Estate Planning for Blended Families

The following was presented by James W. Spencer in April 2015 at the KCBA CLE "Estate Planning for the 99%".

I. Introduction

While estate planning for the 99% may be simpler than that for those facing significant estate tax issues, saving estate taxes is not always the greatest challenge in estate planning. According to the U.S. Census Bureau, blended families now outnumber traditional families, and in nearly half of all stepfamilies, one spouse or the other brings a child or children with them. Blended families can face complex estate planning challenges, not the least of which is ensuring that each spouse's share of the estate ultimately ends up with his or her desired beneficiaries.

A “blended family” is most often the result of:

  • One or both of the planning spouses have children from a previous marriage;
  • The children of the planning spouses being in a second or subsequent marriage and have children from a previous marriage; and/or
  • The planning spouses’ children having a spouse with children from a previous marriage.

The focus of this presentation is on the first of those, though many of the estate planning methods discussed herein can be applied down the inheritance chain where the planning spouses want to include or exclude non-biological in-laws and grandchildren.

More often than not, estate planning for a non-blended family distributes an estate in its entirety to the surviving spouse, with the children as contingent beneficiaries, either directly of by way of a testamentary support trust for their benefit. Where the planning spouses share the same children, this schema is generally effective because presumably the surviving spouse is going to leave his of her estate to the same beneficiaries as the deceased spouse: the couple’s biological children.

In a blended family where the decedent has children, once everything is bequeathed to the surviving spouse, that spouse can easily amend the documents to disinherit whomever he or she chooses, including the deceased spouse's children (it goes without saying that this could happen even in the case of a surviving spouse/biological parent, but logic would dictate that this is far less likely.

This presentation highlights some of the best tools and practices available to protect the legacy of decedent spouses in a blended family who desire to provide for their children.

II. The Threshold Question: Should I Represent Both Spouses?

A threshold question for any attorney planning for a blended family needs to be whether he or she can represent both spouses in a blended family situation. There is no doubt that there exists conflicts of interest when planning for any two people, and this is heightened in a circumstance where the parties have different biological heirs.

This particular presentation is not one on ethics, but the wise practitioner will explore this concern very closely, discuss it in detail with his or her clients, and make a determination of whether joint representation is ethically sound.

III. Post-Divorce

Divorce is a fact of life in the fabric of American marriage. Data suggests that divorce rates are actually declining, but historically about half of all U.S. marriages will end in divorce. On average, fifty percent of those who divorce will end up marrying again (about 55% of men remarry, while 45% of women do).

Any recently-divorced client should review his or her estate plan, update his or her will to reflect the present marital status, and think about updating all the beneficiary designations on accounts and policies that name the former spouse as the beneficiary. These can include life insurance policies, annuities, bank and brokerage accounts, IRAs, and workplace retirement plans. The recently-divorced should also remove the former spouse as the joint owner of any real estate, cars, or other assets that were purchased together from the assets and accounts received in the divorce settlement.

Of course, all of this should be done in the context of any separation agreement of court-ordered property settlement, but this preventative work can make it easier on each ex-spouse if and when the time comes for them to remarry.

IV. Pre-Marriage/Marital Property Agreements

A prenuptial agreement is not only a great device to clearly spell out the interests of second-time-around spouses in separate and community property, but they can be an excellent way for parents who are remarrying to specify which of their assets they’d like to earmark for their children. A properly-executed prenuptial or postnuptial agreement can clearly delineate the nature of assets as separate or community, and prevent future transmutation of separate assets into community. Because community property laws prevent either spouse from bequeathing more than half of the community property by will, this can be a good safeguard to make certain there is no cloud on current or future assets intended for the decedent spouse’s children.

V. Wills

A.  Joint, Mutual, and Reciprocal Wills

Wills alone may be an insufficient tool for blended families, as surviving spouses are generally able to revise property distributions to children after the death of the first spouse. Joint or mutual wills may prevent this, but their use has become less common over time for a variety of reasons explored below.

Reciprocal wills are wills that contain common or reciprocal provisions, but that are not necessarily executed pursuant to any agreement to make or not to revoke such a will. This term could be applied to most wills that are drafted for couples. The execution of reciprocal wills by two testators does not, without more, prove that the testators contracted not to revoke their wills, regardless of whether the testators are married. The result is that upon the death of the first spouse, the surviving spouse may inherit the decedent spouse’s entire estate, and then change any contingent property disposition to his or her liking.

Joint wills are reciprocal wills that are incorporated into one document that is executed by both testators as their respective wills, whereas mutual wills refers to reciprocal wills in which the two testators have contracted to make those wills and also contracted not to revoke them except under certain circumstances. The contract may be subject to the statute of frauds (for example, because it relates to real estate or because it is consideration for marriage), and the simple making of reciprocal wills is not sufficient part performance to satisfy the statute of frauds.

The burden of proving the contract not to revoke a will is on the person asserting the contract, and burden of proving the wills is the same as other will contracts. Unless the wills are proven to be mutual or there is proof of a contract not to revoke a will, any will or any reciprocal wills may be revoked by the testator at any time without any notice to the testator of the reciprocal will or to anyone else.

The remedy for a beach of a contract not to revoke a will is one or another of the usual remedies available for the breach of a contract: damages or an equitable remedy such as constructive trust or specific performance. As a result, even if a contract not to revoke a will is established, the will may still be revoked unilaterally, even after the death of the first spouse. This leaves children, who may have been named in the original joint or mutual wills, to assert their claim in accordance with applicable estate administration law.

B. No-Contest Clauses

A "no-contest clause," also known as an in terrorem clause, specifies that if a beneficiary challenges the trust or will, that person receives nothing or some token amount. No-contest clauses are valid in Washington, but a contest brought with probable cause will not result in a forfeiture of the legacy.

It has been held that a contest by one acting on the advice of an attorney will be deemed to be brought with probable cause (and in good faith) as a matter of law, but only if all material facts have been fully and fairly laid before the attorney prior to his advising the contest. The mere lack of success in a will contest does not indicate either bad faith or lack of probable cause.

Assuming that the prohibition is limited to contests, it may be difficult to determine just what a “contest” is. Cases have held that challenges that do not technically come within the term "contest" (because they do not go to the validity of the will and therefore are not within the "will contest" statute) would not be within the term "contest" in a no-contest clause.

C. Tangible Personal Property Lists

The use of a tangible personal property list pursuant to RCW 11.12.260, which permits the use of separate, unwitnessed documents to pass tangible personal property upon death, is an excellent way to ensure that family heirlooms and photographs stay in the family, and to ensure that children or grandchildren receive the individual items they admire. Post-marital tangible personal property, of course, is subject to community property laws.

VI. Trusts

A. Revocable Living Trusts

Perhaps one of the most effective tools for estate planning in a blended family is a revocable living trust. Each planning spouse can have their own trust, or the spouses can maintain a trust together. During the grantors’ lifetimes, the trust can be amended, changed, or terminated, and the grantors can take withdrawals and receive income from them. After the death of the first grantor (or the only grantor if each spouse has their own trust), the trust can be drafted to become irrevocable, wholly or in-part, locking in a set distribution for the decedent spouse’s children, while still providing for the surviving spouse.

The trust, when managed properly, also has the added benefit of providing for management of assets of the grantors if one or both of them become incapacitated, and avoiding the costs, delays, and headaches of probate.

A typical example of this would be as follows: upon the death of the first spouse, half of the couple's assets would be placed into an irrevocable trust for the benefit of the surviving spouse, who is able to live off of the income generated by that trust, while the remaining half of the original revocable trust assets remain at the disposal of the surviving spouse. Upon the death of the surviving spouse, the principal of the irrevocable trust is passed to the biological children of the first-deceased spouse.

Grantors can also spell out how the trust's assets are shared and spent:

  • Per stirpes language which distributes the assets equally to each branch of a family if a child predeceases the grantor, ensuring that his or her children share equally in the assets the grantors intended for his or her parent.
  • "Spendthrift" provisions that can protect a child’s share from wasteful and unwise spending, including the appointment of an independent trustee to control the funds on behalf of the child. Properly drafted, the trust’s assets are off limits to the beneficiary's creditors, including any future ex-spouse of the beneficiary.
  • "Discretionary distribution" language which can direct the assets even more specifically, including earmarking trust proceeds to cover health care expenses, helping to maintain a beneficiary’s standard of living, purchasing a home, establishing a business, or paying for an education.
B. QTIP Trusts

Generally, the purpose of a Qualified Terminable Interest Property trust, or QTIP, is to provide income and, potentially, principal, if necessary, for a surviving spouse while preserving the underlying assets of the trust for the grantor's children or other designated beneficiaries. If the trust is structured such that the surviving spouse has at least a lifetime income interest in the QTIP, the grantor's funding of the trust qualifies for the unlimited marital deduction, which means than an unlimited amount may be transferred to the QTIP without federal estate or gift taxes being incurred on the transfer.

The QTIP can be drafted as part of a revocable living trust, as discussed above, or as a testamentary trust in a will.

C. ILITs

An Irrevocable Life Insurance Trust, or ILIT, can be used to allow the death benefit from a life insurance policy to pass outside of the grantor's estate, therefore shielding the life insurance proceeds from federal estate taxes.

Typically, the grantor places money in the trust, and a trustee uses the funds to purchase an insurance policy on the grantor’s life. Because the grantor does not own the policy (it is owned bythe trust), the insurance policy is excluded from the grantor's estate, and the full value of the policy can go on to benefit survivors rather than a portion of it being paid in estate taxes.

Parents in blended families may choose to make their children the beneficiaries of the life insurance trust, while leaving assets outside of the ILIT to the surviving spouse.

An ILIT has another benefit: it can provide the liquidity a family may need to cover taxes on an estate. This advantage is especially helpful if the estate consists largely of relatively illiquid assets, such as retirement accounts, real estate, or a business.

Bear in mind that the first "I" in ILIT stands for "irrevocable." Money placed in an irrevocable trust is no longer available to the grantor, regardless of need. There may be gift tax implications related to funding the trust, both initially and on an ongoing basis, as may be necessary to support the trust's payment of life insurance premiums. For example, the annual and federal gift tax exemption amounts must be adhered to in order to avoid the application of federal gift taxes to the grantor's transfer of assets to the trust.

VII. Beneficiary Designations/Nonprobate Assets

Generally, beneficiary designations and other nonprobate dispositions will override a will if the documentation isn't consistent, and it is important to review these post-divorce and post-remarriage to ensure they are in line with the planning spouses’ goals. Note too that beneficiary designations on employment-related benefits will be subject to community property laws and ERISA, and dealing with those pre-death by way of a marital property agreement and, if appropriate, ERISA spousal consent, is key to ensuring that a decedent spouse’s bequest of these assets to anyone but his or her spouse will be effective.

VIII. Conclusion

Potential pitfalls abound when planning for the blended family. An attorney must be extraordinarily aware of potential conflicts of interest, and provide sound advice to individuals or couples that want to see some of his or her assets end up in the hands of their biological children while providing for a spouse who is not the biological parent of those kids.

Wills may be an ineffective tool for this type of planning, as the protections that may exist by way of joint or mutual wills could be difficult to enforce. No contest provisions in wills may help, and the associated tangible personal property list can be an excellent tool to get specific items to family members who aren’t the decedent’s spouse.

Trusts likely provide the greatest flexibility and protection in drafting for the blended family, and may offer additional benefits in spite of the additional associated production and management costs.

Finally, as always, non-probate assets must be monitored over time to ensure that their dispositions match the decedent’s intentions.

Community Property Concerns in Washington State Guardianships

Three generations of my own family traveling old-school via ocean liner.

The following was presented by James W. Spencer in April 2015 at the KCBA CLE "Advanced Guardianship Issues".

I. Introduction

Washington’s community property laws present unique challenges to guardians where a single adjudicated incapacitated person (“IP”) is married or in a state-registered domestic partnership (“SRDP”), or where a single guardian is appointed for both IP spouses/SRDPs. These challenges mainly arise from the management rights given to both members of the marital or SRDP community over community property.

This presentation identifies some of the greater collision-points between the management of guardianship and community estates, and provides some fundamental tips for anticipating these conflicts before they arise, as well as managing them if and when they do.

II. Community Property: A Refresher

In Washington, the property of spouses or SRDP partners can be categorized in one of two ways: separate or community.

RCWs 26.16.010 & 020 identify separate property as follows:

“Property and pecuniary rights owned by a [spouse/SRDP] before [marriage/registration] and that acquired by him or her afterwards by gift, bequest, devise, descent, or inheritance, with the rents, issues and profits thereof, shall not be subject to the debts or contracts of his or her [spouse/SRDP], and he or she may manage, lease, sell, convey, encumber or devise by will such property without his or her [spouse/SRDP] joining in such management, alienation or encumbrance, as fully, and to the same extent or in the same manner as though he or she were [unmarried/not registered].”[1]

The RCWs go on to define community property as “Property not acquired or owned, as prescribed in RCW 26.16.010 and 26.16.020, acquired after marriage or after registration of a state registered domestic partnership by either domestic partner or either husband or wife or both…”[2]

The ability of spouses/SRDPs to manage community property is then delineated thereafter in RCW 26.16.030 by stating:

“Either spouse or either domestic partner, acting alone, may manage and control community property, with a like power of disposition as the acting spouse or domestic partner has over his or her separate property, except:

(1) Neither person shall devise or bequeath by will more than one-half of the community property.

(2) Neither person shall give community property without the express or implied consent of the other.

(3) Neither person shall sell, convey, or encumber the community real property without the other spouse or other domestic partner joining in the execution of the deed or other instrument by which the real estate is sold, conveyed, or encumbered, and such deed or other instrument must be acknowledged by both spouses or both domestic partners.

(4) Neither person shall purchase or contract to purchase community real property without the other spouse or other domestic partner joining in the transaction of purchase or in the execution of the contract to purchase.

(5) Neither person shall create a security interest other than a purchase money security interest as defined in RCW 62A.9-107 in, or sell, community household goods, furnishings, or appliances, or a community mobile home unless the other spouse or other domestic partner joins in executing the security agreement or bill of sale, if any.

(6) Neither person shall acquire, purchase, sell, convey, or encumber the assets, including real estate, or the good will of a business where both spouses or both domestic partners participate in its management without the consent of the other: PROVIDED, That where only one spouse or one domestic partner participates in such management the participating spouse or participating domestic partner may, in the ordinary course of such business, acquire, purchase, sell, convey or encumber the assets, including real estate, or the good will of the business without the consent of the nonparticipating spouse or nonparticipating domestic partner.”[3]

Because both spouses are giving full authority to manage community property, with the exceptions noted above, a non-spouse guardian is potentially at odds with the competent spouse who shares like management and control over the couple’s community property.

III. Incapacitation of One Spouse/SRDP

A guardian is charged “to protect and preserve the guardianship estate…”[4] which includes an IP’s interest in, and dominion over, all of the IP’s community property. Because community property is the pool of property acquired by both spouses/SRDPs as stated in the aforementioned RCWs, all of the community property becomes subjected to the guardianship, regardless of whether the other spouse/SRDP is incapacitated.[5] As a result, the guardianship proceeding impairs the sole management powers of the competent spouse/SRDP in respect to the community estate because the appointment of a guardian subjects all of the IP’s community property to the guardianship.[6]

If a non-spouse/non-SRDP guardian is appointed, the guardian is charged with the duty of management of all of the property of the ward,[7] including the ward’s fully vested undivided interest in community assets. Disputes concerning management of community assets may arise between a spouse/SRDP and a guardian, with the court being requested to resolve the disputes. There is no provision for the disposition of community property in the event of incapacity of a spouse/SRDP, and Washington case law on this topic is relatively scarce. In any case in which one spouse/SRDP is declared incapacitated and a guardian is appointed, the competent spouse/SRDP should seek appropriate court orders clearly defining the management rights possessed by competent spouse/SRDP.

Even when the competent spouse/SRDP is appointed guardian, that spouse/SRDP’s community property management right becomes subject to the guardianship laws,[8] which require court approval for the disposition of real or personal property.[9] Case law has held that the competent spouse/SRDP, by seeking to be appointed guardian and by inventorying the community estate in the guardianship proceeding, has voluntarily agreed to the restriction on management powers.[10] When representing a spouse/SRDP guardian, that guardian should be advised that their ability to control the disposition of their own community estate is now impeded by the guardianship proceeding.

In selecting a guardian for community property, case law says that good conscience and equity plainly dictate that the courts should try not to burden a competent spouse/SRDP by appointment of a third party to control of community property.[11] It is also important to note that if the spouses/SRDPs have created an estate plan, they may have appointed each other as guardians in their respective powers of attorney. Because the law provides that the court “shall make its appointment in accordance with the principal's most recent nomination in a durable power of attorney except for good cause or disqualification,”[12] it is important to determine whether the IP has made such an appointment.

IV. Incapacitation of Both Spouses/SRDPs

A guardian has a fiduciary duty to the IP to manage his or her guardianship estate for the benefit of the IP.[13] The appointment of a single guardian for both spouses/SRDPs may create a divided loyalty in the duties of the guardian in that the guardian must manage the community and separate estates of both IPs for their individual benefit. On its face, such an arrangement may benefit both spouses/SRDPs, but the appearance of potential conflict and the likelihood of an actual conflict of interest eventually arising is substantial.[14]

Examples of situations in which potential or actual conflicts may exist include one or both spouses/SRDPs having children from a prior relationship, the terms of an estate plan or property agreement or the lack of such planning or agreement, separate property ownership and inheritance intentions/expectations of that property, and even the strength or stability of the marriage/SRDP and the long-term intentions of the spouses/SRDPs as they relate to the relationship.[15] These potential or actual conflicts go on to include benefits eligibility and spend-down/gifting issues, residential decisions and the source of funds to pay for living expenses, and health care and end-of-life decisions.[16] These lists are not exhaustive, but only illustrative of some of the most obvious conflicts that may arise.

Because of these, a petition of guardianship wherein a single guardian is appointed for a married couple or SRDP should give the court pause, and a guardian is best-advised to obtain the advice of counsel when considering such an appointment. In any circumstances where the same guardian serves both spouses/SRDPs, there is always the possibility of a conflict going unrealized until it is too late and something like the death of one of the spouses/SRDPs obviates the issue.[17] Such circumstances can place the guardian and the incapacitated persons in an unworkable situation ethically and practically, often resulting in expensive litigation naming the guardian personally as a defendant or other party. If the guardian senses a possible conflict of interest, he or she should file a request for instructions from the court to assist in identifying, disclosing, and resolving conflict of interest issues at a hearing with all concerned parties.

There are times when the appointment of a single guardian for an IP couple may be more obviously appropriate. These included, but are not limited to, when there exists a competently and mutually executed pre-guardianship estate plan that contemplates the eventual incapacity of one or both spouses/SRDPs that provides resolution to possible conflicts, and when there is a long-term marriage/SRDP with both spouses/SRDPs in a care facility and the parties have little or no estate and have competently executed health care directives.[18]

V. Committed Intimate Relationships

The equitable doctrine of committed intimate relationship (CIR) provides some marriage-like rights and responsibilities to unmarried cohabitants of both different- and same-sex relationships where those relationships meet certain criteria,[19] including the treatment of property that would have been community property had the parties been married as community-like property subject to equitable division upon termination of the CIR or the death of one of the parties.[20]

It is important to note that even if the parties are not married or in a SRDP, case law has implied and applied certain community property principles to such relationships, and legal presumptions may apply. A guardian must be aware that the potential for conflicts, as discussed herein, exists even where the parties are not married or SRDPs.

VI. Conclusion

As the attached cases will show, both a competent spouse/SRDP guardian and a non-spousal guardian face significant challenges in both managing community property and meeting their fiduciary obligations to their ward. If a guardianship estate includes community property, great care must be taken to avoid potential and actual conflicts of interest in the management of community property on behalf of one IP, as well as where a single guardian is appointed for a couple both adjudicated as incompetent persons. In any case where a conflict may arise, the guardian should seek guidance from the court.

Furthermore, competent spouses/SRDPs appointed as guardians must be advised that by availing themselves of the guardianship, they have limited their otherwise (relatively) unfettered management of community property.

Finally, guardians must be aware of the CIR doctrine and its impact on property rights of unmarried cohabitants.

REFERENCES

[1] Revised Code of Washington (“RCW”) 26.16.010 & .020.

[2] RCW 26.16.030.

[3] RCW 26.16.030.

[4] RCW 11.92.040(5).

[5]Estate of Sullivan v. Brashear, 2003 WL 1742631 (Wash.App. Div. 1) (unpublished opinion).

[6] RCW 11.92.040(5).

[7] In re Guardianship of Michelson, 8 Wn.2d 327, 111 P.2d 1011 (1941).

[8] Seattle-First National Bank v. Brommers, 89 Wn.2d 190, 200–01, 570 P.2d 1035, 1041 (1977), and In re Guardianship of Youngkin, 48 Wn.2d 425, 429–30, 294 P.2d 423, 425 (1956).

[9] RCW 11.92.090.

[10] Seattle-First National Bank v. Brommers, 89 Wn.2d 190, 200–01, 570 P.2d 1035, 1041 (1977)

[11] In re Wood’s Guardianship, 110 Wash. 630, 188 P. 787, 632 (1920).

[12] RCW 11.88.010(4).

[13] RCW 11.92.040(5).

[14] Certified Professional Guardian Board Ethics Advisory Opinion 2002-0003: Simultaneous Appointment as Guardian for Both Spouses or Domestic Partners.

[15] Id.

[16] Id.

[17] Id.

[18] Certified Professional Guardian Board Ethics Advisory Opinion 2002-0003.

[19] Connell v. Francisco, 127 Wash.2d 339, 898 P.2d 831, 346 (1995).

[20] Olver v. Fowler, 161 Wash.2d 655, 168 P.3d 348, 668 (2007).

Giving

Participants in the 2015 Washington Future Business Leaders of America State Business Leadership Conference anxiously await the posting of competition results.

The profession of the law holds a significant and important place in the American experience. Because the law governs so much of our daily lives (the temperature of our morning coffee, the speed of our commuter train, regulations on the manner by which we receive information all day long), attorneys may very well have a greater (not to be confused with "better") impact on the day-to-day life of our typical countryman than anyone else; even greater than celebrities, politicians (many of whom are attorneys), and celebrity politicians.

For better or for worse, we live in a highly regulated society, and the significant bulk of those regulations came about by the actions of attorneys (and the clients they represent). This impact my profession has on the world in which we live is not something that I've ever taken lightly, and it has probably been one of the biggest reasons I've spent my entire legal career trying to apply my professional skills, at least some of the time, for the greater good.

Today, I'm off to Spokane for the 2016 Washington Future Business Leaders of America State Business Leadership Conference. This annual event draws together high school (and a few middle school) students from all over the State of Washington to compete in dozens of business-related events, from Public Speaking to Emerging Business Issues to Business Ethics. As a member of the organization's board of directors for a little over a year, this will be my second SBLC, and another opportunity for me to give back to the community by actively engaging with these young leaders that are the future Bill Gateses and Elon Musks of our State. It is an honor and an inspiration to be a part of this great event and this amazing organization.

As a small business owner, time is the greatest asset I have to give. As drafter of hundreds of estate plans, I'm always amazed at the generosity of so many of my clients when it comes to leaving a financial legacy for community organizations. Regardless of how any of us choose to give, my personal experience with giving has enriched my life beyond measure, and hopefully left the world a tiny bit better for my efforts.

For anyone interested in giving (to WAFBLA or any of your favorite local charities), there is a great opportunity on the horizon: Seattle Foundation's Give Big on May 3, 2016. Give Big is an annual event where your dollar donations are matched, at least in part, by larger donors to really boost the dollar you're giving to your favorite charity.

I'll be giving financially to the two organizations on whose boards I sit: WAFBLA and Three Dollar Bill Cinema. I'm lucky to have time to give to these organizations, but I recognize that family and work commitments mean that not everyone has that kind of time to spare. Give Big provides you an opportunity to give to these and so many other great organizations by leveraging your donation to financially support the amazing work of these nonprofits.

I hope you'll join me in supporting one or more of your favorite local charities on May 3. And if you happen to be looking for an organization to support, please check out the great work that WAFBLA and Three Dollar Bill Cinema do.

If you've been looking for an opportunity to give, there's no time like now. And whatever your motive for giving (even if it's to ameliorate your guilt at being part of a profession that sometimes does as much harm as good), you'll feel good for doing it.

Caveat Emptor, Legal Consumer. LegalZoom Is Not Your Attorney.

There is no doubt that LegalZoom and similar online document generation services have provided a simple, inexpensive way for the consumer to generate a basic set of estate planning documents.

Most consumers, for better or for worse, see their trust, will, power of attorney, or health care directive as a commodity, believing there is no difference between a document generated by LegalZoom or RocketLawyer and one drafted by an attorney they have hired.

Butlook closely at the disclaimers provided on the LegalZoom web site, and the consumer will quickly see just what they are (or more descriptively, are NOT) paying for. Here's a sampling of some of LegalZoom's disclaimers, the full text of which may be found here.

"LegalZoom is not a law firm, and [is] not acting as your attorney. LegalZoom's legal document service is not a substitute for the advice of an attorney."
“LegalZoom is prohibited from providing any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms or strategies.”
“[C]ommunications between you and LegalZoom are protected by our Privacy Policy, they are not protected by the attorney-client privilege or work product doctrine.”
“At no time do we review your answers for legal sufficiency, draw legal conclusions, provide legal advice or apply the law to the facts of your particular situation. LegalZoom and its services are not a substitute for the advice of an attorney.”
“[T]he legal information on this site … is not guaranteed to be correct, complete or up-to-date.”
“LegalZoom is not responsible for any loss, injury, claim, liability, or damage related to your use of this site…. In short, your use of the site is at your own risk.”

It's there in black and white, and LegalZoom will very reasonably argue that they make no pretense of being anything but a document generation web site.

That said, LegalZoom does pair their document generation up with "independent contractor" attorneys who can offer customers of the site (the use of the word "customer" here is key as LegalZoom's users are in no way a "client") client-like advice while the customer generates their own document. I might liken it to opening a copy of Gray's Anatomy, getting a doctor on the phone, and asking her to guide you through your self-administered appendectomy.

My intent is not to bad mouth LegalZoom. LegalZoom fills a need in the marketplace, and it is my job as an attorney to educate the legal consumer about the value of my services. To that end, I would offer the following counter to LegalZoom's disclaimers shown above, what I like to call the Attorney Charge:

“I will act as your attorney, which means I am ethically bound to provide to you the best legal advice and counsel I can, and you will be able to rely on that advice.”
“As your attorney, I shall provide to you, MY CLIENT, the best advice, explanations, opinions, and recommendations about the law’s impact on your legal matter that I can, and I will guide you through the selection of forms and strategies.”
“As your attorney, I am legally bound to the strictest privacy in communications between you and I. This is a level of privacy that is afforded only to lawyers, doctors, spouses, and clergy. Anything that you and I discuss will remain completely confidential between us, and with very limited exceptions, only you can waive that privilege.”
“I will always seek your full advise and consent to learn from you the information I need to address your legal matter in the manner you desire. It is my responsibility to ensure that you and I, working together, develop a strategy that is legally sufficient, and that I’ve applied the law to the facts of your particular situation.”
“As your attorney, it is my responsibility to keep myself up-to-date on the law as it applies to your matter, and to always apply the law completely and correctly to your personal circumstance.”
“As your attorney, I strive to ensure that I practice the law diligently and accurately. In the unlikely event I mess up, I carry professional malpractice insurance to protect you against any loss, injury, claim, liability, or damage resulting from errors I may inadvertently make during your representation.”

I strive to offer great value in my services to clients. I'll never be able to match the pricing offered by LegalZoom and other online services. But it's an apples to oranges comparison.

My's clients are paying for advice and counseling. They are paying for security. They are paying to ensure that their matter is handled with attention paid to their specific goals and desires. My clients are paying to have an attorney, and that is something that LegalZoom readily admits they simply cannot be to their customers.