Who would have thought financial advisers could learn a thing or two from Donald Sterling?
I'll admit it, I was skeptical when
InvestmentNews reporter Darla Mercado set out to do a piece on the
trust and
estate planning lessons for advisers embedded in the fiasco involving Mr. Sterling, his estranged wife and the sale of the Los Angeles Clippers professional basketball franchise.
As far as I was concerned, the less we heard from, or about, the disgraced former Clippers owner, the better — except, of course, when his shenanigans are incorporated into the comedic monologues of late-night television hosts.
But one of the first rules of being a good editor is to let your reporters follow their “hunches.” So, that's what I did.
And it paid off.
As you'll see from Darla's story, which begins on page 3, Mr. Sterling's undoing touches on a critical issue that many advisers are already dealing with and that will become even more prevalent as baby boomers age: preparing for clients' mental incapacity.
NOT SO GIVEN
Although I am not a financial adviser, I have to believe it's easier for most advisers to talk to their clients about what will — or should — happen when they die. After all, death is a given for all of us except, of course, Betty White.
Talking about becoming mentally incapacitated is different and more complicated, however. It doesn't happen to everyone, for one thing, and the degree to which it does can vary widely.
The process also can be subtle and incremental. So much so, in fact, that it often goes unrecognized for years.
That said, it's important that advisers and their clients have a plan in place for dealing with cognitive impairment — whether it occurs through the slow progression of a disease such as Alzheimer's or an accident or other catastrophic event involving a brain injury.
That plan, as Mr. Sterling's situation so clearly illustrates, should include specific “triggers” to set off an incapacity clause in a trust.
Once those triggers are activated, it is up to advisers to step in and make sure their clients' wishes — that is, those they detailed before they became mentally incapacitated — are carried out with dignity and precision.
[email protected], Twitter: @fredpgabriel
