Estate Planning Attorneys Say ‘No’ Too Much

Remember when your kids were little and one of the first words they learned to say after “Mama” or “Dada” was an emphatic “NO!” As a toddler my daughter Gabrielle would march around our home pointing at her baby doll yelling “No! You can’t do that!” It’s obvious that children feel the need to voice their frustrations at being told “No” all the time, so they do this to the family pet or to inanimate objects they feel a sense of control over.

It turns out that none of us like to hear the word “no”, even after we reach adulthood.

Unfortunately, attorneys have a habit of rejecting our clients’ ideas out of hand. This makes for bad counseling.

“No – you can’t just sell that million dollar asset to your son for a dollar and report it to the IRS as a capital loss or as a tax-free gift.”

“No – you can’t have us draft provisions terminating the marital trust if your spouse remarries and expect to achieve a marital deduction on the estate tax return.”

“No – your trust can’t simply direct the payment of a $5,000 monthly stipend without first carving out some asset or amount of principal from which to generate the income.”

And on and on.

Rejecting Bad Client Ideas

Of course, your attorney is correct to direct the client away from a course of action that is likely to fail or that may even fall outside of the law. After years of practice we develop an instinctive ability to reject bad client ideas. I admit to becoming frustrated when a client tries to dictate how I should draft his trust when it is clearly headed down a wrong path.

But I’ve learned over the years that in so doing, my client is merely giving me something that is very valuable – his intent. He may not be doing it in a way that will actually serve to achieve his goals, but by throwing ideas at me, he is merely attempting to voice what it is that he would like to accomplish.

When I wave my hand in rejection of his idea, he becomes frustrated. Like the parent who is only trying to keep the toddler away from danger, I may sternly and emphatically deny the very thing that he hopes to realize when my work with him is complete.

But that’s the wrong way to deal with the gold mine of information that my client has just laid down at my feet.

Ask a Simple Question or Two

When I instead treat these seemingly bad ideas as significant information seeping into my client’s wishes and desires, I’m inclined to approach his bad direction differently.

Instead of voicing an outright rejection of the ideas I’ve learned to ask a few simple questions: “What are you trying to accomplish?” and “Why is it important to you to do it this way?’

The conversation might look something like this:

“Why do you want to make this million dollar gift to your son now, during your lifetime? What do you hope to accomplish?”

“Why would it worry you if your spouse remarries after you left the income trust to her?”

“How do you envision this $5,000 stipend being paid? Which assets or money do you see generating the necessary income?”

I’m sure you can see how these answers don’t directly rebuff my client’s idea; rather they demonstrate an attempt through dialogue to reach into his thought process. By examining his mindset I begin a constructive conversation centered on why he is sitting in my office seeking advice in the first place.

He also feels heard.

Wisdom Achieves Client Goals

The end result of our client conversations is to use my wisdom and experience to help my client achieve as many of his goals as possible. That’s where true value creation arises. By delving into my client’s mindset I am able to do so in a uniquely positive way. Once I understand where the client is coming from, it’s usually quite easy to direct them to a course of action that will work.

Even where the best tax outcome isn’t possible, given his intent, so long as I communicate that and he is fine with the result, he’ll be happy.

“I understand your desire to cut off the income if your wife remarries. So long as you understand that the federal estate tax marital deduction isn’t available when you provide an income interest that terminates in any way before her death, I’m okay drafting it that way for you.”

Never the let the “tax tail wag the dog” is an adage that a wise law partner told me almost three decades ago. Sometimes clients want to do things because they want to do things, come hell or high water. So long as they make informed decisions, I’ve done my job.

Another trick that I’ve learned over the years is to provide alternatives:

“What if instead of a marital trust we left some portion of your IRA to her outright? How do you feel about that? This way you disengage your children from their step-mother. A marital trust ties your children and your wife together economically for the rest of her life. Maybe it’s best to avoid that.”

When I learn my client’s motive, I have a better opportunity to provide true client value in the form of leadership, relationship and creativity by coming up with alternative solutions he may never have considered. That’s a win-win for everyone.

The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

2018-03-09T11:39:22+00:00

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