Dan’s Perspective: It’s a “New Day” for Estate planning, Or Is It? Recent Developments in Federal Estate Tax Law Have Dramatically Changed Estate Planning

In December 2012, Congress made temporary increases on the estate and gift tax credits permanent and adopted further benefits for taxpayers. Those credits resulted in individuals being able to give away during their lifetime, or transfer at death, approximately $5 million in assets to beneficiaries ($10 million for married couples). For most taxpayers, these new limits and other tax provisions like “Portability” (which allows married couples to use the first spouse to die’s $5 million estate tax credit upon the second spouse’s death without the need for a married separate trust) brought “tax-based” or “motivated” estate planning to an end. The new rules have resulted in estate planning attorneys having to refocus their attention to other planning concerns for their clients. However, these planning concerns are not new – they have always been there, and good estate planning attorneys have always recognized them.


What Do Clients Want From Their Estate Planning Attorney?


I have practiced law for 27 years. Since the beginning, although clients have always been concerned about avoiding taxes if possible, the “tax tail” seldom wagged the whole dog. Clients I have encountered in my practice have most often been concerned about various family and distribution issues such as planning for a distribution of assets to a special needs child; planning to keep a spendthrift son-in-law away from a daughter’s inheritance; and other numerous planning concerns in response to what I refer to as “life situations.” For most of my clients, solving non-tax issues has always been more important to them than saving taxes. In fact, certain clients have made planning decisions that resulted in increased tax consequences to accomplish the goals they perceived necessary to take care of or protect their family members.


As I think about it, the most heartfelt “thank you’s” I have received from clients for whom I have completed plans is not for saving their heirs so much money (although I have had those “thank you’s”), but rather for putting their minds at ease that their families will be protected from some negative event.


The “New” Estate Planning Process Is Less About Numbers and More About People


Today’s estate planning attorney needs to be thinking about his/her role in the aging and planning process of his/her clients. A good estate planning attorney not only needs different skills and knowledge, but a different focus, and that transition will be harder for some than others. An estate planning attorney needs to be less about numbers and formulas and much more about understanding the aging process and family dynamics. This includes issues such as the effects of clients and their family members suffering from dementia, caregiving issues, caregiver burnout, housing options, family dysfunction and financial exploitation, among others. In many ways, an estate planning attorney needs to have the skills and empathy of a social worker or family counselor. Those skills, together with the lawyer’s legal experience and know-how, should be invaluable assets to families who are attempting to plan for the future or who are reacting to current circumstances involving the ill health or death of a family member.


The Bell Has Rung


When advising clients on planning matters, estate planning attorneys – now, more than ever – need to be aware of the increasing circumstances and complications affecting their clients. The attorneys that continually adapt to the complicated, ever-changing attorney/client environment will prove to be an invaluable resource.


At The Penning Group, we are concerned with all of our client’s needs, not just those involving numbers. Whether you are an existing client, potential client, referral partner or get this email as a friend of the firm, please don’t hesitate to contact us or give our name to a friend who may require planning assistance. Please remember that planning “just in time” is not necessarily the same as planning “on time.”