By: Stephen R. Elville, J.D., LL.M., [email protected], 443-393-7696
At our September 17, 2016 Client Event, I gave a PowerPoint presentation outlining in very brief ten-minute fashion an overview of the major events affecting estate planning, elder law, and special needs planning over the past twenty-five (25) years since 1991. What was revealing about this condensed information was not only how much change had occurred, but how some of those change events had come full circle – some events seemed to have changed the landscape forever, while others indicated change that once appeared permanent but in reality was only cyclical, with later observation revealing that further change negated the original change event or series of events, reverting back 180 degrees to the original law or status. Then came the November 8 presidential election, and with it the specter of further change. In its aftermath, many Marylanders are concerned about the changes that may come, while others anticipate and desire change – be it social, political, or otherwise. From an estate planner’s and elder law attorney’s point of view, the challenge and the question is how to deal with change over time, and how to take care of clients, both during their lives and in anticipation of the end of their lives – all at some unknown date, time, and place many years from now, and under future circumstances none of us can predict or realistically anticipate? And yet, time and inevitable change do not give us a reprieve. We must answer this question.
The answer, it seems, can only reliably be derived from logic. If we are driven by anything else (the news, current trends, financial considerations, personal opinions, the opinions of “experts,” anxiety, fear, or other emotions, overconfidence), we may reach a faulty conclusion. Let us then restrict ourselves to logical reasoning as a means of testing for truth in our search. Our process need not be lengthy, perhaps three (3) steps, and we can begin with some familiar statistics. First, according to the American Bar Association (ABA), fifty-five percent (55%) of Americans have no estate planning. This naturally means that only forty-five percent (45%) of Americans have an estate plan. Of that minority of Americans who have planning in place, statistics from the National Network of Estate Planning Attorneys (NNEPA) show that those plans are only updated once every nineteen (19) years. That fact becomes even more startling when we look at the brief list of historical events since 1991 in the presentation below – they include, among many others, the following:
- Since the early 90’s – continued changes in marital deduction planning, and in elder law and special needs planning;
- Low federal and state estate tax exemption amounts;
- OBRA-93 (Omnibus Budget Reconciliation Act);
- The Bush years – begin estate tax phase-out;
- Maryland’s estate tax decoupling;
- Deficit Reduction Act of 2006 – changes in Medicaid law;
- Maryland’s long-term care division for Medicaid – $4,300;
- Continued increases in estate tax exemptions through 2009;
- Proliferation of traditional estate planning;
- 2010 temporary elimination of the federal estate tax;
- 2011 – end of EGTRRA (Economic Growth and Tax Relief Reconciliation Act of 2011);
- Portability – effective 1/11/2011 (made permanent – 2012);
- Medicaid Manual Release MR-159
- The Affordable Care Act;
- Maryland’s estate tax recoupling;
- Maryland’s long-term care divisor for Medicaid changes to $7,940, and now $8,684;
- Maryland Trust Act;
- Augmented estate;
- Elder care explosion;
- Special Needs – ABLE, Special Needs Fairness, and other laws;
- Fiduciary Access to Digital Assets;
- Just to name a few.
If we accept that these few events represent an enormous body of change in the estate planning and elder law world over the past 25 years, we can now examine how this change is dealt with, or needs to be dealt with, in practical terms – the second phase of our process. As a general rule, there is no proactive client education or maintenance/updating of clients’ estate and elder law plans across the country. Let’s place the blame for lack of client care squarely where it should be – with the estate planning and elder law planning community – the professionals responsible for helping clients maintain and update their plans, and educating them. According to the Client Maintenance Academy (CMA), Elville and Associates was only the forty-second (42nd) law firm in the United States to complete training at the Academy for the purpose of designing and implementing a high-level Client Care Program. While the firms who have been trained by the CMA are not the only law firms in the U.S. utilizing a client maintenance and updating program for their clients, it is safe to conclude that of the thousands of law firms across the country actively engaging in estate planning and elder law planning, only a handful have such a program, or even attempt to implement one – conservatively speaking, likely at least ninety percent (90%) have no such program. So to realistically provide solutions and client care throughout the generations, the estate planning and elder law attorney must offer a client maintenance and updating program, and provide client education. If there is no such offering, clients (non-professionals) cannot be expected to maintain and update their plans over the years and decades to come, and thereby avoid plan failure.
The third phase of our search for the answer comes back to the client – whether there is a real partnership relationship? Once the estate planning or elder law attorney has recognized the importance of client care and has implemented a client legal education and maintenance/updating process, clients must reach out in partnership with the attorney/law firm. It is when this union takes place that true power is achieved. When real partnership exists between a client and their planning attorney, usually beginning at the time of the initial engagement, wonderful things can happen in the accomplishment of the client’s goals and objectives. And the fulfillment of those goals and objectives can only be truly measured at a time of need or crisis, usually in the form of the following questions: is the plan current and reflective of the client’s wishes and changes in the laws, with ample built-in flexibility?; and how are the client’s assets titled at the time of need or crisis (illness, incapacity, or death)?
So the answer to the question and challenge we are presented with is threefold: (1) we must recognize the problem that most Americans have no estate plan or do not maintain their estate plans for extended periods of time during which enormous changes occur in the world; (2) we must accept that the vast majority of estate and elder law attorneys/law firms offer no maintenance and updating plan, and no process-specific legal education for their clients, leaving most estate plans poorly maintained or updated, and generations of family members without optimal knowledge of how to execute the plan, thereby creating plans that have a high probability of failure – attorneys/law firms must change from transaction-based models of planning to client care models, in order to offer clients the updating and maintenance programs that are essential to ensuring plan success; and (3) clients must embrace the client care and power in partnership concepts.
The point is this – changes of great import have already occurred over the past twenty-five (25) years, and will continue. Changes in tax, health care, and other policy that will likely occur under the new administration are nothing more than a continuation of the past. There is nothing to fear – rather, we are called upon to prepare for change. And since we cannot stop or control change, preparedness in estate and elder law planning equals client education and continuous maintenance and updating through client care, by and through which we answer the challenge and the question.