NAEPC Report

The Futures Task Force of The National Association of Estate Planners & Council released a report on November 16, 2011 that examines how taxpayers would be impacted if Congress extended the current $5 million wealth transfer tax beyond 2012. The report also considers the future of the members of the NAEPC council. The executive summary of the report is below:

First, despite the task force’s efforts to examine issues from an estate tax neutral position – – – it is not material whether there is any tax at all or a $1,000,000 to $5,000,000 exclusion – – – the estate tax issue is still “the elephant in the room.” Even though we endorse the position that estate planning is not just about taxes, the profession is clearly driven in significant measure by the Internal Revenue Code’s estate and gift tax rules, whatever those may be in a given year or decade.

That said, the task force members seem inclined to reluctantly accept that the relative stability we enjoyed in the gift and estate tax laws through much of the 20th century may not again exist in the foreseeable future. We have become somewhat accustomed during the past eleven years to dealing with circumstances that exactly mirror the conditions set forth in the first paragraph above. No Congress in the past decade has given us any indication that a stable tax environment will be in place to allow us to help our clients plan their estates with any degree of long term certainty over tax-driven liquidity issues.

However, since there exists such uncertainty over taxes, we were unanimous in our opinions that each of our member disciplines needs to become even more focused on the many non-tax issues to be dealt with in designing and monitoring an effective estate plan for our clients. By not allowing the costs of dying to dominate our focus, we should become much more adept in assisting our clients first to build and create, then to protect and continue to grow, then to distribute (during life and at death) those estate assets, and finally to continue to serve the next generations/beneficiaries through the same processes!

Task force members have addressed the skills required to fulfill the above objectives in considerable detail in this report, so we shall not repeat that dialogue here, but we do think it important to summarize key points:

1. It is critical that we continue to populate “the estate planning profession” with individuals who are experienced, educated, and degreed and/or credentialed in their special fields of expertise. One should no longer be able to claim estate planning capabilities just because he/she can recite that “the first $5,000,000 is excluded from taxation; everything above is taxed at 35%,” or whatever the law happens to be at the moment.
2. Asset protection considerations will continue to become more prominent in our estate planning efforts. Our generally litigious society, bad marriages and bad divorces, and beneficiaries incapable of financial management are all issues that will not go away regardless of tax laws.
3. We all need to focus more upon building relationships than upon conducting transactions.
4. Similarly, the continued aging of our society will place more emphasis upon elder law and other services for senior citizens – – – activities which fall squarely into the field of estate planning.
5. Because estate creation clearly falls within our realm, all advisors will be required to become even more knowledgeable about investments (both in qualified and non-qualified plans) and insurance (not only life, but high limit disability and long term care as well).

Finally, the NAEPC and its member councils should continue to provide both broad-based and practice specific education to the 27,000+ professionals who represent our total membership. While it is true that most of our members have the availability of excellent practice specific education within their individual professional organizations, no other association provides its members with such insight into and education about the issues critical to professionals in the other fields that comprise our membership. Such broad-based education will be even more important in the future as the team concept of financial planning becomes increasingly more accepted by those of us who do the planning and by the clients whom we serve.

As implied in the Foreword, this has been a difficult topic about which to apply guidance. If, however, each or any reader gleans any new insight at all into what the future may hold for those of us who practice estate planning, we on the task force will feel that the time and effort spent in constructing this report were well worth our commitment. Only time and events will tell us how close to the target we actually came. Stay tuned on that!

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.