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How do you build lasting relationships with your clients and make sure they don’t see you as just the provider of an ink-on-paper commodity?
One way to do this is to keep in regular communication, with routine “touches” throughout the year. At the Academy, we find that it’s ideal to make contact with clients twelve times per year. It would be a little odd for your estate planning attorney to call you every month or to send you an email, like clockwork, every few weeks. However, there are a variety of ways to provide value to your clients and remain in regular contact with them. Things like:
- Newsletters, both paper and electronic
- Estate Plan Review Invitations
- Client Appreciation Events
A number of our Member firms also have a Client Advisory Board. They invite 6 to 10 loyal clients into the office every quarter to get feedback and to find out what additional services those clients would like the firm to provide.
Using strategies like these to stay in touch with your clients sets the stage for you to have lifetime and even multigenerational clients. Eventually, you’ll meet the children of your existing clients and have the opportunity to win their trust and loyalty. Before long, they will be clients as well.
You want to be viewed as the trusted advisor for the entire family. By remaining in contact through valuable information that is of interest to them, you continue to nurture the relationship as well as be visible and relevant. Make sure you do everything possible to be the sounding board and problem solver most are looking to rely upon.
In your experience, what are the most effective ways to keep in touch with your clients?
Sanford M. Fisch
CEO & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com
There has been considerable back and forth over the release of 2012 Republican Presidential candidate Mitt Romney’s income tax return. He released his 2010 federal income tax return recently. It’s been widely publicized that the return reports over $21 million of income and that he paid tax at an effective rate of less than 14%.
You can view Romney’s 2010 federal income tax return by clicking here.
The return reveals the use of trusts. The return references a “blind trust.” A blind trust is used to avoid the appearance of an improper bias. Theoretically, the Romney’s would not have knowledge of the assets in the trust and, therefore, would have no reason to implement or advocate political policies to favor those investments. With a blind trust, the trustee does not divulge the nature of the investments to the grantor.
The tax return also hints at the implementation of estate planning strategies. In particular, the return shows over $1.5 million of dividends from the Ann & Mitt Romney 1995 Family Trust. Of course, due to the nature of trusts, we do not know the terms of that trust. But, we could speculate that this was an irrevocable trust set up as a grantor trust. With a grantor trust, the income is taxable to the grantor even though the income may remain in the trust or gets distributed to others. This is a common way to reduce transfer taxation because the income tax paid on the trust’s income is not deemed to be an additional gift by the grantor.
The tax return also shows the existence of the W. Mitt Romney 1996 CRUT. A “CRUT” is a Charitable Remainder UniTrust. With a CRUT, the trust pays a fixed percentage of its assets to the non-charitable beneficiary each year during the term of the trust. At the end of the trust term, the remainder of the trust goes to the charity. The CRUT itself is a tax exempt entity. However, distributions from the CRUT to the non-charitable beneficiary carry out the income tax characteristics those dollars would have had.
Let’s look at a simple hypothetical. Mitt owns $1 million of XYZ Corporation, which he acquired for $100,000. If he sold the stock, he would recognize a gain of $900,000 and pay tax at 15% ($135,000) on that gain. If he contributes the stock to the CRUT, he will get a charitable income tax deduction based on the full fair market value of the stock (including the $135,000), less the value of the income interest he has retained. When he receives distributions from the trust, they will be “flavored” by any income the CRUT has received, first ordinary income, then capital gain, etc. Thus, the CRUT can be a great way to defer the income tax consequences of a sale of an asset that has gain.
While we cannot know Mitt Romney’s exact estate plan from this income tax return, the peek reveals the likelihood of some reliable estate planning tax strategies.
Stephen C. Hartnett J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com
Estate planning, as well as funeral planning, is generally a hard conversation to start. People are reluctant to talk about their mortality.
There’s actually a psychological term for this reluctance: the Terror Management Theory. It’s based on the work of Dr. Ernest Becker and his 1973 Pulitzer Prize-winning work, The Denial of Death.
The Terror Management Theory posits that all human behavior is ultimately motivated by the fear of death. Death creates anxiety: it can strike at unexpected and random moments, and its nature is essentially unknowable.
This awareness of our own eventual death, called “mortality salience,” affects our decision-making in the face of this terror. Many people deal with it by deciding to avoid the topic altogether.
It takes personal value and a healthy self-esteem to even consider talking about estate and funeral planning. And it’s estimated that two-thirds of the general population has low self-esteem.
So perhaps one-third of your potential clients have the positive self-esteem to even show up at your office to plan their estates. Playing a little game can help start the reluctant conversation.
Remember the TV show, “The Newlywed Game,” which quizzed newly-married couples on how well they knew each other? The Newly-Dead Gameä– based on elements of “The Newlywed Game” — tests how well couples know their partner’s last wishes in a fun, upbeat way.
The game debuted at the 2011 Frozen Dead Guy Days festival in Nederland, Colorado, and will be returning for this year’s festival March 2-4, 2012. (See the September 19, 2011 post on Cryonics and Estate Planning.)
Couples who have played this game come away with a fresh appreciation of how much they still need to know about each other when it comes to funeral planning. The Newly-Dead Game can also help adult children obtain information about their parents’ last wishes.
For those Academy Members who would like to consider The Newly-Dead Game for client or community outreach events, contact me and I’ll send you a complimentary .PDF file of the question cards and game rules. Just as talking about sex won’t make you pregnant, talking about funerals won’t make you dead – and your clients will benefit from the conversation.
Gail Rubin is a Certified Celebrant who brings light to a dark subject and helps get funeral planning conversations started. Her award-winning book, A Good Goodbye: Funeral Planning for Those Who Don’t Plan to Die, won Best of Show in the 2011 New Mexico Book Awards. The book is available in print and e-book formats at Amazon.com, Barnes&Noble.com, and at AGoodGoodbye.com. Contact her at 505-265-7215 or email Gail@AGoodGoodbye.com.
Academy Guest Blogger
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com
A funny thing happens when you really start marketing your law firm. Suddenly, there are a lot more people coming in for initial consultations, and they don’t automatically hire you. They’re sizing you up and interviewing you.
Two Ears, One Mouth
It’s at this point that we as estate planning attorneys might want to heed the words of Greek philosopher Epictetus, who said, “We have two ears and one mouth so that we can listen twice as much as we speak.”
Perhaps more than other people, lawyers like to hear themselves talk and it’s a problem when the lawyer talks more than the client in an initial consult. Yet that’s what usually happens. We’re so used to being the “answer man or woman” that it requires a whole new skill to stifle ourselves long enough to really hear about the client’s needs.
The Secret
The secret to converting a prospect into a client is to use the initial consult to show off your skills as a great counselor. You cannot – I repeat cannot– effectively counsel someone until you understand what their problems, concerns, and issues are.
We’ve found that attorneys tend to have trouble converting prospects to clients because of how they handle client meetings. Doing things like talking too much, talking about things that are really of no interest to the clients, and not asking great questions are ways to guarantee your first meeting will also be your last.
Know What to Listen For
Just as important as asking great questions is listening carefully to the answers. That’s how you find out where the problems and issues are and delve into them. Learn what the impact is if those issues aren’t handled in a timely manner. What are your clients’ fears and concerns? How important is it for them to handle their issues right now? Where do these issues rank on their priority list?
Your job is to help families make decisions that are in their best interests. Discussing things in this manner gets results because it leaves clients feeling like you really heard them and like you really understand what matters to them.
Try this approach and you’ll become a trusted advisor, and you’ll have a client for life.
Robert Armstrong
President & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com
This week I’m at the Heckerling Institute on Estate Planning. In the Recent Developments session during the opening day of the Institute, we looked at a Tax Court case involving a taxpayer with dozens of cats. Van Dusen v. Commissioner, 136 T.C. No. 25 (2011). In fact, she had so many cats that she could not invite guests over. The number of cats in her home varied between 70 and 80 over the course of the year. In addition, the taxpayer had 7 cats who were her pets and who had names.
The taxpayer claimed an income tax deduction for various cat-related expenses including: pet food, medical expenses, increased utilities for laundering of feline linens, etc. The taxpayer worked closely with “Fix Our Ferals,” a cat rescue operation, and other charities. The IRS denied her a charitable deduction. However, the Tax Court found for the taxpayer because of the close connection between the charity and the taxpayer. However, they limited the deduction to $250 because there was no contemporaneous acknowledgement of the gift/expenses by the charity, as required by regulation for a larger deduction.
This shows the importance of planning. If she had planned and obtained contemporaneous acknowledgment from the charity, all of those expenses would have been deductible. While she did not plan well for her income tax deduction, we can hope that she has planned for someone to care for her 7 pet cats and the dozens of other cats in the event of her death or incapacity.
Estate Planning attorneys plan for our clients and their human families. However, often, the non-human members of the family are overlooked in the planning process. As Van Dusen shows, pets may be a very important part of a client’s life. It is important to do Pet Planning so that a willing and able caretaker is designated to carry on with pet care. (Can you imagine how quickly a home with 80 cats would deteriorate without someone to take care of them?) Also, Pet Planning provides the financial support necessary to care for the pets. It’s easy to underestimate the financial obligation pets require. Ms. Van Dusen spent over $12,000 a year in caring for cats.
“Pet Planning” is planning for the often-overlooked, non-human members of a client’s family. Do you provide Pet Planning as part of the estate planning services you provide?
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com
Have you helped a client become eligible for VA Pension benefits? If so, did you advise them that each year an annual review, EVR, is due on March 1st? So many veterans lose their benefits each year because they did not return the EVR or did not complete it correctly. In addition to losing benefits, they also have to pay back everything paid to them by the VA for the previous 12 months. Don’t let this happen to your clients!
What is an EVR? The Eligibility Verification Report is an annual report due no later than March 1st of each year for beneficiaries who are receiving the Improved Pension. Because eligibility for this program is based on disability status and financial criteria, the VA must ensure that the beneficiary remains eligible from year to year. The EVR provides a report of actual income and dependency status in order to verify that the payment the beneficiary is receiving is correct.
What are the required forms to complete and return to the VA? The VA will send the required forms to the beneficiary in late December or early January. One of the following forms should be completed, based on the type of beneficiary:
- 21-0516-1 Improved Pension EVR (veteran without children)
- 21-0517-1 Improved Pension EVR (veteran with children)
- 21-0518-1 Improved Pension EVR (surviving spouse without children)
- 21-0519s-1 Improved Pension EVR (surviving spouse with children)
In addition to the aforementioned forms, the beneficiary must also complete a Medical Expense Report on VA Form 21P-8416 (NOTE: THIS FORM WAS UPDATED DECEMBER 2011). This form must be completed twice. The first one is to report actual medical expenses paid out of pocket by the beneficiary during the EVR reporting period. The second one is for the beneficiary to report the next 12 month’s projected medical expenses. This form must also be signed by the beneficiary or the fiduciary if one has been appointed.
Where are EVRs Processed? There are three Pension Management Centers (PMC), Philadelphia, Milwaukee, and St. Paul. Whichever PMC adjudicated the initial application for pension benefits will be the same PMC to process the EVR.
Is Anyone Exempt from Filing an EVR? Annual EVRs are not required for Improved Pension recipients who have no countable income, or whose only countable income is from VA or Social Security. However, filing an EVR may be helpful even in this situation if the beneficiary is not receiving the maximum VA pension due to the amount of medical expenses projected at the beginning of the year. If the medical expenses increased throughout the year, or if the beneficiary paid out of pocket for medical expenses that are not considered “recurring” (i.e. doctor co-pays, prescriptions, travel expenses, hearing aids, etc.), then these expenses can be reported on the EVR and the VA will recalculate what the monthly pension should have been. If the pension amount for prior months should have been higher based on the medical expenses reported in the EVR, the VA will pay a lump sum payment to the beneficiary for the appropriate amount.
Termination of Benefits. If a person does not return the EVR, benefits will be terminated as of the beginning of the EVR reporting period. Because of that, the beneficiary will receive notice that the VA overpaid them and, thus, they will owe the money they received back to the VA. Clients are usually not able to return the money because it has been spent on their high cost of medical care. It is essential that the EVR is returned by March 1st, that it is completed accurately, and that it is signed by either the beneficiary of the benefits or by the fiduciary if one has been appointed (neither a 21-22a representative, a power of attorney agent, nor a guardian can sign the EVR).
For more information, refer to M21-1MR, Part V, Subpart iii, Chapter 7 and 38 CFR 3.277.
Victoria Collier is a nationally recognized expert in VA Benefits Planning and author of 47 Secret Veterans’ Benefits for Seniors…Benefits You Have Earned but Don’t Know About, available on Amazon.com. Victoria established The Elder & Disability Law Firm of Victoria L. Collier, PC in 2002 and has been appointed by Georgia Governor Sonny Perdue to the Georgia Council on Aging Advisory Board. Victoria is a member of the National Academy of Elder Law Attorneys, National Organization of Veteran Advocates, Co-Founder of Veteran Advocates Group of America, Co-Founder of Trust Associates Inc (a non-profit), and creator of “In the Trenches” veterans benefits conference. Victoria frequently speaks at national estate planning and elder care planning conferences and has appeared on radio and television as an authority on veterans benefits. Victoria is an ongoing contributor to the Academy blog. More information on her materials, books and training schedule can be found on her website www.elderlawgeorgia.com.
Academy Guest Blogger
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com
Did you know that there are only three ways to expand your business? Here they are, in a nutshell:
- Have your existing clients buy new services
- Increase the fees your clients pay
If you want your firm to grow, you need to be doing all three. And you should have a system in place for each of them, rather than engaging in a few random marketing activities here and there.
What kinds of systems am I talking about? Systems for:
- Acquiring referrals from centers of influence
- Acquiring referrals from existing clients
- Going directly to the marketplace to seek new clients
- Making efficient, intelligent use of the internet to find new clients
- Attracting new clients through image building public awareness and PR efforts
- Positioning clients for additional services they may need
- Positioning the value of your services for increased fees
The tool that will enable you to organize and implement these systems is what we call a Marketing Calendar. This is your law firm marketing blueprint for the year.
Consistent growth is not automatic, and marketing is not an innate skill for most attorneys. It’s something we need to learn about and keep learning about. As the heads of our firms, we need to be the ones leading the charge when it comes to marketing. A good place to start is by deciding which of the three areas you want to focus on, which systems you want to use, and getting started on that detailed Marketing Calendar.
Sanford M. Fisch
CEO & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com
Each New Year, we talk about how to better ourselves ― eat well and exercise, watch less television, spend more time with family, etc. And while determining how to live a healthier and more personally fulfilling life is an admirable goal, there’s another question, I think, to ask ourselves at the New Year: what can we do to effect positive change not just in ourselves, but in others? How can we, individually, make the world a better place?
One of my friend’s family members was recently diagnosed with terminal cancer. She did not expect this, and she is not prepared. Her wishes have not been recorded. And it’s hard for her to even think, let alone plan, when she feels so sick from the chemotherapy. Her family is arguing about what is best for her, and how to make it happen. This has already led to serious clashes that may take years to fully heal, and this process is just beginning. And the fact that my friend is in a family business just makes the dynamics all the more charged.
I’d like to say my friend is alone in this challenging circumstance, but as we all know, she’s not. When someone passes away, or is diagnosed with a terminal illness, families may argue. And if that person hasn’t planned in advance, the process can become even more difficult, sometimes tearing families apart entirely.
Unlike many people, we have been granted the opportunity to help others, to improve the world through our work. As attorneys, you help create and execute people’s wishes for the ends of their lives and after their deaths, through their healthcare and estate planning documents. As a healthcare directives registry and electronic document repository, we help ensure that these wishes can be known, available, and followed when it counts. It can be easy to forget amidst the day to day, but with these acts, our efforts can help simplify the complications that arise toward the end of life and after. These actions can help hold families together at the most critical of moments, when they might otherwise split at the seams. What a blessing it is that we have the opportunity to help others, just by doing our jobs.
Self-betterment is a great goal for the New Year, but helping others is at least as important. Clearly, the volunteer activities that we engage in throughout the year are an obvious way to give back. But at this time of year, I think it’s also useful to take a moment to reflect on the fact that this work is not just a source of income; it’s also a service, a means of helping others. As we go forward into this New Year, let’s pledge to renew our efforts to offer good counsel in helping people make the difficult decisions, to support them with these documents when they are needed, and to prevent unnecessary pain for family members when the time comes.
Wishing you a Happy New Year and good works in 2012.
Randi J. Siegel, MBA, is the President of DocuBank, the largest advance directives registry in the U.S., which ensures that the healthcare directives of its 190,000 enrollees are immediately available 24/7/365. Working with estate planning professionals since 1997, Randi frequently speaks at national estate planning conferences and has appeared on radio and television as an authority on registries. She is active in health policy pertaining to advance directives and serves as a Senior Fellow at the Jefferson School of Population Health in Philadelphia. Randi is an ongoing contributor to the Academy blog.
Academy Guest Blogger
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com
What usually happens when an employee gives you their two weeks’ notice? If your firm is like a lot of others, by the time you find someone to replace your departing employee, there are only a few days left. The rush is on for the departing employee to impart years of information to the new hire, and the results usually aren’t very good. There’s no real consistency. You suffer, your employees suffer, and, worst of all, your clients suffer.
If your firm is to be your unique creation, it has to have a unique way of doing things – one that sets it apart from all the other estate planning law firms in town. This is one area where so many law firms are lacking, and systems are the key to fixing the problem.
Having systems in every area of your practice is central to your success. A system is really a roadmap that lets your employees know how your firm does things. So, what kinds of systems do you need, and what do you use them for?
Simply put, if you do something more than once, you should have a written system in place for it. You take every single area of your practice, break it down into its component tasks, and spell out the specific way it is done in your firm. Not only does this ensure that your clients are served consistently and effectively, it also ensures that your firm’s unique personality is injected into every client interaction.
Putting systems in place – and using them effectively – benefits you, your employees, and your clients. It ensures that your employees are clear on your expectations, and it gives them the chance to meet and exceed those expectations. It allows your clients to get to know the stellar experience they can expect every time they interact with someone from your firm. And it allows you to be confident in the work your firm produces, the office environment you’re cultivating, and the reputation you’re creating in your community.
Robert Armstrong
President & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com
Here’s a practical and powerful exercise you can do that will help you accomplish your goals for your law firm and know exactly who is responsible for every task! It involves making a unique organizational chart that is created by looking at what needs to get done before you determine who in your law firm will do it. Function takes precedence over personalities.
This is how to do it:
You’re the leader of your organization, so your name goes on top. Underneath that, you list each broad category of functions that needs to be handled within your law firm – much like a large business is divided into departments. Each category is further divided into smaller programs, with a box under that for each distinct task involved in running every program.
For instance, you might have categories for Lead Generation, Lead Conversion, Fulfillment (doing the actual work), Finance, and Management. Under each category, you’ll list the programs needed to implement that category, with each program further subdivided into distinct tasks. There will be a box for each category and for each program and for each task. Everything that needs to get accomplished has a box.
As you go through this process, you’ll add a name to each box, giving someone in your organization responsibility for that category, program, or task. At first, you’ll notice that your name will be plugged into a lot of boxes. As your firm grows and expands, and as you train more employees, their names will fill in the boxes and replace yours.
There’s a certain magic that happens when you go through this process and actually put the organizational chart on paper. Doing this allows you to see the pieces of your firm almost like they’re on a chess board – you can literally move the pieces around strategically to figure out how to best implement each idea and task within your firm.
This exercise will give you a feeling of control you may never have experienced before. Try it – you’ll see what I mean.
For those of you who have already done this for your own firms, how has it helped you achieve your initial vision for your practice?
Sanford M. Fisch
CEO & Co-Founder
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com
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