Clients who haven’t thought about their estate plans since the plans were first drawn up aren’t too different from individuals who are still using an outdated smartphone, or worse, a flip phone. Their last upgrade is what they’re stuck with.
For some clients, the simple revocable trusts, wills and power of attorney documents prepared for them years ago may remain sufficient. For others, the failure to review or update an estate plan prepared even recently may result in otherwise avoidable taxes or family tensions or simply missed opportunities to put their heirs in a better place. How do clients know which group they are in? If the burden is on them, they likely don’t know.
For example since August, the estate-planning world has been abuzz about the Treasury Department’s proposed regulations under Internal Revenue Code Section 2704. For some families, the implications of the regulations’ limits on the discounts available in valuing family businesses could be significant. But even the most well-informed clients likely need in-depth discussion to understand how the regulations might affect them, much less what they might do about it.
And now we have the election results with the possibility of an estate tax repeal under President-elect Trump. Whatever the eventual legislative outcome, it will likely impact many individuals’ estate plans. But how many clients will realize they need an update, much less follow through and get it done?
These are definite, broad examples of developments that can trigger the need for an updated estate plan. We need to remember that it’s usually the ordinary, gradual developments within a family that necessitate an update. Children and grandchildren are born and grow up. Couples marry and divorce. Parents age. Relationships and philanthropic concerns change.
We know all of these events can render an existing estate plan out of date.
Nevertheless, we struggle to ensure estate plans remain appropriate, largely because the primary burden is usually placed on the client who’s usually already overwhelmed by the task of establishing an estate plan in the first place.
Need for a Team
For clients, the best hope is really a team. As advisors, we really need each other. The attorney who prepares a plan should be working in concert with the client’s accountant and investment manager, who will be in regular contact with the client after the plan is done. The accountant and investment manager need to be talking to each other, and they each need to know when they and the client need to be talking to the client’s attorney.
The team needs to recognize the value of each other’s work. The team needs to be vigilant that the team is complete and the client has the right people around to do what the client really needs.
Do your clients have the proper teams around them? How often do you encounter an estate plan that’s horribly out of date or clients who’ve missed out on an opportunity?
After assessing election results and proposed regulatory changes, what are you doing to ensure those out of date plans and missing out clients aren’t yours?