Thanks to the American Taxpayer Relief Act of 2012 (ATRA) and the current economic conditions, the times indeed are a changin’ in the trusts and estates practice. Software has continued to morph to address continually more sophisticated estate-planning techniques; articles on the Internet addressing non-tax (or real) estate planning and software and online services that assist in this area are increasing; the scope of technology services has expanded; more planning services are moving to the cloud; and the Internet has exploded with informational and advisory resources to assist the estate planner. Let’s examine these areas of change and the technological and online resources available to address them.
Client Issues After ATRA
As a result of ATRA, fewer clients have serious estate tax planning needs. There’s an increase in the number of client situations in which the estate tax is less of a threat, and the need for “real” estate planning becomes the focus of service. That is, the needs for practitioners to help clients address equitable and peaceable inheritance among family members and the succession of ownership and management for family businesses stand out when the estate tax isn’t center stage in estate planning. In the mid-range are those clients on the edge of serious estate taxability, who need to consider gifting and value freezing arrangements that require quantification of federal and state estate tax possibilities. These areas present different billing situations, with the former type of client facing quantifiable financial threats and the latter dealing with predominately interfamily relationships with less tangible financial effects of planning. This situation has led to a reduction of estate-planning personnel by large firms and an increase in small or boutique firms.1
As stated by Steven J. Harper in “The Lawyer Bubble:”2
We’re in the midst of a technological revolution leveling the playing field and making it easier than ever for small firm lawyers to compete with larger firms … reasonably priced technology that makes it easier than ever for them to manage their practices and deliver legal services in ways not possible prior to the large scale proliferation of cloud and mobile computing … nimble solos and small firms now have access to affordable technology that gives them a competitive edge in the legal marketplace.
Harper suggests that there’s a relative stasis in trust and estate legal software, with little change to be expected in those products that react to the estate tax environment.
Various articles address how to deal with the new federal estate tax paradigm in your practice.3
As Deborah Jacobs states in “Morphing into the New Age of Estate Planning:”4
One potential growth area is the field of elder law, which deals not just with the subject of asset transfer, but also with the quality of life as people age over a period that, given improved medical care and increasing life expectancies, may extend for 20 to 30 years.
ElderDocx, at www.eldercounsel.com, is designed to automate assembly of documents needed in an elder law practice. It addresses Medicaid, Veterans Administration documents, special needs matters and estate-planning documents. After the client’s information, document selection and planning choices are entered through a series of interviews, it assembles the document being prepared and displays it in Microsoft Word.
Wealth Transfer Planning (WTP) publishes the Elder Law Planning automated drafting system, at https://www.ilsdocs.com/products/elder-law-planning-overview.
Elder Counsel also offers EC TransferCalc, at http://www.eldercounsel.com/store/ec_transfercalc%2%84%a2/, which does calculations for promissory notes, gifts and annuities. It includes a promissory note calculator, transfer penalty calculator, summary report, client report and amortization schedule.
Down on the Farm
Contrary to the flat economic situation generally, the agricultural sector, particularly in the Midwest, has experienced such dramatic growth that the increased federal applicable exclusion may have little effect on the number of clients exposed to federal estate tax.5 The estate tax calculation programs that have been available for many years continue to be useful in this practice.
The eLegacyConnect web-based service provides succession solutions for farm families at http://elegacyconnect.com. This website offers farm and ranch owner/operators with a step-by-step analysis of succession planning, including a primer on the succession process, suggestions for intra-family communication, action plans and how to review and refine the succession plan. The site includes a Community Forum discussing various estate planning and succession topics. A Resource Center provides a variety of articles. The steps suggested may provide a useful framework for professional planners, as well as for educating the family. While this site specifically offers itself to farm and ranch operators, the techniques it employs in analyzing the succession process would be useful to any family business operation.6
Research on the Internet
Explosive growth of tax and trusts and estates materials online continues as to both primary and secondary resources. Your ability to engage in immediately useful research through Internet search engines has become limited only by your imagination and (yes) courage in conceiving searches. You need to be able to streamline and organize your searches for efficient results and have some preliminary idea of what areas and categories of materials are available.
Primary tax documents are available free on the Internet in broader scope than ever—for example, tables, codes, regulations and rulings at both the state and federal levels. The Internal Revenue Service has done a massive revision of their website, but help in navigating it is available.7
Here’s a sampling of some of those websites.
• The Ultimate Estate Planner website, at http://ultimateestateplanner.com/, previously discussed in my “Tech Review,”8 furnishes legal document forms, books, DVDs, various articles, publications, decision-making charts and podcasts from nationally known authors, as well as information on publications and marketers of products for the estate-planning practice.9
• Mystatewill.com, at www.mystatewill.com, is a remarkable website that provides information relating to the intestate distribution of a decedent’s estate according to the decedent’s personal and financial circumstances. It presents free intestacy calculators for all states and the District of Columbia and links to selected portions of state intestacy laws, an interactive summary of state intestacy laws, a degree of kinship chart and other resources. It features per stirpes and per capita calculators that compute the amount of the net estate passing to each heir based on such estate divisions. It also has facts and charts on degrees of kinship, intestacy law, family member shares and blended family shares.
• MedLawPlus.com, at www.medlawplus.com/library/legal/intestatesuccessionlawsUS.htm, provides intestate succession information for all states, and Child Welfare Information Gateway, at www.childwelfare.gov/systemwide/laws_policies/statutes/inheritance.cfm, offers information on the effect of adoption on inheritance and access to state statutes on intestacy.
Services for T&E Practitioners
Services to assist practitioners in the implementation of client plans are increasingly available on the Internet.10
Solomon Share, at http://solomonshare.com, is a service for assisting in working out equitable shares among estate heirs. Developed as a system to divide up property not readily divisible among heirs, it involves appraisal of estate items and a conference of persons involved in the estate, followed by a bid process.
Insurance Trust Monitor, at www.youritm.com, is a web-based service that allows irrevocable life insurance trust (ILIT) trustees to outsource the review, analysis, management and administration of ILITs and policies held in such trusts.
CrummeyService, at www.crummeyservice.com, is a web-based solution to the administrative problems of Crummey trusts. It automatically sends gift and premium payment reminders and creates Crummey notices informing beneficiaries of their withdrawal rights. It sends the notices to beneficiaries, records acknowledgement of the notices, sends copies to trustees, grantors, fiduciaries and advisors to the trust and provides other ILIT administration services.
Comprehensive estate-planning programs are presently available that calculate federal and state estate taxes integrated with common estate-planning devices, such as grantor-retained annuity trusts (GRATs), grantor-retained unit trusts, planned sales and charitable trusts into the inheritance and tax computations. These programs have been typically enhanced to address the deceased spousal unused exclusion amount (portability of the unified credit). Such programs include:
BNA Estate Planner, Intuitive Estate Planner and WealthTec Suite, which are extensively reviewed in my The Electronic Practice ebook (http://wealthmanagement.com/electronicpractice).
Programs providing standalone calculations of various components of estate plans include:
zCalc—now ONE SOURCE Estate Planner, at http://onesourcetrust.thomson.com/trusttax/estate/estate-planner.asp.
NumberCruncher, V. 2013 for Windows, at www.leimberg.com/products/software/numberCruncher.html.
Tiger Tables V. 2013, at www.tigertables.com/.
Estate Tax Return Preparation
Estate and gift tax return software will continue to be necessary in all offices. Such software is economically justified by an occasional estate requiring federal or state estate tax filing.
Examples that offer gift tax preparation and estate accounting software are Mark Gillett’s GEMS, at www.gillettpublishing.com, and the Lackner Groups’ 6-in-1 Estate Administration System, at http://www.lacknergroup.com.
Securities valuation services include EstateVal, at www.evpsys.com and Appraise Windows, at www.appraisenj.com/ESI/appraisewindows.html. Appraise is now available as a web-based application.11
Personal and Family Data
CBData (Personal), at www.cbdatasystems.com/Home.aspx, provides a software solution to gathering, storing and organizing your clients’ personal, medical and financial information all in one place, where it can be tracked, updated and used in preparing status reports. The program can store and track medical information, including claims, such as those with Medicare. You can track collections, manage family data, list and track assets and store documents. The publisher also offers CBData Pro (Business), a small business product for similar information handling.
Collectify, at www.collectify.com/new/collectify.php, is software dedicated to organizing and valuing collectibles. It’s a database program that facilitates the cataloging and creation of reports regarding art and other collectibles
iPad and Other Tablets
Basic resources are available for trusts and estates professionals new to the iPad.12
A major development in estate-planning resource apps is the Trusts & Estates Plus app ($149) that allows the user to search, sort, browse and share expertly curated content from over 70 industry news and opinion sources, features robust search capabilities, up-to-the-minute news and information, daily updates on estate planning and unfettered access to premium estate-planning content on WealthManagement.com. It may be purchased independently or together with a Trusts & Estates subscription.13
The ACTEC Wealth Advisor app for the iPad (free) includes relevant tax rates and calculators, convenient access to frequently cited estate-planning statutes presented in state-by-state summaries, a directory of ACTEC Fellows and insightful articles that examine developing trust and estate issues.14
IRS Rate Tables
Applicable federal rate (AFR) history (short-term, mid-term and long-term):
Raymond James, at www.raymondjames.com/taxcreditfunds/hist_app_fed.htm and the IRS Index, at http://apps.irs.gov/app/picklist/list/federalRates.html.
AFR Internal Revenue Code Section 7520 history: Leimberg.com, at www.leimberg.com/software/7520rate.html.
Charitable gift annuity rates: Tiger Tables website, at www.tigertables.com/CgaRates.htm, and American Council on Gift Annuities, at www.acga-web.org/gift-annuity-rates.
Quarterly tax interest rates: Intuitive Estate Planner: Tax Underpayments Rate Table, “Federal Interest Rates on Tax Underpayments” page, at http://static.legalsolutions.thomsonreuters.com/static/pdf/iep/CPItable.pdf, and Dan Evans’ “Interest on Underpayments and Overpayments of Federal Taxes,” at http://evans-legal.com/dan/underpay.html.
Consumer price index (CPI) table for adjustments required under IRC Section 1(f)(3): Intuitive Estate Planner, CPI Table, at http://static.legalsolutions.thomsonreuters.com/static/pdf/iep/CPItable.pdf.
Selected Online Computations
The following computational and presentation programs are available online (free, unless otherwise stated):
• Treasury Direct Savings Bond Calculator computes what U.S. Savings bonds are worth and helps maintain an inventory, at www.treasurydirect.gov/indiv/tools/tools_savingsbondcalc.htm.
• Bureau of Public Debt—Treasury Direct offers the Savings Bond Calculator for computing the value of EE bonds, I bonds and Savings Notes, at www.treasurydirect.gov/indiv/tools/tools_savingsbondcalc.htm. Its Savings Bond Wizard software helps you to inventory and value U.S. Savings Bonds, at http://www.treasurydirect.gov/indiv/tools/tools_savingsbondwizard.htm.
• The Savings Bond Advisor Savings Bond Calculator values I, E, EE, H, HH bonds and Savings Notes, at www.savings-bond-advisor.com/savings-bond-calculator#calc.
• The Michigan State University Guide to Giving offers a variety of online charitable bargain sale, annuity and trust illustrations and explanations, with diagrams at www.givingyourway.org/msu/current-gifts-pledges.html.
• Calculations are available on the McGeorge Law School site for gift annuities and charitable trusts, including charitable remainder unitrusts, charitable remainder annuity trusts (CRATs) and charitable lead trusts (CLTs), at http://mcgeorgelaw.giftlegacy.com/?pageID=43.
• The Assetstream website includes the Sample Charity Stock Gift Calculator, which computes the tax advantages of donating appreciated stock to charity, at https://sample.giftprocessingcenter.org/calculator/calculator.
• The BYU Marriott School provides outstanding client explanations of gifting techniques and excellent diagrams of CLTs, CRATs and charitable lead annuity trusts, at http://marriottschool.byu.edu/giving/waystogive. This site includes discussions of gifts of cash and other assets, gifts at death and planning gifts from larger estates.
• The Social Security Administration Retirement Estimator site, at www.ssa.gov/planners/calculators.htm, does both basic online calculations of social security benefits available to an individual and offers other calculators to download.
Online Materials and Presentations
Here’s a sampling:
• Bourland, Wall & Wentzel, at www.bwwlaw.com/resources-seminars/resources-seminars-archives, has materials on charitable tax planning and business succession planning, including the use of family limited partnerships (FLPs) and charitable trusts.
• The InKnowVision, Periodic Table of Estate Planning Elements, at http://inknowvision.com/Per_table.html, is a matrix displaying the various estate-planning tools as an aid to client communication and decisionmaking.
• Dwight Drake provides a slide show with diagrams (University of Washington School of Law), at http://faculty.washington.edu/djdrake/EstateGiftLastDay.ppt, addressing IRC Section 2701 issues, preferred stock freezes, GRATs, intentionally defective
irrevocable grantor trusts and FLPs.
• Keebler & Associates provides charts, IRS materials and articles and limited liability partnership charts that include illustrations and information on planning techniques and issues, such as understanding the 3.8 percent health care surtax, Roth individual retirement account conversion decisions, required minimum distribution breakdown, Roth quadrants, and the generation-skipping transfer tax, at www.keeblerandassociates.com/education.
• For client education, the excellent ACTEC Foundation Inside the Law video series, at www.actecfoundation.org/PubsIndex.asp, includes death and taxes, disability strikes, life and death decisions and tax implications of estate planning.
1. Megan Leonhardt, “Taking the Reins from ‘Big Law,’” (Feb. 28, 2013), Wealthmanagement.com. This article looks at the effect on law firms of the continuing need for estate planning and the resistance of clients to the large hourly rates generated by other fields of practice, especially when there’s no imminent estate tax impact. The author suggests that smaller firms and boutique shops will have an advantage in the future.
2. Steven J. Harper, “The Lawyer Bubble,” Law Technology News (Nov. 15, 2013).
3. See, e.g., Jason Havens, “What Now? Using Technology to Survive the Transfer Tax ‘Repeal’” (Part 1 of 2), 27 Probate and Property 46 (July/August 2013), discussing techniques to sustain and build your practice; Jason Havens, “What Now? Using Technology to Survive the Transfer Tax ‘Repeal’” (Part 2 of 2), 27 Probate and Property 52 (November/December 2013), discussing practice management technology, mobile practice enhancement applications and specific trust and estate legal software. See also Donald H. Kelley, “Estate-Planning Strategies after ATRA 2012” (May 14, 2013), http://wealthmanagement.com/technology/estate-planning-strategies-after-atra-2012, referring to online articles discussing planning strategies and client services after the American Taxpayer Relief Act of 2012 and non-tax planning.
4. Deborah Jacobs, “Morphing into the New Age of Estate Planning,” Forbes (Jan. 15, 2013).
5. See Donald H. Kelley, “Planning for Farm Operators and Investors in 2013” (Oct. 15, 2013), http://wealthmanagement.com/technology/planning-farm-operators-and-investors-2013.
6. See Donald H. Kelley, “eLegacyConnect” (July 17 2013), http://wealthmanagement.com/technology/elegacyconnect.
7. See Donald H. Kelley, The Electronic Practice (2013), http://wealthmanagement.com/electronicpractice, which is designed to (among other things) provide a front end, or Table of Contents, for the Internet as to trusts and estates resources, including the revised Internal Revenue Service website. It compiles resources in specific areas of the practice.
8. See Donald H. Kelley, “The Ultimate Estate Planner” (Oct. 16, 2012), http://wealthmanagement.com/technology/ultimate-estate-planner.
10. The Electronic Practice, supra note 7 and Donald H. Kelley, “Internet Services for T&E Practitioners,” http://wealthmanagement.com/technology/internet-services-te-practitioners, discuss deed preparation and filing and court filing services.
11. See Donald H. Kelley, “Appraise-Web,” http://wealthmanagement.com/technology/appraise-web.
12. See “Basics of the Lawyer’s iPad” on Jim Calloway’s Law Practice Tips blog, http://jimcalloway.typepad.com/lawpracticetips/ipads/.
13. See https://itunes.apple.com/us/app/trusts-estates-plus/id551217071?mt=8.
14. See www.actec.org/public/wealthadvisorapp.asp.