A Member posted a great question recently… he has two offices and is brainstorming how to use Skype for initial consultations with clients.

I, for one, am a huge fan of Skype. I use it to talk to my son in Iraq and to communicate with several of our offsite Academy employees. However, Skype tends to be easiest to use – and therefore most effective – when you have a pre-existing relationship with the person you’re talking to. It’s not the same as a face-to-face conversation, so it might take some effort to learn how to use Skype to conduct a business meeting or an initial consultation that works. In short, I wouldn’t recommend substituting a face-to-face meeting with an online connection unless you don’t have a choice.

That being said, I think it’s possible to learn the skills you need in order to work with prospects or centers of influence and close them via Skype (or by phone, for that matter). The key is to understand that you’re learning a new skill set, and to be prepared for the learning curve that comes along with any new endeavor.

Here are a few lessons I’ve learned that might help you take the awkwardness out of the situation, and help make an initial consult by Skype successful:

• The main objective in this type of meeting or in a face-to-face meeting is to help the other person feel comfortable enough to open up and share the concerns they have with you. You have to be masterful when it comes to helping them put their finger on some of that pain… and doing that over the internet is a little tricky.

• Eye contact is key in any meaningful conversation… and generally, it’s not natural to keep and maintain eye contact when you’re using Skype. This is something you’ll need to practice so that you can put your prospect at ease like you would in a face-to-face consultation.

• Skype does not allow for multitasking. Whether you’re engaging with a client by Skype or by phone, 100% focus is essential. You might have to work to break the multitasking habit, but it’s necessary and worth it to gain the trust of your prospect.

• As a rule, active listening is a no-no when you’re using Skype for a meeting. Your goal should be to have no interruptions.

• You’ll need to consider how to create an effective client experience when you can’t shake hands, lean over to hand them a tissue, or pat their shoulder on their way out of the door. As useful as it is, there’s a certain lack of the human element when you’re using Skype, simply because you can’t reach out and touch the person you’re talking to. Liken it to doing a Living Trust Seminar on a conference call with all the participants muted. You have to create it all on your own with zero feedback, and they have to take a leap that you’re not untrustworthy without an up close and personal sniff test.

In my next post, I’ll talk a little about preparing a prospect for a Skype consultation, and why you might want to offer a choice between Skype and a face-to-face meeting.

Have you used Skype for client consults? What have you found that works for these conversations… and what have you found that doesn’t?

Jennifer Price
Director of Member Services
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd Ste 240
San Diego, CA 92124
858-453-2128
www.aaepa.com

In the past, wealthy donors have been hesitant to use a Charitable Lead Trust as a tax planning option. In the past, the lifetime gift tax exclusion has been low. With a low exclusion, a Lead Trust has to be structured with a relatively high payout rate to ensure that the ultimate gift to the trust’s remainder beneficiaries (usually the donor’s family) falls below the exclusion amount. While this might have been a good theoretical planning strategy, as a practical matter the high payout rate resulted in a high risk that nothing would be left for the remainder beneficiaries. In other words, the strategy that was good in theory ended up failing in practice.

However, with the advent of TRA 2010, things are different, at least until TRA 2010 sunsets on December 31, 2012. Now, the lifetime applicable exclusion is $5 million until the sunset. So, right now there’s a window of opportunity for making a more conservatively structured Lead Trust work.

To use an example cited by Jonathan Gudema in the On Philanthropy blog, a $5 million Lead Trust, paying 3% ($150,000 a year) for 20 years creates a reportable gift of approximately $2.8 million and a credit to the donor for a $3 million charitable donation. On paper, the low payout rate works because the predicted remainder falls below the $5 million lifetime gift tax exemption. In the real world, the low payout rate increases the odds that the donor’s family will actually see something left over at the expiration of the term, usually at the donor’s death.

Under this scenario, everyone wins.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd Ste 240
San Diego, CA 92124
858-453-2128
www.aaepa.com

Death and taxes are life’s two certainties. While they are both inevitable, Tax Day in April comes around every year. We get much more practice preparing our taxes than planning funerals or organizing memorial services.

Tax Day has once again come and gone, and we know it will be back. Yet death and funerals happen infrequently, and they always seem to be a surprise. I suggest utilizing these five tips to reduce the stress of addressing both death and taxes:

1. Deal with it: Neither the Tax Man nor the Grim Reaper will wait when the appointed time comes. Avoid procrastination! Just as talking about sex won’t make you pregnant, talking about funerals won’t make you dead.
2. Plan ahead to save money: Smart taxpayers look at all the angles for taking advantage of deductions before the end of the year. Smart consumers pre-plan their funerals so they know the substantial costs involved and can figure out how to afford a meaningful “good goodbye.”
3. Collect important information: Taxpayers who place all their W-2, 1098, 1099 and other tax forms in one place make it easier when it’s time to file. Similarly, have one place for the Will, advance directives, veteran discharge papers, personal information, and list of people to contact upon death. It makes it much easier having important information all in one place.
4. Keep good records: Knowing your income and expenses for the year simplifies accurate, complete tax preparation. Knowing a person’s birthplace, social security number, mother’s maiden name, family contacts, and other information can save family members much stress at a time of grief.
5. Make it meaningful: Charitable contributions made before the end of the year can help reduce taxes while helping the taxpayer’s favorite causes. Discussing preferences for an end-of-life celebration, before there’s any death or illness, gives family members helpful insights to create a meaningful ceremony when the time comes.

Take the sting out of death and taxes by taking these steps to organize your information and communicate your wishes.

Gail Rubin, “The Doyenne of Death,” speaks to groups about “Funeral Planning for Those Who Don’t Plan to Die” and gets the conversation going. A member of the Association for Death Education and Counseling, she’s the author of the new book, A Good Goodbye (www.AGoodGoodbye.com) and The Family Plot Blog (TheFamilyPlot.wordpress.com).

Academy Guest Blogger
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd., Ste. 240
San Diego, CA 92124
858-453-2128
www.aaepa.com

In my last post, I shared some of the strategies that have worked for me in choosing attorney subtenants, and in establishing my relationship with them. Today, I’ll give you a few suggestions for managing your relationship with your subtenants.

• It’s not a good idea to provide secretarial space or answer your subtenants’ phones, but if you do, make sure you charge for it. The same is true for office supplies. It’s smart to avoid providing office supplies for your subtenants, but if you do, you need to charge for the supplies they use.

• Another concern is allowing a subtenant to use your postage meter and reimburse you. I have found this to be a bad idea, because the arrangement forces you to keep track of what they use, and you end up: (a) being their banker; and (b) never getting reimbursed 100% of the postage that they use because people sometimes forget to mark down what they use. Instead, I have my subtenants use stamps.com.

• It’s smart to avoid providing staff support for your subtenants, but if you do, you’ll want to only do so sparingly to avoid it becoming a habit; and, of course, you’ll want to charge for the service. Depending on your firm’s salary and benefits structure, you will need to charge probably at least 20-33% above the staff member’s standard hourly rate to cover your true costs and put a little profit in your pocket. One important caveat:  if one of my subtenants ran into a serious problem, needed immediate support, and had no immediate ability to pay for it, I would provide the support and worry about getting paid later.

• Last, but not least, we treat our subtenants as though they were members of the firm, which means we celebrate their birthdays (with a big cookie) and we include them in our periodic firm-paid lunches. One subtenant does not want us to celebrate his birthday, so we order a cookie anyway and then I put a memo in everyone’s chair, including the subtenant’s, that says we are not celebrating his birthday… the cookie is for no good reason… and to not say “Happy Birthday” to the subtenant because we are honoring his desire not to celebrate his birthday. He takes in good spirits, because he knows we care about him.

What happens if you need to sever ties with a subtenant?

I have only asked two subtenants to leave for lack of payment, and those guys simply fell on hard times. We parted amicably. In one case, the attorney covered probate hearings as a way to repay us. We still use him for probate hearings, but we now pay him to cover the hearings. In the other case, we accepted his offer to keep his office furniture in satisfaction of his debt. We still occasionally permit both attorneys to use the office for the execution of a will for their clients, provided they bring us cookies as a fee for the conference room. The point is, be nice to the folks that fall on hard times and leave, because they are referral sources for you. For example, one of our former subtenants sent us a probate worth $5,000.

About the author: Stephen A. Mendel is a trial, real estate, business, and estate planning/probate attorney in the Houston, Texas area. Mr. Mendel has over thirty-four (34) years of business experience, over twenty-three (23) years of legal experience, and has maintained his own private law practice for the past sixteen (16) years. Mr. Mendel is a also a registered architect, licensed real estate broker, AV rated by Martindale Hubbell, was recognized in 2010 as one of Houston’s Top 100 Professionals, and was recognized as 2011 Boss of the Year by the Houston Association of Legal Professionals. Mr. Mendel was a fulltime faculty member for five (5) years with the University of Houston, Central Campus, where he taught construction related courses while he attended law school. Mr. Mendel is a contributing author of four books:  (1) Strictly Business; (2) Love, Money & Control; (3) Total Wealth Management; and (4) Guiding Those Left Behind in Texas (a book on probate). Mr. Mendel publishes his own blog for his estate planning clients. www.mendaellawfirm.com/blog. In his “spare” time, Mr. Mendel enjoys jogging with his wife, snow skiing and attending sporting events with his son, and cycling.

Academy Guest Blogger
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd Ste 240
San Diego, CA 92124
858-453-2128
www.aaepa.com

In America Builds an Aristocracy, an article published by the New York Times last summer, Professor Ray D. Madoff voices the opinion that “dynasty” trusts should be eliminated. These trusts, permitted under the laws of a number of states, are designed to keep wealth within a family for many generations, shielding trust assets from taxation and from creditors’ claims. In fact, these trusts have proliferated in recent years as more and more states have repealed or modified the traditional Rule Against Perpetuities.

The New York Times article points out a number of potential drawbacks that accompany allowing dynasty trusts, from a macro perspective. For example:

• Assets held in dynasty trusts have the potential to concentrate very large amounts of wealth – hundreds of millions of dollars – in the hands of a few families.

• The fact that dynasty trusts commonly include spendthrift clauses protecting trust assets from creditors means that beneficiaries can act recklessly with no real consequences.

• Assets in a dynasty trust can pass free of estate and GST taxes indefinitely.

President Obama agrees that the impact of dynasty trusts should be minimized. His proposed 2012 budget contains a provision that would limit the tax-sheltering of dynasty trusts to 90 years. Trusts which had already been established and funded would not be affected. The provision would apply to newly-formed trusts and to additional assets funded into existing trusts.

The provision is not likely to pass this year, but it might signal the eventual demise of one of the key benefits of the dynasty trust: estate and GST tax sheltering.

Now is the time to take advantage of the current law for your clients. Help your clients establish a dynasty trust to protect their descendants from estate taxation and creditors.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd Ste 240
San Diego, CA 92124
858-453-2128
www.aaepa.com

I shared in my last post that clients’ healthcare directives are useless if they cannot be produced at the hospital when they are needed. To close this gap between the legal and the medical worlds, registries for advance directives have been created that provide rapid access to these important documents by storing them electronically.

How do such registries work? Typically, the registry scans and stores a copy of the individual’s advance directives electronically, and the individual registrant receives a wallet card with a unique identification number. Hospitals use this card to obtain the person’s directives, usually by calling a toll-free number and receiving the documents via fax, or by going to the registry’s website and printing the documents.

So, all well and good: The question is, how do you go about choosing the right registry for your clients? Your options include a variety of private registries, as well as a state-operated public registry in some states. Here are a few of the factors you might consider in selecting a registry for your clients:

• Does the registry provide live support 24/7/365, so hospital staff can talk to a human being at any time, if necessary?

• Can the hospital receive directives both via web and via fax? Internet-only services pose access problems at some hospitals, where some staff are not granted web access.

• If the client is traveling out-of-state or internationally, will the service work immediately in all cases?

• How do hospital emergency personnel know that a client is registered? Does the registry provide a wallet card, wallet stickers, or any other means of alerting hospital staff to the patient’s registration?

• How easy is it for your firm to register your clients? Is the client registration form integrated into your firm’s document creation software to avoid duplicate data entry?

• Does the registry review the directives for common clerical errors:  missing pages, documents assigned to the incorrect client, etc?

• What firm branding opportunities and other marketing support does the registry offer?

• Does the registry have a proven record of reliability and stability? How long has it been operating? How many individuals has it registered? Many registries have come and gone in the last 15 years.

By registering your clients in a proven, effective emergency access service, you can show your clients that you are committed to making each document you draft work for them when it is needed. Clients, in turn, will be grateful to you for the peace of mind and protection that registration ensures, whether or not they ever use it at the hospital.

Randi J. Siegel, MBA, is the President of DocuBank, the largest advance directive registry in the U.S., which ensures that the healthcare directives of its 175,000 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.
6050 Santo Rd Ste 240
San Diego, CA 92124
858-453-2128
www.aaepa.com

Taking on other attorneys as subtenants can be a great way to defray your firm’s operating costs, and it can even give you a little help in building your practice. Currently, I have three subtenants. One has been with me for nine years, another for five years, and the third for two years. Here are a few things I’ve learned over the years about finding good subtenants and structuring your agreement with them.

• There is nothing more permanent than a temporary situation. My relationship with my subtenants is quarterly. Neither you nor they want a long term lease. I have found that attorney subtenants will stay with you practically forever, if you provide an office environment that makes a nice appearance for their clients, and you are nice to the subtenants.
• If you have more than one subtenant, I recommend that the rent be the same for all the subtenants. When I interviewed prospective subtenants in the past, one or two wanted to negotiate the terms. I told them the rent is the same for all, the terms are the same for all, and that there were not going to be any secrets between me and any of the subtenants. I even told them they were welcome to confirm those facts with the other subtenants, which, to my knowledge, they never did. The moment you provide different terms, you create a caste system, which usually leads to ill will by one subtenant towards you.
• I recommend that you pick subtenants that bring value to your practice. For example, one of my subtenants does an extensive amount of oil and gas work, which is a big deal in Texas, and so it is nice to team-up with him on certain matters.
• I would not be afraid if the subtenants do some estate planning or probate work. Two of my three subtenants do small estate plans and very simple probates. If a matter is more complicated than that, then they usually refer the business to us.

In my next post, I’ll talk a little about what has worked for me in terms of managing an ongoing relationship with attorney subtenants, and the approach I’ve taken when it comes time to sever ties.

About the author: Stephen A. Mendel is a trial, real estate, business, and estate planning/probate attorney in the Houston, Texas area. Mr. Mendel has over thirty-four (34) years of business experience, over twenty-three (23) years of legal experience, and has maintained his own private law practice for the past sixteen (16) years. Mr. Mendel is a also a registered architect, licensed real estate broker, AV rated by Martindale Hubbell, was recognized in 2010 as one of Houston’s Top 100 Professionals, and was recognized as 2011 Boss of the Year by the Houston Association of Legal Professionals. Mr. Mendel was a fulltime faculty member for five (5) years with the University of Houston, Central Campus, where he taught construction related courses while he attended law school. Mr. Mendel is a contributing author of four books:  (1) Strictly Business; (2) Love, Money & Control; (3) Total Wealth Management; and (4) Guiding Those Left Behind in Texas (a book on probate). Mr. Mendel publishes his own blog for his estate planning clients. www.mendaellawfirm.com/blog. In his “spare” time, Mr. Mendel enjoys jogging with his wife, snow skiing and attending sporting events with his son, and cycling.

Academy Guest Blogger
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd Ste 240
San Diego, CA 92124
858-453-2128
www.aaepa.com

As highlighted in a recent Wall Street Journal blog post, IRS audits of taxpayers reporting $10 million or more in income increased sharply last year. In 2008, 9% of taxpayers in this group were audited. In 2009, that number increased to 10%, and in 2010, there was a significant jump – 18% of taxpayers in this income range were audited. There’s also been an increase, although not as dramatic, in the number of audits for Americans in other high income groups, starting with those who make more than $500,000 per year.

The spike in audits is courtesy of the relatively new “Global High Wealth Industry Group” of the IRS. This segment of the IRS came into being in 2009. It employs experts who are experienced in sorting through the entities and complex transactions used by the very wealthy to reduce their tax liability. The group doesn’t simply focus on income tax concerns, it’s designed to take a big-picture view; for example, coordinating gift tax and income tax audits.

Apparently, undergoing an audit by the Group can be an unusually difficult experience. The experts employed by the group are used to dealing with corporations with legal and accounting departments equipped to deal quickly and efficiently with IRS demands. These same types of demands made on a family tend to be burdensome, especially given the short timeframe typically allowed for a response.

If you have high income earning clients, the lesson to be learned from this taxation development is twofold. First, it’s more important than ever to make sure you’re the estate planning and income tax planning are coordinated because, under the new approach, the IRS is more likely to scrutinize both. Second, it’s essential to do it right – the first time. Dotting your i’s and crossing your t’s has the potential to save you and your clients time, money, and stress.

Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd Ste 240
San Diego, CA 92124
858-453-2128
www.aaepa.com

Many folks have told me in the last 25 years that marketing does not work in certain areas, or with certain people, or with certain products or with certain services. It’s normal and it happens to thousands of businesses. Direct mail doesn’t work anymore, this part of the country doesn’t do well with seminars, it’s too expensive – I hear it all the time.

But GOOD marketing does work… anywhere and with anything, if done RIGHT. To be successful in marketing yourself, your business and your services, you have to abide by proven and tested formulas. Most importantly, do it right to begin with, then do it with frequency. Allocate a specific budget (4% to 7% of your revenues) and do not stop spending it. Have a message that impacts your audience and makes them want to call you. Make it easy for them to meet with you. Give examples of what you are doing that has helped so many in your surrounding area. Offer an expert opinion on what they’re doing now may not be working. Give folks a relevant GIFT for taking the time to see you.

To make sure you’re using good marketing, hire expertise and follow what has worked before for so many others in your particular industry. In real estate sales they tell you to invest in what others will buy – not in what YOU would buy. Makes sense right? The fact is, it’s about what the consumers are telling you they like. That is what good marketers guide themselves by… not by gut or personal instinct. Doing the latter will cost you lots of money and lots of headaches.

Frequency is what good marketers do so well. They stick to things and stand above others. Because they continue to market they are there when the consumers are ready to make a decision to buy. Some even say that the message and the vehicle is less important than the frequency in which you do it.

Your marketing investments will pay-off if you commit to an ongoing promotion plan. So many folks are so close to turning the corner in marketing themselves and reaching what is called “CRITICAL MASS,” but then they stop. Don’t let that be you.

Continue to market your business and do it the right way… oh yeah, and with frequency.

Jorge Villar is President of Response Mail Express (RME), with more than 26 years of direct marketing experience, he is known in several industries for his ability to create mail packages that garner the highest response rates. He is responsible for the Seminar Success program that, for the last 17 years has accounted for more than 65% of the events being held in the nation with over 14 million individuals making reservations. Mr. Villar has also been very successful marketing to physicians and business owners regarding Success Planning and Asset Protection. Response Mail Express, and parent company DME, is a $100+ million marketing powerhouse, housing over 600 employees in their 2 state-of-the-art facilities in Florida. Their marketing ideas are presently being utilized by over 10,000 clients, including: top producing advisors, estate planning attorneys, large financial organizations, health care organizations, universities and many other industries. Mr. Villar is a frequent key note speaker at national financial symposium and training conferences.

Academy Guest Blogger
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd Ste 240
San Diego, CA 92124
858-453-2128
www.aaepa.com

We were recently visiting with one of our Peak Performers about their hiring process. It reminded me that, indeed, little things can and do matter. The attorney had just conducted a group interview for a new staff person and told us “… any of the people who came would be a fabulous addition.” That triggered a strong internal response requiring I weigh in on how that attitude can backfire when making hiring decisions. Here are a few thoughts to keep in mind about the attitude we should bring to the hiring process.

Is there anything more important to the success of our firm than the caliber of people we hire?  Too often we hire those like ourselves. It is easy to find the good in people. Many of us are thoughtful, kind people, always seeing the best in those in our lives. Yet, professionally, when we draw conclusions that a candidate would be a “fabulous” addition after one group interview that observation is a huge leap of faith, one I believe can lead to poor results. Yes, it is absolutely necessary to approach the selection of team members in a positive manner. Yet we should be very cautious about drawing conclusions after one interview. Other than initial impressions they may leave, at that early stage in the process you don’t know enough about any of the candidates to know how they will fit in or perform.

Your entry bar must be set high. And, frankly, if you find one or two who ultimately qualify you’ll be fortunate and may be on to a good hire. Be clear, that doesn’t mean this is a negative approach to the process. Rather, it means you approach candidate selection with a discerning, demanding, clinical, almost skeptical eye. Make them prove they deserve to be an employee of your firm.

Despite what may be an urgent need, to adapt an old adage, measure multiple times, cut once. By that I mean, there are more steps to successful hiring than a group interview, profiling, 1-1 interviews and a decision. That is not enough when the stakes are this high, and they always are this high in firms our size. Finally, post-hire, it doesn’t mean they are “terrific.” As they say in the National Football League, they might be a good draft choice from what was available at the time. Only time – and it usually doesn’t take long – will reveal if they are a player. And it will also reveal whether we approached the process by utilizing wisdom or hope.

About the author: Mr. Parman is a frequent guest on the radio and can be seen on television talk shows explaining the importance of proper estate planning. Prosperity Productions selected Mr. Parman is a featured speaker in a nationally-recognized educational video on Living Trusts. He is the author of numerous published articles on financial and estate planning matters and the co-author of two books, Estate Planning Basics: A Crash Course in Safeguarding Your Legacy and Guiding Those Left Behind in Oklahoma: Settling the Affairs of Your Loved Ones.

Mr. Parman is a Member and Fellow of the American Academy of Estate Planning Attorneys. He is also a member of the Oklahoma and Missouri Bar Associations, the American Bar Association, and the Oklahoma City Estate Planning Council.

Academy Guest Blogger
American Academy of Estate Planning Attorneys, Inc.
6050 Santo Rd Ste 240
San Diego, CA 92124
858-453-2128
www.aaepa.com