By Steven J. Oshins, Esq., AEP (Distinguished)
Having practiced estate planning for more than two decades, I have seen and heard my share of comments and representations that are true head-scratchers that often make you roll your eyes. This epidemic seems to have gotten much worse through the years, possibly because of the pressure to perform and thrive in a very competitive environment. This article will highlight some of my favorites.
DUMB COMMENT #1: “Bad facts make bad law!”
The “bad facts make bad law” excuse has been around for many years. Obviously, every case that has a result we don’t like had facts that convinced the judge to rule as such. And every case has different facts from every other case. Many are very similar, but there are always different facts that the planner can use as excuses to claim that the law was made because of the facts.
The bottom line is that yes, there were bad facts. However, the result was determined by the judge who applied the law to those facts. Certainly, judges are often wrong, often because they don’t understand the complexities involved in the estate planning industry, but was it really the bad facts that caused the decision to appear to be wrong? No, it was the bad facts that caused the judge to rule against the party who lost.
This “bad facts make bad law” excuse is frequently found with both tax planning and asset protection cases.
DUMB COMMENT #2: “I’ve prepared thousands of asset protection plans and never had one lose in court!”
This is one of my favorites. The asset protection industry is filled with snake oil salesmen who don’t have the technical skills of an advanced estate tax planner, who simply throw scary-looking boxes around assets with arrows from box-to-box on the professionally-created full color flow chart that looks impressive to a prospective client. They sometimes give the structure a clever marketing name such as the Iron Wall Trust (which I am making up for this article) and will even throw a trademark or asterisk with a patent pending footnote into the marketing materials to make it appear to be even more impressive.
They will also tell the prospective client that they have prepared hundreds or even thousands of these without ever having had one lose in court. That comment solidifies the sale to the unsuspecting client.
Let’s apply common sense to this sort of representation. First of all, the planner often misrepresents the actual number of plans prepared. The planner may say “thousands” when the true number is a few hundred. Out of those few hundred, how many of the clients actually got sued? Maybe five or ten? Remember that most people set up asset protection structures and then never get sued. [Just like buying homeowner’s insurance in case our house burns down, how many houses actually burn down?] Of the five or ten, how many of them settled the case before it went very far? Probably all of them did.
The fact of the matter is that there are very few asset protection structures that are actually challenged to the extent that they result in a court decision. Therefore, the snake oil salesman can easily claim that all of his or her structures has worked. The more sophisticated planner can look at the structure and know that the settlement number becomes much higher when the structure itself isn’t the scary structure that the unsophisticated asset protection planner believed it to be.
DUMB COMMENT #3: “[My State’s] trust laws are the best in the country in every respect!”
Let’s be realistic. No state has the best trust laws in every respect. Even South Dakota and Nevada can’t make this claim, but ironically, despite being the two states that are closest to being able to legitimately claim dominance in nearly every material aspect of desired trust laws, you never see this claim made by practitioners in these two close-to-deserving, but not deserving, states.
The “we’re the best at everything” claim is made by practitioners in a few of the other first-and second-tier trust states. Do some practitioners and clients fall for this white lie? Absolutely. But might the promoters change their marketing to simply highlight that each state has subtle differences and it’s the attorney and trust company relationship and experience that is most important? Gee, what a novel concept!
DUMB COMMENT #4: “This [case/statute] says [the exact opposite of what it actually says]!”
Especially over the last few years, it seems that the newest trend is to claim that a statute or case that is very adverse to the estate planner’s desired position says the exact opposite of what it actually says.
This line of irrational reasoning turns into a “yes, it does”/”no, it doesn’t” email exchange or series of written articles as neither side budges and until everybody involved grows tired of the exchange and finally moves on. The side that was completely wrong gets a moral victory for not admitting that they were wrong, whereas the side that was right gets agitated, maybe forwards the email exchange to a few friends in the industry, shares a few laughs with these friends and just moves on, not having gotten the satisfaction of the other side admitting having been wrong.
DUMB COMMENT #5: “That technique is very risky!”
Very often, the “that technique is very risky” comment is 100% spot on. However, more and more this comment has become the go-to comment made by planners who simply don’t have the necessary knowledge, technical skills and expertise to prepare the necessary documents to utilize the technique even though it is the right technique for the client.
Wouldn’t our world be a better place if planners who don’t have the necessary knowledge, technical skills and expertise to utilize the best technique were to tell the client that the client is better off with a different planner who can actually help the client?
Frequently, when a planner says, “[t]hat technique is risky”, the planner is actually saying, “[t]hat technique is perfect for you, but I don’t know what I’m doing so I’ll pretend that it’s too risky in order to convince you to hire me to do what I know how to do so I don’t lose your business to another planner who can actually help you.”
Conclusion
The estate planning industry doesn’t lack its share of dumb comments. To those readers who think that they were the target of one or more of the five examples in this article, maybe you were and maybe you weren’t. If you were, then a big thank you for providing content for an article that should have been written long before now. As professionals, we not only owe our clients the highest level of honesty and professionalism, but we also owe the same level of such to the industry itself.
Mind-boggling, head-scratching comments and representations have no place in our industry in the opinion of this author. We should all seek to provide the highest level of professionalism and honesty in everything we do that can have an effect, both positive and negative, on our wonderful industry that has been so good to so many of us.
ABOUT THE AUTHOR
Steven J. Oshins, Esq., AEP (Distinguished) is an attorney at the Law Offices of Oshins & Associates, LLC in Las Vegas, Nevada, with clients throughout the United States. He is listed in The Best Lawyers in America®. He was inducted into the NAEPC Estate Planning Hall of Fame® in 2011 and was named one of the 24 Elite Estate Planning Attorneys in America by the Trust Advisor. He has authored many of the most valuable estate planning and asset protection laws that have been enacted in Nevada. He can be reached at 702-341-6000, ext. 2, at soshins@oshins.com or at his firm’s website, www.oshins.com.