A recent case caught my eye. First, the facts had an interesting twist. But, second, divorce is sometimes considered by couples who wish to protect assets from Medicaid or for other financial reasons.
In Burnett v. Burnett, the court looked at a divorce case. But, this was no ordinary divorce case. The traditional couple was married in 1984. However, in 2003, the party to the marriage who was born a man underwent gender reassignment surgery and became “Bobbie.” At that time, Devon, who was born and continued to be a woman, was not competent. Devon’s children, as her conservators, sued for divorce.
There were two primary issues in the case. First, since Michigan does not recognize same-sex marriage, did the gender reassignment surgery act as an automatic divorce? Devon’s conservator/children argued that the reassignment surgery acted as an automatic divorce. The court found that it did not. The parties were not the same gender when they were married back in 1984. The fact that one party underwent gender reassignment surgery did not invalidate the marriage.
Next, the court addressed whether a conservator can bring a divorce action for the conservatee, or, if divorce is a personal action and only exercisable by the individual himself or herself. The court found that a conservator may bring any action on behalf of the conservatee, including a divorce action.
Thus, in Burnett v. Burnett, Devon’s children/conservators were able to bring a divorce action on Devon’s behalf.
While few of your clients will have these circumstances arise, it is interesting to note that divorce is still a possibility, even after the incapacity of a client. Divorce is a drastic step that Medicaid rules now make less attractive. Medicaid now allows a substantial Community Spousal Resource Allowance that keeps the “well” spouse from being completely impoverished. But, if the circumstances require a divorce, it may be possible to achieve, even if one of the parties no longer has capacity.
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
In today’s electronic age of smartphones, tablets and laptops, it is a challenge for many working professionals to detach from their jobs during non-working hours. If you are one of those who are tempted to check your work email when you are not at work, you should be aware of the research findings of YoungAh Park, Assistant Professor of psychology at Kansas State University. YoungAh Park found that detaching from your work mentally, physically and electronically is the key to recovering from job stress and managing your work-family boundaries. Staying connected to your job through checking work emails or text messages outside your normal working hours can be advantageous to your job. However, it can also lead to work-related stress that can spill over into your home and family life causing added stress between you, your spouse and your family.
For instance, if you receive an unpleasant email or text from a boss, co-worker, client or other business associate and you read the message after work hours, this could affect how you feel and behave toward your spouse or family and disrupt your home life. According to Park, “if one spouse is experiencing work stress, it can affect the other spouse. If both are stressed from work and neither is able to use the home as a place to recharge for the next day, the stress can build up at home rather than decrease.” When individuals are under stress their mental and physical resources are exhausted. Park says: “…they are less likely to self-regulate hostile behaviors and provide sufficient support for their spouse… If working couples don’t recuperate from their job stress while at home, they would be likely to fall into a spiral of lost resources.”
Data shows that people who are able to detach from their work have less burnout and are more energized with positive emotions, and they are more satisfied with their lives. Park recommends setting up strong technological boundaries and rules for restricting your work activities to during working hours and separating work from your home life. Granted, there are times when you may need to be involved in a work-related activity outside normal working hours. Let your co-workers, boss or employees know what your boundaries are and what they should expect so they can set their own boundaries. This helps everyone work harmoniously.
If you or your employees are not getting enough time to unwind from the stress of work-related activities, your company actually loses money. Research shows that everyone must be given the opportunity to be refreshed, rested and de-stressed from work activities so they are at their best to perform. By being able to detach from your work, both you and your business benefit. Job performance will improve, and your business will reap positive benefits because you will be performing at your peak.
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
We are pulling together THE ACADEMY’S GREATEST HITS—1993 through 2013. There are eight courses that we’ll be offering to non-members at no charge during our 20th year, (members feel free to sign up and review!).
Each week we’ll give you the summary of ONE course. You can begin the course any time you want. Once you register for the series of sessions, the courses will be delivered to you one at a time over an 8-week period.
Looking back over the past 20 years that the Academy has virtually invented the services, coaching, marketing, legal education and legal documents, estate planning attorneys deserve to build their practices with has been fun and exciting. We’re honored to make these sessions available in an effort to celebrate our two decades of support with attorneys in every state!
YOU ONLY NEED TO REGISTER ONCE (If you previously registered for this course, you were already added to the class schedule. No need to register again.)
Session 1:Presented by the Academy’s first keynote speaker, Michael E. Gerber, author of The E-Myth, Why Most Small Businesses Fail and What to Do About It
Session 2: “Top 10 Estate Planning Legal Questions (and Answers) from Attorneys Nationwide” presented by Steve Hartnett, Academy Associate Director of Education
Find out what the most commonly asked questions are in estate planning. Attorneys across the country think those questions are often obscure, esoteric questions… you may be surprised at the questions attorneys want to be clear on! Steve Hartnett, Associate Director of Legal Education has been here at the Academy working with attorneys across the country on basic as well as advanced legal questions asked since 2001.
The legal department is available to all members for any legal question they have. The department functions as a “senior partner” for members in every state. They author the Academy’s comprehensive estate planning documents as well as teach Webinars and provide face-to-face training for the membership. They are frequently published nationally in Money Magazine, and quoted in a wide variety of estate planning publications.
As a part of this session, we are also offering one legal consultation on the topic of estate planning or elder law. Contact information for the department is provided upon completion of the course.
Stay tuned, we’ll feature another session soon! We hope you enjoy the series and share the registration link with the attorneys you feel would get the most out of this instruction.
Jennifer Price Chief Operating Officer
American Academy of Estate Planning Attorneys, Inc. 9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128 www.aaepa.com
In this video blog, Associate Director of Education, Steve Hartnett, examines the Obama Administration’s “Green Book,” or revenue proposals. The blog discusses the 5 proposals of greatest interest to estate planning attorneys.
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
From friends and family to clients and prospects, we all have relationships that require some form of nurturing on a regular basis. Just like you know that giving Mary a dozen yellow roses on your first date is only one step in the courtship process, you also know that sending her one email (or one generic email campaign) is not enough to impel enduring trust and devotion. Nurturing is a long-term commitment. As in any relationship, lead nurturing involves more than simple delivery. It’s about communicating clearly and regularly, understanding and addressing your intended’s concerns, and establishing a cohesive bond over time.
Can you nurture prospect relationships via email? Absolutely.
Email campaigns nurture leads when they tell stories, allowing your prospects to get to know you and your areas of expertise. They avoid overt sales pitches, which is a major turn-off (particularly in the early stages of your relationship). Mary doesn’t want to know how much you charge to draft up a will – she doesn’t know you well enough to care about that yet. She would prefer to read about you and your team, learning about your proficiencies, and determining whether or not your firm can meet her needs. She does not want to be threatened with the overt expectation of an immediate response. She wants to be wooed with highly relevant content that speaks to her needs.
The more relevant your content, the more you demonstrate your commitment to the relationship. Make sure that your email databases are segmented by topic of interest and that your prospects receive exactly the kind of information that they yearn for. One of the best ways to ensure that your prospects get what they need is to let them tell you what it is they want – let them choose categories, topics, and other preferences when they subscribe to your email newsletter.
Do not confuse mere delivery for nurturing. In order for email nurturing to be effective, it’s all about the content: what is being deliveredand how well it addresses your audience’s needs, priorities and objectives. The perceived relevance of the delivered content is the key to your prospect’s heart (and business).
Another way to find out if you’re sending out the best kind of content to nurture your subscribers is to track their activity. Use an email program that enables you to track click activity. For example, if Mary receives your general litigation newsletter, but she only seems to read articles about estate planning, use that data to update her member record so that she receives more information about estate planning than any other topic. Put her on your estate planning list to receive special offers, reminders, tips and strategies about estate planning. That shows her that you have noticed her interest (without her having told you), which will elevate your status and push your relationship forward.
Jazz up your standard email content to make it more compelling by incorporating a personalized note, great photos of yourself and your team, or link to one of your videos on YouTube or your website. Make sure that your email campaign is branded consistently so that Mary recognizes it as coming from you, but keep the content fresh and engaging so that she’s not bored by the same old thing.
But don’t stop there. Mary needs more from you than one-way communication, even if what you’re giving her is exactly what she’s looking for. Give her alternate ways to interact with you and get to know you better. Ask her to join your Facebook page, follow you on Twitter, connect with you on LinkedIn, sign up for a webinar, or fill out a prospect survey. Mary may prefer to see how you communicate with existing clients on Facebook before she takes the next step in your relationship. Or perhaps she wants to see and hear how you present estate planning strategies via a webinar before making a commitment to a face-to-face meeting. Allow her to communicate with you in a variety of methods by delivering options to her in your nurturing email campaign.
Prospects who follow you on social media or sign up for webinars are essentially winking at you. It’s their way of demonstrating a sincere interest in your content and a willingness to continue the conversation with your firm about a particular topic. Keep track of who your social media fans are, monitor which subscribers interact with which articles in your emails and newsletters, maintain an activity log on your hottest prospects (like Mary) and watch your metrics. That data will tell you when the time is right to give Mary a call and ask her to be yours.
Lead nurturing is a cumulative relationship-building process. This process consists of several components, including: 1) understanding the unique needs of your prospects, 2) communicating that understanding via educational content and demonstrating expertise, and 3) developing respect, trust and rapport.
As with any relationship, multiple communication methods used in combination are often the most effective. Use your email campaign as the foundation for your lead nurturing efforts, and utilize the data you glean from the campaign to integrate additional relationship-building behaviors as your prospects glide through the buying process.
Let the courtship begin.
Becca Fieler is an Online Marketing Specialist for BizActions, a Thomson Reuters Business, serving as a strategic partner in the planning and implementation of electronic communication and marketing initiatives. She develops and oversees comprehensive programs that present marketing strategies and solutions to diverse audiences, including attorneys, accountants, banks and credit unions, human resource companies and other professional service providers.
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
The Academy recently announced a new coaching model for members consisting of 11 Training Courses. Each course has a series of classes, and the subjects focus on major practice building systems and marketing strategies. They range from Strategic Planning to Marketing Planning to Staffing to Public Seminar Marketing, and more.
This platform expands on the coaching from the Practice Building Consultants by providing more opportunities for each member firm and their team to participate in a structured coaching and training program from the Academy. Each course has been developed to examine each major system in smaller, more manageable and easy to comprehend topics. This will allow members and their teams to take a microscopic look at all of the details involved in each particular topic area. In combination with the assignments and recommended reading, each course will provide member firms with the training, tools and accountability to plan and execute on Academy systems and recommendations at a much faster pace.
Since the announcement of this new coaching and training course model, there has been an overwhelming amount of excitement and conversation around the Academy office and amongst the membership.
In fact, the first training course, The Power of Law Firm Systems & Workflow started on April 4th, and almost one-third of member law firms registered to participate. The first class focused on time management as a foundation to effective systems. Yesterday, we finished the second class in the course, where we reviewed the recommendations on how to prepare for consultations – from the confirmation to setting follow-up appointments after the client is retained.
All 11 courses are scheduled to be covered this year, with a total of 57 classes taking place thru the end of December. The next course on Strategic Planning starts on May 6th, followed by Creating Your Marketing Plan starting on May 28th. A syllabus for each upcoming course will be available for members to review and registration for each course will begin a month before the course starts.
We are thrilled to be offering this new program – we are confident that it will quickly become an indispensable opportunity for members and their team to set themselves up for unprecedented success. In fact, our intention is that these courses will not only facilitate an increase in knowledge but will also accelerate mastery and implementation of Academy recommended systems.
Lillian Valdez Practice Building Consultant
American Academy of Estate Planning Attorneys, Inc. 9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128 www.aaepa.com
President Obama recently released the Administration’s FY2014 budget proposal, including the Treasury’s “Green Book.” There were some interesting inclusions.
Many estate-planning attorneys breathed a sigh of relief in January, when ATRA was passed with a $5.25 million applicable exclusion. More importantly, they were relieved by the certainty of the removal of the “sunset” provision in the prior law. We finally had a “permanent” estate tax. We now learn just how “permanent” it may be. Only a few months after ATRA’s passage, the President has issued his proposal to modify the estate tax once again.
The budget would reduce the exclusion to $3.5 million, the 2009 level. Perhaps more importantly, it would remove the inflation-escalation provision and limit other strategies. This is basically the same as last year’s proposal, before ATRA was passed.
In addition, the proposal would limit tax-favored retirement accounts to a maximum of $3 million. This is concerning because it appears that these accounts are increasingly viewed as a potential source for increased revenue. Last year, the Senate Finance Committee had a bill that included a provision that essentially would have imposed the 5-year distribution rule on all accounts at death, other than ones going to the surviving spouse. While the Committee did not include it in the final mark up, it shows that increased revenue from retirement accounts is on the radar.
Does suggested planning change in light of this budget? It might accelerate it. If you have a client with over $3.5 million in assets, you may consider having them plan more aggressively to keep the value in their taxable estate down. As a reduction in the value of the taxable estate can take years with a methodical plan, it may be best to start sooner rather than late.
As for the proposed change to retirement money, one strategy would be to convert assets to Roth plans. That would make the value in the plans worth more, as they would be after-tax dollars.
Of course, the President’s proposal is just that, a proposal. Even though it comes from the President, passage is far from assured. We will have to wait to see what tax legislation comes out of the House and Senate.
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 attorneys can use the popular TV program Mad Men to help their clients start conversations on wills, trusts and funerals.
In the season premiere of AMC-TV’s Mad Men, mortality seems to be on the minds of many key characters.
Ad exec Roger Sterling’s secretary tearfully delivers the news that his 91-year-old mother died of a stroke in her bathroom. This sets in motion many of the reactions and relationship issues we so often see at funerals or memorial services: dazed and stunned mourners, tense and awkward interactions with distant relatives, and family members angling for money.
Roger takes the news without a tear. In a later scene, he confesses to his psychiatrist that he really doesn’t feel anything at all anymore.
At the memorial service held in Mom’s elegant home, a demanding older woman in a wheelchair (an old friend of Roger’s mother) insists on being the first speaker at the event. She relates that after Roger’s father died, Mom made her son the center of her life. Roger doesn’t seem to know what to do with this information.
Use this as a lesson your clients can learn from: It can be helpful to have a celebrant or clergy person emceeing the memorial service, to thoughtfully manage speakers such as this lady. The bereaved family has enough on their hearts and minds without having to stage-manage a show.
Interestingly, Roger’s mother was cremated. She was in the minority in 1967. That year, those choosing cremation for final disposition in the U.S. averaged 4.18% of the entire population (figures from CANA, the Cremation Association of North America).
Roger’s ex-wives and daughter show up at the memorial service. In the fashion of the era, all are dressed in black. One of the ex-wives has a new husband who shows up to pay his respects, and Roger screams at him to get out. Then Roger declares the memorial service over. It hardly had a chance to get started.
After the service, Roger’s daughter asks if “Nana” had left her anything. Roger hands her a jar of water from the Jordan River, water used to baptize them both. She was hoping for money that could be used for a new venture her husband wants to invest in – refrigerated trucking.
Roger informs his daughter that Nana’s estate directed most of her considerable assets toward supporting animals at the zoo. Roger says her will “looked like the manifest for Noah’s ark.”
At least her money went toward a cause she believed in.
Mad Men is an addictive television series. Even if you or your clients have never watched it, you may want to seek out this season six opening episode, titled “Doorways.”
Gail Rubin, The Doyenne of Death®, is author of the award-winning book, A Good Goodbye: Funeral Planning for Those Who Don’t Plan to Die. She hosts a new television interview series, A Good Goodbye TV and the upcoming Internet radio program at RockStarRadioNetwork.com. She uses humorous film and TV clips to help start funeral planning conversations. Her website is www.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
We are pulling together THE ACADEMY’S GREATEST HITS—1993 through 2013. There are eight courses that we’ll be offering to non-members at no charge during our 20th year, (members feel free to sign up and review!). The courses will be delivered one per week and the range of topics will cover every facet of your practice.
Each week we’ll give you the summary of ONE course. You can begin the course any time you want. Once you register for the series of sessions, the courses will be delivered to you one at a time over an 8-week period.
Looking back over the past 20 years that the Academy has set the stage for the services, coaching, marketing, legal education and legal documents, estate planning attorneys deserve to build their practices with has been fun and exciting. We’re honored to make these sessions available in an effort to celebrate our two decades of support with attorneys in every state!
YOU ONLY NEED TO REGISTER ONCE (If you previously registered for this course, you were already added to the class schedule. No need to register again.)
Session 1:Presented by the Academy’s first keynote speaker, Michael E. Gerber, author of The E-Myth, Why Most Small Businesses Fail and What to Do About It
(1.5 hour audio session, no materials, BUSINESS STRATEGY)
The Academy systems made available to members are absolutely the systems outlined in the best-selling book, The E-Myth. Michael Gerber’s relationship with the Academy founders brought about the collaboration it took for Robert Armstrong, Sanford M. Fisch and Michael Gerber to co-author a version of this book for attorneys, called “The E-Myth Attorney.” During this session you’ll shine a light on every area of your practice that could benefit from establishing or revisiting your systems.
By working “on” your practice, not just “in” it – you can develop the practice and quality of life that you really want. Establishing systems and procedures for literally everything that needs to be done in your practice allows you, the attorney/owner, to be the CEO and counselor in your law firm. Once systems are established, you and your team have a track to run on. Many of our members have set goals to work “normal hours” or perhaps work 4 days a week, or vacation 10-12 weeks per year… and they achieve these goals while growing a thriving law practice. It’s not magic. It’s discipline, strategy and execution.
You can have the life and practice you dreamed about.
Stay tuned, we’ll feature another session soon! We hope you enjoy the series and share the registration link with the attorneys you feel would get the most out of this instruction.
Jennifer Price Chief Operating Officer
American Academy of Estate Planning Attorneys, Inc. 9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128 www.aaepa.com
Often, there is confusion regarding the income taxation of trusts. There are two general types of trusts for income tax purposes: grantor trusts and non-grantor trusts.
A grantor trust gets its status because the grantor has one of the powers listed in sections 671-678 of the Code. Some of these powers also trigger estate tax inclusion, like the power to revoke. Thus, a RLT is a grantor trust because, as its first name suggests, it is revocable. Some of the powers do not trigger estate tax inclusion, such as the power to substitute assets. Thus, you can have a trust which is out of the grantor’s estate for estate tax purposes, but is income-taxed to the grantor. This has become known as an “intentionally defective grantor trust.”
A grantor trust is taxed directly to the grantor for income tax purposes. It can use either the grantor’s social security number or a tax ID number. Financial institutions may give some resistance on using the grantor’s social security number, but it’s right in the regulations. (See Treas. Reg. § 1.671-4).
One of the best ways to get value out of an estate is through the use of a grantor trust that is out of the estate for estate tax purposes (an intentionally defective grantor trust). With such a trust, the grantor pays the tax on the income, even though it will be held for or distributed to the beneficiaries of the trust. Let’s look at a quick example. Mary sets up a grantor trust, using $5 million of exclusion. The trust earns income of 2%, or $100,000. The $100,000 gets reported on Mary’s Form 1040 and she pays the tax, say $40,000. That $40,000 is not an additional gift to the beneficiaries or the trust. Thus, the trust gets to grow without the diminishment from payment of the income taxes.
A non-grantor trust is taxed to the trust itself. A non-grantor trust gets a distribution deduction when it makes distributions to the beneficiaries that carry out its income. This carries out the taxability to the beneficiary. Thus, a non-grantor trust which distributes the income has it taxed to the beneficiary.
Non-grantor trusts have a significantly compressed run-up in income tax rates. They hit the maximum income tax rate of 39.6% on less than $12,000. Thus, it often makes sense to distribute the income to the beneficiaries, especially if they are in lower income tax brackets.
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
