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At 6:30 on a Sunday morning, Steven Loeb rolled out of bed to start a full day of work — just as he has every day for the past year.
Seven-day workweeks have become the norm for trust and estate lawyers like Loeb, who said he’s been working around the clock since April 2020. The pandemic galvanized people to look more closely at their mortality and consider proper estate planning, and high-flying stocks in the past year also expanded high-net-worth clients’ portfolios, further complicating estate lawyers’ work.
“I haven’t had a day off since 2020 started. It’s been every day — we just have that much going on,” said Loeb, who works at the law firm Chiesa Shahinian & Giantomasi.
Lawyers are no strangers to strenuous work lives, but the demand has been unusually high. Politics also play a role, as likely tax changes under the President Joe Biden’s administration could upend old ways of advising clients and managing wealth.
“The phone won’t stop ringing,” said Pamela Grutman, a partner at Olsoff Cahill Cossu, telling Insider that she saw a “tremendous uptick” at the end of last year after the presidential election and has gotten triple the number of clients as usual in the past few months.
Estate lawyers say they don’t see the surge subsiding any time soon. “This could be a do-or-die time,” Loeb said.
The rich are panicking over tax proposals from the government that would upend estate planning as they know it
Estate attorneys’ workload is typically cyclical, increasing during election cycles and before spring break and summer break when clients want to make changes before getting on an airplane. But for the past 15 months, work has been at a fever pitch, beginning with the US lockdown in March 2020.
“Last March, we were faced with people who weren’t worried about how much they could save on taxes as much as whether they could die tomorrow,” said Larry Mandelker, counsel at New York-based law firm Venable. Clients in their 40s and 50s were suddenly rushing to change their wills and advanced directives, terrified of catching COVID-19 and needing a ventilator.
But by late summer, clients had shifted their attention to the upcoming election and prospect of a blue wave. That didn’t come to pass, but the Georgia runoffs in January gave Democrats a functional majority in the Senate, making it much more likely that tax hikes could happen. Now there are several legislative proposals that are keeping moneyed Americans and their lawyers up at night.
For starters, Sen. Bernie Sanders’ For the 99.5% Act would lower the lifetime estate-tax exemption — the amount of money somebody could give during their life or bequeath at death without incurring the estate tax of 40% — from $11.7 million to $3.5 million for estates and $1 million for gifts. If the act were to pass without changes, gifting or bequeathing $11.7 million would lead to a tax burden of more than $4.5 million.
Biden’s American Families Plan would likely be the most devastating to the wealthy. It would eliminate step-up in basis, a loophole that would severely affect how inheritance could be taxed. In short, capital-gains tax would be applied to an inherited asset such as a house or car depending on how much the value increased since the deceased person bought it, if it appreciated more than $1 million. Those affected would also have to pay this capital-gains tax upon the person’s death even if they don’t sell the asset, which is a fundamental change in the tax code.
Combined with the proposed capital-gains-tax hike of 39.6% from 20% for top earners, the bill would raise $113 billion in a decade, according to a study by the University of Pennsylvania’s Wharton School.
Estate lawyers have to turn away new clients
At the outset of the pandemic in March 2020, work for many lawyers dried up as mergers and acquisitions came to a halt and courts closed. But for trust and estate attorneys, it never really slowed down.
“When the pandemic first hit, I told my wife, ‘Maybe I’ll have my first break in 35 years.’ The total opposite happened,” said Eric Kramer, a partner at Farrell Fritz. “Everyone was home and said, ‘Hey, let’s look at our will and call Eric.'”
Demand has only increased since the election and the Georgia runoffs. Estate lawyers have been so busy that they’ve had to turn away new clients. CSG’s Loeb said he’s had to tell potential clients that he can’t take them on until at least October because it’d be unfair to existing clients.
“We’ve been picking up a matter a week, with old clients resurfacing,” said Jason Kohout, a partner at Foley & Lardner. Work has ticked up by 20-25% in monthly production since late last year, Kohout said.
The personal nature of trust and estate work means lengthy phone calls and in-person meetings are important, both of which are time-intensive tasks. Each matter takes an average of two to three months — longer for more complex real-estate and business portfolios, Loeb said.
In order to keep up with the demand, lawyers have been working longer hours, some more than they have before in their decades-long careers. Robert Strauss, director at Weinstock Manion, has been averaging 12 to 15 hours a day for six days a week since August.
“I am literally booked every minute of the day,” he told Insider. “Nobody knows what they should do about these changing laws, and we have ideas about what they should do, but all these ideas are predicated that laws that exist today will be respected after a change. I have this conversation with clients at least six times a day.”
Law firms can’t find enough estate attorneys to ease the workload
While hiring more lawyers would ease the burden, law firms are having trouble finding talent.
“We hired more people because people were overwhelmed,” said Scott Malin, a trust and estate partner at Lathrop GPM. “We would hire more if we could. We are continuing to interview, and there aren’t a lot out there who have experience.”
Part of that dearth has to do with the psychology of law students, Strauss said. “At least when I was in law school, the view was the best jobs, the sexiest jobs were with big firms, and none of the jobs at the big firms are in estate planning,” he said. “They have to go into M&A and litigation and work on the biggest deals or be a failure.”
Compounding the problem is the wave of baby boomers reaching old age. “You have this huge transition of wealth coming from the baby boomers over the next couple decades. I’ve been telling people for at least the last five years, if not longer: If you go into this field and you become an expert, you’re gonna have plenty of work to do,” Malin said.
Will the work ever slow down?
When asked about whether they thought demand would increase as the year comes to a close, most attorneys said yes. “You are scaring the s— out of me,” Strauss said.
It depends on how the significant tax proposals before Congress pan out, but clients will likely rush to make changes before 2022 in case any new laws take effect.
As for the years to come, attorneys predict more clients will need their services. The stock market’s growth over the past several years has created tremendous wealth.
Baby boomers, expected to transfer an estimated $68 trillion in assets over the next 25 years, will be calling. And if the estate-tax exemption goes down to $3.5 million, there will be a lot more taxpayers subject to estate tax. This is all a boon and burden to the industry.
“It’s profitable, but it’s just exhausting. I don’t think the extra increment of pay is worth the extra increment of work at this level,” Strauss said.
Malin thinks that the talent pipeline won’t be able to keep up. “I don’t think there’s enough people in the industry to do the work that’s coming down,” he said. “I don’t know how we would be able to handle that type of demand.”