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The Wealth Counselor
Talking To Your Clients About Estate Planning In The New Year
It seems like only yesterday that we were in the midst of primary debates and the election season. But with the new year comes a chance to recalibrate how you serve your clients and help them deal with the inevitable changes of life. To that end, clients generally view estate planning from different perspectives. Following is an estate planning approach designed to be effective for three general perspectives (Categories).

Category 1: People who believe they have nothing to pass to their heirs.

These people might say things like, “I don’t need estate planning because I don’t have an estate.” In their minds, they have disqualified themselves.  A common theme:  "Estate planning or trusts are only for the wealthy, and I am not wealthy."

Approach: Get them to focus on the future. They want to protect their legacies and leave assets to their kids and grandkids—but they are unsure whether they have accumulated enough wealth to warrant an estate plan. You can assist by illustrating the many reasons for an estate plan versus the more limited view of transferring assets upon death.  For example:
  • If a client has children, appointing a guardian is critical.
  • As average life expectancy increases, so does the need for incapacity planning.  Such planning is an important component of a coordinated estate plan.
  • If a client wants to keep something out of probate, there is a range of alternatives that can facilitate an asset passing directly to an heir without being subject to probate. 
  • Life insurance coverage is arguably more important for smaller estates.  I am particularly intrigued with some of the new features such as combining death benefits and long-term care coverage.  Clients should also be reminded that life insurance must be coordinated with the estate plan in order to achieve desired results.
  • Direct distributions to some beneficiaries may have unintended or adverse consequences.  For example, a beneficiary with: creditor issues; substance abuse issues; a failing marriage; or, on or applying for needs-based government benefits. We can provide a range of effective solutions for such beneficiaries.

Category 2: People who feel estate planning is too difficult or expensive.

People in Category 2 have assets, but they are either “too busy” or cash-poor to address estate planning.

Approach: Explain the cost of not having a plan. An ounce of prevention is worth a pound of cure.
  • Disputes over assets or debts can exhaust a significant portion of the estate. Brainstorm with your clients to identify possible points of conflict and review solutions for each. It is much better to have the difficult discussion now, since inaction may result in additional legal expenses and family frustration later.
  • Is the estate at risk of high taxation? Although the estate tax is no longer an issue for most Americans, the income tax is alive and well.  And, in Washington, we must still consider the Washington estate tax for estates greater than $2,129,000. Older or nonexistent estate plans may not be income tax optimized, resulting in unnecessary taxes. Finally, with the new administration in Washington, D.C., there may be some tax saving strategies that develop in 2017.
Category 3: People who believe they’ve already done all they need to do.

These people believe they have “finished” their planning.  This "set-it-and-forget-it" mentality, however, can lead to obsolete estate planning strategies, surprise taxes, and family disputes.

Approach: People in Category 3 do have something to lose.
  • Changes to the tax laws in 2017, may make some estate plans obsolete or ineffective.  We need to keep our clients ahead of tax-related developments.
  • An effective estate plan today, may be ineffective tomorrow if it does not keep up with changes to the family structure or financial situation.  Estate plans should be systematically reviewed at least every three years.  Only a current estate plan will effectively carry out the client's wishes.
The beginning of a new year presents a great opportunity to remind clients of the importance of an estate plan that is designed exclusively for their particular situation. We are here to help you and your clients with estate planning questions or concerns.
Sound Estate Planning, PLLC • 152 3rd Ave. South, Ste. 107 • Edmonds, WA 98020 • (425) 967-7287