Death and Taxes: Estate Planning for High-Net-Worth Clients

Kyle McEntee:

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. I’m Kyle McEntee. In this episode, I interview an estate planning lawyer who loves numbers and people.

Kyle McEntee:

We're joined today by Lindsay Gleason, a 2008 graduate of Michigan State University College of Law and partner at Varnum, a large firm with about 175 attorneys predominantly in Michigan. She practices estate planning in Grand Rapids, Michigan, though she is also licensed to practice in Florida. Linsey, let's start at a fairly high level. Can you talk about the various components of estate planning?

Linsey Gleason:

When we talk about estate planning, we are primarily trying to help clients address two main things. One is asset transfers upon death or perhaps during life as well. And the other is planning for the event of incapacity. So if a person becomes incapacitated, who's going to assist them with their financial affairs, medical decisions, et cetera? And there's a lot more wrapped into that: a lot of tax planning, real estate components. Clients who own businesses have a lot more complex needs as well. But essentially, that's what we're trying to do, help people plan for death and taxes. So that's why I always tell my family, death and taxes is what I do.

Kyle McEntee:

You’re now about 15 years into your death and taxes career. And unlike many other mid-career lawyers, Varnum is actually where you started. Is estate planning the direction that you thought you'd go prior to starting that summer internship after your second year of law school with Varnum?

Linsey Gleason:

When I was in law school, I definitely didn't have a clear idea of what I was going to be doing. And actually when I was trying to figure out what I was going to do the summer of my 2L year, so between my second and third year law school, I decided to take a summer associate position at a big firm just because I was going to rule that out. So I wasn't even going to go into, you know, private practice or big law. I was confident I was going to go out there and, you know, change the world. But I was like, oh, let's try this. You know, the big firms pay, it'll help me with my student loans.

So I came to Varnum the summer between my second and third year. And we had a rotational program. We'd rotate around and get some experience trying different practice areas. And I didn't have any exposure to it until about halfway through my summer. I started sitting by the estate planning attorneys at Varnum, picking up a lot of projects and just loved the work right away. It was, it was the right fit for me and they needed someone.

Kyle McEntee:

I think it's easy to imagine someone sitting in the back of an office, flipping through numbers and charts, but there's just this huge client interaction component to what you do and then you've got a little bit of court plus that tax component. But I want to talk a little bit about the client interaction piece because it does require an interesting skillset. And I think a lot of prospective lawyers underestimate how their life experiences really prepare them for those interactions.

Linsey Gleason:

Probably the main thing that drew me to estate planning is that high love of client interaction. It's just not back office. It's, it's sitting with real people and helping them with their real issues. A lot of it's just listening. Trying to understand what it is that they want to accomplish and then using our skills and the tax code and, you know, whatever we can to try to help get them there in the most efficient manner.

We have a tendency, in estate planning to assume that what all of our clients want is to help them pay the least amount in taxes during life and at death, but that's not always the case. You know, some of my clients, their goals are to limit how much their family receives because they don't want their kids to be, you know, those trust fund babies that you've heard of. Every single client comes in with different goals and different backgrounds and different assets.

The, the career and I'm, I'm using air quotes here, career that I had before I went to law school, uh, was scuba diving. I was a professional scuba diver before I took this route. And that's a lot of teaching and it's actually sort of teaching in what can be a dangerous situation. So if people don't do that right, it is physically dangerous. And so I think that sort of helped me kind of fine tune my listening and communication skills, which helped because again, when it's really important that my point is getting across and I'm understanding people's fears and things like that. I think that probably helped a lot more than you would think that career would transition to one in law.

Kyle McEntee:

Let's talk a bit about these clients that you are interacting with. Who are they typically?

Linsey Gleason:

I work with a really wide range of types of people, which is another reason I like this work. Sometimes I'm meeting with young families who just had their first child and want to make sure they have a guardian lined up so they have a plan for if something happens to them when their kids are young. You know, who's going to raise their kid and pass on their values and manage the money for the benefit of those kids? I probably spend the majority of my time working with high-net-worth individuals or people with more complex needs, whether they're a business owner, which just comes with more legal needs that they have, or they've got kids with special needs or blended families. They've got two individuals, kids from prior marriages. I work with a lot of same sex couples. So, every day is really different, which makes it really fun.

Kyle McEntee:

When you say high net worth, I mean, I think if someone doesn't have any money, they might think that means they've got $200,000 in assets, but that's probably not what you mean. What is high net worth to you?

Linsey Gleason:

So one of the things that makes estate planning complicated is high net worth and that the types of people I have to do tax planning for -- that changes every year. And sometimes it changes dramatically. And over the past 15 years or so that I've been doing this, there have been significant changes to the estate tax and the tax code, so that is always different. Typically when I say high net worth or the clients that I'm focusing on doing transfer tax planning for: those are people who have more assets than the estate tax exemption amount. And for a married couple right now, that is pretty close to $26 million. So when I'm talking high net worth, I'm talking people around that threshold who we have to do some extra sophisticated tax planning to help them to minimize the estate tax that they're going to pay. But again, that number changes, that might be half of what it is now soon. When I started doing this, it was just a couple million dollars a person. It's really been all over the place. The landscape is always changing. Never a dull moment.

Kyle McEntee:

So for these people who are planning for death, what are they planning exactly?

Linsey Gleason:

I'm helping people plan for who, uh, their fiduciaries are going to be, who's going to help administer their estate and make decisions on their behalf after they've died. So who their trustee is going to be is who is going to gather, manage their assets and leverage them for the benefit of their beneficiaries. I'm also helping to plan who their beneficiaries will be. If they have kids or if they've charities they want to support, you know, how they want to see those funds used. what ages their beneficiary should be before they get access to it. And we help with creditor protection and just all sorts of components. You know, I'd sit down with my clients and I'd talk to them about what's most important to them. How do they want to see their wealth leveraged after they've died? You know, what's their legacy going to be? I'm walking them through all of those decisions. Again, it might be setting assets aside and trust for their grandkids or again, setting up a scholarship fund or a private family foundation. Again, very different for everyone. when we're talking about that end of life process. I usually say, what's your legacy going to be? And that's sometimes where we start.

Kyle McEntee:

A big part of figuring out what your legacy is, is determining, you know, what are the assets they actually have right now or might have in the future. What does that diligence process look like for you?

Linsey Gleason:

I typically just ask my clients to let me know what they have and what they have now is never going to be what they have when they die -- or very rarely. So a lot of times I'm working with clients, as I mentioned, who are business owners. And that's going to look very different if they have a liquidity event – you know, if they do a sale of their business or start to transition their business to the next generation or their employees. That's another big part of it is just talking through what do you own? What do you think you may own after you've died? Are there specific assets that you want handled in a certain way? In Michigan, cottage planning is another big thing that we talk about.

We have a lot of families here who have owned cottages on the lake that have been in their family for generations. And not only are those assets valuable, they often are paying property taxes at a much lower rate than they would if they had a transfer outside the family. There are often a lot of sentimental and emotional decisions that go into those. How are we going to set it up so that my kids can all share the cottage if one of them might not have the resources to pay the property taxes? What are we going to do if one of my kids dies or gets divorced? Are we going to be able to rent it? What happens if one of my kids wants to bring their pet, but my other child's allergic? We just see all sorts of issues that can seem minor, but can actually be huge issues for families to navigate, particularly when the first generation is gone.

By asking my clients what's important to them, I can really nail down to what assets do we have to spend more time addressing. And sometimes it's just money and... And my clients think of it that way and the analysis is different.

Kyle McEntee:

There's a lot of intermingling of emotional and financial complexity here.

Linsey Gleason:

Yes.

Kyle McEntee:

When your clients meet with you for the first time, do a lot of them have a sense of how complicated their estate is going to be, or is that something that you're teaching them?

Linsey Gleason:

Some of my clients do have a sense that it's going to be complex and sometimes that's actually a barrier for them to get started in the process. I try to tell clients, you don't need to have it all figured out before we sit down. That's one of the things I can do is help you figure it out. Sometimes they think it's complicated and it's really not that complicated because you don't need to have a plan for what happens to every spoon and fork, right? We just, again, find out what's important, what are your values? What do you want to see done? Understanding that the assets are going to be different by the time they've died. And sometimes the process is really ongoing. Again, particularly some of my high net worth clients or clients with more legal needs, like if they've got children with special needs, sometimes I talk to them every month or more often than that because the situation is always different and they need my guidance more often. Sometimes I'm just helping them with a plan and that plan will be implemented when they die with whatever it is they own at that time.

Kyle McEntee:

There's a lot of different ways you can go about the planning for them. So how do you avoid making something more complex than it really needs to be, especially when you're charging for your time?

Linsey Gleason:

Yeah. Oh, Kyle, good question. Um, again, it's, it's understanding my clients and what their goals are. Some of my clients love to get in the weeds. You know, they love the complexity. They really want to make a lot of intentional decisions. Other of my clients, so I can tell they're sort of overwhelmed by it. And we just tell them that we can help address the, the things that are most important. And it's really always bringing it back to: What is it we're trying to solve? And let's solve for that. We don't need to solve for everything. And I like to try to plan for every contingency and our documents can do that.

Another thing that, you know, we've learned over the years by doing this and fine tuning our approaches is we can build in a lot of flexibility into the documents that we draft because you never really know what the future is going to be. You could have a child who has an accident, a traumatic brain injury and it's completely changed their life trajectory. And now we're not talking about trying to set aside funds for them to pursue a higher education. We're talking about making sure funds are available for sophisticated medical treatment. So again, that's a lot of part of it too, is leveraging what we've learned and, uh, our experience to make the documents flexible to change with the times.

Kyle McEntee:

And beyond changing with the time because you don't know what it's going to be like 20, 30, maybe hopefully 40 or 50 years from now, you do have the ability to update the estate plans. And I guess one of the advantages is that they're not always going to be adverse parties. How do you stay in contact with your clients to make sure that the estate plan that they started with you is actually still what they need later?

Linsey Gleason:

Yeah, I mean that you're bringing up some really valid points there. One of the reasons again, I love this work is I have real relationships with my clients. It's not transactional. It's very rare that it's do this once and I'll never talk to you again. Again, some people for simple needs it is, but I like to have a relationship where they know that they can call me anytime they have questions, they call me when things change. Again, we walk through are the changes in your life such that we need to revise and amend your plan? So everyone knows that they can and should reach out to me anytime they have questions and then we try to be proactive too. We'll often send letters to our clients periodically, like maybe every three to five years that just says, “Hey, if you haven't thought about your estate plan since we sat down in year 2023, let me know if any of these sorts of things have changed or if you just want to chat about is it time for me to make an update.” And then we send out client advisories if there have been significant changes in the law that might impact an estate plan. So, again, changes to the estate tax exemption amount or, you know, other factors.

Kyle McEntee:

Let's talk about the outcome that you're planning for. So someone dies. How do the beneficiaries or the trustees know to come talk to you?

Linsey Gleason:

I usually tell my clients that they should let their first named trustee or fiduciary know that they have an estate plan and it's with Varnum. I give them a binder that has their plan that has my card in the front and say, if anything happens, they should just know to call Lindsay. And we also read local obituaries every day. Our reception team does that. And we try to, again, proactively reach out when we know that a client's died so we can start that process. And very often I get engaged by the fiduciary after my client’s died. So whoever their trustee, successor trustee would be to help navigate the trust or state administration process.

Kyle McEntee:

What does that conversation look like? Feels like it might be pretty difficult.

Linsey Gleason:

You know, it's, I wouldn't say it's difficult. One of my favorite things about my job is I'm helping people navigate some of the hardest things that they've had to face. Death of a spouse, death of a parent, death of a child. And so I like to be able to be there to help them with those processes. And sometimes they are difficult, especially when it's a young person, you know, unexpected, it can be tough. It's not really very often like the reading of the will that you've seen in the movie is, you know, where the whole family sits down and the lawyer's at the big mahogany desk and, you know, pulls out this document and everyone's like, “I had no idea.” You know, it's rarely that dramatic. And the way life often works is when people start to age, their kids or their next fiduciaries are helping make medical decisions and financial decisions as part of that process. You know, most people at some point in life are going to downsize and move into a retirement community or a smaller home or condo and their kids start to talk then and start to give away some of their items of personal property. It's rarely a surprise and it's part of how life works.

Kyle McEntee:

So I was going to ask you, how do you know what steps you need to take? But I'm thinking that actually, that's what the estate planning process is. It's a process. And so just whatever was established prior, that's the process you'll follow. But I'm guessing that sometimes you weren't the one to establish the process with the client, but you're still helping the beneficiaries or the trustee anyway. How do you go back and learn about some client you now have, but you didn't actually prepare their estate?

Linsey Gleason:

Yeah, for the most part, more often than not, I've helped the client to prepare the estate plan, which is the will and/or the trust. And that's the roadmap that says, here's who my fiduciary is. Here's who my beneficiaries are. This is what you shall do. And I guide the trustee, the fiduciary through that process and through what the law requires of them. Again, there are certain notices that have to go out, you know, tax returns have to be filed and you can, and I just know that from experience in doing it, and some of it is outlined in the document itself. And occasionally I am helping administer a trust that I didn't draft. But again, most of the important, the roadmap, is in that document itself, and the law, you know, fills in the gaps. Occasionally I'm helping beneficiaries with a breach of trust action. So a beneficiary will call me and say, my aunt, my brother is the trustee of this trust and I don't think they're doing it right. And so sometimes we are looking at from that angle, I'm helping them with an action against the trustee to try to make sure the rules are being followed.

Kyle McEntee:

You have considerable expertise, but one of the benefits of you being at a larger firm is that there are a lot of other people who also have considerable expertise. So when something like that happens, where one of the beneficiaries isn't happy with how the trustee is acting. How do you go about figuring out who you're involved in that litigation?

Linsey Gleason:

As you mentioned, one of the things I love about being at a firm my size is I can develop deep expertise in my area, which is estate plan drafting, transfer taxes, administration. I do work in a lot of probate litigation matters, but when we are in court, I will often team up with a litigator and I have some colleagues who have expertise, deep expertise in probate litigation. So I will call that attorney and we'll often work together so I don't have to know all of the rules of evidence. I can rely on my litigation partner colleague to know that and I can help supply. This is what the law provides and particularly it can be helpful if I did have a relationship with that client so I know their intent and it can help fill in a lot there.

Kyle McEntee:

Yeah, well, it's a tough place to be if your desire is to have knowledge that's a mile wide and an inch deep.

Linsey Gleason:

Yes.

Kyle McEntee:

One of the challenges in your practice, at least from my perspective, is that there's not a continuous flow of work from a few big clients. So you need volume to sustain your business. What are some of the ways in which you find clients or ways in which maybe clients are finding you?

Linsey Gleason:

Yeah. First, I would say, I like to think of that as a benefit of my practice is there, there's always a stream. There is a high volume of clients. So I never have to be worried that when one big matter resolves that I have to go be looking for the next thing. Um, that does come with some challenges that I'm often working with 20 clients in a day. So when it comes to, you know, billing hours, every attorney's favorite thing to do, I'm often entering time on 20 to 30 matters a day. And that's administratively a lot more than the people who might have worked on one matter for the whole day. But I think it's great and it's safe and I always feel like I'm never going to run out of things to do. I've certainly never felt that in my 15 years.

And clients are coming from all sorts of different sources. I get a lot of referrals from the clients that I already am working with, particularly if I'm working with Generation 1. You know, the parents pass away and I'm helping the kids. You know, I'm often helping all of them and often their kids and their neighbors and friends, and I get a lot of referrals from other professional advisors. So a lot of my work comes from financial advisors. The good financial advisors are often asking their clients, “do you have an estate plan?” And if they don't, many of them will say, “Hey, why don't you call Linsey?” or give some names, some suggestions for, for clients to call. So I get a lot of work there as well. Accountants as well.

Kyle McEntee:

What are some of the affirmative steps that you've taken to create and grow that network of people who think of you when someone has an estate planning matter, like those financial advisors?

Linsey Gleason:

I try to be really active in my community and try to know the other people doing the kind of work that I'm doing. Some of that's through professional organizations. I'm a member of the West Michigan Estate Planning Council, and there are estate planning attorneys and trust officers and accountants and insurance agents and things who are part of that network. I'll get to know people doing that work. Early on, when I came to Grand Rapids, I joined the Women Lawyers Association of Michigan, Western Region. And so I got to know just women attorneys at other firms. I get work there if those other firms are conflicted out or for people who just don't do estate planning or their firms don't do estate planning. And I sit on a lot of nonprofit boards, so I just get to meet people and business leaders and I get connected to the philanthropic community and those tend to be the high net worth individuals. So, you know, I just start to start to get to know people and, and I try to not spend my whole day at my desk behind my laptop because...that's not where the world is and the clients are. So just try to be out and about.

Kyle McEntee:

So for young associates, all of this networking might be pretty intimidating.

Linsey Gleason:

I think there are a lot of things that you can do to help young lawyers understand that that's part of the business and it doesn't have to be part of the business necessarily for every attorney. Um, you know, I think we try to acknowledge that some attorneys are better at client development than others. And we have some clients or some attorneys, some of my colleagues don't want to do that, but they are great practitioners. And I like to think that we've got, we've got a home for all that.

But one of the things we do at Varnum is we actually have a minimum number of required hours that our associates have to spend on client development. And I mentor and work with a lot of young attorneys and try to show them that that's not as scary as it might sound like. It doesn't mean walking into some business and making a pitch. It can mean keeping in touch with someone you went to law school with. Just having coffee with them and knowing what they do so they know what you do. So when they need someone, they can think to give you a call and it can just be attending these different fundraising events in town and community events. And again, just, just getting your name out there. I like to tell people it should be fun to be outside the office. I also frequently encourage young associates to serve on nonprofit boards as, again, a fun way to spend some time with one of your passions that you might not get filled at work. So it's just such a great way to expand your network, expand your knowledge, and give back and work on some passion projects that again, your work might not fill all boxes for.

Kyle McEntee:

Because of the nature of the work you're doing, you interact with the client a lot when they're working on their estate plan, but then after your client's death, you're working with their estate. It's like that has to have some kind of impact on how and when the firm is paid. Can you talk a little bit about that?

Linsey Gleason:

Yeah, I can. So when I meet with clients, I'm often, you know, they are engaging me to draft their estate plan. Sometimes we do that on an hourly basis. Sometimes we work on fixed fees. Just kind of depends on what their needs are. After my client dies and I'm engaged by their fiduciary, it's often the same thing. You know, they're engaging me typically on an hourly basis to assist. And, and again, they're paying me out of the trust or estate asset. So it doesn't really have much of an impact. You know, the client's always engaging us to do the work. And there's a source of funds. Sometimes, you know, there is not liquidity. Like if an estate has mostly real estate holdings or a business that's operating, there isn't a lot of liquidity. You know, sometimes it just takes some time before that happens. But again, that's fine. That's the nature of it. Again, being at a larger firm, it's nice that I don't have to worry about that. I'm not a solo practitioner where I can't, you know, keep the lights on in my house unless that one client pays me. And I'm thankful that that's not an issue I've ever had to think about.

Kyle McEntee:

Yeah, that's definitely a much bigger issue for people at smaller firms. So you mentioned both a fixed fee structure and hourly fee. What determines whether you're going to go one route or the other?

Linsey Gleason:

I usually make that determination after I have an initial meeting with a client, again, depending on what it is that they're asking us to do. So if I'm just preparing a brand new estate plan for new clients I met with, and I've got a pretty good idea of what that plan will need to look like to achieve their goals, I can do that in a pretty easy fixed fee because I know what it entails. If it's a larger estate and there's a lot of moving pieces, we're going to be doing a number of trusts and things, we're usually just going to do hourly because that makes the most sense and is more fair. And we don't always know which direction the project's going to go when we get started. And for administration, that's almost always hourly because every administration is very different. And what the fiduciary asks us to do is different. You know, some clients really want me to be very hands-on and be filling out the claims paperwork for life insurance policies and setting up the meeting with a financial advisor and sometimes we're even going to the house and helping get things ready for the realtor. And other times I'm just providing advice on tax compliance things and, you know, their legal requirements to give notice and it'll be much simpler. So it depends on the complexity. It depends on the client. We're here as a resource to help with whatever it is that they need.

Kyle McEntee:

It sounds like you have a pretty big team working around you. How many estate planners are there at Varnum?

Linsey Gleason:

The number can sort of change depending on how you count it, but I would say there's probably about 14 of us who do an awful lot of estate planning. So we've got, I would say likely one of the largest estate planning teams in the state of Michigan. And a lot of my colleagues are here in Grand Rapids, but I work with colleagues who do some tax and some estate planning and some employee benefits and, you know, a wide range of ancillary practices. But we do have a big team and that's just attorneys. We've got a large support staff as well. We have professional trustees who work here. It's great to be part of this large full service group so we can handle really complex projects.

Kyle McEntee:

Have you run the group?

Linsey Gleason:

No, I've not run the group. That's a whole ‘nother can of worms, you know, to want to do that administration. I like being with my clients.

Kyle McEntee:

So that's really what it is for you. That adds this extra layer of administrative burden and you just want to work with the clients.

Linsey Gleason:

Yeah, you know, and there are pieces that are fun and my team is still relatively small and I like to think that we are very high functioning and collaborate really well together. So we have regular team meetings, partner meetings, attorney meetings, just with my team where we talk about best practices and we talk about the direction that we want to go and associates we want to bring onto the team and hire. So we do work really well together. And obviously the whole direction of that group is really important to me, but the more time I can spend with my clients, the better for me.