As you have no doubt heard, Facebook is poised to go public. TechCrunch has reported the company is looking at a May 17 IPO date, with an anticipated value of $100 billion.

By all indications, Zuckerberg and Moskovitz have carefully planned for the coming increase in their already substantial net worth. According to Forbes magazine, back in 2008 they made an extraordinarily smart move – particularly for a couple of unmarried twenty-something guys with no kids. They each transferred a sizable portion of their Facebook stock into a Grantor Retained Annuity Trust (GRAT).

A GRAT is an irrevocable trust that, when well-planned, can be a valuable gift tax savings tool.

The grantor transfers assets – in this case stock that is anticipated to appreciate quickly and significantly – into the trust for a predetermined term of years. Normally, the term of the GRAT is between two and fifteen years. During this term, the grantor receives an income stream, or annuity, from the trust. At the end of the trust term, any assets remaining in the trust go to named beneficiaries. If the value of the retained annuity is sufficiently high, the value of the remainder interest can be zero. The remainder assets are transferred at the end of the term free of gift tax. Often, these remainder beneficiaries are the grantor’s children. Since the Facebook founders are childless, it’s more likely that each of them named a trust as the beneficiary of his GRAT.

The twofold trick to successful GRAT planning is:

1. Choosing the right trust term. If the grantor dies before the trust expires, the trust fails and the assets are included in the grantor’s estate for estate tax purposes. Mark Zuckerberg and Dustin Moskovitz are both 27 years old, so chances are this is not much of a concern.
2. Using the right assets. With a “zeroed-out” GRAT, the grantor’s annuity is equal to the value of the assets transferred to the trust, plus an interest rate assigned by the IRS, known as the Section 7520 rate. When the grantor is projected to regain his initial transfer plus interest, there is no gift tax on the transaction. This is known as a “zeroed-out GRAT”, and it’s what the Facebook founders did. The key to this strategy is funding the trust with assets whose growth is anticipated to outpace the Section 7520 rate during the term of the trust. This way, there are (hopefully significant) assets left over for the remainder beneficiaries, allowing the grantor to transfer wealth and take advantage of the gift tax savings.

According to Forbes magazine’s estimates, the Facebook founders’ GRAT assets are not just poised to appreciate, they’re set to explode. Forbes had its expert crunch the numbers and he came up with these conservative estimates:

If you have clients who could benefit from a GRAT, now might be the time to get them into your office for a discussion. Not only are section 7520 rates favorably low, but the opportunity to use zeroed-out GRATs might be short-lived. President Obama’s proposed 2013 budget would do away with this planning strategy altogether.

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

I have been attending these Summits for 15 years. What I find striking each time is just how much a relationship can develop in short spurts over a long period. I see these folks for a few days at a time, twice a year. We catch up on changes in their firms and changes in their personal lives. It’s similar to the relationship with an old friend or with out-of-town extended family. We’re not in each other’s lives on a daily basis, but it’s great to come together, catch up and reconnect.

It’s like this with your estate planning clients, too. This is why, I think, the Academy is stressing to its estate planning firms the importance of having an annual client maintenance program and helping firms establish them. (For those of you not familiar with this term, a “maintenance program” is a set of annual client services delivered to the client for a set annual fee. It often includes basic document updates and client education/appreciation programs, among other offerings.)

Yes, the obvious goals of a client maintenance program are to help clients keep their estate plans up-to-date, and to add some extra income to the bottom line in the short term. But even more fundamentally, the goal is to nurture the ongoing relationship between the attorney and the client.

A maintenance program creates the structure that allows firms to reconnect with clients at least annually, and to do so efficiently. You and your clients can see each other in the flesh once a year (or at least offer them the opportunity to see you); clients learn something useful and maybe even have fun at your annual client education or client appreciation day. Some years, you may empathize with them over a death or illness that results in the need to make a change in their estate plan; other times, your staff may answer a quick question that puts a client’s mind at ease.

These brief but periodic contacts make clients feel connected to you, and you to them.

A maintenance program helps firms achieve that holy grail of estate planning — the long-term client relationship — where the client considers you an ongoing trusted advisor. You become someone clients think to turn to in a time of new need, new financial opportunity, or family crisis.

Why? Clients feel that they can easily pick up where they left off with you last. Reaching out to your firm poses a smaller psychological barrier and takes less emotional work for them, because they don’t feel that they’re recreating the relationship from scratch.

Does it take some work to create a maintenance program? Sure. But maybe not even as much as you think. And, there are also tools and systems that can help you do it.

Randi J. Siegel, MBA, is the President of DocuBank (docubank.com), the largest advance directives registry in the U.S., which ensures that the emergency information and 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 and health education related to advance care planning and advance directives and serves as Pennsylvania liaison to the National Healthcare Decisions Day initiative. 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

Elder abuse can take many forms:

• Physical

• Emotional/Psychological

• Sexual

• Financial exploitation

• Neglect

Whatever form abuse takes, there are a few things we know about it:

• It is prevalent. Elder abuse is underreported, but the U.S. Administration on Aging believes that nearly two million older Americans are abused each year.

• It crosses racial and socioeconomic borders. Wealth, and even fame, does not provide immunity from abuse. Consider the cases of Mickey Rooney and Brooke Astor.

• Most elder abuse is perpetrated by caregivers – often these caregivers are family members.

As estate planning and elder law attorneys, we are in a unique position to be able to identify and help abuse victims. Not only do we encounter aging clients and their families on a regular basis, we’re often privy to sensitive, personal information. So, we need to be prepared in case we suspect an instance of abuse.

The first order of business is to know the signs of elder abuse. Considering our line of work, we should be particularly alert to the signs of financial exploitation. Perhaps the bigger issue, though, is what to do if you suspect abuse.

First, talk to the older person when you are alone with them to gather more information about what is actually going on. Be aware, though, that victims of abuse are rarely eager to identify themselves as victims.

Second, familiarize yourself with your community’s resources, and take steps to get help for the victim:

• Contact your state “Adult Protective Services” (or similar agency), your local police department, and/or another local agency tasked with investigating allegations of abuse.

• Find out how your local courts address elder abuse cases, and whether there are specific programs or services available. Seek a temporary protective order on behalf of the victim.

• Consult the ElderCare Locator (1-800-677-1116) to find out about local counseling, support, and other services.

• Consult the ABA Commission on Law and Aging, the National Center on Elder Abuse, or another similar group for information and advice.

Have you encountered victims of elder abuse in your practice? If so, what have you done about it?

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

The Bush tax cuts are set to expire on December 31, which means that absent intervention by Congress:

• Tax rates for ordinary taxable income will increase, with taxpayers in the highest bracket paying 39.6%

• The number of taxpayers subject to the Alternative Minimum Tax will expand significantly

• Maximum long-term capital gains rates will increase from 15% to 20%

• Stock dividends will be taxed as ordinary income, meaning a maximum rate of 39.6% rather than the current cap of 15%

• The estate and gift tax applicable exclusion, currently $5.12 million, is scheduled to reset to $1 million. The maximum estate and gift tax rate is scheduled to increase to 55%, with a 5% surcharge for estates that exceed $10 million.

There are several proposals pending that would soften the impact of all these tax changes. For example, President Obama has proposed a return to the $3.5 million estate tax applicable exclusion and top estate tax rate of 45% that were in effect in 2009. Other proposals would maintain the current $5 million or repeal estate taxes altogether.

But this is an election year. Therefore, Congress is unlikely to take any action until late November at the earliest.

With tax laws once again in limbo, clients can be even less eager than usual to commit to a plan – what is an estate planning attorney to do?

• Be sure to consider the impact of an applicable exclusion in flux. If you are giving the applicable exclusion to a bypass trust at the death of the first spouse, consider that it may be anywhere from $1 million up to the entire estate. If this is not what is intended, be sure to draft limits on the size of the bypass trust.

• Take advantage of today’s $5.12 million gift tax applicable exclusion. It may not be there next year.

• For a client with an even larger estate, take advantage of “zeroed-out” GRATs.

I’ll discuss “zeroed-out” GRATs and how they can be used successfully in my next blog.

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

The same applies to being a powerful and effective seminar presenter. Before you get up in front of your audience, you better know your presentation by-heart. You do not want to be looking back and forth at the screen to get cues on what to say when. While you’re going to be sharing important information – a seminar presentation is still a performance. You must show complete mastery of your presentation and the subject matter. This leads to the next key point on making a great presentation – know your stuff!

KNOW YOUR STUFF

Knowledge is power. The key to conducting a smooth, successful seminar is to know your topic inside and out. The better you know your material, the more compelling your message will be. Your audience will know if you are prepared and will quickly determine if you believe in what you are saying. The more compelling you are, the more people you will move to action. Remember, you’ll never be able to set appointments with your prospects unless you can establish that “know, like and trust” factor. From the minute you stand up and begin talking to the minute you’re finished – you are on “stage” and being assessed by each attendee. Don’t “wing it” and don’t take for granted that each person is “sizing you up” as you speak.

In addition to knowing your stuff inside and out, you want to know yourself even better. There are a couple of “closes” that take place during the presentation – well before these prospects consent to make an appointment to see you:

1. You will have to sell them on “Why you?”
2. You will have to sell them on “Why your law firm?”
3. You will have to sell them on “Why they should take action now?”
4. In other words, from the client’s perspective: “What’s in it for me?”

Be social, tell stories about how you have helped local folks with your services and do not let the PowerPoint Presentation do you in. What do I mean by that? Many presenters have folks staring at the screen instead of having them focus on them and what they are saying. Engage people by asking easy questions or having them participate in some way. Entertain them and be a great host in every way. Their experience that day is what matters. They will tell others if you come across as an experienced, educated, caring and helpful individual. That is who they are looking for. They want someone to help them… and that can now be you.

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 social educational events being held in the nation with over 12 million individuals making reservations. Mr. Villar has also been very successful marketing to physicians and business owners regarding Marketing Success Planning and Lead Generation. Response Mail Express is a $25 million marketing powerhouse, housing over 133 employees in their state-of-the-art facilities located in Tampa, Florida. Their marketing ideas have been utilized by over 10,000 clients, including: top producing advisors, estate planning attorneys, large financial organizations, health care organizations, franchise operations and several other industries. Mr. Villar is a frequent speaker nationwide at financial symposiums and training conferences.

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

Clients are no longer using the phone book when in search of local products and services. Instead, more and more are turning to computers, smartphones, and search engines. In fact, according to comScore, global leader in digital marketing intelligence, 54% of Americans have substituted the internet and local search for phone books. Perhaps more importantly, 82% of those local searchers follow up with an in-office visit or phone call.  That means it’s vital for local search marketing to be part of every marketing plan.

Incorporating Local Search Marketing into your overall marketing plan doesn’t have to be difficult. Here are three strategies that you can implement today.

1. Establish a listing in all major local search directories

• Google Local Business/Google Places

• Bing/MSN Local Listings

• Yahoo Local

• Localeze

• Yelp.com

2. Customize your listing

• Include a local phone number and address. Be sure that all information is identical in every listing, including any abbreviations.

• Optimize your listing with targeted keywords and customized details.

• Add video, images, and promotional offers to enhance your listing.

3. Implement a review and reputation management strategy

• Encourage clients to post online reviews on sites such as Google, Yelp, and Yahoo Local

• Do NOT post all reviews directly from your office, as your IP address will be recorded to prevent fraudulent posts

• Monitor online mentions of your firm by establishing a Google Alert

• Respond to any bad reviews with a brief explanation, without being defensive or argumentative. Showing potential clients how well problems are handled and that you care about your customer’s experience can be as valuable as a positive review.

Local search offers a tremendous opportunity to market to everyone actively looking for your services in your community. Are you reaching out to all of those potential clients?

Rita Chaires is an SEO professional, managing SEO and Social Media Marketing for Academy members. She has been part of the Academy SEO team since 2010. Rita is an ongoing contributor to the Academy blog.

Rita Chaires
SEO and Social Media Manager
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com

The Will names Ms. Houston’s daughter, Bobbi Kristina, as sole beneficiary, with a provision for her estate to be distributed via a testamentary trust.

The fact that Whitney Houston left behind such an underwhelming estate plan creates some great talking points for you and your clients. Here are three:

Living Trusts Have Advantages: We’re all well acquainted with the benefits of living trusts, but our clients aren’t so familiar with them.

Here’s a thought: If Ms. Houston had opted for a living trust rather than a will, her estate plan would not be available for public viewing via Inside Edition or other curiosity-seekers. Most of your clients won’t have to worry about their Wills appearing on all the gossip websites, but they might be concerned about extended family members, colleagues, or acquaintances snooping through their private business.

Depending on the probate process in your state, the fees and delays associated with probating a Will may also be a concern. In addition, living trusts can serve as a valuable tool for balancing the varying needs and interests of blended families. You should counsel your clients to take all of these factors into account when thinking about an estate plan.

It Pays to Understand the Law: Whitney Houston made her Will in 1993, when she was married to Bobby Brown and was a resident of New Jersey. Had she and Brown still been married at the time of her death, he would have had the right to an elective share of her estate, regardless of the terms of her Will. That is, unless he’d signed a waiver of his right to an elective share. Who knows whether Whitney Houston understood that New Jersey law trumped the terms of her Will? Your job is to ensure your clients make educated choices about their own estates.

Update, Update, Update: Regardless of the estate planning method your clients ultimately use, it’s imperative that they update their estate plans. A lot transpired in the 19 years between the making of Whitney Houston’s Will and her death. She signed a codicil in 2000 naming her mother as executor, but she didn’t make any changes to her plan after her 2007 divorce.

Again, this is a great discussion point for your clients. Your clients may or may not know that a divorce creates the need for a new Will or trust. But they’re likely unaware that a divorce decree doesn’t automatically sever all ties – think beneficiary designations, for example. It’s your role to counsel and educate them – not only about updating after a divorce, but after other life changes, too.

The Whitney Houston estate – or any other celebrity estate – can present a great jumping-off point for a discussion about your clients’ needs. It can be a great way for you to connect with your client on a personal level, while giving a teaching moment, as well.

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

The truth is…. grief takes so many different forms that you can never be prepared.

My perspective might be somewhat unique, and in some ways, it’s probably a worst-case scenario perspective.

I do a lot of pro bono work with Hospice patients in our area. It’s truly a different calling as many know… it is hard and difficult because our clients and their families know they are dying. Working with our hospice clients is never easy and truthfully, it sucks!

These patients take top priority in my practice. The Hospice director, social workers, and my Hospice clients all have my cell number. I may get a call from the director or from a social worker in the middle of the night, “a patient has decided that they are dying, can you come and talk to them?”

Whether it is 3AM or 4PM, my staff knows that when one of these calls comes in, it is serious. Please interrupt a meeting. Hospice staff knows better than I when someone is close to death – I hope my other clients understand this, too.

I am not a trained Hospice volunteer because their job is too hard. In fact, my staff’s job is too hard. We lose every client/patient we work with. Some stay on longer than others and we are always happy when someone outlives Hospice. Usually, they do not. And that is okay. As a staff, we attend as many funerals as we can, we send plants and sympathy cards, but it is never enough.

So, why do it? Our clients are not going to be with us long but our hope is that we can be there for them if they need us and put their wishes into place. We hope that what we can provide is a listening ear, and whatever it is that the Hospice patients want – whether it be a will, a trust, a patient advocate, whatever. Sometimes, it’s just holding their hand when they die. For many, providing these simple things gives them peace of mind that allows them to die peacefully.

And I guess I have to say that I may never be hugely rich in dollar figures but what I have gained from this experience makes having a firm of my own worthwhile because I feel like I have made a difference in many families’ lives.

And that is hard to gauge in numbers.

Shelley J. White-Thomas is an estate planning and elder law attorney in Sault Sainte Marie, Michigan. She is a solo practitioner at the White-Thomas Law Firm, PLLC and has been a member of the Academy since 2011.

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

Chances are you “specialize” in a particular area of law. But unless you’re board certified, your state’s rules of ethics likely don’t allow you to call yourself a specialist.

Many lawyers focus on an area of practice where they can develop a certain level of expertise. It’s natural to gravitate toward a practice area that holds a special interest for you or that allows you to use your innate talents and abilities – or for which there’s a particularly high level of client demand.

Plus, focusing on a particular practice area makes it easier to develop the level of knowledge and experience you need to serve your clients with confidence and authority.

But here’s an interesting statistic: nationwide, fewer than 4% of attorneys are board certified.

If so many attorneys choose a specific practice area to focus on, why do so few take the next step and become board certified?

There are a couple of reasons.

First, board certification for attorneys is a relatively new concept.  Until fairly recently, the legal profession was a profession of generalists. Specialty certification of attorneys did not start until the 1970’s, and the ABA did not accredit the first attorney certification board – the National Board of Trial Advocacy – until 1993.

Second, and probably more significant, becoming board certified is difficult. It takes time and effort, and it can be expensive. To become board certified, an attorney must:

• Devote a large percentage of his or her legal practice to the area of law in question

• Have a substantial amount of experience in that area

• Maintain a substantial amount of continuing legal education credits in that area

• Submit to a peer review and recommendation process

• Pass a written examination

• Maintain a high degree of professionalism

• Meet additional requirements as determined by individual certification boards

Becoming board certified is not an easy process. But think about what it says to your clients when they see that designation after your name. It lets them know that you’re dedicated to your practice. You’re an expert in your field. You’re serious about taking care of your clients. You’re well-regarded by other lawyers. In short, it gives clients that added boost of confidence that they’re in good hands.

What do you think about board certification? Are you board certified? Has it made a difference in your practice?

Jennifer Price
Director, Member Services, Marketing & Recruiting
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com

With the abundance of issues to consider when funding real property into a trust, I thought I’d devote one final blog post to a checklist of five additional items to consider before making a final transfer.

Due on Sale Clauses: Due on sale clauses are ubiquitous in loans. However, the Garn-St. Germain Act, 12 USC § 1701 (j)-3, and the corresponding regulations prevent a lender from calling a loan due when a borrower transfers residential real estate of less than five dwelling units to a revocable trust. The act only applies when the transfer is to a living trust of which the borrower is and remains the beneficiary. It does not apply to irrevocable trusts, where the borrower is not a beneficiary.

Even if your client’s transfer is protected under Garn-St. Germain, you’ll want to notify the lender of the transfer, and be prepared to remind the lender of the terms of the Act and the regulations.

If your client’s transfer does not fall under the protection of the Act, be sure to obtain written permission from the lender prior to transfer.

Restrictions on Transfer: Be sure to investigate whether there are any restrictions on the transfer of the property that must be removed or renegotiated.

Administrative Charges: What additional costs will your client incur upon funding real estate into a trust? Will banks, title insurance companies, or other organizations charge to provide necessary services?

Condominiums and Other Multi-Unit Properties: It is imperative that you obtain, review, and comply with the terms of the association’s governing rules.

Foreign Properties: The transfer of foreign real estate into a trust can have consequences which we, as American lawyers, cannot anticipate.

For example, in some Caribbean nations, transferring real property to a revocable living trust can result in hefty stamp duties. Waiting to transfer the same property at the owner’s death may result in little, if any, duty.

Therefore, NEVER attempt to transfer real estate located outside the United States into a trust without first consulting counsel from that jurisdiction.

There you have it – a four-blog overview of the issues to consider before funding real estate into a trust!

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