As a financial advisor, you’re unauthorized to prepare legal documents, such as wills and powers of attorney, and you may be unsure what else you are permitted to do on behalf of your clients. As a result, you may be apt to avoid helping your clients with estate planning altogether. If so, you’re doing them—and your business—a disservice.
Because attorneys often focus solely on minimizing taxes when drafting estate plans, they miss so many other goals the plan could be designed to achieve—goals that you are in a position to know about, since you know your clients’ financial circumstances inside and out. Let’s take a closer look at the role you can play in your clients’ estate planning success.
Don’t Let Taxes Run the Show
Like investment planning, estate planning should start with identifying and prioritizing your client’s goals. For many attorneys, reducing taxes takes precedence over any other objective, but your job is to not let tax considerations run the estate planning show. After all, your clients have plenty of other reasons to address estate planning, including:
- Challenges related to children who are financially immature, face exposure to creditors, or are involved in bad marriages
- The need to provide for a disabled family member
- Unique circumstances, such as bequests to longtime friends or partners
As prominent estate planning attorney Roy M. Adams wrote in the January 2011 issue of Trusts & Estates, nontax goals should drive what estate planners do: “This year, I will listen more and couple my advice with the profound respect I now have, understanding that my client knows about his family, his business, and everything else more deeply than I do.” For you, one way to uncover these nontax goals is by having a conversation about estate planning.
Broaching the Subject
Many of your client meetings most likely start off with a question like, “What’s going on in your life?” And you probably spend a fair amount of time talking about your client’s dreams and how to achieve them. So, guiding the conversation to estate planning should be a natural transition.
You might start by saying, “Based on your financial plan, it’s possible that you’ll leave substantial assets when you pass away. What would you like to see happen with this money? Do you have any concerns?” Remember, people love to talk about their families. As you discuss each family member, ask your client who may need financial help.
Focus on the living. Because many clients associate estate planning with dying, an effective tactic is to focus on the living aspects of an estate plan. You might ask, “Are you currently making gifts to family members?” If the answer is no, find out why. Showing the impact of gifts on his or her financial plan may make the client feel more comfortable about transferring wealth during his or her lifetime.
Refocus. From there, you can delve deeper, asking questions such as, “Have you thought about the legacy you will leave your children, grandchildren, or community? What values and beliefs have you developed during your life that you’d like your family to embrace when you’re gone?” Keep in mind that this could be the first time the client has approached estate planning as something other than the tax-efficient transfer of money and property. He or she may appreciate your effort to refocus the conversation on guiding and inspiring the next generation to use their inherited wealth wisely.
Not an Expert? Not to Worry