In a recent interview, attorney Steven J. Oshins and CPA Bob Keebler described the current estate planning environment as a “perfect storm”. The unified credit amount is $11.4 Million per person; the interest rates are at an unprecedented low of 0.6% (June 2020); the CARES Act waives the Required Minimum Distributions from Retirement Plans; market volatility and the lack of capital is discounting private businesses and publicly traded stock and bonds. There is a limited window of time to leverage tax savings on transfer of wealth using tactics like GRATs, CRT’s, CLT’s, IDGT’s, SLATs, DAPTs and so on. The endless webinars by every estate planning commentator goes on; until, you can practically hear them thinking, “Isn’t this neat! Isn’t this neat!” For some clients, this is enough to get them to dive into this alphabet soup of planning, but for most “Isn’t this neat!” tax techniques is not enough to take the plunge. Here is why and what to do about it.
It’s all about being human. The short term turmoil and the long term decline in the market and the economy has forced clients to face the fact that what was certain six months ago in their financial, social and personal life is no longer. They are, at a minimum, uncomfortable and uncertain and at worst they are panicked. Clients have been forced to face these changes without the familiar face-to-face social contact they need for reassurance. The immediate loss in value of what they own, and the need to reconsider the way they have always done things, means clients need reassurance that there is a solution to their immediate and long term problems, not just their long term tax bill.
Estate planners and other advisers are going to need to change. We need to have plans that are clear on the current conditions and help clients react quickly and adapt to unforeseeable events. Rather than rely on the person-to-person charm, we will need to have clients who are well informed with relevant information, not just flooding them with webinars and newsletters. First and foremost, the plans must address the client’s security: the level of satisfaction with both you and their lives, and reassure them that, despite everything, there is room to grow, personally as well as financially. Plans will be less about the technical expertise needed to draft and execute one of the number of “neat” tactics, but, rather, on having a plan that is customized, holistic and effective for the client.
This is especially important in the current social and economic crisis: your clients need you to address their very human condition. Achieving your client’s goals for security, satisfaction and growth is and should be the highest priority, with tax savings as a critical tactic for achieving these goals.