Thornburg, James F.

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Book Survey: Recent Books on Estate Planning -- A Practical Perspective

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Notre Dame Law ReviewVolume 36 | Issue 2 Article 53-1-1961Book Survey: Recent Books on Estate Planning -- APractical PerspectiveJames F. ThornburgFollow this and additional works at: http://scholarship.law.nd.edu/ndlrPart of the Law CommonsThis Book Review is brought to you for free and open access by NDLScholarship. It has been accepted for inclusion in Notre Dame Law Review by anauthorized administrator of NDLScholarship. For more information, please contact lawdr@nd.edu.Recommended CitationJames F. Thornburg, Book Survey: Recent Books on Estate Planning -- A Practical Perspective, 36 Notre Dame L. Rev. 162 (1961).Available at: http://scholarship.law.nd.edu/ndlr/vol36/iss2/5BOOK SURVEYRECENT BOOKS ON ESTATE PLANNING - A PRACTICAL PERSPECTIVEJames F. Thornburg*WORMSER'S GUIDE TO ESTATE PLANNING. By Ren6 A. Wormser. EnglewoodCliffs, N.J.: Prentice-Hall, Inc. 1958. Pp. ix, 175.Mr. Wormser introduces his book with a statement of objectives entitled,"A Preface Short Enough to Read"- and we might add, "Important Enough toReread." The existing literature of estate planning, explains Mr. Wormser, largely"tells the reader how to get to various ends; very little of it helps the reader to decidewhere he wants to go."'- By author's design, therefore, "This book is concerned prin-cipally with objectives."2Accordingly, in this particular treatise, Mr. Wormser, the lawyer, retreats fromthe ponderous footnotes and comforting citations customarily indulged in by hisprofession. In writing this book, he is Ren6, the man-professional writer, culturedspeaker, artist and, above all, jolly fellow and humble purveyor of bland Republican-ism. Here Ren6, the man, is preoccupied with inflation. Here Mr. Wormser, thetechnical artisan, has become more concerned with the philosophy of "time" thanwith the precision of fine watch making.Although of more than mild interest to the professional practitioner in the areaof estate and tax planning, this book is scarcely designed as a source book for thosewho are entrusted with the refinement of broad estate ideals into the detailed execu-tion of ideas. For the lawyer who seeks the refuge of a form book, the safety of acheck list against his own inexperience, or an expedient substitute for research, adifferent text must be sought (even though it may well be derived from the sameauthor). However, for the lawyer who would depart from his customary "greatthinking in matters of small thought"; who, at least in a portion of his professionalbeing, would like to explore ideas rather than act as a mere scrivener who pains-takingly adopts and adapts the settled notions of others-this work becomes theestate planner's book of revelation.If it rightfully may be complained that Mr. Wormser has used a wide anglelens to picture the broad expanse of aspirations and inspirations of the man with anestate to plan, it also must be admitted that the man with an estate to plan, whenthus inspired, is very likely to hire the services of a microscopic technician, i.e., alawyer, to pinpoint his problems and their solution. Since Mr. Wormser, therefore,is talking to the man with an estate to plan, he is gently nudging a client in thedirection of your office. Believe me, your "well-to-do" client probably has read, evenreread, this book, and he may well consider himself burdened by a "ne'er-do-well"lawyer if you have neglected his idea of required reading. Portions of this bookappeared in U.S. News and World Report in 1958, and, accordingly, the work hasbeen widely celebrated and read by businessmen of means. Thus, this book is truepocketbook reading for the lawyer.In the initial chapter, the book treats "The Investment Problem." Funda-mentally, Mr. Wormser's observations in this area relate to the problems of plan-ning for an estate rather than the problems inherent to the planning of an estate.However, the two problems are necessarily interrelated since the type and nature ofinvestments may well influence the post mortem position of an estate. Moreover, thetype of investments to be considered, on an ante-mortem basis, not only varies withthe age of the individual, but often is at variance with the requirement of the bene-ficiaries on a post mortem basis. It is frequently charged, and we believe accurately,that a lawyer does not accomplish his maximum potential of usefulness in merely* A.B., J.D.; member of the Indiana Bar. Mr. Thornburg will continue this survey in theMay issue.1 Text at v.2 Ibid.BOOK SURVEYplanning an existing estate. Perhaps even more is accomplished where the lawyer,consulted with respect to wills and estate plans, is alert to income tax savings poten-tials and other devices of family advantage during the lifetime of the client. Through-out this chapter Mr. Wormser finds himself concerned and disturbed with the prob-lems of inflation and possible hedges against inflation through investment media.Although he favors insurance as a basic investment, especially for the young father,it seems that he permits inflation to prejudice his judgment regarding the validity ofthis investment.3 Since no other acceptable method of creating an estate, in advanceof actually being possessed of one, has yet been devised, life insurance remains abasic requirement for a multitude of objectives. The mere fact that inflation mayrequire more dollars for the ultimate security of a family does not depreciate theworth of life insurance. It merely indicates that more insurance is required to meetthe problems of inflation. In addition, insurance may well be secured by the wife orother intended estate beneficiaries in such manner that the insurance proceeds arefree of federal estate tax in the estate of the husband. The savings in federal estatetax alone, in many instances, is sufficient to offset the magnitude of present or po-tential inflation. Under the caption of "The Investment Problem," Mr. Wormserpoints to our changed conditions and the advisability of "living boldly" in the matterof investment, especially during the earlier period of one's economic life. He alsotreats of such matters as the variable annuity, investment selection problems, specialinvestment situations, the problem of investing in one's own business, and the rela-tionship of tax savings to investment potential. Perhaps the most significant observa-tion in this area is that if one invests or builds his fortune largely in his own business,it is as important to have a planned method for getting out of-business as it was tohave the opportunity for getting into business. At related Chapters 2 and 3, Mr.Wormser addresses himself to the fundamentally personal problem of the occupationto be pursued by the client and of the guidance of children in their occupationaltraining. There is much to be said for a serious consideration of occupations in thatcertain occupations at this time, such as those of the professional person acting as anindependent contractor, afford very little or no opportunity for capital gains taxeswithin the ambit of the occupational field itself. Retirement plans, including deferredcompensation, both qualified and non-qualified, likewise are considered, as well asthe extremely personal problems inherent to an unplanned and abrupt retirement.At Chapter 4, the tricky legal problem of domicile is considered. Most lawyersare thoroughly familiar with the multiple death taxes of the various states which canarise as a result of an improperly established and evidenced domicile. Perhaps toolittle emphasis has heretofore been placed upon the necessity for accumulating posi-tive evidence as to domicile, and avoiding a multiplicity of conflicting evidence inrespect thereof, in advance of death. Of course there is the allied problem of selectinga geographic area of domicile favorable to the climate of such estate planning prob-lems as the death and gift taxes imposed by a given state and the extent or limitationof the statute of perpetuities in the state, and allied considerations. Although theseproblems are well known to the average practitioner in this field, perhaps insufficientemphasis has been placed on them by the layman whose ultimate problem it is notonly to establish, by positive, convincing and unequivocal evidence, the place of hisdomicile but also to select intelligently a place to live. The problem, of course, hasbecome exaggerated in recent years as a result of our increasingly migratory habits,our penchant for the acquisition of residential property to accommodate the seasons,and our sudden departure from our place of original residence at the time of retire-ment, a departure normally made in haste and repented at death.Mr. Wormser devotes 36 pages, at Chapter 5, to "Objectives in Planning forYour Wife." The initial sub-topic is captioned "What Kind of Wife Have You?"Although this undoubtedly is a topic of salient inquiry for both the client and his3 Mr. Wormser answers this comment in a Review of the Review, 36 NOTRE DAMELAWYER 166 (1961).NOTRE DAME LAWYERlawyer, many of us find that, under normal circumstances of at least temporary do-mestic tranquility, the wife insists on being present at estate planning discussionsinvolving her husband's property. We agree with Mr. Wormser that these questionsrequire answers and involve estate planning issues of paramount importance, issueswhich too frequently are neglected in favor of standard devices and forms of willsand in the rush to obtain maximum death tax savings.Mr. Wormser then treats the usage of irrevocable trusts, including accumulationtrusts, the use of the marital deduction for maximum estate tax savings, and thesaving of a second and subsequent tax at the ultimate demise of the surviving spouse.The problem of "common disaster" and its effect upon the marital deduction like-wise is given consideration. The utilization of special powers of appointment, theadvantages and disadvantages of jointly held property by the spouses and the ad-vantages of "wife" insurance likewise are treated.Mr. Wormser quite properly emphasizes the necessity, under today's laws oftaxation, as well as under practical considerations, for obtaining requisite informationwith regard to the respective estates of the spouses, and the need for tailoring willsand other estate planning forms in accordance with the property holdings of theparties. In this connection, the author offers this salutary advice: "If your wife hasan estate of her own, it should be planned in coordination with yours. You mustconsider not merely what would happen if you die first, but also what would be thesituation if she were the first to die.' 4 This is a prerequisite of all good estate plan-ning.Following his acknowledged plan for considering "Objectives," Mr. Wormserproceeds at Chapter 6 to a consideration of "Objectives for Your Children." Con-sideration again is given to the special problems concerning each child for whomplanning is being done and likewise with respect to grandchildren. The problems ofdiscrimination among children and among grandchildren, and as between childrenand grandchildren, are considered. The omnipresent problem of "spoiling the child"with sudden donations of substantial principal receives its full and warranted atten-tion. Mr. Wormser Well and adequately considers the matter of custodial gifts (ahelpful but much misused device), the advantages under the gift tax law of so-calledminority accumulation trusts, the usages of Clifford style short term trusts, and pos-sible trusts for the carrying of insurance. These thoughts and brief analyses of estab-lished tax saving devices represent stimuli which will bring the client to your office.The ghost of Clifford will ride again unless we, as practitioners, are thoroughlyversed in the modem usages of the Clifford style of trusts.Second only to a preoccupation with the problem of inflation in its relationshipto estate planning, Mr. Wormser concerns himself with the problem of "the forgottenwoman," viz., the daughter-in-law. He suggests that by the use of appropriatesprinkling or spraying clauses under testamentary or inter vivos trusts, S substantialflexibility is granted which will redound both to the tax and other economic advan-tage of all family members within the unit to be benefited, including "the forgottenwoman." This treatise on children, grandchildren, and their families represents thebest known analysis of the problems presented, the objectives to be obtained, and thesolutions for those objectives.At Chapter 7, Mr. Wormser deals with charitable giving under the title "Ob-jectives for the Charitably Inclined." His principal theme is set forth in the openingsentences of this chapter: "When private charity ceases, the government will takeover. When the government takes over, I fear for the condition of our society."5 Thischapter is largely devoted to the problems of "what to give" with tax advantage, theusages of charitable foundations and trusts of both a permanent and temporarycharacter, the advantages of the charitable remainder (such as has recently beencelebrated in the now famous Notre Dame life income plan), the advantages derived4 Text at 69.5 Id. at 94.BOOK SURVEYin exchanging property for a charitable or private annuity, and the usage of chari-table entities as a device for continuing control of a private business which otherwisemight be subjected to forced liquidation for the payment of death taxes. Many estateplanners are now turning their primary attention to the use of charitable devices as amedium for the preservation of estates. Frequently income tax savings derived frominter vivos charitable undertakings can be used to offset the gift tax consequences ofprivate distributions to one's family. Death tax savings often enable the preservationof the estate through the rather simple medium of diverting estate income for a termof years to charitable purposes. This is the era of "selfish giving," the age when thegiver truly receives more from the gift than does the object of his beneficence. Wecan only hope that Mr. Wormser's next literary effort will confine itself to this sourceof estate planning as the subject currently is deserving of intensive and extensivetreatment.In Chapter 8, Mr. Wormser reviews the usages of a family enterprise underpost mortem conditions, including such topics as redemptions under Section 303 ofthe Internal Revenue Code for the purpose of draining away, on a non-taxable basis,an earned surplus account to the extent of defraying death taxes, administration costs,etc. Many other suggestions for the continuation or the liquidation of the business ofthe family enterprise likewise are considered, as well as the ante mortem benefitswhich may accrue from a family enterprise. He considers at this point such problemsas those presented by the use of restricted stock options, the utilization of profitsharing and pension arrangements, the benefits to be achieved "in "split-dollar" lifeinsurance arrangements, and other similar devices. Mainly, however, the problem re-mains, in the planning of an average business man's estate which is largely investedin a family enterprise, of how to get out of business without the impediments offorced liquidation with its consequent shrinkage.Mr. Wormser, at Chapters 10 and 11, translates the entire subject matter of hisbook into the problems of the lawyer and other professional persons dealing in estateplanning in obtaining the requisite information to enable a thorough and objectiveanalysis and plan. He proceeds with a test analysis of a prospective estate, very muchas the lawyer is required to do when confronted with the practical problem of trans-lating the basic concepts of estate planning into the realities of a will and comple-mentary documents. This portion of the book represents reading for lawyers andshould be a source of intensive study. Moreover, it is likely that the layman readingMr. Wormsers book will have convinced himself, as a result of these particularchapters, that he not only requires attention, but requires the attention of an ableand qualified lawyer.At Chapter 9, Mr. Wormser boldly states-and, we believe, correctly states-the respective assistance which a series of advisers can afford a client in respect tohis estate planning. Mr. Wormser considers the position of the accountant, the in-surance underwriter, the investment adviser, the banking house fiduciary and, beinga lawyer, above all, the lawyer, in projecting and consummating estate plans. Heemphasizes and re-emphasizes, with pragmatic acumen, the fact that no adviser,however well equipped by training and experience, can reason in a vacuum. Goodestate planning necessarily presupposes facts against which to plan. Noestate planning undertaking is better than the facts assembled as a prelude to theplan. In no sense is Mr. Wormser's book a series of home remedies. It does notsuggest what the business man of means should do in the planning of his estate; itemphasizes only that which he should consider. Above all, Mr. Wormser, in havingaddressed his book to the laity, stimulates interest in estate planning at the point oforigin, viz., with the man who has an estate to plan or to plan for. In this effortMr. Wormser is a sort of modem Robin Hood who is stimulating the rich to scattera little of their belongings among the good, the poor and the deserving, viz., uslawyers!

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Book Survey: Recent Books on Estate Planning -- A Practical Perspective

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