The three biggest threats to estate planning in 2019 are family conflict, market volatility and tax reform, according to a recent survey conducted by TD Wealth.
The survey included 105 respondents who attended the 53rd Annual Heckerling Institute on Estate Planning in January, including attorneys, trust officers, accountants, charitable giving professionals, insurance advisors, elder law specialists, wealth management professionals, educators and nonprofit advisors.
Nearly half of these estate planning experts identified family conflict as the biggest threat to estate planning in 2019.
The survey explored the various causes of family conflict when engaging in estate planning, citing the designation of beneficiaries as the most common cause of conflict. Other leading factors included not communicating the plan with family members and working with blended families.
“Family dynamics have always played a critical role in estate planning. As we start to see more blended families, we expect these conversations to become even more prevalent and challenging,” said Ray Radigan, head of private trust at TD Wealth. “Estate planning comes with the responsibility of motivating families to communicate through difficult times, which requires regular dialogue and complete transparency. To minimize risk, we encourage families to invite everyone to the table to participate in open and honest conversation about their shared goals and objectives.”
Market volatility was also top of mind for respondents in 2019, with nearly a quarter of respondents identifying volatile markets as the biggest threat to estate planning this year. This was up from 12% in 2018.
According to Radigan, this is not surprising because many clients view lifetime gifting as an important component to their estate plan.
“These gifts, however, should only be made if enough assets are retained to provide support during retirement years,” Radigan said in a statement. “While market fluctuations are certainly worth watching and can cause concern for potential gift givers, we encourage our clients to keep a long-term view when investing and remember that short-term market movements are no match for a robust estate plan and a well-balanced portfolio.”
The sweeping tax overhaul enacted in 2017 is making a broad impact on estate planning, according to the survey.
Following the increase in the federal gift and estate tax exemption, estate planners are introducing various strategies to allow clients to take advantage of the exemption. About one-third of respondents propose clients consider creating trusts to protect assets, while 26% suggest clients plan to minimize future capital gains tax consequences and 21% agree to gift now while the exemption is high.
“Estate planners are now emphasizing the importance of creating trusts for the benefit of their loved ones so that assets can be protected from future claims,” Radigan said in a statement. “For example, rather than provide a child with an outright gift or bequest, many parents are creating trusts as a means of protecting assets from future divorce claims. Additionally, these trusts can be used to ultimately protect loved ones from themselves or other loved ones.”