This is the first introductory glimpse at the materials for our upcoming ?Estate Planning for Farmers and Ranchers? CLE webcast to be held next week (October 3rd).
Written by Attorney Jessica A. Bourke
Providing a good plan to clients requires the correct balance of listening to what they are saying, hearing what they are not saying, and understanding what they should be talking about.? That is to say, counseling a client who owns a farm or ranch means respecting each client as a unique planning opportunity while keeping in mind the planning concerns that are generally applicable to farmers and ranchers.
Counseling the Client
Goal setting can be the most complicated part of the planning process, and if this step is not completed comprehensively, then all the legal techniques in the world are not going to allow the plan to execute properly because the plan is not oing to fit the client.? You need to know what it is that you as the attorney are being asked to ?solve.?
On the most basic level, the counselor role is defined by the professional rules of conduct that apply to attorneys.? These may differ in minor ways from state to state, but the general premises are universally applicable. (In Wisconsin, these rules are found in Wisconsin Supreme Court Rules Chapter 20: Rules of Professional Conduct for Attorneys.)? The first question is, who is your client?? The ansewr to this question is essential to practicing within the applicable ethical requirements.? ?The client? is whose interests you are representing, and the person whose voice should be carrying the most weight throughout the planning process.? the client is to whom you owe the duties of confidentiality and due diligence.? (WIS. SUP. CT R. 20:1.3-1.4)? This is the person with whom you should be entering into the representation agreement/engagement agreement/fee agreement. (WIS. SUP. CT R. 20:1.5)
Determining the identity of your client is relatively straightforward when handling a criminal matter, or a personal injury lawsuit, or even a single person estate plan.? However, this can be substantially more complicated when working with owners of farms and ranches.? these are often family businesses with a lot of people who have a lot of interests.? The person whose interests you are representing may not be the same person who has expressed a willingness to pay for your services or the same person who has offered to be a key contact person for phone calls and emails.? Failing to recognize that the decisions of one family member cannot be taken for granted as the decisions of the client could mean violating rules that pertain to conflicts of interes. (WIS. SUP. CT R. 20:1.7-1.8? Violating conflict of interest urles can then lead to formal reprimands, the forfeiture of fees, and/or removal from the representation of either or both clients. For a recent example of this in Wisconsin, see In re the estate of Rebecca Derzon v. Johnson. 2011AP377)
It is beneficial to include other family members in the planning process in addition to the client.? Succession planning requires key individuals who are part of that plan understand the plan, and also requires an attorney understanding of how much heirs are capable and willing to contribute in terms of financial contributions and effort.? heirs may be able to identify the gradual decline of mom and/or dad?s physical and mental capabilities.? On the other hand, mom and day may know best which children are the most financially competent.? Furthermore, other individuals who are not directly part of the plan but have valuable information to contribute, such as accountants and financial planners, are alsouseful people to have at the table.? Inclduing everyone in the conversation may save a substantial amount of time in terms of making sure information is adequately disseminated to all key players in an accurate manner.? This may include keeping that initial referral source in discussions if he or she was the initial troubleshooter.
To make sure the interests of the client are kept at the forefront throughout the planning process, conflict waivers should be utilized and explained to make sure everyone knows who the clients are and what that means for everyone else before any planning takes place (see WIS. SUP. CT R. 20:1.7). If the client grants someone else permission to communicate or receive information on their behalf, channels of communication directly with the clients should still be maintained to ensure that the clients? interests are not lost when others are included in the process (see WIS. SUP. CT R. 20:1.4).? This may mean one meeting with everyone and another meeting just with the clients.? This means figuring out a way to separate a dominant client from a more passive client to make sure both of them are represented fully.? Different attorneys will have different strategies for addressing this issue, but no matter the method, the objective should be the same.
The goal setting part of the estate planning process requires attorneys to utilize the ?counselor? part of the profession.? Farmers and ranchers are generally emotionally invested in the business, rather than looking at their businesses from a detached investment perspective.? An attorney must be able to listen to clients and others and pick up subtle cues regarding family dynamics, as well as the willingness and ability to proceed with a particular course of action.? This means knowing when to ask the hard follow-up questions, or knowing when to question an unenthusiastic response.
Substantive Considerations
Attorneys provide value in terms of understanding the variety of legal techniques and the considerations that are required before proceeding with those techniques.? Clients have often fixated on one or two key concerns that have brought them to your office.? the legal techniques of which they have knowledge depends o n their sophistication with legal matters, but often is based on what their relatives/friends/neighbors have experienced.? Aside from identifying the client and opening those channels of communication with the client, goal setting requires making sure that you have touched ont he possible areas of concern before suggesting a particular course of action with the client.
The following are possible concerns that should be considered regardless of whether the client articulates them as goals:
- Providing for owners during their lifetimes.? Consider retirement plans, the cost of long-term care, planning for a surviving spouse, and maintaining a particular standard of living.
- Providing for heirs.? Is the point simply to make sure that all the heirs ?get something,? or is there a particular plan of distribution that would make the most sense?? Should all the heirs be included in this process?
- Keeping the business in the family.? If the farm/ranch should continue to be run by family members, which family members, and how are they going to make that work financially and interpersonally?
- Minimizing financial costs. Minimize taxes on income, gifts and the estate; measure attorney fees versus probate administration fees, protect against creditors.
- Ease of administration.? Can key players properly administer a corporate entity and execute installment sales, or will a more straightforward (if slightly less optimal) plan be more likely to be administered effectively?
Some preparation can be done ahead of this meeting through making sure the initial contact with the client is productive.? Providing the client with introductory materials to better understand what planning invovles amay help them be better prepared and have less apprehension going into the initial meeting.? Likewise, asking for information from potential clients ahead of time, such as information on their family, their business and their finances can help you know in general what items will likely need to be discussed at that meeting.? Asking for them to spell out their specific concerns can provide an understanding of what they are expecting out of the initial meeting and the planning proess as a whole.
About the Author:
JESSICA A. BOURKE is an Associate Attorney for Willms, S.C. who focuses her practice primarily in the areas of estate planning, elder law and disability law, and business planning.? She focuses on long-term care planning, which includes estate planning, special needs trusts, long-term care financing through insurance as well as public benefits, and planning for incapacity through advanced directives and guardianships.? Much of her practice involves working with small business owners, particularly farmers, to assist in transferring their businesses intact to the next generation.
?Jessica graduated summa cum laude from St. Norbert College in De Pere, Wisconsin, and cum laude from Marquette University Law School.? Prior to joining Willm, S.C., Jessica worked with the Milwaukee Legal Aid Society, focusing on disability-related public benefits, and with the Milwaukee County Corporation Counsel, focusing on guardianship proceedings and mental health matters.
?Jessica is a member of the State Bar of Wisconsin, the Milwaukee Bar Association, and the National Academy of Elder Law Attorneys.? Currently Jessica is serving as the Chair of the Friends of Life Navigators (formerly ARC of Greater Milwaukee).
Related posts:
- 5 Things Estate Planners Need to Know About Elder Law
- What Constitutes a Gift for Purposes of Medicaid Planning
Source: http://cleblog.nbi-sems.com/2012/09/goal-setting-in-estate-planning-for-farmers-and-ranchers/
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