In June, a couple in their early 80s met with Jim Barnash, regional director of financial planning for Lincoln Financial Advisors in Rosemont, Ill., who specializes in estate planning. This couple had stalled on their estate planning for 10 years. Why? Previous advisers had offered "a rifle-shot approach" to estate planning, Barnash explains. "They were never sure whether it was the best way to go."
By contrast, Barnash recommended a combined approach. He had them revise their wills and trusts to take advantage of tax law changes, and add some insurance to provide liquidity. Then he created a family limited partnership (FLP) to hold their business interests and marketable securities, and eventually settled on the idea of selling the now-discounted FLP units to an "intentionally defective" trust--a newer technique that immediately removes the assets from the estate, an important consideration for this older couple. The clients' four daughters will eventually inherit the assets.
"They smiled and said, 'You're the first person who understands that we wanted to get as much out of it as we can,'" Barnash says.
The estate planning area is the "last frontier," Barnash points out. "Those who are good look at all solutions and find a combined solution that offers the biggest bang for the buck."
A 23-year financial industry veteran, Barnash started in insurance. About 14 years ago, he had what he calls an "epiphany" and rounded out his practice to include financial planning, becoming a CFP. Barnash discovered his strengths were business succession and estate planning.
He educated himself about estate planning by attending conferences, reading articles and asking questions of other professionals. "If I see something I don't understand, I'm a bulldog about figuring it out. I want to know I have all my bases covered," Barnash says. Serving as an adjunct faculty member with the Denver-based College for Financial Planning also helps Barnash stay abreast of estate planning issues.
As Lincoln's regional director of financial planning, Barnash has some responsibility for compliance, coaching and training reps. The firm takes a team approach. If Barnash's client has a large investment, he refers him to one of the planners in the office who specializes in investing. Clients who need an estate plan are referred to Barnash or one of the firm's other estate planning specialists.
At the first estate planning meeting, Barnash and the client find out about each other. The client's homework for the second meeting is to bring their financial details. Then, "We try on solutions," Barnash says. "I test them to see how they feel about different strategies."
The firm uses generation- skipping techniques, family limited partnerships, trust arrangements and gifting strategies, tailoring the estate plan to the client's goals. After Barnash creates an estate plan, the documents are drafted by an attorney.
Educating clients about estate planning concepts before the attorney meeting is key, Barnash says. "The benefit the client gets is that they know everything before they get to the attorney."
At that meeting, Barnash generally says: "Here's the way we'd like to go. Do you see any reason why we should not go forward?" If Barnash and the attorney come up with different recommendations, they present both. "The client chooses, and one of us backs down," he says.
Barnash says a lot of the smaller law firms are not creative about estate planning. "They know the fundamentals--wills, revocable living trusts, durable power of attorney. But the real beauty, the art to estate planning, is getting to the next levels--gifting, valuation discounts, various types of trusts."
Part of the reason Barnash enjoys estate planning is the challenge. "It's like a puzzle," he says. "You take the client's objectives and resources, and blend them with their family situation, ages and health. You look at a variety of solutions and find the one that does the best job."