Online Will-Making: Something Charities Should Consider
When online estate planning sites like Legal Zoom and Rocket Lawyer debuted a decade or more ago, it was predictable that gift planners would seize on the technology as another way for donors to “seal the deal” on promised bequests. A few companies (Providers) now provide branded will-making websites (Sites) to which charities refer supporters. The charities pay for the Sites, which donors can access for free.
The major Sites offer a quality product with appropriate caveats and disclaimers about limitations of the documents, not a substitute for legal advice, etc. At their best, Sites are preferable to “homemade” wills (whether holographic or fill-in-the-blanks) and even to some lawyer-drafted wills that use bad or corrupted templates.
CCK is aware that some exempt organizations have been reluctant to consider having a Site. Typically, such charities have a fear that providing such an estate planning service could expose the organization to legal risks, such as claims of “undue influence.”
We believe that the risks presented by Sites are modest and can be further reduced by simple measures. The following analysis, which is not legal advice, is a high-altitude look at:
- The types of Site-related claims that an individual with standing might make against a charity; and
- Risk management techniques that a charity might consider if it uses a Site to promote bequests.
Potential Will-Making Site-Related Claims
One of the classic situations in which a charity might be accused of “undue influence” is when one of its employees, or a lawyer that it engages, assists in the preparation of a donor’s will. Some charities may shy away from having a will-making Site because it seems like the charity is assigning an estate planner. However, a Site is not a person. It is a tool to accomplish a task, functioning like a “Finish and Pay” button when checking out at a store. In all states, “undue influence” involves coercive behavior (which need not be malicious) that overcomes the will of the testator and compels her to make a gift that she did not want to make. A well-designed Site cannot coerce.
Gift planners always encourage donors to prepare estate plans and to include their charities. The encouragement, and even the “ask,” does not constitute the coercion needed for undue influence. In view of that, it is difficult to see how a will-making Site, a static tool that the donor freely chooses to utilize, could be coercive. Even though Sites may “suggest” a bequest to the sponsoring charity, the prompt is arguably nothing more than a unique way of making the routine “ask.”
CCK TIP: Naturally, Site or no Site, gift planners need to refrain from acts that may be coercive, such as overinvolvement with the details of estate planning or making an intimidating demand for a bequest. With a Site, for example, it is prudent that no one associated with the charity assist the donor in completing the details in the Site‘s estate plan. If the testator needs help with the Site, that should come from another source.
Unauthorized Practice of Law
This kind of case would center on an allegation that the will-making Site was doing something only a licensed lawyer can do. Typically, this is a criminal case against an individual or a “cease-and-desist” action against a business entity. When Legal Zoom started providing online legal assistance, it faced several such challenges, which forced it to tweak its method of operation, but not change its fundamental service. The target for any such action would be the Provider and not the charity. Additionally, a reputable Provider will have taken steps to ensure that its operations are compliant in every state.
CCK TIP: The contract between the Provider and the charity should clearly place all responsibility for the operation and content of the Site on the Provider. In addition, the Provider should warrant full and ongoing compliance of the Site with all requirements of applicable law.
These cases are rare, but usually occur after death when it becomes clear (at least to someone) that the testamentary documents were negligently prepared to the detriment of the estate as a whole or a particular beneficiary. Again, this kind of action would be against the Provider. The “CCK TIP” directly above applies here as well.
This kind of action would usually arise in conjunction with a malpractice claim and allege that the charity failed to police the site and negligently led the testator to believe that he would get a good product. If the charity has secured sufficient warranties and representations of site quality in the governing agreement with the Provider, this type of claim – unlikely in any case – should be at worst a nuisance.
Key Mitigation Measures
Beyond those mentioned above, charities should consider the following measures:
- Ensure that the will-making Site contains a clear notice that (1) no bequest to the charity is required and (2) the charity will learn of the donor’s estate plan details if and only if the donor so requests.
- Obtain a strong indemnification/hold harmless/defend commitment from the Provider for “all claims against Charity arising out of the use and/or operation of the Site.”
- Maintain insurance that will cover the charity for claims. This is particularly important for malpractice and negligent referral issues, which would typically arise years after estate plans are drafted. By that time, the Provider may or may not still be in business. Even though the claims would be unlikely to succeed, defense costs can be significant. Most policies will cover those costs. (The policies listed are typically “time of claim” policies. This means that if a charity receives a claim in 2037 for an estate plan drafted in 2019, the 2037 policy will respond and defend.)
While risk mitigation measures are always appropriate, we believe that charity-sponsored estate planning websites can be a valuable tool for the gift planner. This analysis has identified theoretical liabilities that could arise from utilizing Sites. We believe that the likelihood of these problems, however, is low and that the obvious risks can be managed by methods that most organizations will view as routine. For many charities, these risks will not be sufficient reason to forego the benefits of a will-making Site.