Estate planning

The Reality of Artificial Intelligence in the World of the Family Office | Arent Fox Chef


Across industries, professionals talk about the opportunities and benefits of artificial intelligence (AI). In real estate planning and family offices, two areas that require a distinctly human touch, consultants are asking how, if at all, AI can be leveraged.

Artificial intelligence is the replication of human intelligence by a machine. Generative artificial intelligence (GenAI) takes this a step further by harnessing the power of computers, collected data, and machines to mimic the problem-solving and decision-making capabilities of the human brain. This leap in machine capability can be a powerful tool for simplifying a work product. While it may be wise for consultants to incorporate AI into their practices, professionals in estate planning and family offices must remember that a machine cannot replace the human relationships we build with our clients.

Consider the following scenario

Your longtime client is calling to tell you that her mother’s mental state has rapidly deteriorated. Your client would like to review her mother’s existing estate planning documents to understand what to expect when the inevitable occurs. In addition, your client wants to determine the size of her mother’s estate and her authority to manage her mother’s affairs at this point in her life.

How can artificial intelligence be leveraged in this scenario?

An artificial intelligence cannot (and frankly, should not) replace this call – a grieving daughter reaching out to discuss a sensitive and emotional life event. However, there are GenAI tools that may help the consultant respond more efficiently to the client’s needs.

Real estate summary

GenAI can review and summarize complex estate planning documents and asset groups. In our scenario, you can upload the financial and estate planning documents of the sick mother to the AI ​​server and use it as a semi-search engine. You can ask the machine a simple question, such as “What is the net worth of my client’s mother?” You could ask a more complex question, such as, “Would my client’s mother benefit from setting up a private foundation or selling to a deliberately flawed donor?” Although clarifying the answers to these questions can save significant time (especially if the explanations are relayed to the client, as we will discuss later), advisors must review the answers closely for accuracy.

Most importantly, advisors should pay particular attention to data privacy considerations related to providing confidential client information to AI platforms. Studies show that although “the availability of users’ private data enables AI systems to perform better, there are also significant risks associated with such data collection. One of the main problems is that data is used for unintended purposes. Users are often unaware of how it will be done.” Processing, using and even selling their data.(1)

Even if the software agreement prohibits the sale or exchange of user information, uploaded data may be used in other ways. There is little research on the reliability of the data privacy assurances that AI companies provide. Moreover, federal and state regulation could not catch up to the burgeoning industry. In our scenario, let’s say our client’s mother’s trust includes distinct, well-crafted judgments. If this language is incorporated into a program databank, specific and individual estate planning provisions may be compromised. The dangers of using AI in the emerging data privacy landscape should not be overlooked.

Document drafting

Generative AI tools may be particularly useful for drafting documents. LLMs can provide a rough draft of standard estate planning documents. In our scenario, the client might designate her mother as the fiduciary agent on her estate planning documents. It may be wise to update those designations or revise the current successor structure. LLMs may one day have the ability to produce a rough draft of essential documents, such as a power of attorney or a will.

Of course, advisors who use AI drafting capabilities should no Treat any AI-generated document as a final draft. LLMs and any AI-generated materials must be reviewed and edited prior to use. like Bloomberg reported“Poor accuracy is one of the many issues keeping law firms wary of generative AI. It has already led a New York federal court to threaten penalties against attorneys who submitted a legal brief using ChatGPT-generated research that cited non-existent case law. And judges elsewhere have begun to erect guardrails on the use of technology A Texas judge issued an order Require all lawyers to certify that their documents were not drafted by Amnesty International. If any AI-generated language is used, it needs to be checked for accuracy “by a human”.

As technology evolves, the quality and accuracy of estate planning drafts produced by AI is likely to increase. However, advisors must review the documents with a keen eye. Estate planning is more of an art than a science. Detailed knowledge of a particular client’s circumstances determines how documents are drafted. So, while the material generated by the AI ​​may be accurate, it should be optimized and customized to suit the client’s needs and preferences.

Customer contacts

A counselor’s primary skill is the ability to explain complex concepts in a way that the client can understand. Artificial intelligence can be used to translate legal terms into a more easy-to-understand form. For example, you might ask GenAI to “explain”. for every stirpes to a 10-year-old” or “To explain the concept of late cancellation in an Illinois Health Care Power of Attorney.” The program will provide a simplified explanation of exactly that.

Using artificial intelligence to simplify complex tax and estate planning concepts may be the most powerful resource available to advisors because it does not require the input of any private or sensitive client information.

In short, GenAI software is a development tool that has the potential to contribute to the productivity and efficiency of family office and estate planning workers. However, clients and counselors alike must remember that some conversations and tasks require a detached and human approach. By keeping an open mind to the potential of GenAI technology and staying in tune with the security and sensitivity of our practice, consultants can benefit from AI in a myriad of ways.

Additional research and writing by Zoe Belford, a Summer 2023 fellow at the ArentFox Schiff Office in Chicago and a law student at the University of Chicago.

(1) Jim Bartnick and others. An introduction to robotics and artificial intelligence ethics, and privacy issues in artificial intelligenceSpringer Abstracts in Ethics. (12 August 2020)

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