Estate Planning Questions Every Advisor Should Be Asking

Here are just a few of the questions that every advisor should be asking their clients about estate planning.

By Jim Sinai

For many people, creating or updating an estate plan is a task that lingers on their to-do list and is treated with a “let’s get this over with” mentality. And when they finally do address it, they put the docs in their file cabinet and cross it off for good. But great advisors know that a great estate plan is a living plan that must be revisited constantly.

Estate planning can feel foreign and complex for clients, especially since it involves dense legal language. But it is essential for ensuring that client assets are distributed according to their wishes after their death. There are a group of advisors who are now including estate advisory as part of their Total Wealth Advisory offering. What is estate advisory? It’s the practice of doing an annual estate conversation — as part of the client offering to both add value to their client as well as to connect deeper with their clients.

Every individual has unique values, beliefs, and priorities when it comes to wealth distribution and legacy preservation. Some may prioritize charitable giving, while others may want to ensure their assets stay within the family for generations. By asking questions that explore these values, advisors can understand their client at a deeper level and help ensure the client ends up with an estate plan that aligns with the client’s principles, providing peace of mind that their assets will be used in ways that reflect their values.

By prompting a client to better articulate their comprehensive wishes, advisors can go beyond the basics and implement strategies that will truly protect the client’s legacy. Ultimately, having deeper conversations helps to align the advisor’s services with the client’s holistic needs and values, creating a win-win situation for both parties.  It leads to stronger client relationships, increased client satisfaction, a competitive edge, referral opportunities, and long-term business growth.

Here are just a few of the questions that every advisor should be asking their clients about estate planning:

Do you fully understand how your plan works and does it match your goals?

Advisors should never take for granted that clients grasp the mechanics and implications of their estate plans. Having this check-in empowers clients to make informed decisions and flag any gray areas that could lead to potential misunderstandings and unintended consequences.

When heirs are involved, ensuring relevant parties understand the plan helps to proactively manage expectations. Understanding the tax implications allows clients to optimize tax planning, preserving more wealth. It’s also a good opportunity to note any updates that need to be made due to a change in their relationships or other circumstances.

Understanding family dynamics can help advisors identify and mitigate potential risks, such as disputes among heirs or legal challenges. Proactively addressing these issues can save both time and resources, protecting the advisor’s reputation and client relationships.

Key follow-ups:

  • Do you know the basics on beneficiaries and fiduciaries?
  • Do you understand how provisions for tax work?

Have you considered ways to distribute your assets equitably among heirs, or do you want them to just be split equally?

Advisors are in the important position of helping clients understand that equitable does not always mean equal. Equitable treatment means distributing assets in a way that is fair, even if it does not mean that all children receive the same amount of money.

Clients may default to an equal split when, in fact, that doesn’t align with their true wishes. In fact, the recent Vanilla State of Estate Planning report found that 71% of survey respondents believe that assets can be split among heirs in a way that is fair but not necessarily equal. For example, they may want to give more money to a child with special needs or to a child who is pursuing a costly education.

One advisor shared the story of their client who left two properties to their two adult children: an apple orchard in Michigan and an orange grove in Florida. Both were worth $5 million at the time of the client’s death. Fast forward 10 years later and the orange grove appreciated 6 times due to its beachfront location while the apple orchard remained flat in value. The child who received the Florida property now has to reconcile the “luck” she inherited with her sibling, adding unwanted guilt and friction.

Discussing equity over equality can go a long way in helping to mitigate the need for costly legal interventions, family conflict, and damage to the advisor-client relationship.

Key follow-ups:

  • Do all of your heirs have equal needs?
  • Do you expect all of your assets, once divided, to appreciate in value equally?

Do you want your heirs to inherit all the money at once?

Clients might not be aware of the various options available to them regarding how heirs access their assets over time. Some may prefer to leave their children a lump sum inheritance, while others may prefer to leave them money over a period of time. Depending on their values and family-specific situations, they may opt for more creative options than giving their heirs a one-time windfall, so this is a critical issue to raise.

How heirs will access wealth is a crucial consideration. Vanilla’s report found that respondents with a household net worth of more than $25 million were five times more concerned about creating “trust fund monsters” than they were about taxes. Advisors can help clients weigh the pros and cons of each approach and choose the option that is best for their family.

Key follow-ups:

  • How are you protecting your kids from the potential perils of sudden wealth?
  • Do you believe that immediate access to an inheritance will be used responsibly by your heirs?

Do you already give to charities and do you want your legacy to include charity?

Understanding a client’s values can have a significant impact on the tax efficiency of the estate plan. Many people want to use their estate plan to support charities that are important to them. Advisors should ask clients about their charitable giving goals and help them to incorporate those goals into their estate plan.

If a client values philanthropy, the advisor may recommend strategies like charitable remainder trusts or donor-advised funds to optimize tax benefits while supporting the client’s chosen charitable causes.

Key follow-ups:

  • If you cap the amount your heirs get, who gets the rest?
  • If your heirs pre-decease you, do you want to give to charity or next of kin?

Are you interested in solving for multi-generations?

Some clients may not have fully considered how their decisions will reverberate beyond their direct heirs, and may not be aware of the steps they can take to protect their family and legacy far into the future. For clients interested in preserving wealth for future generations, advisors can design trust structures and governance mechanisms that promote responsible wealth management and help maintain family cohesion over generations.

Key follow-ups:

  • Are you interested in preserving a college fund for your grandchildren and beyond?
  • Have you thought about adding conditions to ensure family unity, such as dedicating assets to be exclusively used for family reunions?

When in doubt, dig deeper…

The bottom line is that estate planning is not just a one-off, one-size-fits-all task. As such, clients and advisors need to work together to think beyond the basics of financial instruments and tax optimization. Advisors who dig deeper and excel in understanding and incorporating personal values and family dynamics into their services differentiate themselves in a competitive market.  Using estate planning software can help advisors visualize and simplify estate planning concepts, and polished estate reviews can help reflect a client’s plan against their goals. When advisors take the time to explore these considerations with their clients, they can create stronger plans that not only protect wealth but also uphold the client’s legacy and promote family harmony for years to come.

About the Author

Jim Sinai is the Chief Marketing Officer at Vanilla. Vanilla is a complete estate planning software platform purpose-built for wealth managers and estate strategists. Vanilla helps advisors and their clients organize and visualize their existing plan, create powerful legacy-building strategies, and create documents on demand.

As a father to three boys, Jim is passionate about helping every parent ensure they have a strong estate plan. At Vanilla, he leads marketing where he is responsible for evangelizing why every wealth manager needs to do ongoing estate planning. He lives in California with his wife and three boys.

About Vanilla

Vanilla is a leading provider of estate planning software for advisors. Vanilla transforms traditional estate planning into a modern, comprehensive estate advisory experience. Its platform brings together innovative technology, design, and industry-leading expertise. By reimagining the outdated, complex legacy estate planning process, Vanilla allows advisors to deliver differentiated advice, foster meaningful customer interaction, and provide a more expansive total wealth advisory offering so they can win new business, increase retention, and grow assets under management over time.

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