Amjad Hussain

Apr 13, 2023

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The four ways Artificial Intelligence (AI) will transform estate planning

We’ve been hearing a lot about AI recently, and for good reason. The innovation happening with Large Language Models (LLMs) and Generative AI are remarkable, have sparked our imagination, and beg the question: What does the future hold? Of course I can’t predict the future, but I do have some thoughts about what it will mean for our industry.

When it comes to estate planning, machine learning has the potential to reshape things in some important ways. This evolution may be more subtle in the present and near future – with AI playing a role in the background – but I believe that in a few years we will look back at an industry transformed. Here are what I believe will be AI’s most significant impacts on estate planning:

1) Transforming documents into data – and data into documents

Have you had enough of filling out forms? Or sifting through existing forms to find the information you need? One of the promises of AI, particularly in estate planning, is to simplify tedious and error-prone data entry and analysis. Creating documents will get a lot easier. And, so will understanding them and using their information to devise a more comprehensive strategy.

With estate planning, advisors and attorneys create and analyze a range of different documents – powers of attorney, healthcare directives, wills, and trusts of all kinds. Each one of these documents might vary in how it’s structured, and even the language used, based on the state and jurisdiction in which it was created. The volume of data in these documents and the variation in which that data is presented makes creating documents more challenging. It also makes synthesizing the information in these docs and making sense of them more challenging. That’s where AI can be a big help.

AI is fantastic at making sense of structured and even unstructured data. Not only will it help us create documents with varying complexity based on questionnaires, but it will be able to extract the relevant information from each document in a more scalable way. Advisors and clients will be able to see this information showcased in whatever format is best, whether that’s a spreadsheet or a more illustrative graphic.

2) Creating better, more intuitive user experiences

To be clear, AI is not a requirement for creating great customer experiences, even in tech. Those can be crafted through thoughtful design powered by customer feedback. But AI can help uplevel these experiences. Machine learning can greatly assist customers in creating docs or formulating an estate plan, reducing the likelihood of confusion or uncertainty. AI would learn behavior patterns and the likely reasons for those behavior patterns. For example, if a user were to spend more than a typical time on a page, they might be offered help to get through the next part of the process. This is already happening today, on a rudimentary level. As AI advances, it will just be able to type their needs or challenges freeform into a dialog box, and AI will take it from there.

What would that look like in estate planning?

A user might type: “I need a basic power of attorney that allows my daughter to make decisions for me, but only in the event that I’m incapacitated.”

From there, the AI might ask a few simple follow-up questions and deliver the document. Then, all of the data in the document would be ingested into the client’s holistic plan and balance sheet to be viewed by the advisor and client in any number of ways they see fit.

3) Learning, in the moment

Estate planning is complex and nuanced, so there’s a lot to learn. Even individuals who have spent years in the industry may get stumped on occasion. Technology, specifically AI, has the potential to bridge that learning gap in an intuitive way.

With the help of AI, advisors and attorneys will be able to obtain specific information about even the most complex aspects of estate strategy without leaving the product. AI can understand the user’s subject matter expertise and tailor information accordingly.

4) Seeing the big trends and enabling us to act on them faster

One of the areas where software and AI excel is in quickly processing massive amounts of data. AI can analyze vast amounts of data to identify trends and insights that might otherwise go unnoticed. This ability to work on such a scale can be a valuable tool for advisors and attorneys as they make strategic decisions for their clients based on historical data and trends.

For example, an estate planning firm using AI could input data from all of its clients and analyze it to identify patterns and trends. With this information, the firm could determine that clients with a specific asset allocation or risk tolerance tend to have more successful outcomes. Additionally, AI could help identify the most tax-efficient strategies for passing on assets to heirs, such as using specific types of trusts. The ability to spot these trends and opportunities could provide a significant advantage to advisors and attorneys in developing customized and effective estate planning strategies for their clients.

The human perspective on artificial intelligence

We have talked a lot about what AI will bring to us in estate planning. Let us talk about what it won’t. AI will help crunch data and serve up strategies that map to patterns that have worked in the past. However, what it won’t do and what lies at the heart of the advisor’s job is to connect with clients on a human level. AI won’t understand their hopes, dreams, and fears, or how those might translate into effective strategies. While there is so much potential for how AI can help us, at Vanilla, we are thrilled by the possibilities. AI will not replace advisors but will further hone the value that they bring – it will drive home the essential need for human connection that cannot be found in ones and zeros.

The information provided here does not, and is not intended to, constitute legal advice or tax advice; it is provided for general informational purposes only. This information may not be updated or reflect changes in law. Please consult with your financial advisor or estate attorney who can advise as to whether the information contained herein is applicable or appropriate to your particular situation.