Technology—Probate Editor: Jason E. Havens, 4400 East Highway 20, Suite 211, Niceville, FL 32578, firstname.lastname@example.org.
Technology—Probate provides information on current technology and microcomputer software of interest in the probate and estate planning areas. The editors of Probate & Property welcome information and suggestions from readers.
Crunching and Conveying Your Client’s Estate Plan
Crunching the numbers to determine your client’s transfer tax exposure has probably never been more complicated. In today’s world of the 2001 tax act and the decoupling of numerous states, estate planning lawyers must calculate that exposure on a sliding scale. These complexities compound the challenge of conveying these mathematical and legal concepts to a client, who generally only knows about the income tax system and often misunderstands what a taxable estate includes. The solution to both of these problems might be just a click away.
Software Solutions That Calculate and Illustrate an Estate Plan
Only a few software programs truly calculate and illustrate a more advanced estate plan. Following are some of the leading programs.
The Intuitive Estate Planner
Thomson/West ™ (http://west.thomson.com) has released the ninth version of its comprehensive program known as the Intuitive Estate Planner (IEP) (http://west.thomson.com/product/17215017/product.asp or http://west.thomson.com/customerservice/software/iep.asp). The IEP is authored by Donald H. Kelley and Konrad Schmidt III. Kelley is a distinguished estate planning lawyer who has led much of the advance in using and improving technology in estate planning practice.
The IEP closely follows the format of the federal estate tax return, IRS Form 706, and calculates and illustrates more techniques than any other software program of which this author is aware. First, a client’s biographical, asset, and assumed deduction (such as administrative expenses) information is entered under the “Assets” and “Deductions” tabs.
Next, adjustments are made under the “Adjustments” tab. The IEP accounts for prior gifts made by the client, including the calculation of the “gross-up” rule under Code
§ 2035(b) for taxable gifts made within three years of death. Other adjustments include the previously taxed property credit under Code § 2013 and a state’s adjustments to or augmentation of the federal estate tax. The “State Adjustments” sub-tab has been updated and improved compared to previous IEP versions in response to developments, particularly decoupling and the introduction of new transfer and inheritance taxes, in a number of states. An IEP “Help” topic provides additional state-specific guidance.
The “Tax Choices” tab allows the selection of the desired marital deduction formula: outright, a general power of appointment (or “estate”) trust, a qualified terminable interest property (QTIP) trust (with automatic use of a qualified domestic trust (QDOT) if a noncitizen spouse is entered), or no marital deduction. The order and specific type of funding for the marital share also can be chosen. Information can then be entered into the “Tax Burden” sub-tab that specifies the type of tax apportionment you desire to calculate and that includes an “automatic” apportionment option. Lastly under the “Tax Choices” tab, the client’s generation-skipping transfer (GST) tax choices can be made, including the optimum use of a client’s GST tax exemption or the use of alternative approaches.
The final tab, “Calculations,” is where the action really begins. Use the “Scenario Selection” sub-tab to name and calculate various estate planning techniques for a particular client. Alternatives can be compared. Most of the planning options are under the “Gifts & Growth” sub-tab. Here, the effects of a wide range of gifts, split interest trusts, planned sales, and charitable gifts (outright and/or in trust) can be calculated. Before producing any output with the IEP, the user can view a “sneak preview” under the “Tax Analysis” sub-tab, which shows the tax computations for the client’s scenarios; the “Chart” sub-tab shows the same information in graphical form.
Beyond the IEP’s coordination of a client’s assets with the schedules of the federal estate tax return and its powerful calculation capabilities, the IEP produces customized presentations. The slides can be based on scenarios created from a client’s data, a pre-formatted slide show, or the user’s own customized slides. All slides are based on Microsoft’s PowerPoint formatting, which makes them easy to change.
The primary potential obstacle for users is the IEP’s more complex input interface. Because of the IEP’s enhanced capabilities, an advanced input interface is necessary. An extensive tutorial and an excellent manual are included with the IEP. In addition, author Donald Kelley can be contacted directly with general questions that cannot be answered in the IEP’s packaged resources. Finally, a slideshow demonstration and software patch files are available via the IEP page on the Thomson/West web site.
Kugler Estate Analyzer
Brentmark® (www.brentmark.com) released the Kugler Estate Analyzer™ (“Kugler”) in January 2003. The program uses three steps: client information, assets and liabilities, and techniques. Although the Kugler Estate Analyzer does not perform the extensive calculations available in the IEP, you will appreciate the user-friendly Brentmark input screens and Kugler’s broad range of planning choices as well.
Kugler combines Brentmark’s well-known Estate Planning QuickView and Estate Planning Tools capabilities, which allow the user to calculate and illustrate planning techniques with flowcharts. The broad capabilities of these programs can be seen via the user’s manual for each program, both of which are available via Brentmark’s “Free Downloads” page (www.brentmark.com/download.htm).
Kugler culminates in its “Techniques” offerings, which allow multiple techniques to be combined and illustrated in a single comparative presentation. For example, the use of a grantor-retained annuity trust (GRAT) can be combined with a charitable remainder trust (CRT). The full list of integrated planning techniques is included on Brentmark’s web site (www.brentmark.com/kugler.htm).
Kugler can be downloaded via the Brentmark web site, which includes specific pricing information. A demo of Kugler is available on the web site (www.brentmark.com/download.htm#Kugler), where you can also view one of its sample reports and even view and download the user manual.
CCH® (http://tax.cchgroup.com) introduced its comprehensive program, known as ViewPlan® Advanced, a few years ago. ViewPlan Advanced integrates the features of CCH’s basic ViewPlan, Beneview, and Factuary programs. Like Kugler, more than 20 different asset transfer techniques can be calculated and illustrated. Visit the ViewPlan page of the CCH web site to review the “Quick Start Guide” and other resources (http://tax.cchgroup.com/ViewPlan/) or to request a demonstration of ViewPlan Advanced (http://tax.cchgroup.com/Store/Products/CCE-CCH-2115.htm).
NumberCruncher and Estate Planning QuickView
Leimberg & LeClaire, Inc. (www.leimberg.com) created the popular program NumberCruncher™ (www.leimberg.com/products/software/numberCruncher.asp), which is used by thousands of estate planning lawyers and other professionals across the country. NumberCruncher provides instant calculations for a wide variety of estate planning techniques, which are listed on the NumberCruncher page of the Leimberg web site. Natalie Choate’s endorsement on the web site page summarizes the experience of every user whom this author knows: “I use NumberCruncher almost every day. In terms of ease of use, usefulness, practicality, [and] lack of bugs, it is the best software for estate planners I have ever encountered.” NumberCruncher can even be used to perform quick calculations for clients.
Another Leimberg software program called Estate Planning QuickView ™ (www.leimberg.com/products/software/quickView.asp) enables a user to compare basic dispositive strategies for a client. Estate Planning QuickView is primarily designed to illustrate so-called “A-B” planning for a married couple, that is, family (“credit shelter” or “bypass”) trusts and marital trusts. The program produces instant graphs and flowcharts, which again allow the user to create a summary presentation for a client or even for fellow team/staff members.
Both programs can be purchased via the Leimberg web site above.
zCalc’s™ Tool Box is comparable to NumberCruncher, although zCalc operates on a Microsoft® Excel® platform (required to run zCalc). Unlike most other programs, zCalc (http://fasttax.thomson.com/zcalc_estateplanning.asp) can be customized by changing the Tool Box templates or the actual functions in the function library. zCalc was acquired by Thomson/Fast-Tax and can be purchased through its web site.
zCalc also introduced its Presentations program a couple of years ago, which includes various presentations on select estate planning topics. Unlike the presentations produced by IEP, zCalc Presentations are not coordinated with a client’s specific calculations and situation. The Presentations program is now included with zCalc.
Regardless of the nature or level of your estate planning practice, these calculation and illustration tools will help you provide accurate information to your clients in a way they can understand. The more advanced programs, such as the IEP, Kugler, and ViewPlan Advanced, require more effort to learn and use. Nevertheless, they deliver more comprehensive results in a variety of formats. The stand-alone calculation tools, on the other hand, require little effort to learn and use and can provide instant feedback. Calculation programs, such as NumberCruncher and zCalc, deliver more basic results but can provide those results in an extremely time-sensitive situation. If you do the math, one of these solutions (or something comparable) will deliver for your clients and you.
For additional guidance on these and other programs, consult the very helpful book, Wills, Trusts and Technology: An Estate and Trust Lawyer’s Guide to Automation (2d ed. 2004), written by this column’s former editor, Daniel B. Evans, and published by the RPTE Section.