A quarter of advisors don't have their own estate plans

Financial advisors are big advocates of estate planning – at least for their clients.

As many as one in four don’t have estate plans for themselves, according to results of a survey published today by estate-planning company Trust & Will. That firm found that nearly all, 97 percent, of advisors agreed that encouraging clients to make estate plans is the right thing to do, even as a smaller proportion, 75 percent, indicated that they have their own plans.

Trust & Will surveyed a mix of advisors in August, with 142 using the company’s services and 145 being unaffiliated. Among the 145 who do not use the firm, about half indicated they don’t have their own estate plans, chief legal officer Doug Luftman said.

“How many doctor friends do we have that don’t go to see doctors?” he said.

“Client look to their advisors to understand more than just their finances,” he said. The finding that most advisors encourage estate planning “is recognition that financial planning and estate planning are two sides of the same coin,” he said.

Providing access to estate planning not only gives advisors better insight into where client assets will be going when they die, but it can be valuable for helping firms retain some of those assets by building relationships with clients’ families. Two-thirds of the survey respondents said that integrating estate planning improved the relationships they have with clients, according to Trust & Will. Most advisors said that estate planning is all but a must for those with at least $250,000 in assets, and under half said it can be valuable for people with less than $50,000.

Just over a third, 37 percent, said they try to involve clients’ adult children in the estate-planning process.

InvestmentNews asked numerous financial planners via email about how they incorporate estate planning into their practices and what benefits they have seen from it.

Mitchell Kraus, owner of Capital Intelligence Services, is president of the Los Angeles Estate Counselors Forum. His firm does not help clients create estate documents, “but unlike most estate planning attorneys who do not talk to their clients for years, we talk to most of our clients several times per year, and as life changes, we can suggest ways to improve their planning,” he said.

“Our practice is focused on legacy planning and we find planning their estate is crucial,” he said. “There are too many examples of clients' wishes not being fulfilled because their estate plan was done once (or never) and things have changed.”

Estate planning should absolutely be part of comprehensive financial planning, said Alastair Stansfield, partner at Rise Private Wealth Advisors.

“One of the more ‘eye opening’ things we share with people is how a will is a probate instrument, so while it is good to have, doing your due diligence to make sure you have beneficiaries listed on all accounts is a much more direct way to ensure assets are passed on as intended,” Stansfield said. Beneficiary designations are extremely helpful not only for life insurance policies and retirement plans but also for checking or savings accounts, or even on deeds to homes if allowed in the state in which the client resides, Stansfield noted.

Estate planning simply makes things easier for families, and it can mean the difference between heirs paying taxes or not, said Marianela Collado, CEO of Tobias Financial Advisors.

“This is where we are able to do so many things that will otherwise result in family disagreements, nightmare administrations, tons of legal fees, and unnecessary taxation that chips away at so much of the wealth the client has worked so hard to build,” Collado said. 

“Working with clients through their estate plan in conjunction with their attorneys has allowed us to demonstrate significant value and build trust not only with them but with their children. We are able to start conversations on things that they didn't even think about, and it has helped to get next generation engaged.”

Planning also goes beyond finances, said John Power, principal of Power Plans.

“It is having powers of attorney and health care proxies in place. It is having wills. And perhaps trusts. Or special needs trusts. It is complicated,” Power said. “I help clients define what they need, help them find an attorney to do the work, and share with the attorney the wealth profile and who owns what. I'm not sure it has helped the practice except that it has helped my satisfied clients refer others to me. I know it has helped those that have lost a loved one.”

Carla Adams, founder of Ametrine Wealth, said she encourages clients to review their estate plans every five to 10 years or whenever they have a major life event.

“People may not think to update their beneficiaries when getting married, divorced, having kids, etc., which can cause issues down the road,” Adams said. For instance, a new client hadn’t updated their life insurance policies after a child was born seven years ago, and their son’s name wasn’t included on it, “which if gone unchanged could've resulted in someone other than their son receiving the life insurance proceeds after both parents passed.”