The laws that govern estate and retirement planning do not change much from year to year beyond adjustments to the relevant tax tables. In fact, the most recent major changes stem from the Economic Growth and Tax Relief Reconciliation Act of 2001.
That's a problem for software companies, which must find a way to develop a recurring revenue stream from a product that may not change over five or even 10 years.
Products that don't demand functional updates can't be sold on the basis of cosmetic changes to the user interface. Nor are users willing to pay much for incremental bug fixes or minor enhancements. And because of this, much of the software development for estate and financial planning was, until recently, in decline - marked by a steady progression of product withdrawals and company mergers.
But this is changing.
With President George W. Bush talking about massive changes to Social Security and the Congress mumbling about repealing the estate tax (which Republicans like to call the "death tax"), the next two years could be banner years both for makers of the software and for the accounting, law and financial planning firms that use it.
The result is that major software developers are moving back into the estate planning and retirement markets. BNA has re-introduced its BNA Estate & Gift Planner; Thomson has acquired the estate planning systems of Selden Integrated Systems and merged them into its Fast-Tax line; and EISI has beefed up its estate and retirement capabilities in Version 9.0, with more enhancements planned for Version 10.
Where this will take the market remains to be seen, but software developers know that estate planning, while necessary, is a tougher sell to clients. And in almost all of the packages surveyed, care is taken to build out the software in ways that help make that sales job easier.
BNA Estate & Gift Tax Planner V. 2004.1
BNA is acutely aware of the shifts in the accounting and consulting markets, and their re-introduction of an updated Estate & Gift Planner is an excellent sign of both impending growth and renewed interest in this segment of the market.
The program is a stand-alone computation engine for federal and state estate and inheritance taxes, handling up to three family planning situations or six single-decedent cases for all years since 1986. Each of the cases may use different planning data, including different dates of death. An integrated program such as the BNA Planner manages more complicated situations, including interrelated marital, charitable or state deduction calculations; charitable trusts; and generation-skipping tax transfers.
Recognizing that estate planning is often a more complicated sale to clients than other forms of financial planning, the program includes an analysis wizard to quickly generate scenarios from client data, as well as a more powerful presentation system that combines reports, graphs, flowcharts and data into a PowerPoint presentation. The presentation engine even includes a library of more than 200 professionally prepared slides. The revised BNA Estate & Gift Tax Planner also offers optional automated links to BNA Tax Management EGT Web Portfolios, with instant access to code, regulations and TM's portfolio analysis.
The interface has retained some of the familiar look and feel of its spreadsheet-style predecessor, but has been upgraded, with better navigation, streamlined entry screens and a cleaner appearance. This overhaul alone is worth the upgrade price, providing a comfortable transition from a rock-solid 25-year-old icon to a stronger, more focused sales tool.
BNA Estate & Gift Tax Planner is a straightforward, flexible product that will help to bridge the gap between the estate planners of the 1990s and the next generation of products. It is also a tool that recognizes the difficulties faced by accountants and planners in building their estate planning business, and takes appropriate care to help, rather than hinder, that process.
PFP Notebook 2005
Brentmark Software Inc.
Now celebrating its 20th year, Brentmark Software offers a wide array of tools for estate and retirement planning. In addition to its Web site, Brentmark operates specialized information Web sites (RothIRA.com, NewRMD.com, Roth401k.com, PensionPlanners.com and others); online calculators; and online publications (GoldbergReports.com). Its software products include Pension & Roth IRA Analyzer, RetireNow, Kugler Estate Analyzer, Estate Planning Tools, Estate Planning QuickView, PFP Notebook, Savings Bond Toolkit, Retirement Income Navigator, Charitable Financial Planner, IRS Factors Calculator, Pension Distributions Planner, Pension Distributions Calculator and Minimum Distributions Calculator.
PFP Notebook is one of Brentmark's core products and is the focus of continuing improvements by the company. PFP Notebook is organized as a series of screens that literally walk the planner through each of the modules. A separate program, the Financial Planning Data Gatherer, is loaded onto a diskette and provided to the client. Once the program data is filled in, the diskette can be used to upload the client data.
From that point, the planner works through the screens for each module - client section, financial data, risk management, investments, retirement planning, estate planning, education funding and income tax. The program offers optional links between modular areas so that they can be used either separately or as an integrated plan.
New in the 2005 version, introduced in January, are enhancements that include the addition of 2005 income tax rates; the ability to save reports in PDF, RTF or HTML formats; improved engagement letters and documents; an improved editor for information paragraphs and client letters; new calculations and reporting for education funding; and the addition of net worth category totals to reports.
PFP Notebook is aimed at small or midsized accounting offices, but is customizable to scale up for larger ones. A strong indication of Brentmark's commitment to this market is its recent acquisition of FPlan and its current program to move FPlan customers to the PFP Notebook platform.
CCH Tax and Accounting
CCH ViewPlan Advanced is the estate planning package of choice for the National Institute of Estate Planners, and it earns this distinction through its easy and elegant planning features.
ViewPlan Advanced makes use of both a top menu bar and a left-side icon bar for navigation. Data input is fast and simple, and the program includes the ability to import data directly from the CCH ProSystem fx Tax software. The software then generates sample client plans that range from "All to Spouse" and "Optimum Marital" to "No Marital," with additional capabilities for customized plans. A comparison manager allows the selection of up to three plans for side-by-side comparison of either graphic or columnar data.
Updated every six months, the software has kept pace both with the requirements of the Economic Growth and Tax Relief Reconciliation Act of 2001 and the intricacies of the GST, as well as providing automatic calculations for more than 20 of the most popular techniques for transferring wealth to charities and family members. An additional module, the State Law Builder, enables adjustment of state estate taxes for each plan scenario, with tax laws and tables for all 50 states and pre-set tax categories.
Enhancements in the current version include the ability to calculate state estate taxes and the new Code Section 2058 deduction; the addition of a detailed beneficiary allocation report; and an enhanced presentation wizard that simplifies the process of putting together comprehensive estate plan illustrations for clients. The wizard enables practitioners to present clients with a simultaneous "thumbnail" preview of specific charts, along with the entire presentation, all on one page and in real time.
CCH's ViewPlan Advanced is a standout estate and retirement planning system that provides planners with the flexibility to create simple or complex scenarios and output reports that clients can easily follow in either text or graphical format. Its close ties to the popular ProSystem fx product line will make it particularly useful to existing CCH customers, though this in no way limits its use as a stand-alone planning product.
DTS-IRA/Pension Distribution Planner
Denver Tax Software Inc.
The DTS IRA/Pension Distribution Planner is a specialized tool that needs little updating unless the laws change, which they have not in recent years. The only change for 2005 is that the software has been updated to make it compatible with Service Pack 2 for Windows XP.
The program is designed to calculate the maximum distribution for clients under 59, who need their funds but also wish to avoid the 10 percent early distribution penalty. Likewise, the program handles clients over 70 who need to withdraw the required minimum distribution amount by December 31 to avoid a 50 percent penalty. Since these penalties are often understated or treated as an absolute by banks and financial institutions, they result in substantial losses to the client unless the accountant adequately prepares for them.
The software is simple and straightforward. The opening screen displays file, view, inputs, options and help, presented both as icons and drop-down menus. Of these, the two that are of greatest interest are the inputs and the views.
The inputs icon brings up two data entry sections, one for information about the IRA owner and the other regarding the IRA and its details. The IRA tab includes the means to list a spouse as beneficiary or a non-spouse beneficiary. If the non-spouse button is pushed, there is a place to list the non-spouse beneficiary and their birthday. The balance in the account, first-year minimum distribution, amounts distributed already this year, and rate of return round out this page.
The views icon is used to select the report display function, which covers reports on the input data, general information, distribution calculation, calendar-year summary and projection of distributions.
The DTS-IRA Distribution Planner is one of 17 specialized accounting tools from Denver Tax Software, which boasts 1,400 accounting firms as customers. Utilitarian in design and function, this is software designed for a single but ultimately important client service.
Fiduciary Practice System and zCalc Tool Box Suite
Fast-Tax (a Thomson company)
Fast-Tax FPS and zCalc are the major elements of a suite that includes FPS Accounting; 706 for Federal and State Inheritance/Estate Tax, which automates most tax functions; 1041 for Federal and State Fiduciary Income Tax, to prepare, review and file federal and state fiduciary income tax returns with forms and schedules; 709 for Federal Gift Tax, to handle net gifts, calculation of the GST on direct skips, importing of information from the donor's prior return, split gifts with spouse, and Crummey trust gifts; a calendar program to tickle for coming client events; and the zCalc toolbox for estate planning.
FPS Accounting prepares accounting for trusts and estates, handling transactions that include dividend and capital gain reinvestment, short sales, exercise of options, spin-offs, and both taxable and nontaxable exchanges. It produces accounting in various jurisdictionally specific formats suitable for filing. There are currently 10 formats: the national standard and formats for California, Connecticut, Florida, Massachusetts, New Jersey, New York, Ohio, Rhode Island and Virginia. The national standard format is acceptable in most of the country; all formats allow customization to suit personal preferences for client presentations.
Rounding out the suite is the zCalc toolbox, a group of analytical products and tools to enhance the ability to create, analyze and present powerful tax and estate planning strategies. It provides the engine for client interaction, using reports, graphs and presentations to help walk clients through the estate planning process.
Thomson is also making bold strides in the estate and retirement planning market, acquiring the ProBate line from Selden last year to expand on the offerings of its Fast-Tax line of estate and trust products, the Fiduciary Practice System. While the line is just completing its transition, the result is a stronger, faster and more effective estate planning suite that is highly capable now and worth watching in the future.
Emerging Information Systems Inc.
EISI has taken a substantive step forward, moving its planning software to the Internet with the introduction of a Web-based solution called NaviPlan Central and the expansion of the already-impressive NaviPlan Standard and Extended versions.
The core of the new system is NaviPlan Central, a secure, cost-effective ASP solution that provides tools for collaboration, workflow controls, management reporting and Ibbotson asset allocations. Extending these capabilities to the work desk, EISI offers NaviPlan Standard Offline and NaviPlan Extended Offline, which feature browser-based interfaces for easy navigation. The Offline formats are compatible with the ASP platform or they can run as stand-alone applications.
NaviPlan Standard Offline is a flexible, goal-based financial planning tool built around three levels of complexity. A basic plan can be completed in minutes in NaviPlan Level 1. Additional planning features are added for NaviPlan Levels 2 and 3, which create a more detailed plan. These provide a quick system to assess progress toward retirement, education and major purchase goals in order to determine whether existing savings plans can meet those goals. They also provide the basics of life, disability and long-term care insurance, asset allocation, and estate planning analysis.
For both the Offline and Windows versions of NaviPlan Standard and Extended 9.0d, new features include planning for non-traditional families, new estate planning calculations and redesigned flowcharts, and a new financial needs assessment report designed for client presentation. The company is in the process of enhancing the NaviPlan Offline and NaviPlan Central offerings to support retirement distribution functionality; these enhancements will be in place for the V. 10 release.
In the Offline, Windows and ASP version, NaviPlan performs tax calculations for estate, gift and generation-skipping transfer taxes, and tracks exemptions that have been used. It provides a detailed estate analysis, including gifting assets to heirs, creating charitable trusts, and family limited partnerships.
With the move toward an ASP solution and desktop solutions, EISI has provided a scalable solution that can handle the most robust planning scenarios. While it may be a more complete solution than estate planning demands, it has all of the tools to effectively manage estate, retirement and financial planning within a single firm of any size.
Profiles+ Professional V. 7.5 Financial Profiles Inc.
Profiles+ Professional is a stable and robust application with 14 financial planning modules designed to assist the financial planner in building sales to clients through a set of 150 sales concepts and 14 application modules.
The Profiles+ Professional package of 14 modules - four for business planning and 10 for personal planning - were created in order to help professionals sell more financial products, enhance their revenues and increase referrals. These modules may be used independently or in combination, with preset combinations for personal financial previews addressing financial statements, income tax, estate planning, long-term care, financial independence, disability, survivor needs, accumulation, education and asset allocation, and for the four business areas of key employee evaluation, business valuation and continuation, employee benefit analysis, and financial statements and ratios. Other modules, for tax sensitivity to calculate the impact of taxes and a business module for small business owners, are also now included in the package.
Optional modules extend the basic programs with Monte Carlo simulations, integrated Forefield content for planning preparation, and the Ibbotson Security Classifier.
The suite uses simple input screens and a fast calculation engine to produce over 400 National Association of Securities Dealers-reviewed output pages featuring more than 150 sales concepts, images, text pages and audit trails designed to help open, explain and close the sale. In addition, the program integrates with EZ-Data's Client Data Systems, Ibbotson Associates' Portfolio Strategist, Impact Technologies' ETA, and a link with Fixed Income Securities' Web site to simplify data entry.
New in Version 7.5 are substantially enhanced capabilities for estate planning, Web-based versions of the release, new collaboration tools, and data synchronization. The estate planning capabilities are designed to ease this complicated process, handling both a variety of trusts and the transfer of a family-owned business.
Version 7.5 also seamlessly integrates with Financial Profiles' Matrix data consolidation and synchronization solution. This provides wealth management firms with the ability to easily acquire, consolidate and synchronize data, streamlining internal processes while increasing their level of decision-making support for clients.
Profiles+ Professional has evolved into a solid set of planning tools that cover the widest possible array of client scenarios, but has not lost sight of its primary mission of generating revenue for the planning firm. The addition of new tools for collaboration and estate planning only strengthen an already impressive software system.
Total Planning System 2005
Money Tree Software
MoneyTree Software bundles a strong suite of financial and estate planning tools into one package, which has been rewritten for 2005 with the C# and .Net architecture for greater scalability, speed and flexibility. It has also been updated to include the 2005 tax data and tables.
The Total Planning System includes a rebuilt Easy Money, a goal-based financial planning tool designed to provide an overview of needs, objectives, solutions and optimal asset allocations; Golden Years, a cash flow-based retirement analysis tool for the client that is retired or nearing retirement; and Strategic Solutions, a set of 10 short, specialized retirement reports on specific elements of the plan. Modules include: required minimum distribution, 72(t) pre-59.5 distributions, lump-sum distribution, retirement capital projection with a Monte Carlo simulation report, pension dimensions, elderly tax planner, break-even analysis, retirement plan exchange, qualified retirement plans, cost of waiting or delay, and capital accumulation.
Golden Years is a flexible, cash flow-based retirement projection program that tracks assets, income, expenses and taxes every year, up to 52 years. It is best for clients who are retired or nearly so, but may be used for clients in the accumulation phase. A popular feature is the comprehensive tax calculation capability that uses Internal Revenue Service rate tables, annual indexed breakpoints, phase-outs of deductions, etc. Another unique feature is the audit trail that leads from each summary page to the supporting detail pages, allowing quick verification of all calculations. Golden Years includes the Monte Carlo simulation reports and the new RMD calculations.
The 2005 suite also incorporates a Web Services module for Internet connectivity and enterprise-wide collaboration. The secure module allows access to client data via the Internet with centralized data storage.
Money Tree TPS uses a single set of inputs to work through cash flow-based retirement planning scenarios. With its recent streamlining, it is an effective and flexible tool with an extensive array of capabilities.
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