With estate planning, you gotta know the territory
June 1, 2018
You can bicker, bicker, bicker
You can talk, you can talk
You can talk all you wanna
But it’s different than it was.
I love a good musical, and one of my favorites is The Music Man. And the beginning always makes me think of estate planning. Bear with me.
The first number in the show, which is actually named “Rock Island,” after a famous train line, features a bunch of traveling salesmen heading to their next destination. As the train itself beats out the time, they argue about the difficulties of their profession.
With one exception (Charlie the anvil salesman, who keeps insisting that you just “gotta know the territory”) they agree that their job is becoming more difficult in 1912. And several of them blame various new innovations. If you have only seen the original movie (the version with the brilliant Robert Preston in the lead) you have only seen part of it, because they shortened that song.
The original play has a more extended version of the discussion (if you want, you can look it up on one of those newfangled computing machines). One of the salesmen blames the Model T Ford, which allows people to drive all the way to the county seat instead of making their routine purchases at the small local store. Another blames the modern, departmentalized grocery stores. Yet another blames the Uneeda bisquit, which comes in a sealed package and has made the local cracker barrel obsolete.
And this is amusing to us, looking back, because these guys cannot seem to fathom the obvious fact that these changes have created new opportunities. Locked into their concrete ways of thinking, they don’t even think of selling Model T Fords or Uneeda bisquits, or marketing to the modern-day stores in the county seat. Or anything else.
One of them, who sells notions (small useful items) can’t even conceive of how Professor Harold Hill can make a living selling big trombones. He can’t imagine selling items too big to carry around with you (although this apparently does not bother Charlie the anvil salesman).
Plus ca change, plus c’est la meme chose: the more things change, the more they remain the same.
We see the same sort of difficulties today, although it is harder without the benefit of hindsight. Taxi drivers are struggling to deal with the competition from Uber and Lyft. Retail outlets all over the country, even right here in River City (sorry, I mean Anchorage), are closing due to the competition from Amazon and other online sellers.
And I see this in my own little profession of estate planning. Less than 20 years ago, anyone with an estate worth more than $675,000 ran the risk of a 55 percent estate tax. The solutions, which the estate planners came up with, involved very complex trusts. They were not written to be understood by normal human beings, they were written to worm their way through highly technical loopholes in the Internal Revenue Code. The only people who needed to understand them, for those trusts to work substantial benefits for the client, were tax lawyers, accountants, and the occasional IRS auditor. Clients were willing to accept that complexity because, even though they couldn’t understand it, they could understand that it was saving their heirs a huge amount of money.
That all changed beginning in 2001. Today, nobody needs to do complex estate tax planning unless they have an estate worth more than $11 million (or for a couple, $22 million). And yet, many estate planners still peddle complicated, unreadable trusts. And oftentimes their clients abandon them, going to someone else, or even going to an online service or computer program which will provide documents, but no planning.
Living trusts can nonetheless be very useful. They can avoid probate with all its costs, delays, and other problems; and they’re much harder for a disgruntled heir to challenge than a will. And estate planners can provide a much better service than any computer program will ever do. But we have to make these trusts more accessible and understandable to our clients, or we will continue to lose them.
We can do it if we wanna. But we gotta know the territory.
Kenneth Kirk is an attorney and estate planner in Anchorage. You don’t have to ask for his credentials; they’re right on the wall of his office. Nothing in this article should be taken as legal advice for any particular situation. For specific legal or planning advice, consult an attorney of your choice.