The Danger of Computer-Generated Estate Plans, with Debbie Babb

0:01 Yeah, I can't wait to know what we're talking about. [laughter] Well, we're here to find out. You know, with technology today, virtually everybody has access to the estate planning service. I mean, literally at your desk, your phone. Anybody can put together some information, get some documents. But, the problem is many people don't. And what probably many people don't take it serious enough to get the plan they really want, just settling for something that's spewed out by a computer program. And why is that? Well, one problem is it's hard to have a relationship with a computer program. And so, that's why estate planning for many people isn't just some inputs and outputs and maybe some PDF forms, but it's actually a relationship with an attorney who can understand your family, what your goals are. And today, I'm really excited to have back again today Debbie Babb, who we actually met her hosting local events, meeting people, actual human beings, to talk about their actual needs of their families. there's estate planning not just on an app or online, but actually does it with a personal touch. Debbie, thanks for joining us again today on [The Estate Planning Podcast].

0:57 Thank you. It's so great to be here, Bill. And throughout our talks together, it just seems very clear to me that your focus is always you're an estate planning attorney for human beings who have families and family-related needs and such, not just spitting out a bunch of documents. So, talk about your motivation, your vision of your practice.

1:16 I love helping families, like making families make the right choices for their specific situation, their priorities, their family complexities, like every family actually is different. And every family needs something slightly different. It's one The plan that's going to work for your neighbor or your sister is not necessarily going to play work for you. We So, I really get into the dynamics of your specific family. My plans are not cookie-cutter. They're They're geared to address the dynamics of your family and your assets.

1:57 You know, one of the trends I see in our industry when I talk to wealth managers is how many more first-time families are coming into wealth with the technology and stock market and that you know, it's always been the case to some degree, but more than ever younger people in their 20s and 30s are all of a sudden getting enough wealth where they're able to buy a house here in Los Angeles. They're able to accumulate enough wealth to start thinking about what to do with that. They are able to form families or relationships that require proper documentation. And so, it really starts with somebody who might be off the radar as far as a target for a practice, but they're the person who's going to be your client perhaps 5, 10, 20, 30 years or more as they grow through the process. So, talk a bit about how do you get the person who you know, they've gone through life eating fast food and going in a college dorm, all of a sudden they have money, they're forming a family, they have a house to protect. Talk about trying to help them kind of grow up and act like an adult and get an estate plan started.

2:56 Yeah, that it's takes a team, right? Takes a village here because they've got to hear it their real estate agent needs to mention, "Oh, you know, have you heard about estate planning? Do you know what a trust is? Do you know what a what probate is?" And then hopefully the mortgage lender's mentioning it to them, the property insurer's mentioning to them. Like, you know, it takes What do they What's the research say? Like, it takes seven touches for something to really sink in or to become aware of it. So, all the advisors in the young family's life are hopefully mentioning the need, like, at least planting the seed. And hopefully those advisors have referrals to estate planning lawyers.

3:39 Yeah. You know, one of the challenges I think that your industry faces is people can have the tension or stress of not having a plan. They know they need one. They know to get one done. and then sometimes they can make the phone call, make the appointment, or even do the initial consult, and that relieves some of the pain, but it doesn't until the plan's done and executed and funded, it doesn't really solve the problem. So, talk about what do you do to try to help keep them motivated from the beginning through the end of the process.

4:08 Yeah, I mean, and that's where I've really developed my process to, shave off any friction. I try to make it as easy as possible to get people to the finish line. And, you know, part of it's educating like it's so like, you know, you've paid for the plan, we need to actually get it done and signed, and then if it's a trust, we need to get the assets into the trust. But, my job is to make it as easy as possible. I know that people are so busy, we're inundated with information, we have so many demands on our time, especially, you know, families with young children. So, my job is to make it as easy as possible. What I'll do is, you know, if we're having trouble coming up with the signing date, I'm like, would it be easier if I just send a notary to your home? Yes? Great. That's what we're going to do.

4:55 Yeah. Yeah, I mean, that's been the norm in real estate for so long, and I think attorneys the norm is to have them come to the office, and there's something, there's certainly something beneficial about taking the time. I think it forces somebody to kind of eliminate distractions, to go to an attorney's office, but at the same time, if you can't get them in, you can't get them in. If you can get them to notarize it, at least you've done your work up to that point, then at least you get an executed plan, and make it as easy as possible. We do the same thing in real estate all the time.

5:24 Yeah, my preference is to do the signing meeting in person, but for some people, it's just not possible. And also, I serve people throughout California, and so sometimes just location,

5:35 Right. prohibits meeting in person. But, yeah, like it's the lawyer, it needs to be whatever it takes. The lawyers that are so focused on their practice and dragging, you know, the old way of doing things. You know, we have to take into consideration what modern life looks like.

5:53 I think more and more with technology, on one hand, it makes it easier for us to do certain administrative tasks over and over again, but at the same time, it also makes it easier for the competition, the large conglomerates, the large technology companies, to, you know, eat at the edges of our business, and so the available market gets a little bit smaller, and that's how I feel about real estate, right? You have Zillow and these big real estate companies, but what they don't do is they're not the one who returns the phone call to the attorney or fiduciary or the homeowner. In your case, what these big companies who offer them inexpensively don't do is they actually talk to the customer, touch their heart, listen to them, you know, sit across the table from them, see, you know, they answer the question yes, but you can see in their heart the answer's really no, and you can maybe probe a little bit, and it seems like that's why it's so important to, you know, take the opportunity, when you're planning your family's future, to meet with the person who's going to be the quarterback on that.

6:46 Right. I know. And you know, these computer forms, people [snorts] don't always understand the question that they're being asked, and they put in the wrong answer, and, you know, they might be making themselves the beneficiary of their trust, and you know, that's not going to work, right? If the if the person making the trust is now the beneficiary of the residuary of the trust once they've passed away, the I see a lot of LegalZoom trusts. I think people, in their heart, when they're doing it, they know that they don't know the answers to the question, they don't understand the question, because I've had so many people bring me those computer-generated estate planning documents that, you know, I review them, and they it's pretty easy to see the issues with them. Or these computer programs are not telling the clients how to They're not holding the client's hand to get the assets into the trust.

7:45 That's the biggest thing I see. I saw a statistic that 90% of online not LegalZoom, but one of their competitors, 9% of those estate plans aren't funded. They're executed, but not funded. Now, there's also a bunch of don't get executed. That's another story. But, it just seems that if you're not funding it, then what have you really accomplished?

8:08 Right, exactly. You just have an expensive pile of paper. Even if you only spent $150 on the computer program, that was still a waste of $150.

8:17 Right. And people say, "Well, there's a pour-over will." But, that doesn't really work for real estate. It works for some works for the baseball some personal property, I guess. I you know, guess legal question, but it's only I as a real estate agent I can say it doesn't work for real estate. You can have a pour- You have 10 pour-over wills, but it's not going to get your real estate sold. You're going to still have to go to probate court to resolve it.

8:39 Right, exactly. And it just slows it all down. I mean, once you have to go to court, everything is slowed down, and it's a mess. It's a mess. I've got a couple of those going on right now, and I just feel for the families. It's painful to be in probate court.

8:57 So, I've been doing this podcast for a couple years now, and it was uncommon for attorneys to get involved in the funding of real estate. maybe at the highest end it was done. And it seems like with technology and services available, that's becoming more common. I won't say it's the default. I'd say it's the default of the high-quality estate planners I talk to. It's not even not the default of the you know, the ones who do one or two a year don't really know what they're doing. So, talk a little bit about what's your process when somebody is doing an estate plan, and let's say they have a personal residence that they own. What's that How do they get that property into the trust so they make sure they're protected, and how will they know that's been done?

9:37 Oh, well, the way I do it is I take responsibility for that. I draft the deed, I have them sign it when we're signing the rest of their documents, then I take care of getting it recorded. And then I include a copy of the recorded version of the deed in the client's binder of documents. I think you know, there's a lot of lawyers out there who are providing varying levels of service. People don't know the right questions to ask when they're hiring lawyers and so often people will shop on based on price. Well, the cheapest lawyer probably is like, oh, you know what? I'm just going to put the handling getting the deed recorded on the client. Well, the client's not going to go down to the county recorder's office and get the deed recorded when you know, there's for me and the way I do things, it's like I do so many things all day every day. Why wouldn't I just do that for the client? Why would I make the client learn to do something new that they're going to use this education once?

10:47 And there'll be I know there are attorneys who will take the recording as an add-on feature. So, they'll say like our fee is only $1,500, but then for like, you know, I know the recording costs maybe $500 and there's a notary cost. So, let's say costs 150 hard costs and they'll factor in their paralegal's time. So, they'll say for another 250 we'll record your property. And customers say, oh, 250, that's a lot. I'll do it myself. Well, they don't know that you have to pay to record the document, you've got to get it notarized, and then you got to drive to the court and pay for parking and go in and get it done and get done properly and get a copy of it. And so, I think it's one of those things where to me when you I think you're right. People do shop based on price cuz they don't know what else to ask. And the one question I always say to ask is, ask them how is your property going to get from where it is now to being recorded and verified in the trust? It used to be as a real estate agent I would refer people to estate planners and I would do that for them. I would get the document prepared by a by a title company or escrow officer. They would record it as a courtesy. They'd send me a copy of a recorded document and give it to the customer and the attorney didn't know it got done. It to me it seems like that should be done as part of the process. You're paying the attorney, you want to know it's done to their standards. Well, I can do it.

12:04 You want to know that the quarterback has signed off on it, whoever's in charge of the estate plan signed off on it. So, to me that's a minimum standard Right. Yeah, and I think you bring up a really good point because when one attorney quotes a flat fee and another one quotes a different flat fee, you don't really understand what's included in the flat fee.

12:22 Right. So, my flat fee I don't like nickel and diming people and so it just includes everything, right? Like it's the flat fee is the flat fee and I don't like passing on the recording fee to the client. It's it doesn't leave a good taste in people's mouth, but then also I can't show the cheapest flat fee

12:44 Right. because I'm not doing things all a cart. Yeah, I think also part is I think customers expect us to do certain things like as a real estate agent I use a third-party transaction coordinator. So, it's a woman who I've worked with now for years who whose main job is make sure we have all the disclosures signed and she requests something of the other parties and make sure every initial's there, every document's done and tracks them all and that we're in compliance with company requirements. And I pay her per file, you know, it depends, but about 450 a file. I know there are agents who charge a transaction fee to the customer for that. I feel like, well, the customer is expecting me to do this. I'm just delegating my work to the transaction coordinator. Why would I How can I charge the customer? I'm already charging them a commission. Now, I lower my commission and offer as you say, but then we end up nickel and diming if I went through all the different things I did. Or if we're paying for advertising, we get a we get an open house. We typically spend 60 bucks. We run Facebook ads for open houses. And for a new listing, we'll spend another 99 to market it. I guess I could charge those to sellers, but at the same time, well then what are they paying me for? So as an attorney, you know, I feel like the funding of the house most commonly is what people are driving to your office for. You I think the attorneys need to make sure that gets done.

13:58 I agree with you. I agree with you. And that's by far the biggest source of litigation, I think also, is that not being done. Right, exactly. Exactly. I mean, I just if somebody is going to bother spending time and money, I want their plan to work when it needs to work. So, that means we have a properly funded trust, the assets are in the trust, and then we have to keep it up to date over time.

14:25 Right. The harder part of funding is when you get into bank accounts and stocks, partially because the banks and stocks are just so impossible to work with. And I would swear on one I had changed it, you know, two years ago we started with them to into our trust, and I noticed like three or four months ago the statement didn't have the trust name on it. That's kind of odd. You know, and the my rep said, "Oh, we went through a computer change." Because initially I opened the account in our names, and then we moved it to the trust. He said we went back to the default. Well, that's a problem.

14:53 Right. [laughter] What do you What do you mean by that? Right. And that's another reason why attorneys need to be staying in touch with their clients over time. And so we can double check that all the assets that got into the trust remain in the trust. Oh, and that brings up another point. You know, so many lenders still these days, if there's if they're doing a refinance, they make you take your house out of the trust. And you're allowed to put it right back in once the refinance is done, but nobody reminds the client to do that. And so, that's why it's so important for the lawyer to have reviews with the client over time. People need to understand that the documents are just a start, right? You need a relationship. You need somebody to help guide you, hold your hand over life to make sure that your plan stays up-to-date and the assets remain in the trust. And then, huge value add what you're doing when you're working with a lawyer versus a computer program is you've got a trusted advisor for your loved ones when the worst has happened to you.

16:01 Right. Right. To go back to your point on the lenders, you know, I was a lender and I would say most people, you don't need to take out the trust. The lenders Fannie Mae, Freddie Mac created a process where you have a copy of the trust certification especially if you already have it in the in the bought the property that way, there's a process that you should be able to use. It's the lender not knowing their paperwork properly. If the title company won't insure it, because they don't know their job, find another title company. I'm And the reason I also don't like it is typically, the escrow officer will say, "Well, I can't prepare that deed for you. You have to do it yourself. But here's a copy of what we're doing, just do the opposite." Well, it sounds great until, you know, you go online and create the document and make a typo on the name, a typo on the address, a typo on something. You leave You leave a couple names off. and typically, the deed back in is not insured. So, now you have an insured deed out, but you don't have an insured deed back in. So, those typos become open to litigation or open to interpretation or debate. So, I am really, just FYI, against There's no There's no reason why you should have to. There's no lender that requires it. Really, if you have a proper trust with a trust cert and somebody's passed it, the trust cert, you know, sometimes it's required. There's no reason not to take out of the trust. That's That is lazy lenders without people pushing back on them. Go find another lender or go find another title company. That's That's my little rant on lenders and all that.

17:30 Thank you. Yeah, keep getting the word out on that, Bill. Thank you. Yeah, it's it's just Again, it's not a legal point, I think, but you would agree it can only be bad to deed something out of the I can't You're only creating opportunity for confusion, right? By definition. And second, it's not It's not necessary. Then why would you have two documents going back and forth? So, to go to your point, the other one you made I thought was You know, you're dropping some gold here and I'm trying to pick up the pieces is that they have a trusted advisor and I think that that is where other people, you know, fall apart is you know, you can do it online, but now, you know, husband passes, wife passes, parents pass and who's going to help you understand what was done? Who's going to understand what the intentions were? Who's going to help you do the basics of trust administration, which is way underrated as a job, way underrated as responsibility, and at least have somebody to call Or the trust is missing. And they don't know, you know, who to who to call. at least they can call somebody. So, talk a little bit about being that first phone call when they don't even know what they don't know. They just know Mom or Dad passed and that you did the trust. What does that look like that that first phone call?

18:36 Yeah, well, usually cuz I like to do family meetings for in the appropriate circumstances where so Mom and Dad have, you know, signed their estate plan, and shortly after I love to do a family meeting. Usually it's over Zoom. So, at least the adult children have met me before the worst has happened. And then the worst has happened, and then I'm there to help them, you know, I They don't know. Dying is complicated like the Everything that has to be dealt with is complicated, and you've never navigated that before. So, working with somebody that you trust, who can help you and who has empathy, because hey, you're navigating the unknown and you're grieving. Like, it's one of the worst part times in your life, right? And so, having somebody to help you walk through that. Also, if you're serving as the successor trustee, you owe a fiduciary duty to the other beneficiaries, and that is a really big deal, and you can get yourself in really big trouble. So, it's really important to work with a lawyer who can help you navigate that and keep [snorts] you out of trouble. Like, when I'm working Go ahead.

19:55 Oh, what I was going to say, when I'm working with successor trustees on trust administrations, I tell my clients, I say, "My job is to get you in and out of this process with as few scars as possible."

20:10 And I think sometimes it doesn't start being a problem, then over time when they do it the wrong it becomes a problem. They don't properly update, things take longer than they should, favoritism shown to one sibling over another, next thing you know, people are lawyering up and it becomes litigation versus just some proper starting time frames, notices could at least limit the range of possibilities if it done right away, but again, you need to try to help. And the other thing I try to tell people is, you know, if you have the successor trustee of a million-dollar estate, it's like you're running a million-dollar business, and your job for the year is to sell a million-dollars worth of stuff. It may be the house and you know, a bunch of personal property, but it's a business, and you know, if you don't have a job, now you have a job. Like, it's a million-dollar sales is a is a is a full-time job, and I think that I try to caution people, you need some help and like any other business, if you had a million-dollar business, you would hire, you know, an operations manager or, you know, an administrative assistant or somebody to help you with these steps, that's where the attorney comes in and can either do it themselves or delegate you to some people who can help you.

21:15 Right. Yeah. Yeah. Okay. So, tell me a little bit about again, where we met you was you did a local event. I know you've done a couple since. So, talk a bit about what you do at those and kind of when the next one is or what's the cadence for that or how somebody find how somebody find out, you know, what you have to offer if they're interested in your services.

21:37 Yes. So, my website dbabblaw.com we have our upcoming events and I don't know if we have any on the website right now. I know we've got a webinar we're going to be doing shortly. so, I'll get that link to you. what actually, you know what the best thing to do is you'll see, I think it's in that your banner at the top, I'll be covering these subscribe to our newsletter. Subscribing to our newsletter is a great way to find out what kind of upcoming events we have. And yeah, I'm all about educating. I mean, so many people don't know what estate planning is and whether they need it or why they need it. And so, my job is to educate people and I love to get out in the community. I love to speak to different groups. I recently got to speak to a support group for parents who have children with autism. So, that was really meaningful. and speaking at different like senior community centers, that sort of thing. yeah, it's really wonderful.

22:52 And I think that's kind of what attracted me in the first place was you're being you're willing to be out there and meet people face-to-face. Again, we all want to do as much business as we can and get paid and be productive and efficient. But at the end of the day, we also I think, in our hearts want to serve people and make a difference. I know you do. You did a great job. My friend Kevin went and saw I think saw him at one of your live events. So, if you want more information from her, dbabblaw.com is the website. D, now again, this is if you're if you're playing Wheel of Fortune, buy the B's when Debbie's email's online, but dbabblaw.com is also the that's the website. And the phone number [phone number shown on screen]. You can go to the website and get the phone number as well as you can schedule some time online. Debbie, thank you so much for I think being online I think being online with us today, but I think more than that, being out in the marketplace, educating people on these important topics, and taking the time to answer their questions. I really appreciate it.

23:43 Oh, it's truly my pleasure. Thanks so much for having me today. And first of all, this is [The Estate Planning Podcast]. We get together every week and talk about estate planning and how to be successful at it, either administration or writing plans. Obviously, Debbie's a great resource if you're looking to create a plan or have questions about that first step in the process, as well as administering when you have I love your comments. I'd love to get any feedback you have. Put it in the social media that you're watching or reach out to me directly. I'm @billgrossprobate on social media. And as always, make today your best day ever. Thanks so much.