Steve Parrish (Photo: The American College)
ThinkAdvisor published an article this week detailing how legacy and estate planning can get messy, based on the experience of Melanie Schnoll Begun at Morgan Stanley.
Families may experience an unexpected death or face the need to navigate difficult events like a contentious divorce or fights over an inheritance, Schnoll Begun recounted. It’s not always easy or even possible to avoid conflicts in such situations, she said, but having a well-crafted legacy plan helps clients avoid the worst outcomes — namely, prolonged legal fights that can drain assets and drive families apart.
Writing to ThinkAdvisor about the article, Steve Parrish, the retirement researcher and adjunct professor of advanced planning at the American College of Financial Services, proposed yet another reason why legacy planning problems can arise: An affluent person’s legacy advisors are often not the same as their financial or retirement advisor. That can lead to clients receiving conflicting advice about how best to structure, protect and pass along the wealth they have built or inherited.
“As a person who teaches both retirement planning and estate planning, I see this all the time,” Parrish wrote. “What I’ve been saying in a lot of my talks is that for many clients, estate planning should be a subset of overall financial planning.”
Until fairly recently, Parrish observed, it was common for “estate planning” to be seen as the province of estate planning attorneys or life insurance agents — not financial advisors.
“This reality has changed,” Parrish said. “First, the lines have blurred. Is the issue of what to do about the heavy taxation on inherited IRAs, for example, a retirement or estate planning issue? If you’re doing retirement planning, is preplanning for possible diminished capacity a retirement or estate planning issue?”
For clients with any degree of affluence, Parrish argued, their advisors can’t plan their retirement income without considering legacy goals. Additionally, advisors don’t need to be experts on estate planning topics to make a difference for their clients and help to coordinate their legacy planning experience.
On the one hand, Parrish said, clients are happy to see their financial planner collaborate with estate attorneys or other actors. Given the complexity of their financial lives, they no longer expect a single expert to have all the answers.
“Additionally, there are so many tools out there to help financial advisors delve into estate planning issues,” Parrish said, pointing to providers like Wealth.com or Vanilla. “Today, there are various programs that can take in data from financial planning programs like eMoney and build them into estate planning analysis.”
While the attorney does the documents, he noted, the advisor can still incorporate estate and legacy goals into the overall retirement plan.
“I’m just on my soap box that estate planning — or call it legacy planning — should become part of the overall financial planning process,” Parish concluded. “Clients expect it, and now advisors have tools that, with proper training, can help address them both.”
Pictured: Steve Parrish
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