Taxation & Estate Planning

Lindenwood U. and Estate Planning Conflicts of Interest

By Joel A. Schoenmeyer

Professor Caron blogged here about an initiative of Lindenwood University, whereby alums who agree to leave the University at least $1,000 get free estate planning. As the comment to Professor Caron's post suggests, there's a pretty big conflict of interest issue here. It's somewhat common to run across estate planning situations where a third party (usually the client's parents or children) want to pay for the work. That's usually fine, so long as everyone understands that I represent the client, not the person (or in this case, entity) who's paying for the services. In this case, the University will pay for your legal services, but requires you to make it a beneficiary.

The situation appears to suggest a nice arbitrage opportunity, depending on how the University pays for your estate plan (and whether you can get past the moral dodgyness of it):

1. Utilize the University-recommended attorney to do your estate plan, with a $1,000 gift to the University. Will the University really cover an in-depth estate plan? That can run you -- if we're talking about Wills, living trusts, and powers of attorney -- from $2,000 up to maybe $5,000.

2. Hire your own estate planner to remove the gift via a codicil or trust amendment, which should cost less than $500.

3. Voila! An estate plan at a discount (assuming that your agreement with the University doesn't contain a requirement that you report any changes to your estate plan).

Full post as published by Death and Taxes Blog on December 04, 2007 (boomark / email).