Trust Crusader Warns Congressional Deadlock Is Killing Estate Planning

Top estate planning blogger Gerry Beyer says the lack of long-term clarity makes it impossible for professionals to do their job.

Texas Tech law professor Gerry Beyer is one of the best-connected people in the estate planning community, so if he doesn’t know something, odds are good nobody does.

That’s why it’s disturbing to hear him admit that he truly has no sense of what will happen to the tax code when we ring in 2013 two weeks from now.

And it’s why he doesn’t envy planners in the field who don’t have the same information resources, but have to help clients anyway.

“I would not want to be in the practice right now,” he explains.

“I like giving clients relatively ‘solid’ advice rather than just guessing. Now there’s always the fear you’re doing something wrong.”

Get clarity where you can

Beyer runs the most popular estate planning blog in the world with a loyal following of 1,000 to 1,500 visitors a day.

Heavyweights in the legal profession like the ABA Journal have heaped honors on him and Beyer is currently in contention to get enough votes to be named the ABA’s top “niche” blog.

He’s definitely earned it. The “Wills, Trusts & Estates Prof Blog” updates whenever there’s news that estate planners need to know — even on Christmas Eve, if necessary.
That’s part of what makes it so frustrating that the lame duck Congress is dragging out “fiscal cliff” negotiations until the last minute.

At this point, we know that the tax rules will reset to 2001-era levels on December 31 if Democrats and Republicans fail to make a deal.

Beyond that, anything goes and everything is on the table.

The estate tax exemption may drop back to $1 million. Income tax rates may rise or fall. Loopholes may close.

Even in an industry that operates in the shadow of changing government policy, the uncertainty has finally crossed the pain point, Beyer says.

“Certainly, estate planning clarity is what we want,” he explains. “We don’t have it now and as a result, it’s terribly frustrating for people to plan right now.”

The real problem is that years of short-term patches and even talk of retroactive clawbacks have eroded any certainty that Congress is up for the job.

At this point, the relatively “solid footing” that previous generations of planners could pass on to their clients is now anything but dependable.

It makes clients nervous. And that makes planners nervous.

“What’s terrible about the mess caused by the legislature is that whatever decision they reach, it would have been better to know it now,” Beyer says.

“If the exemption amount is low, you can use strategies to reduce your exposure,” he explains. “If the exemption is high, you may not need to take any action. If you have a decision, you can plan. You know the rules.”

Taxes no longer a great certainty

This year is the worst possible scenario in a lot of ways.

For one thing, the disappearance of the estate tax back in 2010 left planners in a world where even previously unthinkable scenarios can happen.

While the 12-month holiday was on the books for years, few expected Congress to keep the loophole open that long.

And when it did, nobody was sure the millionaires who died in 2010 would actually end up owing no tax by the time the estates settled.

Now that Congress has opened the door to retroactive tax increases, it’s practically impossible to close the books on previous filing years with absolute certainty.

Furthermore, the prospect that the changes will have a wider impact means this is no longer an issue exclusive to your top handful of clients.

Two more weeks of Congressional stalemate would, among other things, expose all Americans who leave more than $1 million behind to federal estate taxes of up to 55%.

Many of these mass affluent families thought their need for advanced estate planning vehicles was minimal at best.

An eleventh-hour patch might free them from the need to rush into gifting programs or create trusts before the end of the year.

But Beyer says that would really only be another dodge of the underlying issues and create another 12 months — or more — of angst.

Information is all we have

Realistically speaking, all planners who want to ease their anxieties and serve their clients can do is stay informed and ready to move.

“You need to keep your eyes open and monitor developments in Washington,” Beyer says. “Things can literally change minute-to-minute.”

He’s in a position to know what that means. While I was talking with him, several key lawmakers teased at shifting their stance one way or another.

People from all over the world feed the Wills, Trusts and Estates Prof blog their tips, which Beyer can distribute as fast as it takes to push a few buttons.

When and if the long deadlock ends, his readers will probably be among the first to know and be able to pass on what that news means for their clients.

If Gerry Beyer and his team weren’t blogging 24/7, the estate planning community would need to draft him — which isn’t so far from how he actually started.

“In 2005, Paul Caron from the University of Cincinnati College of Law was searching for a professor to edit this blog,” he remembers.

“I offered to accept this position, he agreed and I’m still here.”

Scott Martin, senior editor, The Trust Advisor


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