Posts Tagged ‘certified document preparers’

Lessons From a Day in Probate Court

JULY 7, 2014 VOLUME 21 NUMBER 24

One day last week I found myself sitting in probate court, watching other cases get resolved while waiting for the Judge to get to my own cases. The matters I was listening to seemed to me to be instructive, and give me a chance to share some observations from the perspective of a veteran probate court participant.

In the almost forty years I’ve been practicing in probate court, some things have changed quite a bit. Others have not. One that has changed dramatically is the now-common practice of probate court litigants doing things themselves, without hiring a lawyer. That was almost unheard of in the 1970s, but is now commonplace. More than half of the cases I watched did not have a lawyer involved.

On top of that trend, Arizona has engaged in a decade-long experiment in certifying non-lawyers to prepare legal documents. The Arizona Certified Legal Document Preparer Program has been run by the Supreme Court since 2003, and there are more than 500 Certified Legal Document Preparers across the state. They have undergone a background check and passed a test — and they can prepare pleadings for probate, divorce and other actions, as well as wills (and even trusts). The key is that they are not supposed to practice law — they can help you fill out forms, but not be your lawyer. Other states (notably Washington) are following or considering a similar path.

Everyone knows that lawyers are expensive, that we complicate matters unnecessarily, that we are slow and unresponsive. Legal document preparers should alleviate those problems, right? That’s not exactly what I saw in my day in probate court. In two cases I think document preparers failed to serve their clients well. In a third, with no lawyer or document preparer involved, a little help would have made the litigants’ lives easier, I’m pretty sure.

Exhibit One: a simple probate (I’ve learned that “simple” is a dangerous word in this context, but let’s keep using it). It involved a decedent who left five children, a will and a house — and not much else. One son and a son-in-law were named as personal representatives in his will, and his son-in-law (as he explained to the court while I listened) took responsibility for getting the probate proceedings going. He contacted a document preparer to get him started.

The document preparer required a $1,200 fee up front, and promised to have the paperwork ready shortly. After months of trying to get back in touch with the document preparer, though, the son-in-law finally figured out that he was out of business — he had been charged with a felony (apparently unrelated to his business) and wasn’t going to be doing any more quasi-legal work for others. The new problem: the original will was somewhere in the document preparer’s files, and he was in prison.

Son-in-law explained that he had gone to a new document preparer, who had prepared a petition for probate of a copy of the now-missing will. That had cost another $650 up front, and required that the son and son-in-law attend a probate court hearing to explain why the original will was missing. The result: about $2,000 in initial costs (it wasn’t clear if more fees will be incurred), a wait of more than six months to get a simple probate started, and a confusing and frightening hour before a friendly but stern probate judge.

What would have happened if the son-in-law had visited a lawyer instead? It’s hard to say with certainty, but a best guess from the information revealed in court: the total cost would probably have been about $2,500-3,000 plus filing fees, the son and son-in-law would have had authority to sell the house in no more than five days, the lawyer probably would have waited to be paid from proceeds from sale of the house (so no one would have to write up-front checks), and the whole thing would almost certainly have been over in about four months. And that doesn’t consider the possibility that there might have been a summary proceeding available under Arizona law which would have saved a few dollars and several months of time. Oh, and no one would ever have had to appear in court, nervously or otherwise. Oh, and the son and son-in-law would have had the correct forms filled out, and wouldn’t have had to visit the County Bar Association office to get one more form the document preparer missed, consuming another hour of their day and causing more confusion and consternation.

You might think the problem was really just bad luck, that this hapless fellow chose his document preparer badly. After all, few document preparers end up in prison, and there’s nothing that keeps a given lawyer from going bad, either. True enough, though (a) most lawyers practice in groups, so if one lawyer in a firm drops out of sight there’s likely to be someone else to take responsibility, and (b) the document preparers do seem to have a high rate of discipline, with about 50 having their licenses suspended or revoked in the decade since creation of the listing. That looks like about a 10% rate of attrition, which seems higher than for lawyers.

Exhibit Two: In another case involving a document preparer but no lawyer, two women were involved in the life of a 14-year-old girl. The girl’s mother had gone to prison some years ago, and a family friend had adopted the 14-year-old and her four brothers and sisters. Now the 14-year-old had decided she wanted to live with her maternal grandmother, and so had just moved in. Grandmother had consulted a document preparer, and filed an emergency guardianship petition without giving notice to the adoptive mother. Last week’s hearing was the permanent guardianship proceeding, seeking to turn that emergency guardianship into a full guardianship.

The document preparer helpfully came to court with the grandmother, though of course he could not speak for her or even be acknowledged in the probate proceeding. He helped her get her documents together and prompted her about what to tell the Judge. The adoptive mother was also there, telling the Judge that she had no objection to the change in guardianship — she just wanted to make sure that everyone realized that she would no longer be responsible for the girl’s medical bills. The problem with that position: she is still responsible for her daughter’s medical bills — and there was no one available to explain that nuance to her (and the Judge, in his eagerness to get through a complicated and mildly contentious proceeding, didn’t help by reassuring her she was completely off the hook).

Would a lawyer have been more expensive? Almost certainly. Would the 14-year-old have been better served by having someone able to actually give legal advice in this complicated family situation? I’m pretty sure. Would the proceeding have been less stressful, less contentious and more suitable for the 14-year-old (who sat through the court proceeding, watching the tension and drama)? Darn straight.

Exhibit Three: a grandmother was seeking guardianship over her infant grandson. Her daughter lived with her, but had no job and no insurance; grandmother was just trying to get the baby on her own insurance plan. She did the paperwork herself, with no lawyer or document preparer. When she gave notice to the baby’s father, he showed up at the hearing and started talking about his pending petition to get custody, his desire to develop a relationship with the baby, and his lingering uncertainty about paternity. Grandmother got temporary guardianship, but the whole proceeding took a stressful hour and involved plenty of assertions and suspicion.

If grandmother had gotten the advice of a competent lawyer, she might have learned that it’s actually not that hard to get medical insurance for an infant, that she could have worked something out in writing with the putative father (and accelerated the process of figuring out whether he really is the father), and that her guardianship would be of little value (at least in Arizona) if the father’s status is confirmed. Maybe she would not have thought the lawyer’s advice was worth the money.

It was an interesting day. I came away with heart-felt sympathy for litigants who are frightened and confused by a, well, frightening and confusing system. I also appreciate the work of judges who have to explain legal principles to unrepresented litigants (without practicing law, of course) and try to help them navigate the system — all under the watchful eyes of other litigants and (sometimes) their lawyers, waiting for their own cases to be called. Finally, I remain convinced that lawyers have an important place in the legal system, and that even when we are under-appreciated we help people far more than they may be willing to concede.

Non-Lawyer Trust Preparation Group Shut Down in Indiana

MAY 3, 2010  VOLUME 17, NUMBER 15

United Financial Systems Corporation looks like they can do it all. According to their website (which you will have to look up for yourself — we don’t want to point to it since it still includes information about how to sign up for the activities that have now been prohibited), they can tell you how to plan your estate, retirement, insurance needs, health care — even your funeral arrangements. There is a disclaimer that lets you know they do not practice law (and do not give investment advice). The Indiana Supreme Court begs to differ.

In a disciplinary action three weeks ago, that state’s high court found that UFSC was “an insurance marketing agency,” and it was practicing law. The company was ordered to stop selling living trusts, to give every client a copy of the Court’s opinion, to offer refunds to all clients they had worked with in the past four years, and to pay the costs and some of the attorney’s fees associated with the proceeding. A handful of lawyers were included in the disciplinary process; most agreed to end their involvement with UFSC (and the practice of participating in non-lawyer legal work) and were dismissed from the case.

What was UFSC doing? It had “Estate Planning Assistants” (non-lawyers) contact prospective customers to tell them about the importance of estate planning. If the customer signed up for the $2,695 living trust package, the salesperson collected $750 to $900 and helped the customer fill out a questionnaire.

That questionnaire was then sent to one of several attorneys UFSC hired to prepare living trusts, wills and powers of attorney. The attorney would be paid $225, and would make one telephone call to the client to discuss the estate plan. Once a trust and supporting documents were prepared the signing was handled by another UFSC salesperson — for another $75 slice of the total fee.

The person handling the signing, whose title was usually “Financial Planning Assistant,” also had access to the customer’s financial information (remember that questionnaire?) and could make recommendations about investment changes. One common proposal was to liquidate other investments in order to purchase an annuity — which, incidentally, would yield a significant commission for the Financial Planning Assistant and UFSC.

The Indiana Supreme Court’s opinion details one extreme example of the effect of this marketing juggernaut. The 72-year-old woman was persuaded to liquidate $500,000 worth of Exxon Mobil stock — the bulk of her entire net worth — in order to purchase an annuity. The result: she incurred a $132,000 income tax liability and her salesperson received a $40,000 commission. State of Indiana ex rel. Indiana State Bar Association v. United Financial Systems Corporation, April 14, 2010.

Would UFSC face the same result in Arizona? Probably not. While the unauthorized practice of law is prohibited by court rule, Arizona repealed its criminal statute decades ago. The Arizona Supreme Court has not been active in reviewing such cases, and indeed has even created a “certified document preparer” classification for non-lawyers who “assist” clients in creating wills and trusts.

How can you avoid being taken advantage of by non-lawyer “estate planners” or “document prepapers”? Lawyers tend to think the best answer is the simplest one: hire a lawyer for your legal needs. If you are approached by a “finanical planning assistant” or something similar, you might want to ask “assistant to whom?”

If the salesperson assures you that they have a crack team of estate planners, tax advisers and financial consultants, ask for a few names, titles and credentials. Above all, be very cautious of any person or group who also happens to sell annuities or other insurance products. Not all insurance salespersons are questionable, but practically all questionable non-lawyer “estate planners” sell insurance products.

©2017 Fleming & Curti, PLC
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