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The Law, Professional Responsibility and the Future of T&E

May 3, 2022 | Podcasts

“The Law, Professional Responsibility, and the Future of Trust and Estates,” that’s the subject of today’s ACTEC Trust and Estate Talk. 

Transcript/Show Notes

I’m Natalie Perry, ACTEC Fellow from Chicago. This is ACTEC Trust and Estate Talk’s 200th podcast. To celebrate this milestone, we’ve invited two leaders of the College to discuss the profession – the current President of the College, Bob Goldman, from Naples, Florida, and Beth Shapiro Kaufman from Washington, D.C., who is Chair of the Estate and Gift Tax Committee for ACTEC. Thank you for joining us today. 

Federal Law and the Impact on Estate Planning

Natalie Perry: Beth, I’m going to start with a question about the pending changes in federal law, and I wondered if you could share with us, what do you think will have the most impact on the profession?

Beth Shapiro Kaufman: Sure. Thanks, Natalie. Now I think you probably expect me to start talking about some technical tax changes that are on the horizon. But actually, my response is more in the area of the corporate transparency rules and other disclosure rules that we’re seeing.

There’s an international concern at this point that the United States has become a tax haven for wealthy and possibly corrupt foreign individuals. And that’s spurring an effort toward new disclosure rules in the United States.

The Corporate Transparency Act that was passed doesn’t reach trusts right now. But I think that probably further disclosure for trusts is on the horizon. Even if you look at the domestic side of things, I think the government feels that the information it collects on the assets and activities of trusts isn’t adequate to allow it to facilitate enforcement of the tax laws.

So, in the administration’s budget proposal that just came out last month, we see a proposal to require trusts to make annual disclosures of the value of their assets. And this is just the beginning of efforts for the government to collect information that might allow it to do a better job enforcing the laws.

Bob Goldman: Beth, I think that’s a huge point you make for our profession. And another one along the transparency lines that I would add that is important to ACTEC, as well as all lawyers, is the Supreme Court now taking a look at an internal ethics rule, which it heretofore has not had, that would outline when a justice must recuse him or herself.

And I know on good authority that Chief Justice Roberts is exploring that even as we speak. This was raised, of course, through Justice Thomas and some cases before the court now that may or may not involve his spouse on amicus briefs.

And ACTEC’s amicus briefs in the Supreme Court, which happen from time to time, of course, affect individuals in their estate planning. And when you take those robes off, all nine justices have estate planning issues like all the rest of us. So, hopefully, a rule comes into place that is clear and that just further promotes the profession and the protection of our practice as lawyers and as judges.

State Legislation and the Impact on Estate Planning

Natalie Perry: Thank you. So, Bob, in addition to being President of the College, you’ve been very involved in understanding how trust and estate laws change from state to state. What state legislation should professionals keep an eye on?

Bob Goldman: Well one, Natalie, that I would keep a real close eye on over the next three or four years involves one of the most antiquated areas of the law, not just for trust and estates, but in all areas of the law, and that is choice of law issues and multi-jurisdiction issues. What law is going to govern in a particular case? And where can you bring that case?

And in the T&E area particularly, not only do you have people moving around, but they’re moving their assets around. They’re acquiring assets in different places. I know that the Uniform Law Commission is, in fact, working on a project as we speak on this very issue.

Another issue that I see coming – I call it the virtual will and trust signings/online storage of estate plans. It’s certainly in the offing in the states. And that, while it was going on pre-pandemic, has accelerated in legislatures during the pandemic.

And that’s the tip of the iceberg in that area because people who are trying to be in the business of handling virtual wills and trusts, where are they really going with it? I think they’re in front of states even as we speak on artificial intelligence and using that to actually create estate plans, which sounds daunting but may end up being a pretty good thing if done well.

 

Two other areas, quickly, that I would talk about involve and go back again to the pandemic. We’ve learned that lawyers can actually work remotely. And by remotely, not just at home and not at the office, but in another state. We have lawyers from New York that have moved to Miami Beach but practice law virtually in New York. They may do the same thing. I know of some who are doing the same thing out of Colorado.

Well, the question becomes in each state – is that the unauthorized practice of law? And in Colorado, they would say, “Yes, it is. And you have to be licensed in Colorado to do that, even though you’re working with New York clients.” In Florida, so far anyway, it’s exactly the opposite. So, this is something all the states are looking at right now in one way or another, depending on how their practice of law is set up in that state.

The last thing I would leave you with – and Beth knows a lot more about this probably than I do– but property is just changing. What does it look like? What is intellectual property these days? Back in the day, it was a Beatles song or a Michael Jackson song. Now it’s what you have on your phone or what you’ve recorded, or the book you wrote on your Apple device. And we’re all doing that.

And, of course, through social media, people are monetizing and becoming influencers. Well, what is that asset exactly? And how is it protected under state law? That’s just a small part of that area of changing property interests and property rights, but it points out that this is an ever-changing area.

And that’s where I can go with that, Natalie. I could speak all day on it because there are so many issues. And in our State Laws Committee, as you suggested, they’re discussing these issues on a regular basis and we continue to try and help each other in our respective states to figure out where to go with some of these issues.

Future of Law in Estate Planning

Natalie Perry: Great. Let’s talk a little bit about the future for estate planning attorneys themselves. What do you see coming as far as changes for the attorneys?

Beth Kaufman: I see a couple of trends, Natalie. One, dovetailing with some of the things that Bob was just talking about, I think we’re going to need to find a way to move from a paper-based practice. We, as trusts and estates lawyers, are very attached to our documents. But the idea that a will has to be written on a piece of paper is a really antiquated concept at this point.

The challenge is to find some secure, tamper-proof way of creating electronic documents that people would feel just as good about as they do with their fancy redlined paper stapled into a nice blue back. The answer might ultimately lie in the use of the blockchain, or maybe there will be an even better solution.  

Another issue that I think estate planners need to plan for is increased mobility and globalization. Mobility – on the side of the estate planners, as Bob was just talking about – people are not necessarily staying where they were historically or working where they’re living. There are a lot of challenges to the profession and to the individuals from that, including challenges to the idea that the Bar Associations ought to be co-extensive with state boundaries. Maybe that is something where we’ll see change in the next decade or so.

We also have to deal with the globalization and mobility of our clients because we’ve got clients who don’t stay put, just like we’re not staying put, and could end up living in another country or at least in another state. And we need to deal with the differences in laws. And in that respect, maybe more uniformity would be a useful tool for estate planners, enabling us to work more helpfully with people who have one foot in each of several jurisdictions.

Bob Goldman: All great points, Beth. I would add, from my perspective as a trust and estate litigator, that I think these changes are coming and indeed in the works, and I hope they are. That is, for good planners like yourself, looking up from the tax code and listening to clients and developing ways to reduce fees and other costs of administration and litigation, and getting the assets to the intended beneficiaries, not the lawyers, as soon as possible.

And a simple example of that is not only the clarity of documents but preparing for the possibility of litigation and putting in alternative dispute resolution provisions in documents and legislating, by the way, for that to make it more of a certainty for the planners. If they do these provisions, will they work? From that side, as a litigator, I would like to see those things happen because the litigation side is just broken and planners can be a big part of fixing it.

Natalie Perry: Those are great points. Maybe as a last question, we can talk about changes you might see coming for individual attorneys in the estate planning area or smaller firms.

Changes that may Impact Individual Attorneys or Smaller Firms

Beth Kaufman: One thing that I see in practice is it seems like there’s an increasing split between practicing for the benefit of high net worth individuals and issues coming up in practice for the 99.5% of the rest of the population.

On the high net worth side, I’m seeing less of a distinction between income tax planning and estate tax planning where a lot of the proposals that have come out in the last year in attempts to tax wealthy people really used some income tax tools and some estate tax tools. For example, saying that death is going to be a realization event. It’s an income tax that’s imposed at death, but it really is an income tax and not an estate tax.  

Or, the way that Congress was looking at the Grantor Trust Rule. There was a lot of tension there between whether they were going to change how grantor trusts are taxed from the income tax perspective or whether they were going to change the treatment of grantor trusts on the estate and gift side.

But for the other 99.5%, we, as individuals and as a profession, really need to find ways to serve the needs of that vast part of the US population who really need estate planning, and we need to be able to serve them in an economically feasible manner.

Bob Goldman: I think that’s a big, big point. And it may come in two directions. One, maybe less lawyering -if you will- and more artificial intelligence being handled by non-lawyer businesses. That will, to some degree, involve the question of unauthorized practice of law. But there are a lot of ways to skin that cat that are already happening out there. It’s just a question of improving the AI, the artificial intelligence. And as the artificial intelligence improves, Natalie, from an individual lawyer’s standpoint, done well, it creates such amazing efficiencies, I believe, the way the computer did when we first got them, that will allow the individual attorney to do a lot of work to maintain a business without having to become a large law firm, which he or she doesn’t want to do because they’re built into the artificial intelligence.

But Beth’s point about being able to serve the needs of really the 95, maybe an even higher, percentage of people in the US, I think it’s critical. And I think it’s a mandate to lawyers in the trust and estate business. And I know that ACTEC thinks a lot about that.

Like Beth, I think that the flip side of that for the rest, as a business matter, I think law firms and individuals are going to probably distinguish themselves by being and maintaining the personal counseling that they do right now and sort of putting AI to the side for a certain set of clients.

But on the high-net-worth side, there are so many complications to family wealth, not only in terms of the assets but in terms of managing the generations of wealth to come that it really requires a personal touch. I think that will be promoted as a business matter, and that will keep a lot of the Beth Kaufman’s of the world very busy. 

Natalie Perry: I think those are great points. And I want to thank you both for sharing your insights with us on our 200th podcast as we talk about the future of estate planning and ethics in the profession. Thanks so much for being here.

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