Thursday, March 27, 2014

Legal Documents that Promise Too Much

I wrote in an earlier post about the fact that most estate planning trusts are simply unable to deal with the wide variety of ways in which incapacity —usually dementia of one sort or another—shows its ugly face. Despite the best efforts of trust designers, families still end up asking a court to intervene, and when that happens the trust can make solutions harder rather than easier. I think that we elder law lawyers are asking our documents to do too much.

I have written before about the role of legal forms in the practice of law and where lawyers get their forms. I completely rewrote my forms a couple of years ago to shorten and simplify them. I started doing it because a client asked me to simplify a long trust (a trust from a national provider of forms). As I went about taking out clauses that I had never seen anybody care about, I realized that my own forms were also bloated with clauses that had found their way into trusts decades ago and had simply been copied from one trust to another with no regard to whether they served any real purpose.

In the process of shortening and simplifying my estate planning forms—and translating them from legalese into plain human English at the same—I discovered that not only were my forms bloated as a matter of prose style, but most of the forms I use substantively attempted to do too much.

A will identifies your heirs (the people who would get your money if you had no will) and then tells the court who you want to get your stuff. The will may also tell the court who gets your money if one of the persons mentioned in your will dies before you do. I have had clients get seriously carried away with this question of out-of-order deaths, asking me what would happen if they were at a family reunion and all their relatives were killed by a meteor crashing into earth. I can answer that question, but I really don't want to put the answer in a will.

Life is unpredictable. The math of large numbers says we should treat highly improbable events as impossible. The same math says that when the numbers are large enough, the highly improbable event is also inevitable. Thus, the chances of winning the Powerball lottery are so small that it is reasonable for any person to consider it impossible. Nevertheless, when enough people play, it is inevitable that someone will eventually win.

Time spent preparing for low probability events takes time away from preparing for more probable dangers. Legal documents that attempt to anticipate all possibilities, I believe, are worse for a client than those that limit their scope to the most common situations. The complex language and legal structures built into estate plans designed to meet every contingency become less effective because of the complexity. An estate plan that anticipated every possible situation that life could throw at a person would be thousands of pages long. It would be unreadable, ignored, and worse than no estate plan at all.

The situation is akin to the parent who keeps his child in doors in front of the television all the time to avoid the risk of abduction by kidnappers—a low probability event—and as a consequent risks obesity and poor health—a fairly common risk.

I am moving toward an approach in which legal documents should be humble. They should acknowledge that they cannot anticipate every eventuality—life being simply too unpredictable—and rather than trying to take courts out of the plan, attempt to embrace what the court system offers.

Estate planners write trusts that anticipate capacity and plan for it. Incapacity, however, comes in too many ways and forms. I suggest that we trust writers continue to plan for the common case, but rather than attempting to make a trust that will never end up in court, we write our trusts to embrace the court system when unanticipated situations arise. Rather than trying to avoid conservatorships at all costs, the trusts could admit that some times they cannot be avoided and allow for the management of trust assets by a conservator during the lifetime of the incapacitated elder.

Similarly, I think people writing wills ought to quit tax planning for people who don't currently have enough wealth to pay estate taxes, quit writing trusts for minors who are unlikely to ever receive anything, and rely more on the law of intestacy. Planning for events that have a low likelihood is not harmless. It complicates and weighs down the plan, making it worse than it otherwise would have been.

It is time, I think for those of us who do this sort of thing to take a course in humility and write short, plain English documents that do a couple things well rather than everything badly.