Law Office Management
Mar. 2, 2010
Estate and Tax Planners Expect a Bumper Year
Thanks to changes in federal law, estate and tax attorneys expect a very rewarding year.
When fortunes shrink during tough economic times, estate and tax planning may not be a top priority. But many expect pent-up demand for such services - and a quirk in the federal tax code - to make 2010 a bumper year for lawyers in this specialty. "In early 2009, there was a strong pull-back on the public's demand for estate planning because people saw their financial accounts drop in size," says Daryl Binkley of Palm Desert, a sole practitioner in the field. "I've heard comments that estate planning demand [was] down 50 percent or even more." As the shock of the poor economy fades, however, the state's aging population can only put off estate planning for so long. Plus, this is a pivotal year for federal estate law: The Economic Growth and Tax Relief Reconciliation Act of 2001 eliminated estate taxes for 2010, though they'll return with a vengeance in 2011. (The maximum rate, previously 45 percent with an exemption of $3.5 million, rises to 55 percent next year with an exemption of just $1 million.) Even though some expect Congress to retroactively apply estate taxes for this year, others are calling 2010 the "Throw Momma from the Train" year. Little wonder, then, that estate and tax lawyers are expecting as much as 25 percent more work. Adding an element of suspense is a push in Congress to make permanent the previous $3.5 million exemption. California's estate lawyers are eagerly awaiting the outcome of HR 4154. "It's going to be busy," says Mark Doyle, a partner at Tredway, Lumsdaine & Doyle in Irvine. "But even if Congress extends the 2009 exemption [amount going forward], we will have a lot to do reworking plans that were written" with the current code in mind. "Ultimately, any permanent decision will result in more work." Observers doubt that HR 4154 will pass unless it includes a provision to "reunify" gift and estate taxes (which were split into different rates in 2001). That, in turn, could mean a two- to three-year boom in tax and estate law as gift givers scramble to take advantage of the shift, says Lance Hall, president of FMV Opinions, an accounting and business-appraisal firm in New York. With all the changes - and potential changes - "The majority of estate plans could have holes," says Sonia Agee, a partner at the San Jose office of Ropers Majeski Kohn & Bentley. "They're often based on formulaic language ...that will probably have some issues because we don't know how the law will be changed. But if there ends up being no [estate] tax in 2010, it will be an interesting year."
Kari Santos
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