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  • Writer's pictureVictor Levy

AI in Estate Planning – Challenges and Opportunities

by Victor S. Levy, president, Levy Wealth Management Group, and Eric DeSouza, summer associate at Levy Wealth Management Group.


In 1970, ex-Beatle, George Harrison, penned one of his most famous songs called “What is Life?” The chorus is quite simple – “Tell me, what is my life without your love? Tell me, who am I without you, by my side?” The chorus poses two answers to the question – what is life? It implies that human life has two primary meanings – 1) to give and receive love, and 2) to be together, “side by side” with other humans.


This feeling of being together with our clients, helping them plan and prepare for the future when they pass away and leave behind resources for their loved ones, is essential to being an effective estate planner. The work is emotional and helping our clients starts with what the late Steven Leimberg, a nationally recognized expert in estate planning, called “The Estate Planning Interview,” which he indicated begins at the start of a new client relationship with words like this - “Someday, you and I might have to talk about death – not as an abstract or a ‘maybe someday thing’ but as a very real event which will happen very soon to you or a member of your family. I’m bringing it up now – so that – if and when that time comes – I’ll have your permission to speak freely, and with candor.”i


We live in a time of rapidly changing technology, where computer technology is now evolving to become more humanlike. With recent developments in Artificial Intelligence (“AI”), questions about any subject can be posed to computers that process the answers based upon sophisticated algorithms designed to replicate a human experience. The most popular, Chat GPT, on its website asks users to “Start a Conversation,” to which upon clicking the Chatbot says, “Hello, how can I assist you?” The makers of ChatGPT provide some insight into their tool on their website – “We’ve trained a model called ChatGPT which interacts in a conversational way. The dialogue format makes it possible for ChatGPT to answer follow up questions, admit its mistakes, challenge incorrect premises, and reject inappropriate requests.”ii


ChatGPT promises to perform the work, or at least get to the answers, which has historically been the domain of humans. This new technology is opening new avenues for opportunity, but it also has the potential to replace human experience in many industries. Query - can AI replace the human-to-human estate planning experience?


AI Defined 

The words “artificial intelligence,” or AI as it is commonly known, conjures up images of science fiction. A movie like the 1968 Stanley Kubrick classic, “2001: A Space Odyssey” comes to mind, which introduced HAL, a Heuristically Programmed Algorithmic Computer, a sentient artificial general intelligence computer that controls the systems of the Discovery One spacecraft and interacts with the ship’s astronaut crew.iii Or, perhaps AI is reminiscent of the 1977 groundbreaking film “Star Wars,” where the character C3PO, the “protocol droid” and trustworthy sidekick to R2D2, bobbled around on screen and was intended to assist in etiquette, customs and translation, boasting that he is “fluent in over six million forms of communication.”iv 


In general, AI refers to the development of computers or machines that can perform tasks that are usually designated to humans, which require some sort of human intelligence.v It is created using algorithms and models that enable these machines to learn from data while adapting and recognizing problems, allowing them to solve problems in a way that simulates human cognitive ability. “General AI” is what most people think of when they are talking about modern AI, because it aims to mimic human intelligence and perform a wide range of tasks.vi 


AI’s current capabilities stem from its ability to process vast amounts of data quickly using deep learning, neural networks and techniques like natural language processing, computer vision and reinforcement learning. This technology has the capability to increase productivity and improve the human decision-making process, but how does it do with estate planning questions?


Sample AI Queries

To test its capabilities, we posed two questions to ChatGPT - one a simple estate planning fact pattern and the other a general life insurance scenario. Here is a portion of the output that was created by the AI algorithm of ChatGPT:


Situation 1: Mary and John, ages 57 and 56 respectively, have three children ages 20, 22 and 24. Their youngest child has a disability and will likely need a lifetime of financial support. They have $300,000 in non-qualified portfolio assets, own a $1,000,000 home jointly in Pennsylvania, and have a total of $1,000,000 of pre-tax resources in 401(k) plans. They have no life insurance and no wills. They are not sure what to do with their estate plan. 


ChatGPT Response: Mary and John’s situation is complex, and they should consult with an estate planner and an attorney to create a comprehensive estate plan. Here are some considerations and steps they should take:


  1. Meet with an estate planner and attorney: The first step is to consult with an experienced estate planner and attorney who can help them navigate the legal and financial aspects of estate planning.

  2. Create a Will: Mary and John should each create a will to outline their wishes regarding the distribution of their assets. They can specify how they want their assets distributed among their children and how they want to provide for their youngest child’s lifetime support.

  3. Consider a Special Needs Trust: Since their youngest child may need lifetime support, it is crucial to establish a Special Needs Trust (SNT).

Author’s Observation: AI saw that the situation was complicated and that the need would best be solved by meeting in person with an estate planner, to have a human-to-human experience. To its credit, AI seems to know its limitations. However, the response, of which we only showed three of the 11 ideas that ChatGPT prepared, would be salutary to an estate planning professional to provide the ideas to help formulate the conversation the estate planner would have with the clients.


Situation 2: What is the proper amount and type of life insurance I should buy if I am a 28-year-old diabetic smoker with four kids and I make $120,000 per year?


ChatGPT Response: Determining the proper amount and type of life insurance can depend on various factors, including your financial situation, your goals, and your family’s needs. However, there are some general guidelines that can help you make an informed decision.


Amount of Coverage (Death Benefit): Income Replacement: A common rule of thumb is to have life insurance coverage that is five to 10 times your annual income. In your case, that would be between $600,000 and $1,200,000. Since you have four children, leaning toward the higher end of this range might be more appropriate.


Type of Life Insurance: Term Life Insurance: This type of insurance provides coverage for a specific term, such as 10, 20, or 30 years. It is often more affordable than permanent life insurance and can provide the necessary coverage during your family’s most financially vulnerable years.


“Given your age, income, and family size, a combination of term and whole life insurance might be a good option. You could purchase a larger term policy to cover immediate needs and a smaller whole life policy for lifelong coverage and potential cash value growth. However, being a diabetic smoker can impact your insurability and premium rates. It is advisable to work with an insurance agent or financial advisor who can assess your specific situation and help you find the best coverage at a price you can afford.”


Author’s Observation: The answer from ChatGPT here is enhanced as we provided financial data. The application excels at looking at things in a mathematical way, and to its credit, the program realizes that working with an advisor is ideal. It is notable that ChatGPT did assist with providing a potential path toward implementation by suggesting a dual policy approach, demonstrating a form of cognitive reasoning.


AI Replacing Humans – Economic and Ethical Challenges

Though AI offers opportunities for development and automation, this does not come without drawbacks. AI’s rapid development has raised many concerns, both economically and ethically. The primary economic concern pertaining to AI is the job displacement it could cause.vii Machines replacing human beings who perform jobs to earn income raises many political and societal questions.

Mass automation in every field and across all industries is the ambitious goal that has been acknowledged by AI developers.viii In fact, the AI movement is a “no-code” movement, which opens up normally complex code writing to the masses, which should expedite the development of the technology.ix At this early stage, AI does not have the instant capability to perform various roles at a high level, however, this could change over time.


There are also ethical dilemmas surrounding AI. Due to its nature, AI must be trained by a human in some way, and a human is bound to have a degree of bias.x If AI were to receive this bias it could further amplify social biases, especially if it is trained with pre-selected data. Moreover, AI’s decision-making process is incredibly difficult to comprehend, leading to a lack of accountability, not just for the AI itself but for its creators. Consequently, there has been increased legislative focus on AI development and use.xi 


Lastly, there are concerns relating to AI around the reliability of its output. Recently, a lawyer used ChatGPT to research a brief for a case, and the ChatBot responded with six case citations that the lawyer proceeded to use in his court filing.xii What the lawyer did not realize is that ChatGPT fabricated the cases it was referencing. One of the biggest concerns of AI is the reliability of the data. This phenomenon is sometimes referred to as AI hallucination.xiii


Benefits of AI to Estate Planners

Despite the ethical and societal concerns, AI functionally excels in data analysis. Humans generally use limited data available to them to guide the decision-making process, however, AI remedies this issue in a meaningful way as it has the capability to use over 99% of all available data to guide decisions in the most accurate possible manner.xiv In addition, AI is faster than any human in finding and organizing data, making it invaluable in the realm of data analytics. With a constant inflow of new data points, it is easy to become overwhelmed and draw false conclusions. AI can logically sift through all this data and offer input for planners to interpret and apply. In estate planning, this functionality will be potentially useful in analyzing complex planning that relies upon case law, revenue rulings, IRC regulations and the like.


Furthermore, AI can offer 24/7 client communication, answering questions and addressing concerns, whereas human estate planners must rest and eat. Another benefit of AI is its ability to summarize client meetings, eliminating the need for handwritten or typed notes.xv With meeting data alone, AI can compose comprehensive email summaries for clients, containing the most relevant information from the meeting. Over time, AI will likely learn from the different meeting experiences, further improving the output, as it learns the estate planner’s style and thought process.


Emotions and Estate Planning

Estate planning is both logical and emotional; each aspect is of equal importance. Something that is both an upside and downside of AI in estate planning is that it does not feel human emotion. Due to this absence of emotion, AI can think far more rationally than any human could by nature. No decision AI would make is based on emotion, meaning it will produce consistent and accurate results based on real data. A downside of this lack of emotion is that there cannot be any human connection with AI, and this could lead to a void between the client and the advisor.


A way to address this is for the advisor to take the solution offered by AI, assess the options and then bring the relevant decisions to the client. This allows AI to cover the more technical, data-oriented work, while human advisors cover the emotional and “human” aspect of the work. This is how AI and human estate planners can work together.


Currently, it is not feasible for AI to replicate the human relationship between client and advisor as AI is unable to have an in-person meeting with a client, nor can it laugh or cry with a client. Because of this, it is generally accepted that people prefer to have a human advisor guiding them. According to a survey conducted by the Million Dollar Round Table, 88% of people believe that the human-to-human financial advisor relationship is extremely important.xvi However, AI continues to evolve and self-teach, and some speculate that at some point soon it may develop the ability to simulate emotion.xvii


Query to ChaptGPT: Will AI replace the human estate planner?

ChatGPT: “In summary, AI tools like ChatGPT can be valuable aids in the estate planning process, providing information and generating basic documents. However, they are unlikely to replace human estate planners, who offer legal expertise, emotional support, customization, and a deeper understanding of individual client needs. Estate planners may use AI as a tool to enhance their services, but the human element remains crucial in this field.”


It is remarkable how quickly this new technology offers the potential to change our profession. At this time, we as planners can rely upon AI as a support tool in assisting us to help our clients with estate planning. The long-term implications of AI and the utility of the technology are yet to be fully realized. Though there are ethical and moral barriers, in a capitalistic economy the least expensive solution will usually find its way to the top. This may be how AI will find its place in the emotional, logical and human world of estate planning.


As George Harrison reflected in his song, “What is Life,” it is about love and togetherness. The answer to the same question when posed to ChatGPT is more logical…“Life” is biological, chemical, philosophical, etc. Steve Leimberg said there is a way to start a conversation about an estate plan by saying, “Someday, you and I may have to talk about death.” For this simple reason, because we need to ask difficult, emotional questions, estate planners of the human variety still matter, at least for now.


Victor Levy is President of Levy Wealth Management Group, an independent financial planning and estate planning firm in Philadelphia. To read more about Victor, please visit www.levywealth.com 


Eric DeSouza was a summer associate at Levy Wealth Management Group this past summer. Eric is a sophomore at the University of Pittsburgh where he is majoring in finance.


xvii For more information about the future of Emotion AI see https://mitsloan.mit.edu/ideas-made-to-matter/emotion-ai-explained.

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