The Outlook for Estate Planning Practitioners

The Outlook for Estate Planning Practitioners:  Data from WealthCounsel's Annual Survey Indicates the Industry is Poised for Growth

By William A. Conway, Esq.

WealthCounsel Principal

While the economic downturn over the last two years may have softened growth in some estate planning firms, the industry has now turned the corner and expansion is expected over the next five years, according to results from the Fourth Annual Industry Trends Survey.  The web-based survey of estate planning attorneys is conducted in the fall of each year by WealthCounsel, a nationwide organization of estate planning attorneys, and Trusts & Estates magazine. Copies of the current survey report may be downloaded at www.wealthcounsel.com

Of the 831 estate planning attorneys who participated in the survey between September 8 and October 25, 2010, 46 percent experienced an increase in business during 2010, up from 40 percent the previous year.  Nearly half of the respondents (49 percent) expect business to increase by 20 percent or more over the next five years, up six percentage points from the previous survey.

Seventy-two percent of respondents cited the aging baby boomer population as the primary reason for the anticipated growth, followed by 68 percent who stated they plan to strengthen their referral networks comprised of other attorneys, CPAs, financial professionals, and financial sector entities such as trust companies, banks, insurance brokers and investment managers.

We also learned from this year's survey that while business at some firms remained the same (26 percent) or declined (23 percent), wealth transfer opportunities characterized by low asset valuations and interest rates partially contributed to the growth experienced by some firms.  Still other firms were able to broaden their business models to derive revenue from areas such as bankruptcy, real estate, trust administration and Medicaid planning.

At the time the survey was launched in the fall of 2010, an anticipated $1 million exemption was top-of-mind, so it is important to point out that 67 percent of respondents cited the lower exemption rate as a reason for anticipated growth. However, now that Congress has acted to unify the estate and gift tax exemptions at $5 million per individual, many of the attorneys we have spoken with recently also view this as positive.  They point to the fact that the law is effective for only two years and there is great opportunity to do planning before the window closes.  In addition, clients will still need to update their estate plans to deal with the new issues presented by portability and asset protection.  Practitioners believe that all of this will make it a very busy two years.

As Lew Dymond of WealthCounsel noted in Finding the Silver Lining in the Dark Cloud of Continued Uncertainty  (Wealth Strategies Journal; 12-08-10), "the only constant is change." (Heraclitus c. 535 BC - 475 BC).  Indeed, this is never truer than in estate planning.  Heirs marry, divorce or remarry, grandchildren attend college, a grantor's spouse passes away or becomes incapacitated, and so on.  For four consecutive years following the initial launch of the survey, data continues to show that one of the top reasons clients engage in planning is to avoid familial chaos after their death.  Attorneys have a responsibility to insure that the estate plan they have crafted insulates the family against that fear and chaos.  Recognizing that a client's true legacy is achieved only if the estate plan is current at the time of the client's death, some attorneys rely on client maintenance programs to help insure that the plan is kept up-to-date. 

Another key finding from this year's survey dealt with concern over the fact that most Americans do not have any written or thoughtful estate plan, whether by trust or by will. Sixty-seven percent of attorneys surveyed believe Americans lack awareness of the benefits and negative consequences of the failure to plan.  Sixty-two percent indicated that Americans are under the erroneous assumption that estate planning is only for "the wealthy," and 51 percent indicated that consumers are not aware of the legal limitations of joint tenancy and beneficiary designations which can place their spouses and heirs in avoidable legal and tax jeopardy.

Other findings summarized in this year's survey report include the average age and net worth of clients, key challenges attorneys face in their practices, continuing education needs, document drafting systems used, reading preferences, billing practices, primary revenue streams, usage of social media and opinions regarding the federal estate tax. 

WealthCounsel encourages all practitioners to take a few minutes to download the survey from the WealthCounsel website at www.wealthcounsel.com.   Each year the data we collect provides actionable intelligence for many practitioners who are curious about how their practice stacks up against their colleagues in other areas of the country.  The survey has also been a popular resource for new or transitioning attorneys who may be pondering a career in trusts and estate law but who first want to get a sense for the typical client demographics and net worth, niche areas that produce the greatest revenue streams, the best estate planning software systems to automate document drafting, and the extent to which one's professional referral network contributes to client generation strategies.

While the annual industry survey was launched by WealthCounsel primarily as a means to monitor the challenges facing today's practitioners and to maintain a pulse on the estate planning needs of American consumers, we also view the yearly assessment as part of WealthCounsel's duty as industry thought leaders. Although the annual collection and analysis of the data is a rigorous undertaking, we welcome the exercise as part of our corporate social responsibility to deliver valuable insight to industry practitioners and to help educate American consumers. 

We are pleased to see that participation by attorneys doubled from 400 in 2007 to over 800 in 2010 - thanks in large part to the strategic relationship we formed in 2009 with the publishers of Trusts & Estates magazine who became our partner during the survey's third year. The Fifth Annual Industry Trends Survey will be launched in September 2011, and it is our goal to increase participation each year. Attorneys should monitor the WealthCounsel website at www.wealthcounsel.com for an announcement regarding the launch date of the next survey.