Estate Planning: Pros & Cons

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JacksonEsq1

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Estate Planning: Pros & Cons

Post by JacksonEsq1 » Wed Feb 03, 2021 2:41 pm

To those having estate planning experience, what do you see as the chief pros and cons of this niche?

FND

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Re: Estate Planning: Pros & Cons

Post by FND » Thu Mar 11, 2021 9:49 pm

biggest pro: it's easily the most laid-back practice area. Unless someone is literally dying or about to go into the hospital, there's rarely a rush. Billable hours are usually lower. Plenty of places work on flat-fee, so clients don't argue about the bill.

Biggest con: business development. There's very little repeat business in EP, so there's constantly new clients coming in. successful EP specialty firms have a marketing machine, sometimes with dedicated marketing professionals. especially on the lower range, it's predominantly a sales job.
Second biggest con: lawyers who don't know what they're doing (see below)

One thing to be aware of is that it's a bifurcated practice area. There's high net worth, which is predominantly tax planning. Very rigorous intellectually, lots of complicated options, and if you screw up, you WILL get sued. Most estate planning attorneys don't do this. I know of even medium-sized firms that prefer to refer this kind of work out. It's not unusual for fees in the $10-$50k range, and I've seen 6-figure bills too.

On the other end there's a lot of long-term care planning. Clients shielding their assets from Medicaid. IU can do this in my sleep, and can teach the typical T14 grad everything they'll ever need to know in a few weeks. There's very little variation, your documents are about 90% the same for each client. I'd say most firms charge around $4-$8k for this.
For the few firms/attorneys that dare, emergency planning when a client is about to go into the nursing home is an extra complication that few firms attempt - it's very meticulous and easy to screw up. Typically fees would be around $10-$20k. You really want a good paralegal to handle the bulk of this.

The other problem is that any idiot with a JD can write a will, and they tend to do it badly. I don't know how often a client has been given bad advice by their second cousin who challenges traffic tickets for a living. For the most part, the law is specialized, but EP doesn't always get the respect it deserves

gekko

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Re: Estate Planning: Pros & Cons

Post by gekko » Thu Mar 18, 2021 2:45 am

FND, I'm planning on entering this area when finished. I come from owning a wealth management practice that I sold a couple years back. Law is something to do mid-life for me and am often surprised at how many estate planning attorneys do not add activity in wealth management, insurance or real estate when related, even if just maintaining a license in those areas to receive related referral revenue. They are literally sitting on a gold mine and have no idea.

For example, I'm in an area where home prices are insane and people have huge gains. Guys will market themselves as drafting CRTs or other items. A couple guys in my area must generate nearly as much revenue from their outward referrals using a RE broker license as they do for the actual documents themselves.

For the people who do need to prefund estate taxes even with the current high exemption (of which there are many in this specific location....) most of the attorneys drafting ILITs are trying to be the insurance agent as well or at least one of them splitting the ticket. Same with insurance funded buy/sell agreements or any number of other related areas.

I'd be interested to hear your thoughts on the natural amount of potential interdisciplinary aspects of the field and to what degree (if any) your practice's revenue (or those you are familiar with) is comprised of referral comp. For the amount that is, how much is from attorneys for other legal services (as in the case of the advanced tax related cases you mentioned) vs referrals out to other related areas.

I would imagine also that the 2nd cousin traffic attorney who occasionally drafts a will is augmented by the number of tangentially related professionals in other fields such as those listed above who incidentally deal with estate planning issues. Years ago when I had to take the estate planning course for the CFP exam I said to myself "lot to know here, good to know when something has come up to refer out." Many unfortunately would make a half informed statement instead of developing a good relationship with a referral partner...

FND

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Re: Estate Planning: Pros & Cons

Post by FND » Mon Apr 12, 2021 2:52 pm

gekko wrote:
Thu Mar 18, 2021 2:45 am
FND, I'm planning on entering this area when finished. I come from owning a wealth management practice that I sold a couple years back. Law is something to do mid-life for me and am often surprised at how many estate planning attorneys do not add activity in wealth management, insurance or real estate when related, even if just maintaining a license in those areas to receive related referral revenue. They are literally sitting on a gold mine and have no idea.
I agree that you can make a lot of extra money, but here are some things to consider:

1) some states outright prohibit you from providing related services
2) where not prohibited, to follow the appropriate ethical rules is a bit of a minefield. As an easy example, if you use a shared computer system, then FINRA can demand access to files that are privileged - say no and you lose your securities license, say yes and you lose your law license.
3) you can't build up a referral network if you're a competitor. If the local financial advisors discover you also provide investment management services, they won't send you their clients. Same with insurance and accounting.
4) Informed Consent is always required (not always followed). If you keep referring clients to services where you get a cut, clients may get the impression you're a bit of a huckster.
5) remember, you're not allowed to split legal fees with non-attorneys. Try asking e.g. an insurance agent to split commissions on cases you refer for insurance, but telling them you can't split fees for cases they send your way.

So, first you need to see if your state allows it. If they do, it becomes a business decision - will you make enough money from the additional services to account for the referral sources who'll drop you? Once you decide to go ahead, you'll need to put in a lot of effort to set it up right.

That being said, there are some amazing synergies, and I've seen:
1) clients who need life insurance or annuities as part of their plan; or clients who no longer need the policies/contracts they already have
2) as part of trust funding, offering a free review of a client's life insurance policies; then offer to provide more coverage for lower premiums
3) you can offer a review of their investment portfolio
4) real estate purchases & sales for investment portfolios or upon someone's death
5) consultant who helps calculate FMV for any of the many situations where that may be needed
6) accounting/bookkeeping services
7) Medicaid related services, such as home care agencies
8) Trust services (including one attorney who set up his own corporate trustee)
9) Scummiest of all - setting up long-term structured payment plans for beneficiaries, then providing up-front lump-sum buyouts
gekko wrote:
Thu Mar 18, 2021 2:45 am
Many unfortunately would make a half informed statement instead of developing a good relationship with a referral partner...
the bane of my existence.

Most attorneys stick to the basics. But if you go beyond that, these services can become very complicated, and I think many people are unable or unwilling to really learn. The smart ones will refer it out, the dumb ones do it themselves, and the lazy ones don't even bother.
The same is true for insurance (e.g. PPVUL, life settlements) and financial advisors/wealth managers (e.g. option-hedging strategies, arbitrage).
Quite simply, if you don't get enough customers of a certain type, why go through all that effort to serve them properly? And, if you're doing well staying solidly in your comfort zone, why stray out of it?

gekko

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Re: Estate Planning: Pros & Cons

Post by gekko » Wed May 26, 2021 4:17 am

Thanks for this response. I'm in total agreement on some of the minefields you mentioned. I have FINRA licensing and a RE Broker and Insurance license. I plan, however, to only get involved in the "biggies." If I have someone with a legit estate tax prefunding need (not uncommon in my city), I would feel crazy to simply charge a fee for drafting an ILIT, then letting someone else write the policy inside it. Similar with whatever appreciated assets are going to a CRT, I want to sell them if real estate and then manage them after in a brokerage or advisory environment, since part of the overall transaction anyway. What I do not plan to do is as people who are simply in need of a basic will/trust/poa package to consider life insurance or any "cross sell" that doesn't seem to be part of the "same transaction."

I have a few more questions if you have time:

-I'd be curious to hear how well prepared you think you were from your LS Will and Trust class.

-Are you using any lead source for marketing other than proprietary stuff of your own? (If so, I'm assuming the call to action is usually will/trust rather than some other need?)

-Is any of your business coming from prepaid or company provided sources that pay you? (Metlife or some of the other company legal service plans that cover the cost and reimburse the attorney?) If so, are they worth the time or kind of a pain?

-Are you charging hourly, by transaction or some other method?

-How much of your biz has been done remotely vs in person?

-What amount of your total business is referred out? For that business that is split, how much of it is more niche EP stuff you've chosen not to do and how much is a different area (PI, Medi-Mal or something else) you just happened to come in contact with by virtue of your relationship with what is primarily an EP client?

-What do you think is the feasibility of someone straight out of LS to hit the ground as a solo practitioner with an EP practice assuming they have gained the knowledge in that specialization and have at least some savings to fund a ramp up period?

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FND

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Re: Estate Planning: Pros & Cons

Post by FND » Sat May 29, 2021 1:34 pm

gekko wrote:
Wed May 26, 2021 4:17 am
Thanks for this response. I'm in total agreement on some of the minefields you mentioned. I have FINRA licensing and a RE Broker and Insurance license. I plan, however, to only get involved in the "biggies." If I have someone with a legit estate tax prefunding need (not uncommon in my city), I would feel crazy to simply charge a fee for drafting an ILIT, then letting someone else write the policy inside it. Similar with whatever appreciated assets are going to a CRT, I want to sell them if real estate and then manage them after in a brokerage or advisory environment, since part of the overall transaction anyway. What I do not plan to do is as people who are simply in need of a basic will/trust/poa package to consider life insurance or any "cross sell" that doesn't seem to be part of the "same transaction."
It's a business decision you need to make - you may find that giving a $1m policy to an insurance broker once or twice a year in exchange for getting several new clients for basic estate planning every month might be a good idea. If you become known for being a financial advisor or insurance broker in addition to your law practice, those sources dry up real fast.
gekko wrote:
Wed May 26, 2021 4:17 am
I have a few more questions if you have time:

-I'd be curious to hear how well prepared you think you were from your LS Will and Trust class.
Zilch, zippo, nada, nothing. And if you want to do HNW, an LLM doesn't do squat either.
Find a mentor. Period.
gekko wrote:
Wed May 26, 2021 4:17 am
-Are you using any lead source for marketing other than proprietary stuff of your own? (If so, I'm assuming the call to action is usually will/trust rather than some other need?)
See my last answer below
gekko wrote:
Wed May 26, 2021 4:17 am
-Is any of your business coming from prepaid or company provided sources that pay you? (Metlife or some of the other company legal service plans that cover the cost and reimburse the attorney?) If so, are they worth the time or kind of a pain?
nope. those services want low budget, and I'm high end.
gekko wrote:
Wed May 26, 2021 4:17 am
-Are you charging hourly, by transaction or some other method?
usually flat fee. I have a menu that I use for pricing, and I have no problem letting the client see the menu... after the consultation.
Some matters need to be done hourly, but the clients generally prefer knowing the exact cost before they get started - and so do I
gekko wrote:
Wed May 26, 2021 4:17 am
-How much of your biz has been done remotely vs in person?
quite a lot is happening remote now. I have done initial consultations and review meetings by phone, by zoom, or whatever works. Some states allow remote document execution, some don't. Still, I prefer in-person.
gekko wrote:
Wed May 26, 2021 4:17 am
-What amount of your total business is referred out? For that business that is split, how much of it is more niche EP stuff you've chosen not to do and how much is a different area (PI, Medi-Mal or something else) you just happened to come in contact with by virtue of your relationship with what is primarily an EP client?
My business meaning EP? nothing gets referred out - I can do it all - HNW, Medicaid, and Special Needs. There are plenty of EP attorneys who refer those things out, and I'm happy to take it off their hands. Same with small-town practitioners who take on a lot of different work.
Quite simply, I'm (one of) the best in town.
That being said, I don't litigate, so that I do refer out.
Anything that comes my way that is not EP, I don't touch it, so I pass it along to someone who does
gekko wrote:
Wed May 26, 2021 4:17 am
-What do you think is the feasibility of someone straight out of LS to hit the ground as a solo practitioner with an EP practice assuming they have gained the knowledge in that specialization and have at least some savings to fund a ramp up period?
It's feasible. A friend of mine who intended from day one to go solo started by picking up cheap wills, and that paid the bills until his chosen practice area was profitable. Luckily, he did realize how quickly he got in over his head.
If you have startup capital, using the right marketing and lead source material, I can help any idiot get started and up and running pretty quickly - so long as you have the skills.

Targeted marking works quite well in this business, but it might take a while to find your niche, which depends largely on the area. For example, you could start hitting all the local agriculture events to talk about farm succession, or you could hit up local retirement communities to talk about medicaid planning. It does take several months to get rolling, and can involve a bit of trial and error. The biggest problem with marketing is that it takes a few months and thousands of dollars before you know if it works. Especially early on, one wrong move could wipe you out. (but the opposite is also true; if everything falls into place, you could make bank).

gekko

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Re: Estate Planning: Pros & Cons

Post by gekko » Wed Jun 02, 2021 6:58 am

Thanks. These are very useful observations. I'm getting more and more interested in this area going forward. I'll definitely try to find a mentor before starting up and learn the specifics from a more practical rather than theoretical standpoint.

FND

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Re: Estate Planning: Pros & Cons

Post by FND » Sat Jun 05, 2021 1:05 pm

gekko wrote:
Wed Jun 02, 2021 6:58 am
Thanks. These are very useful observations. I'm getting more and more interested in this area going forward. I'll definitely try to find a mentor before starting up and learn the specifics from a more practical rather than theoretical standpoint.
feel free to hit me up whenever you need.
Particularly if you manage to get a client that's out of your league :lol:

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