Every estate planner and client should be in pursuit of a good estate planning result, whatever that looks like for the particular client. I define that term differently than most. In my opinion, a good estate planning result where property is properly transmitted as desired, and family relations among the survivors are not harmed during the estate planning and administration process. Notice that conspicuously absent from this definition is any mention of taxes. I humbly submit that taxes have always been the easiest piece of the estate planning puzzle to solve, yet the overwhelming majority of estate planners still focus their attention almost solely on the tax piece, probably because it is easiest to solve and also the easiest to demonstrate quantifiable, tangible results. This is not easy to do. Why is this so difficult to achieve?
I began tinkering with creating such an explanatory model back in the mid-to-late 1990s, and it has evolved a bit over time. However, its basic structure has remained intact since original inception.
The associated rudimentary graphic illustrated below explains why the chase of a good estate planning result is so difficult:
As the graphic, which I call The Path of Most Resistance© (“The Path”), illustrates, there are several “players” in every estate planning “play.” The matters above the thick arrow line that flows in both directions represent views and common experiences in the past with estate matters among all of the “players” in the “play,” and the items below that line are witnessed in each of the respective players in the estate planning “play.”
The Path further illustrates that most clients have more than one advisor in the estate planning process, which creates its own set of issues and potential challenges in the pathway toward a good estate planning result. However, the estate planning process often is further complicated by the interposition of more than two advisors in the estate planning process, but illustrating the issues where the client has more than one professional involved in their estate planning play represents perhaps the limits of graphic design.
Behind the Scenes for All of the Players
Some past experiences are common to all of the players in the estate planning play. These are set out above the thick line that runs in both directions.
Prior Inheritance Experience. Past personal experience as an inheritor, fiduciary or beneficiary can go a long way toward informing one’s views on wills, trusts, probate, and estate planning advisors. This past experience applies to estate planners too. People who have survived a contested trust and estate matter often are more guarded, even jaded a bit, by the experience. People who have no experience with trusts and estates matters are frightened of them, often because of horror stories that they have heard from others. Nevertheless, this past experience impacts how people think.
Tip: Pre-death intergenerational communication can go a long way to reducing rancor in trust and estate administration in large part by properly setting the expectations of the receivers. Once the client has died, the purposeful estate plan will be administered with complete transparency and frequent communication to minimize things going off the rails.
Listening / Communication Skills. Most people think that they are better listeners than they are. Some people are more verbal than others, while others are more visual. Since a significant part of communication is body language, it is very important to watch the other conversant’s body language. We all have differing styles and levels of skills in both listening and communication. It behooves an estate planner to be familiar with listening and communication styles so that he can better serve his clients and work collaboratively with other estate planners. In the third installment of this piece, the author discusses active or reflective listening.
Tip: While it’s important to take good notes, it’s just as important to read the body language. The purposeful estate planner should maintain solid eye contact with the clients during the interview, particularly during times of tension or points where there is some uncertainty, angst or disagreement.
Attitude Toward Death/Fear of Death/Dislike of Death Talk. Human beings are unique in being able to think about death, but most people would rather not think about death, their own or that of anyone else. However, some people simply cannot consciously contemplate their own demise, which can be an obstacle in estate planning. Again, estate planners are not immune to this; most estate planners are just as reluctant to discuss a client’s future death as the client because this discussion reminds the estate planner of his own mortality.
Tip: Consider taking the lead on being vulnerable and discussing death openly and honestly. It’s okay to not like talking about death and to be fearful of it, but fears faced out in the light tend to dissolve or be significantly reduced.
Inner Child Issues. Many people can trace or at least attribute a problem to something in their childhood. John Bradshaw has written extensively about how childhood wounds manifest themselves as we age, as have others. It is important for estate planners to understand that some adult actions, particularly actions that seem negative or over reactionary, may have their genesis in childhood, particularly in working with family businesses.
Tip: Practice mindfulness and being more self-aware of your feelings and past. If an interaction or exchange with a client or another player in the estate planning play brings up feelings within you, first label those feelings and then attempt to find their source.
Relations with Spouses/Children/In-Laws/Descendants. When I happily reported the birth of my first child to one of my mentors in estate planning, the late Gerry LeVan, he told me that that he was half-way toward becoming a good estate planner, but that I would not become a good estate planner until my first grandchild was born. Gerry was right. Indeed, after the birth of my first child, I began looking at documents that I was drafting differently and I shifted many of my default provisions quite a bit, just because of the birth. My son’s birth made me a better estate planner because I could now more readily empathize with parents. Some people have precarious relationships with family members, and divorce often creates more acrimony as the former spouses often force their loved ones to take sides.
Tip: Again, self-awareness of one’s own feelings and past experiences can go a long way toward identifying and dealing with feelings.
Mental & Physical Health. It is undeniable that the health, mental and physical, of everyone in the estate planning play impacts the estate planning process. People who have had brushes with death often are far more appreciative of each day of life than people who have been healthy for their entire lives. Mental health issues often lurk in the shadows of codependency and enabling, where some family members look after other family members, often to the detriment of both, and apologize and cover for the sick family member. This is particularly rampant in drug and alcohol addiction.
Tip: We all are different and have different past experiences. Status of our physical and mental health significantly impacts our bandwidth and outlook on life. Age factors in here as well. It is important to be aware of one’s feelings about physical and mental health, which often are informed by our past experiences.
Relations with Siblings/Parents. Clearly, one’s relationships with one’s own siblings and parents, whether living or dead, has an effect on how one views relations of other people with their siblings and parents. Contrast the “one big happy family” where the members truly love and respect each other, both the good and the bad, with the dysfunctional family where communications have broken down and the members have taken sides and gone into battle station mode – and everything in between.
Tip: Self-awareness of these relationships and how they’ve informed your views on estate planning for your clients can greatly assist the purposeful estate planner with these issues.
Attitude toward Wealth. Some people inherit significant wealth or are raised in affluent homes, while others grew up less fortunate. These experiences often affect attitudes about wealth. Some are jealous, while others are oblivious to what other people’s experiences are regarding wealth. Some people understand the value of hard work and savings, while some people feel entitled to wealth. Inheritors may not view their wealth as their own since they did not create it, being more like stewards of the wealth. Contrast that with the person who created the wealth, whose very personae often is inextricably intertwined with that wealth.
Tip: It is important to figure out how the family came into their wealth because that will give clues as to how the wealth is perceived and how it will be administered and passed on, especially if the wealth wasn’t generated in your client’s generation.
Other Life Experiences. This catch-all category can include experiences like bankruptcy, termination of employment, being a defendant in a lawsuit, jail, tax problems, divorce, etc. The purposeful estate planner will not forget that these potentialities may be present and impacting the client’s decisions.
Tip: This is why your initial client questionnaire must ask some broad general life experiences questions, because, for example, the client who has gone through a nasty divorce or a bankruptcy may be far more guarded than the client who hasn’t had these experiences.
Personality Type. While everyone is unique in some respects, there are recognized personality patterns. Some personality types blend well with others, while other types do not.
Tip: The purposeful estate planner should make himself familiar with personality types, because this knowledge will prove invaluable in getting through to clients of all types. Again, self-awareness is the key. What is your personality type?
We now shift the focus to below the thick green line, where I will consider attributes peculiar to the particular player involved. Let’s begin with the star of the show: the client.
Clearly, the star of our play is the client. As stated earlier, some clients have significant experience with estate planning, but for many, this trek is a maiden voyage.
Distrust / Fear of Advisors/Fear of Loss of Control of Planning Process. Clients in estate planning often are novices in dealing with advisors, although others may have significant experience. Fear of loss of control of the estate planning process keeps many more from tending to their estate planning than most estate planners realize, possibly even as much as fear of death.
Tip: They key is humility on the estate planner’s part and the willingness to let the client be in control of the process. The author realizes that this tact flies in the face of some sales training that teaches how to gain control and eliminate objections. However, the purposeful estate planner always will insist that the client be in full control of the estate planning process, with the estate planner acting as guide and counselor.
Fear of Costs. Given that many estate planning clients possess little experience in dealing with advisors, it is not unusual to see people put off their estate planning simply out of fear of the cost.
Tip: Don’t live and die by the time sheet, which, in the author’s opinion, was a terrible development because it attempted to quantify value through increments of time. The problem is that value and time aren’t co-linear. One can render splendid advice in minutes of time expended that saved client millions of dollars. On the other hand, spending five hours at your hourly rate on a routine will drafting assignment isn’t going to make a client very happy unless the bill is significantly adjusted downward. Talk about fees up front, in writing and periodically as well. Use flat fee arrangements where appropriate.
Feelings about Taxes. While the federal estate tax under current law applies to a very few, although a number of states still have a significant death tax, feelings about death taxes often occupy a client’s mind. Some people are hell bent on paying no death tax, while others recognize that they will not personally ever have to pay their own death taxes.
Tip: Most estate planners are pretty quick to point out that no death tax will be due (no doubt in some substantial part to their excellent work), so nothing further need be said here.
As the author stated earlier, The Path depicts two advisors but is not intended to imply that a client may not have more than two. Obviously, the more advisors, the greater the risk of more problems since the more people involved has the potential to bring more personal experiences and “baggage” into the situation.
Don’t misinterpret what the author is saying here: The client should have as many advisors as the client feels is necessary or appropriate in his situation. The author is a big believer in referrals and collaboration simply because it was his universal experience that clients get better service and a better estate plan where collaboration exists. However, having more advisors creates a situation that must be watched and managed. The author has seen estate planning engagements fall apart because the advisors were incapable of cooperating and collaborating, which is a bad result for the client and can add to the negative experiences that the client will take to the next advisor, if any.
Ethical Constraints. Each of the estate planning subspecialties have their own ethical rules and conventions. These ethics rules impact different subspecialties differently. The legal ethics rules insert some additional complexities in the estate planning process, particularly in the areas of confidentiality and conflicts of interest. It is imperative that the lawyer’s engagement letter permit complete and total access to all of a client’s advisors.
Tip: Make sure that the engagement letter casts a wide net over the people with whom the lawyer may have communication to allow the lawyer to communicate with those third parties. That list could include children or other descendants, family business employees, lawyers, CPAs, investment advisors, fiduciaries (trustees, etc.), financial planners, life insurance agents, wealth psychologists, and, in some cases, access to the client’s treating physician.
Limitations/Teachings/Philosophy of Particular Subspecialty. Each estate planning subspecialty brings its own mindset and philosophy into an estate planning engagement. This often is clearly reflected in the factfinders of a particular subspecialty, which tend to focus more attention on the areas covered by that particular subspecialty. For example, lawyer factfinders tend to focus attention on property, while the life insurance factfinder might focus the attention on life insurance. Moreover, different advisors in the same subspecialty may have vastly different philosophies about estate planning. It is critical that advisors check their egos and biases at the door before getting down to work with an open mind and collaboratively on a client’s situation.
Tip: Try collaboration-true collaboration-just once. If it goes right, you will never want to work any other way again. With collaboration comes diversity of professional backgrounds, educational and experiential pedigrees and different manners of training and significantly knowledgeable about a certain aspect of the client’s estate plan. This diverse strength of the group exceeds the strength of the sum of the individual members of the group. This excess is called synergy.
Fear of Lawsuit. Every professional advisor lives in some fear of being sued by a client. Estate planning advisors practice defensively to minimize the risk of lawsuit. Some of these defensive actions negatively impact the relationship with a client, particularly where the client does not appreciate the risk of a course of action that the advisor recommends.
Tip: Again, one thing that most estate planners do well is practice defensively. The author can only repeat Howard Zaritsky’s sage and timeless advice to simply be nice. To everyone. Lawyers are notorious for not being nice.
Need for Business. Many advisors constantly search for new business. In a way, this is the flipside of the fear of lawsuit discussed above. Some estate planners are better at giving safe “yes” answers to clients, who always want to hear “yes” and loathe hearing “no.” Unfortunately, some estate planners spend an inordinate amount of time telling clients “no” when there is a safe “yes” answer that simply requires fresh thinking.
Tip: The safe strategy is to view potential clients cautiously in that they could be either an opportunity or a curse. Some clients are more trustworthy than others; some clients are more aggressive than others. Sometimes, estate planners who are worried about their level of business will take in just about any client, when a more selective policy makes far more sense.
“Lead Dog” Syndrome. Some advisors, particularly those with some product to sell, are trained to gain control of a situation. This often conflicts with other advisors, especially those who also desire to be in charge of the client’s estate planning. When advisors joust for the desired position of quarterback on the estate planning team, it can delay or even end the planning.
Tip: Be a good example to those with whom you are supposed to be collaborating by checking your ego at the door and inviting them to do the same.
Self Interest. Let’s face it, advisors are in business for themselves and have families to feed or employees to pay. Even though just about every subspecialty of estate planning has ethical responsibilities to clients, it would be foolhardy to expect advisors not to act in their own self-interest at some point in an engagement.
Tip: I found that if I always put the interests of the client first, my interests were eventually covered.
Fear of Collection of Fees. This fear differs greatly from subspecialty to subspecialty. When an advisor commences an engagement without having first secured payment for services, this fear can impact how much work the advisor will do before being assured of being compensated, which can impact the venture toward the good estate planning result.
Tip: It is perfectly acceptable to charge a client who is asking for a lot of work to be done to put up a retainer in good faith to cover the work.
Loved Ones, Intended Beneficiaries, Others
Similar but not identical to the advisors silo, I used one as a surrogate for the actual number of heirs and others that the client has in his situation. This category includes those who believe that they will receive something from the client at death.
Fear of Loss of Person. Most people who have a potential interest in a client’s estate have a relationship with the client. Quite often, these people fear the client’s death as much or even more so than the client or the client’s advisors. In fact, The author has witnessed this fear be so palpable that, when expressed, it ends the client’s estate planning at that point because the mere notion of the client’s death is too great to bear for the family member, and this causes stoppage in the estate planning process. This is attachment theory played out in the estate planning play. The family member’s revulsion at the mere notion of the client’s death was triggered by the family member’s fear of loss of the client. The family member acted out much like an infant whose parent leaves his side.
Tip: Here, it is important to address fears and feelings head on with transparency. This is why intergenerational communication is so important in the quest for a good estate planning result.
Self Interest. As with the estate planning advisors, we should expect people in this category to act or argue out of self-interest. There is nothing inherently wrong with looking out for one’s best interests, until it crosses the line and becomes either undue influence or even outright misappropriation.
Tip: Where many lay fiduciaries make big mistakes is failing to see the difference between outright ownership of property and holding the legal title to that property in trust and as trustee for the benefit of someone else. This is where the estate planner must clearly and, if need be, forcefully, inform the client that being a fiduciary is a potential source of great liability.
Not Getting the Whole Story. My practice experience was that intergenerational estate planning was best where the client communicated the estate plan and the reasons for it to the potential receivers during the client’s lifetime. Nevertheless, it was far more common in my experience for clients to keep quiet about their estate plans during lifetime, despite my most pointed advice to the contrary. Some of the saddest and most unfortunate situations I ever witnessed was where a deceased parent left a smaller amount to the client than what the parent gave to the client’s siblings without explaining why this was done.
Quite often, this unfortunate and inadvisable practice leads to post-death administration difficulties as relationships among the survivors are torn asunder, including litigation. However, the larger problem is the psychological damage that it does to the client, who is left to wonder for the rest of his life whether his parent loved him as much as the parent loved the client’s siblings because many people believe that the relative bequest level is the ultimate final barometer of love, even though this is not true in the vast majority of cases.
Tip: It’s been said before, but it bears repeating: intergenerational estate planning is best.
In conclusion, the good estate planning result is of critical importance and should always be the goal, even though its pursuit is difficult.