safe,' offers the 'peace of mind and the satisfaction of knowing that in the event of your untimely death all your important information is recorded and securely stored where it can be easily accessed by your dependants.' (Because SafeMe.com is based abroad, we have not examined it as closely as we have examined the U.S. sites.)

In addition to these apparently independent e-commerce firms, similar services are offered by proprietary ventures sponsored by, or through, brokerage firms. For example, eMoney Advisor (www.emoneyadvisor.com) boasts of 'serving nine of the 15 largest insurance companies in America, (and) the majority of the most successful independent broker dealers and many of the nation's leading advisory firms,' to provide financial advisers 'the benefit of presenting financial advice and plans online, customized to the needs of their high net worth clients, but branded with their DBA.'

The sudden growth of these services, however, forces one to ask, rhetorically, how estate planners and their clients ever managed to hold and dispose of wealth in the years before the Internet and the easy availability of electronic storage? In other words, are these services better than keeping records on paper or in locally stored electronic files? Has entrusting financial details to trusted financial advisers, such as estate and financial planners, trust companies, accountants, insurance agents or even the good-old family floor safe, been the wrong thing to do for all these years?

The Old, the New,
In Between, Beyond

Obviously, individuals and families have long built and maintained wealth without a computer. Moreover, they have always entrusted secrets to counsel, confident that they will be revealed at the appointed time, typically after one's death. The dramatic 'reading of the will' is a staple of the cheap mystery novel. So why are these e-services needed now?

For one reason, these sites make very attractive claims of convenience. Online document-storage allows easy access for the wealthy and their advisers, from any location, via the Internet. That makes it easy to answer any questions that may arise, or to provide answers to a new professional adviser without extensive photocopying (or the request for such copying that may alert the incumbent adviser that its services may no longer be needed).

But despite these improvements, several self-proclaimed online authorities specifically recommend more traditional storage methods, because of the unknown future of particular technologies, especially when planning for a document to be read many years after it is written. Have you tried recently to read a file on a 5” floppy disk, or tried to watch a video with instructions for heirs on a Betamax cassette? John Grohol, Psy.D., a pioneer in providing mental-health services online (http://psychcentral.com/about/official_bio.htm), specifically warns: 'Resist the urge to use technology to manage sensitive information.' He could not 'emphasize this enough ' try to avoid any fancy computer-based programs to store this information. Putting such sensitive information on a computer, even encrypted, assumes so much knowledge about the future (e.g., it might be 50 years before this information needs to be accessed) and requires constantly updating the program and technology used to ensure it keeps up with the ever-changing computer times. For instance, an encryption program you use today on Windows XP may not be available, in any form, 40 years from now. Just think of the difficulty of trying to even use a program written 15 or 20 years ago today. In some cases, it's virtually impossible' (see, www.psychcentral.com/blog/archives/2008/02/28/lifetip-planning-for-your-own-passing). (We note that as this article was written in late June, Microsoft discontinued sales of Windows XP in favor of its Vista operating system, with the assurance that it will provide support until 2014 ' see, www.microsoft.com/windows/products/windowsxp/future.mspx.)

Similarly, a financial-planning Web site (www.interestingmoney.com) lists several low-tech methods to maintain critical password data for accessing accounts, from the traditional safe or safe-deposit box, to the tongue-in-cheek 'burying it in the backyard' (www.interestingmoney.com/2007/11/24/just-in-case-how-to-make-sure-your-spouse-knows-your-financial-passwords).

Indeed, contrary to the entire business model of the sites mentioned in this article, Grohol generally criticizes overreliance on technology for maintaining personal financial records: 'Don't ever store this or any sensitive financial information in clear text on a computer or in your webmail account. Computers are generally not secure enough to ensure such information would remain safe, nor is your webmail account, which is readily accessible if you stay logged in (as many people do), by system administrators, and others responsible for maintaining such services.'

Fireproof, Yes, But Stable?

In fact, services such as those listed in this article market themselves by pointing out the same risks with traditional methods of storing vital information, and claim instead that online storage offers a more secure and accessible solution than traditional methods ' at perhaps a lower overall cost than relying on an attorney's vault. For example, iGoodbye.com markets itself as an additional service (at an additional cost) to an attorney: 'Many attorneys will keep copies of wills and trusts for their clients. This is fine, but this approach suffers from some of the same shortcomings as a safe-deposit box (paper documents at risk of flood, fire, tampering, etc.) and inconvenience for geographically scattered recipients. We recommend our service as an adjunct, not a replacement for the services provided by your attorney.'

Even at this low level of service, limited to document-preservation and document-access, the e-commerce model should raise fears in those accustomed to the reliability of a venerable trust company or law firm. Given the high failure rate of Web businesses in their first years, a reasonable person should have concern about whether the storage firm (and the documents it holds) will survive until the next change in tax law, much less the 'maturity date' of a will. No one wants to pay to fight with a bankruptcy trustee to get a will (much less leave that burden to one's executor). A site called The Last Email (www.thelastemail.com) even asks in its FAQs section: 'Is The Last Email going to be around in future years? Is it stable?'; although it answers that question by reference to the strength of its investors, its Terms and Conditions provide a different perspective:

'The provision of the Portal service and other Services shall, in principle, have an indefinite term. However, GLOBAL is entitled to terminate or suspend the provision of the Portal service and/or any of the other Services at any time, without prejudice to the provisions in this respect included in the corresponding Specific Conditions. When reasonably possible, GLOBAL will issue prior warning as to the termination or suspension of the provision of the Portal service and other Services.' (See, www.thelastemail.com/ssl/prospect/accnew1.aspx.)

Winners and Losers

Also, e-commerce firms are often bought and sold as 'winners' that take over the business of less successful enterprises ' and these agreements typically permit assignment of their contracts without consent or even notice, regardless of the creditworthiness of the firm that takes over the business. That level of turnover makes it hard to evaluate the stability of a firm being employed largely for its 'staying power,' typically not an estate planner's worry when dealing with banks and trust companies.

Even worse, beyond basic document-preservation, many of these online firms clearly disclaim any effort to treat them as equivalent to legal services, not only for estate-planning and estate-administration purposes, but also for something as basic as whether the promised time for disclosure will be honored. Although these services promote themselves as legitimate alternatives to traditional methods of getting information to an intended recipient, and of making estate documents instantly available at a stressful time, their fine print points out how they may not even be able to meet that limited goal. Virtually all these sites reserve the right to change their promises, a truly 'fatal' mistake when there is no 'second chance' because the user has died, or become disabled (and cannot shift her documents to another site, make alternative notification arrangements or use more traditional planning services). In other words, what the marketing department promises, the fine print may take away.

Hard Copy Backup

For example, iGoodbye.com issues the same warning as the skeptical Mr. Grohol:

Is an electronic document (like a will or trust) enforceable in a court of law? This is an area of law that is starting to catch up with current technology. Thus the laws still vary depending on your locale. We recommend keeping paper notarized copies of important documents in a safe place and using electronic documents as a backup, as well as proof that the paper originals have not been tampered with. (Emphasis added.) There are an increasing number of 'electronic notaries' that can assist you in creating electronic documents that are easily accepted by the courts.' (See, www.igoodbye.com/dnnsite/FAQ/tabid/229/Default.aspx.)

Similarly, the Living Wills and Trusts site warns:

Information contained in our journal system is not legally binding by any means; it is purely provided as a guideline to record and retrieve the asset's locations that are associated with our clients, and/or to provide any information that the author may want know after his or her death. The author of the journal is solely responsible for such content.' (See, www.lwandt.com/terms_condition.php.)

Private Matters' multiple disclaimers 'doth protest too much.' Section 5 of its Terms and Conditions specifically warns that: