Eagle Or Kiwi? It Matters To Your Clients
Psychological differences between financial services professionals can have a big impact on the planning they do for their clients, according to Robert Hales, senior partner of Hales, Hales & George, a law firm in Saratoga, Calif.
Speaking at a breakout session at this years Society of Financial Service Professionals annual educational forum, Hales used an analogy to explain the differences between two personality types.
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He called one type the “kiwi,” after the kiwi bird of New Zealand. “The kiwi bird lives in the tall grasses of New Zealand, and heres the problem with the kiwi. When the kiwi bird looks at the world, all it sees are the blades of grass right in front of it,” he said.
Furthermore, he explained, when one of those blades of grass is crooked, the kiwis entire world is crooked. A professional example of this may be the CPA who is off by $2.50 on a balance sheet, but then spends four days trying to find it.
“Hes not going to be comfortable until he straightens out that blade of grass,” Hales said.
The other personality type is more like an “eagle,” according to Hales. The eagle flying above the world at 150 feet doesnt notice a crooked blade of grass, he explained, but notices that the field is on fire a mile and a half away.
Kiwis only notice that the field is on fire “when the blade of grass in front of them catches fire.”
Hales said it is the responsibility of planners to have that eagle view so they can point out what their clients have to look out for down the road.
He then took both of these personality types and drew comparisons to actual estate planning cases he has worked on.
The kiwi estate plan is looking at the blade of grass right in front, and the biggest blade of grass is the federal estate tax, he said.
“I have seen people do things to straighten out this crooked blade of grass that destroys the entire estate plan,” he explained.
“But with eagle planning there is a difference. The first part of eagle estate planning is distribution of the estate,” he explained. “The eagle says if the estate doesnt go where its supposed to go then you did not do estate planning.”
An example of a situation where the estate may not go where it was intended involves the use of the unlimited marital deduction. For instance, he said, consider a couple with four children and a large estate. The husband dies with the intention of leaving his estate to his wife, children and eventually his grandchildren. To avoid paying estate taxes at his death he gives all his assets to his wife under the unlimited marital deduction. Fifteen years later, his widow has remarried someone who his children may not approve of and the result is his estate may end up going to his spouses second husbands family.
“Now, take the eagle view and look at that situation 15 years from now,” he said.
One of the tools Hales successfully has used with clients to make sure their estate is passed on to the people originally intended is the QTIP (Qualified Terminable Interest in Property) trust.