AI Hallucination - What it is and why it can be troublesome when planning your estate

Feb 20

As AI tools become more accessible and easier to use, many of us are utilizing them for tasks from searching flights to home decoration ideas. For the more intrepid, some even consider using them for jobs like drafting estate planning documents or special needs trusts. While AI can generate text quickly, one major limitation stands out: AI hallucinations. Understanding this issue is crucial, especially when your family’s future security is at stake.

What exactly is an AI hallucination?

In simple terms, it’s when an AI system—typically a large language model like those powering ChatGPT or similar tools—produces information that sounds confident, plausible, and authoritative but is factually incorrect or completely fabricated. Imagine thar one person you know who confidently spews out random facts and he or she may or may not know what they’re talking about. Well, AI isn’t that bad, but there is a need for caution. The AI doesn’t “know” it’s wrong; it generates responses based on patterns in its training data, sometimes filling gaps by inventing details. This isn’t a glitch—it’s a core characteristic of how these models predict the next word or phrase probabilistically.

In everyday use, a hallucination might be minor, like inventing historical facts. But in legal contexts, the stakes are much higher. Courts have documented numerous cases where AI-generated legal filings included fake case citations, nonexistent statutes, or misquoted laws. For example, attorneys have faced sanctions after submitting briefs with entirely invented precedents. Even specialized legal AI tools hallucinate in 17-34% of queries in some studies.

When caution is needed

Now, apply this to estate planning and special needs planning. These areas demand precision, state-specific compliance, and deep personalization. A hallucinated clause in a will or trust could invalidate the document, expose assets to unnecessary taxes or probate, or create contradictions that lead to family disputes or court challenges.

For special needs planning, the risks multiply. A properly drafted special needs trust must carefully preserve eligibility for government benefits like Medicaid or SSI while providing supplemental support. AI might “hallucinate” incorrect rules about benefit eligibility, invent nonexistent trust provisions, or overlook critical details like look-back periods for asset transfers. Generic outputs often ignore nuances such as blended families, disabled beneficiaries, or Medicaid planning—resulting in documents that look perfect but fail when scrutinized. In the worst cases, an invalid trust could force a loved one to spend down assets or lose essential support, undoing years of careful preparation.

Why should this matter to you?

Relying on AI for DIY documents gives a false sense of security. Without human oversight from an experienced estate planning attorney, errors may go unnoticed until it’s too late—after incapacity or death—leading to costly litigation, unintended distributions, or lost protections.

AI can assist with brainstorming or organizing ideas, but it cannot replace professional judgment, accountability, or the ability to tailor plans to your unique circumstances. We strongly recommend consulting a qualified attorney for these sensitive matters.

Your legacy deserves accuracy and protection. If you’re considering updates to your estate plan or have questions about special needs trusts, reach out—we’re here to help ensure everything is done right.

Legally Remote