Estate Planning Remains Strong

October 25, 2004
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GRAND RAPIDS — The word is that some large “brand name” firms aren’t growing their trust and estate planning practices, and in some cases are spinning off those areas of practice all together.

Robert Brower, member of Miller Johnson Snell & Cummiskey PLC, said he’s heard of that but has seen no evidence of it in West Michigan.

As Brower explained, that trend started nationwide when many of the large “brand name” law firms that practice in multiple states decided it wasn’t as profitable to do estate planning work on an hourly basis as it was to do litigation work and corporate work. It wasn’t that they were losing money on trust and estate planning departments, it was just that other areas of practice were more profitable for them.

“Those are the firms that have kind of dried up that practice and lawyers have left to start boutique firms where estate planning might be all that they do,” he said.

Brower said what has happened in West Michigan is that a few of the firms have started separate non-lawyer trust departments that are branches or ancillary divisions of their firm for trust administration.

“We have not done that. I think the practice in West Michigan, for most law firms that have a general practice with corporate clientele as we do, still is to offer estate planning as part of overall wealth management and business services.

“There still is a need for that. In fact, in our firm it’s one of the more successful and pre-eminent practices that we have.”

Trust and estate planning has been a growing piece of Miller Johnson’s business for some time and the firm intends to continue to grow that side of the business, Brower said.

The firm has consistently ranked either No. 1 or No. 2 in terms of new estate planning clients in the Business Journal’s annual list of top area estate planning law firms.

One reason Miller Johnson has been able to maintain that position, Brower said, is that it has a substantial elder law practice — which is a little different from but related to estate planning — and it has a substantial tax and estate planning practice.

Similarly, trust and estate planning have been a growing piece of Warner Norcross & Judd’s practice for years, said Mark Harder, chairman of the firm’s Trust & Estates Group.

He, too, has heard about firms in other cities around the country that are holding the line on or spinning off their trust and estate planning practice.

“The issue of whether trust and estate practices contribute sufficiently to the partnership’s revenues and ultimately to its bottom line has been an issue I’ve heard about for 10 years or more.

“Our experience at Warner Norcross is that our trust and estates group is a significant part of what we do at the law firm; we’re a net contributor to the firm.”

The firm has one of the largest — if not the largest — trust and estate practices in the state of Michigan, he observed.

Warner Norcross has 15 attorneys and eight paralegals in its Trust & Estates Group, and the group recently added a senior counsel in its Detroit office.

Harder estimates that by the number of lawyers in the trust and estate group, those services represent about 10 percent of the firm’s overall workload.

The firm continues to see a lot of opportunities for work in the trust and estate planning area of practice, he said.

Uncertainty in regard to the federal estate tax or “death tax” law likely plays a role in that “trend” of larger firms to spin off their trust and estate planning practice, both Harder and Bower believe. New legislation signed into law in June 2001 reduces federal estate taxes over time, with full repeal of the estate tax scheduled for fiscal 2010.

Although current law holds out the possibility of permanent repeal of the estate tax, Harder is not convinced there’s actually going to be permanent repeal of that tax.

But the planning of one’s estate isn’t solely driven by tax policy, both men pointed out.

“In my own experience, when I’ve looked at my practice and the practices of other members of our group, estate taxes certainly play a role in what we do but they’re often not the client’s single most important concern in estate planning,” Harder said.

“They want to find ways to make sure that their wealth goes to their children or grandchildren.

“Families with family-owned businesses — which we have a huge number of in West Michigan — often are interested in succession planning.”

Harder observed that often the most challenging issue for estate planning clients has nothing to do with taxes, but rather how they’re going to structure the transition of the ownership of their business from the senior generation to the younger generation.

Charitable giving and how to include charity in their estate plan is a bigger factor for a lot of people, too, he noted.

According to Brower, many people are deceived into thinking they do not have to plan their estates because of the supposed elimination of the death tax.

“Nothing is further from the truth,” Brower said.

“The estate tax has not been eliminated even though many more people are excluded. Even though many are excluded, for years there have been plenty of reasons for planning estates other than taxes — personal reasons, minor kids and family members that might not be able to handle their own affairs.”

While both believe the death tax will have some impact on trust and estate work in that it will change some of the nature of what they do, they believe clients will continue to wrestle with other, equally difficult estate planning issues.

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