Helping Families Plan Their Legacy with Trusts and Estates

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From LawHub, this is I Am The Law, a podcast where we talk with lawyers about their jobs to shed light on how they fit into the larger legal ecosystem. In this episode, Debby Merritt interviews a trusts and estates lawyer who runs a boutique firm that helps clients make decisions about financial and personal planning.

Debby Merritt:

Today we're joined by Deacon Haymond, a 2004 graduate of the University of Utah S.J. Quinney College of Law. Deacon is the principal at Haymond Law, a four attorney trust and estates firm in Utah. His practice involves helping clients make decisions about financial and personal planning. I understand, Deacon, that you carved out a job for yourself at your very first firm. Can you tell us a little about that?

Deacon Haymond:

I realized that I probably had to do more work on my own to create a position where I was happy to be practicing law. To that end, I was a member of a very small boutique law firm here in Salt Lake City. I started clerking for them during law school, first a small project for five hours, then later convincing them that they needed more clerk style legal assistance, and then after that, pushing my way towards as I graduated from law school, convincing them that they really did need to hire associate counsel.

Debby Merritt:

And was this at the field that you're currently practicing, trust and estate?

Deacon Haymond:

Their boutique specialty was trusts and estates and as the junior associate, I handled a lot of client communication, scheduling some paralegal duties as well and focused a lot on probate and trust administration.

Debby Merritt:

Explain to our listeners what you mean by probate. That's a fancy legal word.

Deacon Haymond:

Really, probate is probably better described as the process that some families have to go through when a loved one dies, and that's the process of wrapping up the decedent's estate affairs, paying debts, claims and taxes, and then making the way for distributions to beneficiaries and probate in my state often involves that additional court supervised process where the judge will supervise and approve who those heirs of the decedent may be and who needs to be in charge to wrap up the decedent's affairs.

Debby Merritt:

Now how do wills relate to this process? Does somebody avoid probate by signing a will?

Deacon Haymond:

No. In fact, in my practice I have steered away from preparing wills in general. I don't favor them as tools in my state, but again, they're just tools. So practitioners can decide where they're appropriate for clients, but will-based plans often lead to probate.

Debby Merritt:

So right after law school, you found yourself as an associate in this boutique trust and estates firm. How long did you stay with that firm?

Deacon Haymond:

This two person law firm that I was practicing with ended up merging with a very big downtown Salt Lake City firm. They like to say merge. If I had to look back to it in retrospect, it feels a little bit like we were eaten by the larger law firm. So I found myself then as an associate at the large law firm with a large law firm style with the billable hour, my pay increased significantly, my work increased significantly as well. So it was a lifestyle adjustment, it was a psychological shift. It was many things moving into this large law firm world.

Debby Merritt:

What led to you leaving the big firm then?

Deacon Haymond:

A little bit of politics, a little bit of finances, a touch of everything. I leave and left some great friends there at the large law firm, people who I was very collegiate with, people who I still do business with and have great relationships with. But at a large law firm, I don't know if it's possible to like and engage with everyone and be Mr. Popular among the whole group. So there was a little bit of political change at the firm. They were moving in a different direction. The biggest part of the challenge there though, Deborah was I was in the business of preparing flat fee estate plans and at the large law firm, a flat fee never really did translate well into what is an effective billable hour and that creates a problem as you know when the billable hour might reign supreme. So about almost nearing my fifth year of practice in the large law firm, I decided it was time to leave. We parted ways on very amicable terms and then I had to figure out how to start my own law firm.

Debby Merritt:

Did you take any clients with you when you started your own firm?

Deacon Haymond:

I had a 94% retention rate, so I can count on one hand the number of clients that chose to stay with the large firm, perhaps due to other relationships they had with other council there. Some who I think favored the idea that they were with a well-branded reputable firm and they weren't going to follow this younger associate on his journey out.

Debby Merritt:

Tell us about the first weeks of being on your own. Were you operating out of an office? Did you operate out of your garage? What happens in setting up a practice?

Deacon Haymond:

Some of the greatest advice I got during that time to transition was two things. Number one, I had a wonderful following of my clientele with me, friends who would refer additional business, colleagues coming with me who I had done work for in the past, so I felt safe. The message was continue to nurture those great existing relationships you have. That will save you a tremendous amount of time in starting a practice and trying to build a clientele from scratch.

The second piece of financial advice that I got was to keep my overhead low. I knew this as a planner that most small businesses fail. A small law firm is no different. It should be run like a business if it is to succeed. I had a home office and that was my base of operations. I had a laptop and a home office and this was how I was going to begin my practice. Over time, that evolved into hiring an employee part-time, then gradually moving into full-time employee that involved leasing some space, executive suite style space from time to time. So we just began to grow over years into a place where we felt much safer to do things like sign a long-term lease, but that was many years in the making. We didn't overextend ourselves at all.

Debby Merritt:

How many years have you been on your own now?

Deacon Haymond:

We celebrate our fifth year, so there's got to be a cupcake around here somewhere from our celebration party.

Debby Merritt:

And how many people are with the firm now? Both lawyers and non-lawyers.

Deacon Haymond:

We have a staff of about three and a half and I say three and a half because we have a staff member who's going to be a full-time student in the fall, so we're adjusting her schedule a little bit. We have a part-time paralegal who's coming in and may do more with that assistant going back to school full-time. And then we have one full-time administrative assistant. We also have another offsite paralegal that can help us with document generation on certain projects from time to time. So our staff needs are relatively light and our attorneys, we have four of us, including myself, that practice here full-time.

Debby Merritt:

And how does the practice break down? Tell us first the different areas and then we'll go through each one and what it means.

Deacon Haymond:

Haymond Law's mission statement is primarily centered around estate and trust administration. We do not want to be spending any time in bankruptcy, in personal injury, in any other focus. So my two junior associates support me in that mission statement to focus on our client's needs in that niche. I have a real estate council that just joined though. Her background is in real estate development law and she wanted to see if she could help out. It just so happened that we had a mutual client whom I was doing planning for and whom she could do development work for, and so together we collaborate and she has since joined the firm full-time.

Debby Merritt:

Tell us what you mean by trust and estate administration. Do you primarily draft documents or are you actually evolved in implementing them after the loved one has passed away?

Deacon Haymond:

Actually, both are our specialty, but my practice evolved very differently from a trust and estates practice. So first I'll give the raw facts, which is most of our hourly or flat fee work is based in coaching loved ones through after the death or incapacity of a loved one. That's often the reverse of a standard trusts and estates practice, meaning my experience with practitioners is they meet with and consult and do a lot of lifetime planning, drafting wills, drafting trusts for people, and then as they move into the later stages of their practice, that's when as they start to see their clients suffer from events of death or incapacity, then they're helping with administration, call it that life cycle of a traditional grow it then help your clients administer practice. But mine worked in reverse. Remember I was that young associate who started out by meeting people in the trust administration world, so our world is still more heavily laden with us being a coach to those doing a estate administration and settlement and less so in the new clients coming in to do planning.

Debby Merritt:

Deacon, this is very interesting because it fits with what I've seen in some other fields of law that lawyers always think about the upfront sort of pre-litigation through the end of the verdict or through the end of the document and not about the aftermath. I've discovered that in family law, a lot of the work is actually after the divorce, policing the agreements, policing the child custody, and so although you're in a very different field, you're talking about a lot of the same thing that lawyers have forgotten about the administration, which takes a lot more time. Probably brings in a lot more billables and fees than just simply drafting the document.

Deacon Haymond:

Yeah, I think you make a really good point. A client comes to us with a problem and they say, fix this. And it's very easy to, especially when people are on a budget, try to target and marginalize the project and say, we will get this done for you at this cost. But if we're not really paying much attention to when that's done, as you mentioned in your experience in family law, what about the custody? What about the next step? What's that going to look like for you? We want to make sure we're not failing to deliver on anybody's expectations of what happens next.

Debby Merritt:

I know you have to protect confidentiality, but can you tell us a story about a type of client who you've administered a trust for? What goes into that, the steps you take?

Deacon Haymond:

Increasingly so and an interesting area to think about that in that most people don't during life is income tax planning. We don't know where ultimately, perhaps I'll illustrate with my children, maybe my children will later reside in a state that has far more favorable income tax regulations than do my state. And so if they're living in a different state, I don't know that I would want my trust to be situated in a state where it will force them to pay more income tax than they might be treated to in the state where they've chosen to make their home. So I need to think about ways to make my trust flexible enough and those people in charge of it to move it, literally move it to where it needs to be to accomplish the best results for them.

Debby Merritt:

Tell us in a little more detail how you actually spend each day. Do you spend a lot of time talking to people on the phone, working with documents, filing things in court? What's a typical day like?

Deacon Haymond:

Do you want to know what my ideal world is supposed to look like with time and then what the actual world is? Because I've spent a lot of time thinking about both.

Debby Merritt:

That would be perfect.

Deacon Haymond:

All right. My ideal world would be working about four days a week. I try to take as many half days on Friday off as possible because I want to make sure I'm making really good commitments to my family and I've designed a practice where if I'm effective in the four days where I'm working, I shouldn't have to work a Friday. Now that's the idyllic world. The truth is I end up spending a lot more Fridays at work for some reason because it's open on the calendar. That said, on those workdays Monday through Thursday, I'm the Marine here at the office. I'm the first in and the last out, and that's because I have extra duties on my shoulders as managing director, I'm in charge of supervising accounting and payroll and staffing issues and everything.

As we grow, I'll have people develop into those roles to help make those decisions for me. But like with most small person firms, the principals are doing a lot of administrative work. On average, I spend about four hours a day in consultations with clients in one of our conference rooms. The remaining five hours are divided among follow up with clients via phone calls about an hour and a half in front of the computer doing email, another hour and a half with my team delegating, be it electronically via computer or in-person meetings, and that comprises about an average day for me.

Debby Merritt:

The associates who are working with you or are they doing much more of the document work or do they also work with clients?

Deacon Haymond:

They're doing both those things. They are encouraged to grow their own law practice. Ours is one that is a practice centered around having the very best strategic relationships with financial advisors, life insurance providers, real estate industry folks, everyone in the world that identifies a need for someone to have a better plan or to fix something that's broken. They're building clients. They're also facilitating a lot of communication with my clients where my schedule gets busier and busier, I am more than comfortable to put my associates in knowing they will get the same kind of service from them as they can from me.

Debby Merritt:

What are some of the specific ways that your associates or you go out and find clients?

Deacon Haymond:

Early on in my legal practice, and I would recommend this to anybody, build your practice by growing relationships as fast as you can. I did it through a whole host of methods. When I was younger, it was doing a lot of seminar based marketing, that was finding the right people to invite to a seminar. As my progress as a planner grew, I now only do about two or three seminars a year as opposed to 10 or 12, and I get much more client interaction directly from clients referring me and financial advisors referring me business. The truth is those two things don't happen unless you spent years building those relationships. Find a way to find the people you like helping and educate them on how to get to you for that help, however quickly.

Debby Merritt:

At your practice is an interesting example of how finding the client may not always involve directly talking to the client that the clients you want are working with financial advisors and so that's a bridge.

Deacon Haymond:

Yes.

Debby Merritt:

Or they may even be working with a different type of law firm that's doing other type of work for them, but the firm will refer a trust administration client to you.

Deacon Haymond:

Exactly for us. I'll give you an example of how that worked. We met with a client yesterday who was referred by a client who was referred by another client. That client was referred by a financial advisor who didn't even advise that client, meaning that person walked into that financial advisor's office, said, "I don't need financial planning help, but I need to talk with an estate's and trust attorney," and they sent them to me.

Debby Merritt:

You mentioned earlier that at the large law firm you were charging a flat fee. Is that still true in your practice?

Deacon Haymond:

I do believe the billable hour must die. That's me preparing you for this qualified maybe Deborah. 95% of all the work we do in-house is based on a flat fee. There are a few instances where even we have met with the client and we have said we are concerned about setting a flat fee to this, we could guess. But there are too many uncertainties about what third parties will do that will influence how much work needs to be done, that it's either very unsafe for us to quote a flat fee or worse, not safe at all to quote a flat fee to you to charge a very large flat fee for what might be little to no work. So we still do have the billable hour, but I have billed about three hours over the last four months to give you an illustration of how much billable hours we are doing that were hours that I passed out to clients.

Debby Merritt:

What about fees that are a percentage of the estate or the trust? Do you do any of that?

Deacon Haymond:

We do. That makes up the largest types of fees that we quote for trust and estate administration. We charge a flat fee based on a percentage of a net estate to see what type of work needs to be done with a flat fee minimum to start those kinds of projects. That's one type of fee that our clients have the option of picking and it's the one they seem to prefer over the billable hour.

Debby Merritt:

Why though, should the fee go up just based on the size of the estate? I can understand that there might be some things that are more complicated by having more money, but what if I have X amount of money right now and I hope that it will be 2X by the time I die and it will still be the same accounts and require the same sort of handling. Why charge me more based on the size of the estate?

Deacon Haymond:

Yeah, when you have to think about that too, and I should say this before we begin too, our flat fees are often a significantly smaller fee than the types of flat fees we often think about in the legal world. In my legal world, I used to see folks charging 33%, 40% on personal injury style cases. In terms of settlement, ours are less than a fraction of that. The largest flat fee we ever charged was 2% on an estate that had a significant amount of issues on which we worked over about two and a half years worth of time to assist a trustee in administration [inaudible 00:21:48]. But what we've found is that clients are very comfortable when it comes to a flat fee. We've measured it in terms of all these estates where we've worked on that have been by the billable hour and seen about how that measured up to a flat fee.

Whether the estates had, like you said, Deborah, one account in it and you would say it's relatively simple versus the types of estates that have complex ownership interests, multiple layers, states, trusts, and what we find is that for most people, we get a sense of what the work is to finish and it always seems to carry with it as an estate grows all those challenges moving forward of what that fee will be. We also know it seems to be a very reasonable thing as we watch financial advisors and others in the field who often charge similar flat fees going on on perhaps a yearly basis for continued advice, we seek to place ourselves in that same environment.

Debby Merritt:

Just to give people context on this, what would they be looking at as an hourly fee?

Deacon Haymond:

I'm a small law firm and I don't know what hourly rates are everywhere in the world, but we're here in Utah and rates are generally held at a minimum. My hourly billing rate is at about $350 an hour. My associate attorney's bill at a much lower rate and my paralegals and clerks less so. Our clerk billable rate is somewhere between 110 or $120 an hour.

Debby Merritt:

A few minutes ago you mentioned cases in which you get third parties who are pressing a particular claim or difficulties that come up. Has there ever been a case where you just thought, "Ugh, I wish I could get rid of this case?"

Deacon Haymond:

Your question makes me remember to be very grateful for the fact that on the whole, as we've grown as a law firm, we get to be a little bit more selective about the cases that we take. One case where I chose to help a widow and we worked very hard and took all of our direction from her on her late husband's estate and being very concerned that the widow needed resources, we decided to do an hourly fee arrangement. She would receive monthly invoices and could review them, but I deferred on having her pay those and I wanted her to feel the comfort that we would any widow that we might meet along the way that she's okay from a financial perspective. So I deferred on receiving some payments from her and that was a really bad decision. Remember that old advice of keep your overhead low?

I didn't even take my own advice. Letting your receivables grow to your client's benefit but not necessarily your own created a financial challenge for us later that I was very disappointed about and we didn't want to be at odds with this widow with whom we'd met and we wanted to make sure she was protected. And then months later when she considered the totality of our services. Services, she'd asked us to have, meetings she had called and telephone calls she had made with us that she was then disappointed with the size of the bill. But I never want to be in a position with a client where the legal services and fees we have have come between us in terms of relationship. When I wake up every day, I believe I'm a counselor to my clients. That was a terrible feeling.

Debby Merritt:

Deacon, all of us in the legal business have been hearing about LegalZoom and Rocket Lawyer, these online services that promise legal assistance at low fees to clients and we hear about it very often in the trust and estates field. How does that affect your business?

Deacon Haymond:

Most people that I talked to within my field are a little concerned that this will hurt them. It won't hurt Haymond Law or my practice. What I love about this digital age is everybody has choices. I love that the internet provides us with helpful resources where we can get information and really get a whole wealth of detail about what tools work for us and what don't. I welcome this change. In fact, we're excited as a law firm for what that's going to mean for clients. When our clients' estate plans take into account all of the electronic and online access and banking and issues related to that than we have ever had before. I welcome that change in the world and I'm excited what it'll mean for convenience and options in our client's planning. But I see your point about will that get them started down the path?

Absolutely. The next generations will always have an option and choice in planning. Our job though is specialists will be to identify when they need something improved on, when they have questions that we are really doing the work to provide them with the best resources and answers. So that's going to remain the same no matter what may come. If anybody really considers theirself to be a counselor and maybe some of the folks that might be clicking on this, thinking about what it means to be a counselor at law, we try to be the best at what we do. We focus on learning. We never stop learning. There's never a time where we're not learning something new and we're trying to give the very best advice we can to our clients with this grain of salt that we're one advisor around the table and we can't solve everybody's problems on our own.

And we need to identify other trusted team members, family members, loved ones, an accountant, a financial advisor, an insurance agent, the team members that are really going to have our clients' best interest at heart and provide the kind of learned advice that's really going to bring them value for decades to come. It's been our experience. We get what we pay for in life generally. I've reviewed a number of LegalZoom documents that prospective clients have brought into me who have asked, "I want you to review this and tell me it's compliant with Utah law and that everything's going to be okay. That's what I want to pay you for." And in doing my review of their self prepared documents, I often discover that they are not legally trained, that they do not understand how these documents really govern their world, their lives, or that it actually accomplishes what they thought.

So much like any of us should have the choice to do things on our own. We can always choose software as a tool, but the real question is whether we're going to be self preparers and apparently it is lawful for me to do my own brain surgery and it is lawful for me to pack my own parachute, neither of which I am qualified to do, nor would want to do for the sake of what that would mean for me. In fact, I fear that some of that may yield results where my law firm will be there to probate and work on some of those wills that LegalZoom may create and actually require more of my time and energy and fees and planning than it would have those people come to me in the first place and created some of the efficiencies in transfer of their message, their legacy, their family mission statement and their wealth to a lesser degree.

Debby Merritt:

Let me clarify what you've said here. Are you finding mistakes in the wills or are you finding that people didn't think through the issue of whether they wanted a will or a trust?

Deacon Haymond:

It's both those things. It's glaring mistakes. It's those folks not realizing what that quick document, right, because it's just a document. It's words on paper what all those things mean for them.

Debby Merritt:

There clearly are mistakes that are made by lawyers when they create documents like this. In my family, I know of one will prepared by a lawyer that made a significant mistake. Under the particular state you had to explicitly at the time disinherit any children or grandchildren and the will listed one grandchild twice by two different names, nickname and full name. And also I know of a power of attorney that my father had done for him by a lawyer that mistakenly required all three of us children to go to the bank together rather than just one of us. So how do you balance that against the fact that there are also mistakes sometimes made by machines.

Deacon Haymond:

For those individuals who are harmed, call it scrivener's error or just blatant mistake, it's the reason my law firm carries millions of dollars of error and omissions insurance. I don't carry that because we like paying the policy premiums every year. We carry it because we want our clients protected. And those are the kinds of things that if harm is done, I believe attorneys, their law firms and their malpractice carriers should make their clients whole and thus is the danger of those other forms.

Self preparers, people who got a discount under employer provided plan, what are their guarantees? And it's a real big question. If we make errors, we're accountable to our clients. So I don't know about those other preparers in those other states. I fully suspect that over the next 20 years, I believe there will be a tremendous amount of litigation within the estate planning world. There's going to be so many mistakes. There's going to be mistaken beneficiary designations, there's going to be poorly drafted instruments, there's going to be people making mistakes. And given how we see litigation going on in other areas, I can't see why attorneys shouldn't be part of the equation in making sure people are protected when something goes wrong.

Debby Merritt:

Deacon, I heard you mention family mission statement as something that's missing from the LegalZoom documents. What do you mean by that?

Deacon Haymond:

It is a communication of the ideas, principles, goals, or wants that my clients put into their plan. We've watched beneficiaries of what you might call more sizable estates, receive and inherit wealth, and then the wealth disappears very quickly. And we realized as much as we can be a part of efficient wealth transfer, if we are not effectively communicating the goals of those who leave their wealth to their loved ones, whether it's building a special needs trust for a child, whether it's succession of the family business, or whether it's just leaving your IRA payable to your children, if you are not teaching them what you want them to accomplish with that, we've found that the greatest threat to their use and benefit of that wonderful legacy.

The family mission statement is really just that trust store's advice. Don't make bad decisions, don't get in over your head, don't be a spend thrift or guide them into making better decisions, incentivize the kinds of behavior in them that you want to see for them in the future. So we encourage our clients to create them, not only write them down on a letter, but oftentimes include them in such things like their trusts or even the family business succession plan.

Debby Merritt:

So this will be both a specific document that might not be binding but that the heir might follow, and also something that allows the planner to think, how do I want to construct this estate?

Deacon Haymond:

Yeah, it's helpful in all those capacities. And as you mentioned, sometimes we even make it binding.

Debby Merritt:

Right.

Deacon Haymond:

Sometimes it's non-binding and it's just generalized advice. Sometimes we make it actually a core piece of it, a roadmap within legally binding terms for them to follow.

Debby Merritt:

But it all gets back to this issue, which is true through outlaw that a client needs to know the goal before we can do any legal work for them. And yet a client sometimes doesn't know the goal until they've talked to the lawyer about what their different options would be.

Deacon Haymond:

One thing I've learned in my practice is it's not often the goal or intention they come to the meeting with you to talk about. It's really not the key goal. Only through strategic question asking do we then discover this person isn't concerned with estate taxes or income taxes. This person is concerned about the survival of the family business. Clients sometimes don't know. Sometimes it's our job as counselors to really find out what is motivating them to seek a legal solution. So we are really making sure the legal solution we create is going to fit their wants and needs and goals.

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