The Virtues of Estate Planning & Estate Planners Part 2 of 3: Estate Planning’s Role in Civilization

Jul 2, 2024 | Charitable Planning, Diversity, Equity & Inclusivity, Family Law, General Estate Planning, International T&E, Podcasts, T&E Administration

“The Virtues of Estate Planning and Estate Planners: Part 2 of 3,” that’s the subject of today’s ACTEC Trust and Estate Talk.

The Virtues of Estate Planning and Estate Planners is a three-part special:

Transcript/Show Notes

This is Kurt Sommer, an ACTEC Fellow from Santa Fe, New Mexico. Welcome to a special lecture featuring ACTEC Fellow Turney Berry from Louisville, Kentucky. I chose Turney to present the annual Joseph Trachtman Memorial Lecture because Turney is so thoughtful and thought-provoking, and he has contributed significantly to estate and trust law over the years.

Now, we continue with The Virtues of Estate Planning & Estate Planners and what it really means to strive for excellence in estate planning and in ACTEC.

Civilization and Estate Planning

Turney Berry: Civilization. Why are we talking about civilization? Well, civilization is kind of a funny thing. You should know, by the way, I’m not an expert on any of this. I’m certainly not an expert on civilization. I just have a bunch of books and articles sitting around the house because I collect a lot of books and articles and they talk about other things like civilization. But many of you probably studied the origins of civilization, or your spouses did, or your children have, or your brother-in-law is going to tell you all about it over the Memorial Day picnic. Well, send me notes because I’m interested in all that and correct and expand and tell me, “Oh, go look at this or that,” because that all makes me a happy camper.

When I think about civilization, this is not culture, this is not how we got from Neolithic man. No, this is civilization. But civilization begins with a surplus. You got to have something so that you don’t have to spend all your time going to McDonald’s to eat, you got to have something else, right? You got to have something so you’re not just collecting your basic food and shelter. And when you get that surplus and you can transmit that surplus, then lo and behold, civilization can develop. And all the stuff that we have after that- pottery and writing and art and medicine and law- is all built on this basic notion that you’ve got to have something at the beginning that you can transmit.

So, from my point of view- some might say this is kind of egotistical, that’s okay- people who are in charge of the orderly transmission of wealth from generation to generation, that surplus, we are at the tippy top of the civilization tree. The medical people, they’re close. They do good work. I’m happy with the medical people. Before we got mostly the rule against perpetuities repealed, I thought it was kind of a tie because we were both kind of time-limited. Now I say to the medical people, you get the whole immortality thing, you call me back. Otherwise, I think we are there. And there we go.

Importance of Transmitting Wealth

Now, why is that important? Well, because in my judgment, the importance of this notion of transmitting wealth- and I’m going to talk about wealth because I want to think of it in a very broad way that gives us something that is special. It gives us the opportunity not to have a job, but to have an adventure, to have a calling, because of the centrality of what we’re doing to what everybody else, in my judgment, at least, is trying to do. And I think most of us understand that intuitively. Maybe most of us understand it anyway and I’m just telling you things that you’re like, “Yeah, I’ve known that for years.”

Just the other day, just the other day, we were playing pickleball, and I said to somebody, “You know, over here on this side of the court, we’re refounding civilization every time we meet with a client.” Maybe we all know that, but I don’t hear it articulated that very well all the time. But I do think it appears in our happiness level. In our happiness level. And I think we are a very happy profession: estate planners, tax lawyers, estate planners- I think we’re a very happy group.

I recognize I kind of practice in the middle of the country in a mid-sized city, and those are most of the folks that I know. But years ago, when I joined the Uniform Law Commission, I started spending a lot of time with law professors. I like law professors, but they’re interesting people, and I discovered that they’re not necessarily particularly miserable, but they don’t feel the same level for the most part of inherent appreciation that I think we do, I guess,  broad generalization there.

I think I note in a footnote someplace or the other that I do pretty well with broad generalization because I’ve had no formal training in sociology, psychology, or anything. I just spent a lot of time in my youth watching the Phil Donahue show, so, I really can do broad generalizations. But I will say to you that at least among lawyers, we are certainly the happiest lawyers. And it’s because I think we get to do all kinds of fun stuff, right? What do we get to do? We get to have clients who create scholarship funds and do museums, who develop land and who preserve land and preserve family businesses, and turn businesses over to other folks. We get to have all kinds of fun in that regard.

What do the other lawyers have to do? Well, think about the poor, unfortunate corporate lawyers, why are they miserable? They are miserable, you know why they are miserable? Because they are smart people and they work hard and they spend all their time around people that for the most part, they think are not as smart as they are and don’t work as hard as they do, but who are one heck of a lot richer than they are. And over time, that warps their view.

Why are litigators unhappy? You know why litigators are unhappy? The ones who are really true trial lawyers are totally stressed out because on any given day they can be totally humiliated. That’s a bad thing. The ones who aren’t actual trial lawyers, the paper pushers, the people who are engaged in the motion practice, they can make millions of dollars. They can have mega cases. But they know at the end of the day at the club, there’s a door that says, “Trial lawyer, I go to court. You, paper pusher, you stay out here.” And they are looked down on, at best, as second-class citizens maybe lower than that among the true trial lawyers. And the compliance lawyers, of course, well, they’re miserable because compliance is boring and pointless and hopeless. So, obviously, they’re totally lost there.

So, we, I think, are the happiest lawyers. And my sense would be, honestly, really and truly, the only people who don’t want to go into estate planning are people who don’t know what it is. I mean, if you know what it is, everybody wants to be us. And if that sounds familiar to you, if you hear Miranda Priestley in your head, you are supposed to. Because I love “The Devil Wears Prada.” And I think that’s a wonderful line. And I will note for you, if you know that movie, that what Miranda Priestley does for Andy is model how to be a successful young woman in New York City. That’s what she’s modeling. Having nothing to do with fashion at all. That’s the purpose of that movie, at least in my judgment. Having nothing to do with ACTEC.

Estate Planning is a Happy and Fulfilling Profession

But we are happy people. Everybody would want to be estate planners, I think. And there are two exceptions with that. There are people, as you know, who don’t do death. There’s no crime in that. But there are people who, they’ll go to their mother’s funeral, sure, but they won’t go to their best friend’s funeral ‘cause they just don’t do death, they’re uncomfortable with death.

Can’t be an estate planner, right? If you’re an estate planner for very long, when you get slow service in a restaurant, your instinct is to say, “Huh, I wonder if the wait staff died.” It’s an idle thought most of the time, we don’t express that thought. But you can look around the table among the estate planters, you know exactly what we’re all thinking. “Huh? I wonder if they’re dead. Who’s going to bring me my food is getting cold? Wait staff has died.

The other group of people are people who just don’t like rich people. And that’s because, of course, most of the time, we really are, because we got to get paid somehow, we are representing rich people and you’ll see a footnote. I have time for this story. I’m going to make time for this story, many of you have heard this story before, and I apologize, but it is my favorite story. It’s a wonderful story. This is probably 25 years ago.

I have a client, like so many of our clients, so many of your clients, living on a trust fund. Lovely lady, doesn’t have a business, doesn’t have any known real need for expenses, but she’s overspending. And her accountant and office sends me a note and says, “Hey, fresh set of eyes, will you look down the budget?” “Sure, send me the budget.” I look down the budget, and I’m looking down, as I say, 20, 25 years ago. There’s an $80,000 Federal Express charge. This is in the budget. That’s unusual. I call the accountant. “Hey, what’s up with the $80,000 Federal Express charge?” The accountant says, “That represents a cost savings.” Well, you know, something that’s kind of interesting, something that’s new and novel that gets your attention. Speak to me about the $80,000 Federal Express charge as a cost savings.

Well, it used to be that Easter was coming up, and so we loaded a bunch of people into a plane, and we went to New York, and we checked into the Four Seasons, and we shopped at Bergdorf’s. And then we looked and after that, “Oh, we had this little next holiday coming up, Derby’s coming up, and we loaded people into a plane, and we flew to Dallas, and we checked in the Four Seasons, and went to Neiman Marcus, and so on and so forth during the year. Now, what do we do? We only do about half of those and in between- this is pre-internet- we have catalogs, and we order a dress that looks cute. We order it in blue, yellow, and green, sizes two, four, and six. I don’t know if my sizes are right. And all this stuff comes in, and we try it all on, and we FedEx it back $80,000 cost savings.

Now, I tell this story a lot, I tell this story when I teach in law school, I tell this story to our summer clerks, because obviously, the natural reaction to that, you don’t have to be Senator Wyden to want to increase the estate tax when you hear that story. Right? I mean, the natural reaction is 101% estate tax, sign me up, because that’s obviously insane, self evidently insane. But if you’re an estate planner, what do you do? Well, you can kind of laugh about it. You can have a good story to tell people for years. True story. But you can’t just kind of let it go.

So, you call around and you come up with some frequent shipper program, and it cuts the fees down to $40,000. Now, I’m not telling you then when you go to show and tell that, you say, “Hey, this is what I did today,” I’m not telling you this is one of the great accomplishments, but that’s what you have to do. If you can’t do that, it’s hard to be an estate planner. It’s just not impossible. But it’s hard, it seems to me, to be an estate planner.

The American College of Trust and Estate Counsel Needs More Experiences

So, you look at that, in my judgment, you say, “Everybody, in a sense, may want to be in the College (ACTEC).” And so the question then is, “Why do we have a College? What do we offer that’s an advantage to all of us, sitting and practicing and doing our orderly transmission of wealth on our own?”

And I think we have two things- and I’m going to talk about law reform in a little bit. But the main thing I think we have is a pooling of experiences. My judgment is that I know more about the intimate lives of the kind of clients that I have than those clients know about those lives because they know their own lives and the lives of their family, but they don’t know nearly as much about their friends or, as I can say, I see and know more about more rich people than my rich people clients do.

They may know about their golf game, they may know about a particular hobby, but they don’t know the other things. And that’s because I see bunches of those people. Now, my experience is about this wide, we’ve got- whatever it is- a dozen estate planners in our office. And so you add those together, our experience is this wide. What if you’re at a big firm? Maybe it’s this wide.

But America, just to pick on America, is a lot wider. It’s from that wall to this wall. If you buy into the notion that we ought to be trying to do something to help the orderly transmission of all forms of wealth, all forms of assets for everybody- I’m not telling you everybody has to come into your office- but of everybody, I need a lot more experiences. I need a lot more experiences to pool.

And so when I start thinking about membership in ACTEC, which is a popular topic, of course, who are we going to have in as Fellows? I say, to me, what we are looking for are folks who have experiences in estate planning that can help us represent more kinds of clients. That is not to say that we don’t need people who know more and more about GRATs because, of course, we do. Because every day some Fellow in the College who knows something about GRATs dies or retires, and we got to have a steady flow.

But we have lots of kinds of people and clients out there that I think personally we might have a hard time representing. I have a couple of little thought experiments in there. You can just think about this, it’s kind of crazy. But just suppose that Congress, in a fit of madness, created the inverse estate tax. And so what it did was it said, “We’re going to have a 40% tax at the $50,000 or $100,000 level and it’s going to go down all the way up and billionaires will pay no tax.” Well, now you have a lot of new clients that you can help in your neighborhood, right? You can do GRATs for people who have $100,000.

Now you’re going to say, “Well, they can’t pay me.” And I get that they can’t pay you, but I think really, that’s a red herring kind of wrapped in something, I just, I don’t think that’s really the point. So, let’s add another. While we’re in crazy land, let’s add another one. Let’s suppose that Bill Gates or Mackenzie Scott in your locale decided to pay for an estate plan for everybody so they can all come in.

What are you going to do for somebody who’s got $100,000? I submit, I don’t have any idea what to do for somebody who has $100,000. They’re going to pay, in my little example, a $40,000 estate tax bill. That’s crazy. What am I going to do for them? Well, you say, “Well, it’s easy, Berry, haven’t you paid attention? You can do sales, you can do GRATs, you can do a shark fin plat for these people. You can do all kinds of things.” Who’s going to administer it? We don’t have any money to pay. These people have children with problems, they need trusts. Who’s going to serve as trustee?

We have problems out there that, in my judgment, we don’t know how to solve and we hide psychologically behind, “They can’t pay us.” But I’ll just tell you can think about this and you can see if I’m right. But if you have a bright young lawyer, no experience in estate planning, they’re all you got. And in six hours you’re not available they’ve got to go and talk to a billionaire about a private annuity transaction. I think in six hours you can explain a private annuity transaction, a very complicated transaction, well, enough that they can explain it to the billionaire, answer all the billionaire’s questions; they couldn’t invent it, but they can explain it and get the billionaire to sign on the dotted line.

Can you do that with somebody who comes in and they’ve got young children, and they work, and they don’t know who’s going to take care of their young children, except maybe their elderly parents with cancer? And what about the folks who have a drug problem? I would tell you that most of us have no idea. No, we’re just going to send them away because six hours, 60 hours, we don’t know what to do for them. We don’t have an answer for what to do for them.

And if you don’t have an answer, it doesn’t really matter what else you know, if that you’re of no help to them. And so if we’re trying to expand, we’re never going to be able to help everybody. Lots of these are intractable societal problems, but you can’t hide behind that. You want to do the best you can for the widest audience that you can. We need, in my judgment, more experiences.

Now we talk about excellence in ACTEC. I’m a big fan of excellence in my law firm. I talk about excellence for so long that our managing partner, whose father trained at the Mayo Clinic, when his father died, he brought me a picture of the original Mayo brothers with a little statement about excellence and said, “You talk about this so long. Put this on your wall.” I treasure it, it’s sitting on my wall.

The Meaning of Excellence

What does excellence mean? You’ll like this one, I think. We don’t really think excellence means expertise in the College. If we thought excellence meant expertise in the College, what would we do? This is America, we would create a standardized test. The “ESPLAT” the Estate Planning Aptitude Test. In order to get into ACTEC, you have to have an 89 on the ESPLAT.

Now, before you dismiss this, think about how much fun that would be. You get to write the question. Sure, you can have a few boring essay questions, but you can have true/false questions. My securities and my corporation classes in law school exam were 100 true-false questions. Did I mention to you that when I was in law school, I mostly did political science? There we are.

You could have true/false questions. You can have all kinds of questions in ESPLAT. There’s more there. This would be a great money maker for the Foundation, the Foundation could charter a company that, of course, does what? ESPLAT preparation courses. We would be starting from scratch. Our standardized test wouldn’t have to disadvantage people if we could figure out a way to give everybody an equal chance. You talk about PR for the College imagine the New York Times headline, Estate planning group solves problem of aptitude test discrimination. This would be great. Why don’t we have the ESPLAT? Maybe it’s because none of us ever thought about it.

We’re going to have a special, Kurt you’re going to convene at an emergency meeting of the Long Range Planning Committee. But I doubt that’s the case. It’s because we don’t think that expertise is really the deal. We want people who are not only good at what they do but will bring that to us, will help us. And I think that’s exactly right.

What we need are people who will step in the door and will help us do our jobs better, will bring those experiences to bear. Now, you always have the concern, and I mentioned about this, whenever you think in any different way than the traditional way about members, you start thinking about watering down standards.

And we all worry about watering down standards. And to me, watering down standards would mean something very particular, it would mean I look at a bunch of new Fellows and I say, “Here are people who are either unable or unwilling to carry forward and help augment the mission of the College.” That’s the ultimate test, it seems to me. I realized for the Membership Selection Committee, that’s impossible. You got to have some kind of standards and you have to start with what you have, and you have to evolve.

I would say that if we don’t have subtle tweaks to that- to our membership criteria, to what the Membership Selection Committee does- every year, we are not really paying close attention to the kinds of people that the College needs, I think. This is what I think I don’t know if that’s right, but I will toss that out to you just as we go.

Kurt Sommer:  Please join us for the next episode in the series, where Turney continues his lecture on what it really means to strive for excellence in estate planning and in ACTEC.


Additional Trachtman Lectures in the ACTEC Trust and Estate Talk series:

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