Technology has and continues to change estate-planning practices. At this juncture, many firms are largely paperless, cloud-based practices, using document generation software and a wide array of different software products to facilitate better client interactions, better management and more efficient research and drafting. But, the reality is that many practices haven’t yet transformed themselves to take advantage of technological changes.1 These firms likely have experienced inefficiencies and cost pressure. Let’s explore the many technological changes affecting estate planning. Keep in mind that the application of technology is practice dependent, so what worked for our practice may not work for yours without significant modification, or perhaps not at all. A firm might be paperless and cloud-based, but many practitioners might still prefer to review complex documents in hard copy with a yellow highlighter.
Select Appropriate Steps
Every practitioner and firm is different. Be wary of adapting something just because it was recommended by another practitioner or an IT consultant. Adapt and modify implementation steps for your practice. Each practice is unique in terms of the nature of the typical clients, the practitioner’s comfort level with technology and change, how the particular practice operates and capabilities of the administrative staff. A paperless, cloud-based practice will necessarily have to handle these issues differently than a practice that still has yellow pads, Redwelds and other analog tools. A practice that predominantly focuses on a large volume of flat-fee, lower wealth clients will have different technology needs than a boutique firm serving a limited number of ultra-high-net-worth clients seeking a different level of service and relationship. If your clients wouldn’t make use of the technology, the implementation of that technology may not be an effective use of your resources (both staff time and money). Some consultants and colleagues may tend to recommend what works for them, not necessarily what works for your practice. In some cases, cobbling together several techniques or software services, using each in a way appropriate to your practice (and not necessarily the application that most use for that software), may provide a more comfortable and efficient result, even if the complexity and cost are a bit greater.
Benefits of Adapting Technology
Technology can reduce the time, and thus the costs, of generating and processing documents. This facilitates spending more time in meetings, phone calls and other client-facing activities.2 Cost reductions through operational efficiencies may also permit you to profitably service lower net worth clients. It can also make practice more enjoyable, as routine tasks are automated, permitting you to spend more time on business development, planning or other more gratifying and profitable activities. Even firms that feel that they’re current on adapting technology may find that some or even many of their professionals haven’t really transitioned to more technologically advanced approaches. Just as estate planning doesn’t end with the signing of a client’s documents, the adaptation of technology doesn’t end with the implementation of a new program. The progress of technology suggests that an annual review of a firm’s technological uses may be effective, allowing the practitioner to determine if there’s any new software or practices to implement and improve his workflow.
Document Generation Software
Technology can also change the manner in which planning is handled. Consider the effect on a practice of adapting document generation software and moving away from the traditional approach of using standard firm forms. Many practitioners still draft an insurance trust by marking up an insurance trust form. With document generation software, a draftsperson doesn’t have to be constrained by the contents of a particular form and will have much more latitude to efficiently tailor an irrevocable trust document to incorporate whatever mechanisms are appropriate for the specific client situation. For example, the insurance trust can be structured to also be a more robust spousal lifetime access trust, a hybrid domestic asset protection trust or a special power of appointment trust and to have any desired state law apply (although that won’t obviate the need for local counsel in that jurisdiction).
Paperless vs. Paper-Less
“Paperless” means no paper whatsoever, and that may not be optimal for many practitioners. “Paper-less” means less paper than historically was used and perhaps less paper on a continuum of moving towards a paperless office in the future. Some firms have gone completely paperless, but before all practitioners were comfortable working in a paperless environment. The result is that those practitioners may have administrative personnel print all documents and arrange them in Redwelds. This is no different from what they did prior to their office going paperless. If your firm hasn’t gone completely paperless, consider moving towards that goal in phases that make sense for how you practice.3 It might even be best to allow different partners to progress at different rates based on their comfort levels. We evolved to a somewhat intermediate approach.
Be certain that for the paperless portion of your practice, scanned documents are searchable PDFs; if not, identifying electronic documents will be difficult. There are many applications available that can “crawl” through your document management system and convert all PDFs into searchable format.4
Our practice is paperless and largely cloud-based, but we create what we refer to as “temporary Redwelds” for current client matters. Many clients, especially older ones, still live in a paper world and bring physical documents to meetings. While we scan each document provided, and return any originals as quickly as possible, we’ve found that having a paper file for meetings is still useful. When the project is completed, the contents of the Redweld are shredded (as they’ve already all been scanned), and the Redweld and folders are used for the next client.
As you progress towards a paperless office, consider preparing a memorandum guiding staff involved in the process to assure that the steps taken consider ethical and other obligations.5 For example, exercise caution so as not to destroy client property that should be scanned and returned to the client. Confirm a documentation retention policy so you can determine which files should be scanned and then destroyed and which may simply be destroyed. The policy will differ by the nature of the profession of the estate planner involved (and the ethics rules guiding that discipline) and the particular professional’s firm policy on document retention. Having a written policy and procedures memorandum is recommended to avoid any inference that documents were inappropriately or arbitrarily destroyed.
Client Communications
Technology can enhance the ability to communicate with clients. You can create and efficiently disseminate an electronic client newsletter. This isn’t only valuable as a marketing tool but also as a means of disseminating information to inform clients of matters that they might be overlooking, thereby protecting the practitioner.6 Create a website with a client portal with planning materials, articles and writable PDF forms to make it easier for clients to prepare the information that you need to plan for them.
On your website, create, film and post short video planning clips explaining concepts common to your clients and their families. You can create these inexpensively in your office without the cost of expensive marketing and PR firms. The equipment needed includes a quality camera, tripod, microphone and lighting, perhaps a few thousand dollars in cost.7 For a more polished look, hire a professional to create bumpers to add to the beginning and end of each video, and include a disclaimer as well as firm contact information in those. These videos can explain the issues each practitioner sees her clients needing information on. For some clients, video clips might help facilitate better understanding ideas relevant to them than would e-newsletters or written materials.
All this will also enhance the firm’s image and marketing reach because many, if not most, prospective clients look at a firm’s website before retaining an estate planner.
Securing Data
When considering client communications, what steps must a law firm take to secure its data?8 You might consider addressing some aspects of how you do, and don’t, secure client data in your firm retainer agreements (engagement letters) to put clients on notice as to your default procedures.9 These disclosures might then be updated periodically to reflect new ethics rules, changing practices and integration of new technology. Many states have adopted American Bar Association (ABA) Model Rules of Professional Conduct’s changes concerning technology. Rule 1.1 was modified to require technical competence. Rule 1.6 requires lawyers to use “reasonable efforts” to prevent the inadvertent or unauthorized disclosure of confidential client data. The ABA Model Rules state that a client can require a lawyer to implement “special security measures not required by this Rule.”10
Practically speaking, how can a firm demonstrate or even determine what constitutes “reasonable efforts?” An approach we’ve taken is to have our firm IT consultant annually prepare a letter summarizing recent steps taken to address security and other technology issues and to recommend additional steps for the following year. That approach might demonstrate “reasonable efforts.” This year, we’ve implemented an additional step of having an independent IT consultant review our systems to endeavor to identify any issues that might warrant addressing. Many conferences are starting to add tech courses to their programs. Perhaps someone from the firm should attend such a program each year (whether or not credits are required for maintaining licenses) to demonstrate “reasonable” efforts to keep current.
Web Meetings
Web meetings are an efficient tool that many practitioners have already adopted,11 but there may be further applications worthy of consideration that not all use. Web meeting software provides a simple option to record the content of the meeting. That can later be transcribed using the services of the web meeting hosting company or independent web based transcription services, for example, www.temi.com. For smaller or cost-conscious clients who don’t wish to pay for a more formal memorandum, a transcription of a meeting can be a cost-efficient means of documenting what was discussed.
Web meetings can also be a very efficient means to foster collaboration with allied professionals. A web meeting can be more efficient and less costly than having several professionals meet in one physical location. That can resolve client concerns about the cost of collaborative meetings and permit the exchange of information that can facilitate better planning. We’ve found that for many client matters, a web conference of advisors only, intentionally excluding the client, can foster an efficient update to get all advisors on the “same page,” sometimes in as little as 30 minutes. By excluding the client, every advisor can speak freely and use technical terminology without the explanations and details that would be necessary if a client were participating.
Web meetings with clients can be about more than just updating an estate plan and permit you to have an objective and independent check-in on a client, especially an elderly or infirm client. Regular web meetings with video may provide a means for practitioners to keep apprised of changes in an elderly client’s status, thereby minimizing the risk of elder abuse. Many clients plan for meetings in a professional’s office. They select times of day when they may be at their best and often groom for the occasion. Seeing and speaking to a client in the client’s home, without the preparation that might accompany an in-office visit, may be more telling. How does the client sound and appear? Does the client let down her guard when merely calling from home as contrasted to a more formal in office meeting? Is there anything unusual or concerning in the client’s home that’s visible? Is there anything worrisome in the client’s demeanor?12
I’ve used web meetings to help newer colleagues write their first article. By drafting an article together, they can participate in the process, see the article develop from a blank page and get through that hurdle of writing their first article. This is also a great way to encourage new members of any of the allied professions to become more actively involved.
Physical Office and Relocation
Technology has transformed and continues to transform the estate planner’s office. The rows of research bookshelves and file cabinets that historically lined hallways have all but disappeared as electronic files and research services have obviated the need for them. Space layout and design is vastly different. This has changed so much that a moving checklist for an estate planner in today’s environment is primarily focused more on technology than physical assets.13
Software for Planning Discussion
While practitioners are no doubt familiar with software to project outcomes of various planning techniques,14 other applications can be useful. There are software services that can expand the estate-planning conversation by projecting client life expectancy, health care costs and other factors that affect later life planning. For lower wealth clients, an estimate of what health care costs may be an eye opener that motivates them to undertake Medicaid planning. For wealthier clients, the dollarization of possible future health care costs may serve the opposite purpose of demonstrating that the figures are palatable and that there’s no need to defer gift planning out of fear that unmeasurable sums need to be retained for those future costs. This might suffice to help a formerly reluctant client take recommended steps to use the current high temporary exemption. Estimates of actual life expectancy may also drive home the need for long-term financial forecasts to assure that the client doesn’t overspend and run short of assets in later years.15 Estate planners might consider the difference between table life expectancy and calculated life expectancy for a client to tailor planning. For example, you might consider a longer grantor-retained annuity trust term to reflect greater life expectancy.
Rethinking Common Planning Steps
There are a myriad of areas of practice that can be rethought in light of technological changes. Changing domicile is illustrative. Changing domicile has always been a common planning tool for clients domiciled in decoupled states seeking to avoid state estate tax. With the restrictions the 2017 Tax Cuts and Jobs Act placed on state and local tax deductions, more clients are considering changing domicile. But, technology has changed the analysis of factors corroborating a change in domicile as well as the manner in which records to demonstrate the change in domicile are maintained.16 One change is the availability of apps that clients can use on their smart phones to automatically count the days they’re physically present in their former home state and new home state using their phones’ location device.17 But, the impact of technology goes much deeper. Common historic factors considered in evaluating a change in domicile included where the client banks and shops and home phone usage. Now, however, many clients conduct all of their banking activities and much of their shopping online. Many clients no longer even have home telephones. Location of items near and dear remains an important consideration. But, the traditional photo album has given way for many to cloud-based photo storage. New factors that prior case law couldn’t have considered, like the use of Groupon and other local coupon services, may be relevant considerations. The entire analysis should be rethought in light of technology.
Embracing Technology
The evolution of technology is relentless. New software and products are introduced constantly, and the ways in which older software can be used can be transformed as well. Practitioners won’t need every new technology released, and each firm’s technology needs are different. However, it’s unlikely that when a review of available software and applications of that software is made, there will be nothing that a practitioner could adopt for their particular need. Embracing technology, in a logical manner, may enrich the practitioner’s practice and help to make his practice more efficient, profitable and rewarding.
Endnotes
1. This article is in part based on a presentation given to the 2019 Notre Dame Estate and Tax Planning Institute, and the authors acknowledge attorney Jerome Hesch’s suggestions in preparing that program.
2. American Bar Assocation (ABA) Model Rules of Professional Conduct (RPC) 1.4 (b) on Communications states that: “A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” Leveraging technology to allow the practitioner to spend more of a matter’s time (and cost) on client-facing activities may help the practitioner both from a relationship with the client standpoint, as well as with protection against ethical violation concerns.
3 . At a recent presentation for the Notre Dame Estate and Tax Planning Institute on technology for estate planners, we offered to provide a sanitized version of the memorandum we used when we went paperless in 2011 and had more than a score of requests, so clearly many firms still haven’t taken the plunge.
4. Adobe Acrobat, Nuance/Kofax Power PDF, Foxit PhantomPDF, Nitro Pro, Trumpet Symphony OCR and DocsCorp ContentCrawler.
5. RPC 1.15 describes a practitioner’s ethical obligations to safeguarding client property. RPC 1.15 Comment 1 indicates: “A lawyer should hold property of others with the care required of a professional fiduciary.”
6. See Martin M. Shenkman, Sandra Glazier and Howard Zaritsky, “Raia v. Lowenstein Sandler LLP—Thoughts on a Recent Malpractice Case,” LISI Estate Planning Newsletter #2724 (May 16, 2019).
7. For video editing, we use the Wondershare Filmora suite of editing software. There are many other reasonably priced programs.
8. ABA Ethics Opinion 477 addresses securing communication of client data, stating: “A lawyer generally may transmit information relating to the representation of a client over the internet without violating the Model Rules of Professional Conduct where the lawyer has undertaken reasonable efforts to prevent inadvertent or unauthorized access. However, a lawyer may be required to take special security precautions to protect against the inadvertent or unauthorized disclosure of client information when required by an agreement with the client or by law, or when the nature of the information requires a higher degree of security.”
9. Thomas Tietz, Barron K. Henley and Martin M. Shenkman, “Using Technology For The Modern Estate Planning Practice,” American Bar Association e-Report (August 2019).
10. RPC 1.6 Comments 18 and 19.
11. Practitioners often use programs such as GotoMeeting, Webex, Zoom and Skype for web meetings. As one example, we’ll often review draft documents with clients over a web meeting where they can view the practitioner’s screen, so everyone involved can see provisions being discussed and changes requested being made to the documents.
12. “The Uber Version of Estate Planning for Seniors,” ABA (December 2018).
13. “Moving Your Law Practice, A Checklist-Like Approach,” ABA e-Report (August 2015).
14. We use NumberCruncher provided by Leimberg.com. Seewww.leimberg.com/products/software/numberCruncher.html.
15. See Genivity Halo Health, Life Expectancy and Health Care Costs as one of the products that provides this information.
16. Martin M. Shenkman, Lance E. Rothenberg and Joy Matak, “Changing Domicile for Tax Benefits and Asset Protection: The TCJA and Recent Court Decision Change the Calculus,” The CPA Journal (October 2019), at p. 62.
17. See Monaeo, TaxDay and Taxbird as examples.