It doesn’t seem all that long ago when my firm transformed its estate-planning practice from renting thousands of dollars worth of storage space for paper files into electronic storage of scanned-in, signed documents. As it turns out, we shifted the headache from taking the time to retrieve physical files from the storage rooms to keeping up with technology, including maintaining robust file servers, offsite automatic data storage, backup and retrieval, as well as having the ever-present IT specialists roam our office on a continual basis to ensure the smooth functioning of our network.
Remember the scare of Y2K? For those of you too young to have been practicing law back then, ask your partners about how the media and technology firms scared all of us to death that somehow our systems would all crash and burn while we drank champagne and rang in the new millennium.
Party like it’s 1999, baby!
Well, along comes another wave of technology — this time in the form of electronic wills legislation. As I write this, there are two bills of legislation in the Florida House (CS/SB 277) and Senate (CS/SB 206) that legalize electronic wills. I understand that there are similar laws and bills pending in a number of states. For more information, here’s a link to the Florida Senate Judiciary Committee Staff Analysis. Before opining on what this means to estate-planning practitioners, allow me to briefly describe key aspects of the legislation:
Definition of an Electronic Will
The Florida bill defines an electronic will as “an instrument, including a codicil, executed in accordance with s. 732.523 by a person in the manner prescribed by [the Florida Electronic Wills Act], which disposes of the person’s property on or after his or her death and includes an instrument that merely appoints a personal representative or revokes or revises another will or electronic will.”
Executing an Electronic Will
For an electronic will to be valid under the bill, it must:
- Exist in an electronic record;
- Be electronically signed by the testator in the presence of at least two witnesses; and
- Be electronically signed by the attesting witnesses in the presence of the testator and in the presence of each other. However, if the will is self proved by a notary public, the notary’s signature must be accompanied by a notary public seal that meets the requirements of F.S. s. 117.021(3).
To be electronically signed, several requirements must be satisfied, including that the person intends to sign it pursuant to Florida law and either: (1) the witnesses and notary must be physically located within Florida at the time of execution, or (2) in the case of a self-proved electronic will, the will designates a qualified custodian who’s domiciled as a resident of Florida or incorporated in Florida. The notes to the Senate version make clear that the witnesses must either be physically present with the testator and in each other’s presence, or they may be in different physical locations but able to communicate by means of live video and audio conference. If video means is used, the video record must record and store a video transcript of the execution ceremony either in or attached to the electronic document record.
The bill also provides that the testator doesn’t need to be present in Florida to execute a Florida electronic will, but will be deemed to have executed the will in Florida if he states an intention to execute and understands that he’s executing the document according to Florida law.
Qualified Custodian
The bill defines a qualified custodian of an electronic will as a person who meets all of the following requirements:
Isn’t an heir or devisee of the testator;
- Is domiciled in and a resident of Florida or is incorporated or organized in Florida;
- Consistently employs a system for ensuring the safekeeping of electronic records and stores electronic records containing electronic wills under the system; and
- Furnishes for any court hearing involving an electronic will that’s currently or was previously stored by the qualified custodian any information requested by the court pertaining to the qualified custodian’s policies and procedures.
The meaning of the last two requirements appears to be ambiguous. Must all electronic wills be stored using the deemed system? The bill doesn’t specifically require such. What policies and procedures would be deemed adequate? The custodial requirements may be circumvented by the deposit of the will prior to the testator’s death with the clerk of court, but I would assume most people wouldn’t want their last wishes made public prior to death, given the fact that one might change his will at some point in the future.
No Limit to Liability
The bill includes several provisions designed to hold qualified custodians accountable. These include liability for the negligent loss or destruction of an electronic record and the inability to limit liability for doing so, a prohibition on suspending or terminating a testator’s access to electronic records and a requirement to keep a testator’s information confidential. A testator may also force a qualified custodian to immediately hand over to the testator the electronic record of an electronic will, the electronic will itself and a paper copy of the will at any time.
Florida Probate of Electronic Will
Venue for a traditional will would also apply to an electronic will, except that the bill provides additional venue options for the probate of an electronic will of a nonresident. For nonresidents, venue is also proper in the county where the qualified custodian or attorney for the petitioner or personal representative has his domicile or registered office.
Who’s Behind the Bill?
News reports indicate that Bequest, Inc., a Miami-based corporation that runs the website Willing.com is behind the push for electronic wills. Bequest hired the national lobbying firm of Ballard Partners in 2016 and the legislation was filed early this year. Mr. Matthew Forrest, a lobbyist at Ballard Partners, gave testimony (see page 149 of the link) in favor of the bill.
Practical Effects on Estate Planning Lawyers
While I suspect that electronic wills may open up a whole plethora of cases for trial attorneys well-versed in probate and trust administration law, it’s likely too early to tell what the practical effects of this legislation will have on Florida’s estate-planning bar. My personal suspicion is that those with larger estates will continue to prepare wills and trusts the traditional way with paper and attorneys, but those with smaller estates may find the ease and cost of electronic wills to be appealing. This speaks to my other posts on this contributing Xpert page as to whether your firm is in the business of doing simple transactions for your estate-planning clients or whether you’re entering into ongoing client value-creation relationships. Attorneys will probably not want to or even be able to compete in a transactional environment where price is the determinative factor. The advantage clearly goes to the large technological companies that can scale electronic will capabilities with programmers and web designers, not to mention having the resources to serve as qualified custodians.
Further, a firm that wants to compete and offer electronic wills will have to consider whether it wants to be in the business of acting as a qualified custodian. A server failure and corresponding back-up malfunction could potentially economically devastate even the largest firm. Malpractice carriers will certainly consider whether a firm is acting as a qualified custodian when quoting premium rates. This could prompt third-party vendors to enter the arena, but that then calls into question various confidentiality and other ethical concerns.
Just as real estate attorneys lost most title business on the sale of most residential property transactions, the microchip continues to eat away at traditional service-based practices, making a will faster and cheaper for those with modest estates or even less. Estate-planning attorneys going forward will have to consider how to educate those with larger estates, or those with complex problems, as to the advantages of having a wise professional guide parties through that process.
