Wealth Advisers: In Estate Planning, the End Is Just the Beginning

It may be tempting for clients to take a deep sigh of relief once their estate plan is signed, notarized and placed in the safe, but that's rarely the end of the process.

Despite saying their estate plan aligns with their values, according to the Brown Brothers Harriman Private Business Owner Survey, there are many considerations that may require changes to what seemed like finalized plans.

Evolving tax laws, changes in family dynamics and other major life events can come about unexpectedly, making it essential for families to revisit these plans, regardless of how difficult the conversation may be.

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The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

As wealth advisers, it is our role to keep lines of communication open so that we can anticipate and help clients navigate issues that may arise over time.

Common pitfalls in estate planning

When it comes to estate planning, advisers can't fix what they don't know. It's incredibly common for clients to forgo sharing certain information that they don't consider to be relevant to their estate plan or financial life.

However, more often than not, life events that appear to be unrelated to finances can have a significant impact on the estate plan. For example, a client may not think to tell their adviser that their friend who is designated as the successor trustee in their plan moved to a different state, but that could change the future taxation of that trust.

Alternatively, a client may not think to share that a family member adopted a child, but if that child is a current or future beneficiary of a trust, that trust instrument should be reviewed to confirm the treatment of adopted people to ensure the instrument is aligned with intentions.

While many of these topics may come up over the course of a meeting, it can be helpful to have a mental checklist of things to ask, including changes to individual or family assets, marriages or divorces, the birth of a child or grandchild, the purchase of a new home or a move to a new state.

These conversations will help you gather information needed to provide holistic advice while deepening your relationship with your client.

Building flexibility into estate plans is another key component of their success. Most trust instruments include formulas to calculate certain tax liabilities so that amendments are not required every time there is a change to tax laws.

When making bequests, consider using percentages of the estate instead of fixed dollar amounts, or adjusting fixed dollar amounts for inflation.

When preparing an irrevocable trust, it is important to understand which methods of changing the trust are available in that jurisdiction (e.g., decanting) and include any required language in the instrument to keep options open in the future.

How to advise clients during this process

With all of the thought and sometimes difficult decisions that go into estate planning, revisiting a plan may be the last thing your client wants to do.

However, with the right mindset, the process doesn't have to be overwhelming. Begin by asking open-ended questions and try to avoid imparting your opinion or offering a solution right away.

Sometimes, clients will come to a solution on their own by talking it out. Oftentimes, they will still need your advice, but it is helpful to begin with an open conversation.

Once you understand your client’s goals, map out the options for achieving their desired outcome. This may mean amending documents, in which case understanding which parts of their plan are revocable and irrevocable is important, or retitling assets to alter the flow when the owner passes away.

Whatever the process entails, having a clear path for your client to follow will help them feel more comfortable.

Interested in more information for financial professionals? Sign up for Kiplinger’s new twice-monthly free newsletter, Adviser Angle.

As estate plans evolve over time, it is critical that clients continue to communicate aspects of their plans to their loved ones. While this may be daunting to some — 97% of private business owners reported in the Private Business Owner Survey that they have not shared their estate plans with their families — keeping loved ones and beneficiaries in the dark may create a host of issues that can be difficult to navigate later on.

Our role in this process is to help clients understand how to best communicate their plans. Two of the top factors that stop private business owners from sharing information are concern over whether their plan is right (66%) and emotional discomfort in having those discussions (55%).

Working with clients to help them fully understand the planning they have done and how it impacts their family is a good first step in helping them feel comfortable.

Preparing a side letter of wishes can be a useful exercise in thinking through the “why” behind the planning and enables clients to more deeply consider their hopes, concerns and fears for their loved ones as it relates to family wealth.

Some clients may benefit from having an adviser facilitate a family meeting, while others prefer to have these conversations in private.

Going beyond your role as an adviser

Clients often forget that they're not going through these issues alone. It is important for us to remind them that, regardless of the scale of the issue, we're ready and willing to step in to serve not only as their adviser but their partner in this process to ensure that their values are woven into every aspect of their estate plan.

While the job description may say one thing, the role of a wealth manager is constantly evolving to match the needs of our clients. The intentional development of these relationships is what allows us to best serve our clients regardless of what life events may come their way.

Neither Brown Brothers Harriman, its affiliates, nor its financial professionals, render tax or legal advice. Please consult with an attorney, accountant, and/or tax advisor for advice concerning your particular circumstances.

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