Editor's Note: The following article was written as a postscript to the 44th Annual Heckerling Institute of Estate Planning conference, held in Orlando, Fla., in January.
Much of what drives the estate-tax planning practices of wealth advisors-whether they are estate-planning attorneys, CPAs or financial planners-is grounded in the major pieces of tax legislation enacted between 1976 and 2001. These laws have provided advisors with steady business by generating new tax provisions for clients' estate planning documents and, as a consequence, the development of new tax saving techniques.
Yet there are clear indications-not least among them the declining number of people subject to the estate tax-that the estate-tax planning market is shrinking. Estate-tax planners, therefore, may need to rethink their business models and consider branching out their services.
The field has in some ways gone full circle. Few of us stop to realize that even though we've had an estate tax for over 90 years, until the late 1960s or early 1970s, most estate-planning attorneys drafted fairly routine wills and trusts and did little estate-tax work.
Evidence of our field's slow evolution is reflected in the significant number of wills drafted well into the 1970s (and even today for many non-taxable clients) that have much more in common with documents drawn up hundreds of years ago than we might like to admit. Who has not noticed the similarities of the modern "simple will" to English sheepskin deeds and wills from the 1850s that hang on law firm walls, or the circa 1950 onionskin copies of wills buried in the back of our clients' files.
Not only is the language of our trade perhaps not as novel or evolved as many would think, neither are some of the solutions that we have developed to address the human challenges that we wrestle with in our current practices. For example, William Assheton, the rector of Buckingham in Kent, England, lyrically addressed one such situation we've all struggled with in his text A Theological Disclosure of Last Wills and Testaments, published in 1556:
"If your children and relations are notoriously vicious and debauched . . . do not abdicate or cast them off . . . but make provision for them in trust in such manner and with such circumstance, as may relieve their necessities, but not their lusts."
This 450-year-old phrase, "in such manner as may relieve their necessities, but not their lusts," might provide better guidance to a trustee in dispensing funds to certain problem beneficiaries than many of the more detailed provisions developed since.
Until the late 1960s, notwithstanding the existence of an estate tax since the World War I era, the work of trust and estate lawyers has evolved very little. Around 1970, however, the modern evolution of our profession began, as advisors to individuals started devoting more time to estate tax planning. This evolution may have been due to the 1969-76 transfer tax law changes, really the first significant change to our transfer tax system since World War II, or to the general increase in the specialization of lawyers in the 1960s and 1970s.
Whatever the cause, the estate-tax field grew rapidly after 1970, both in the number of specialists and their level of expertise. Yet, while the decade of the 1976-1986 tax acts would appear to be the heyday of opportunity with the changes in transfer tax laws, there is evidence that the profession's prospects may not have been as bright as they may have seemed.