Vanilla

Mar 22, 2021

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Why financial planning clients need advisors to collaborate with estate planning lawyers (and how to partner up)

It’s common for clients, financial advisors, and estate planning lawyers to treat estate planning and financial planning as separate entities. But financial plans and estate plans are closely intertwined.

Without a well-made estate plan, all the financial goals a client achieves can fall apart. Sadly, a poorly made estate plan often leaves the grieving family to pick up the pieces.

You can advise your client on strategies for maximizing assets, but for asset protection, they need an attorney. When financial assets change, so should an estate plan. An attorney can provide the legal expertise by recording and adapting the estate plan to reflect those changes.

Just as you need to refer to an attorney to protect your clients’ assets, an attorney relies on your services to make sure the estate plans come to fruition. Without financial assets (which advisors help clients grow), clients can’t fund estate planning strategies like revocable trusts.

Plus, when you have an estate planning lawyer on call, you can help clients avoid major costly risks, like estate tax penalties and exorbitant probate court costs that come with poorly made or outdated estate plans.

Working in tandem with an estate planning attorney provides holistic client outcomes

Your client needs both a strong estate planning framework and a robust asset portfolio to guarantee the security of their family after they are gone. The role of an estate planning attorney is like that of an architect or an engineer: they develop a framework that makes it easy for your client to pass on their assets. Advisors make sure financial assets are in place, so clients and their families can execute the estate plan.

Let’s take a look at the ways you can partner with an attorney — and when it’s wise to bring an estate planning lawyer into the client conversation.

New client onboarding

When you have a new client, it’s standard to ask if they have core estate planning documents in place and to review them. Use the documents (or lack thereof) to spark a conversation about their goals for their family and legacy:

• What kinds of financial goals does the client have for their loved ones after they are gone?

• What social or charitable causes are they committed to?

• If they own a business, who should be in charge after they’re gone?

• What should happen in case of the client’s medical incapacity?

• Who in their family or personal network should make decisions in the case of the client’s death?

• Does the client have an active relationship with the attorney who created the existing estate planning documents?

Communicate your client’s goals to an estate planning attorney — either your client’s own lawyer or one in your network. If your client already has estate planning documents, have the attorney review the documents to see if those goals are reflected in the estate plan. If not, the attorney can advise the client on strategies to achieve the desired outcomes and can draw up the documents to put the plan in place.

Financial check-ins

As your client’s assets grow, schedule time to review how their portfolio lines up with their estate plan. You can deliver a quarterly or annual report that demonstrates whether their estate plan reflects their financial goals. If there are gaps, call in an estate planning lawyer to help clients develop strategies for overcoming them.

Changes to tax and inheritance laws

When estate and capital gains tax regulations change, it can have a dramatic impact on an estate plan. It’s common to see changes to tax laws after a presidential election, but changes in local government can also impact inheritance laws. Remind clients to check in with their estate planning attorneys if there are major shifts in the legislation of estate, gift, and inheritance taxes.

Financial windfalls

If your client’s finances change dramatically due to a large inheritance, settlement, or property sale, it’s vital that you connect them with an estate planning attorney. The attorney will help the client find the best strategy for protecting the unexpected assets, so they last beyond the client’s lifetime.

Changes to the family

Is your client getting married or divorced or adding a new family member? Any big changes to their family call for a review and update of the estate plan. Be proactive by reaching out and referring the client to their estate planning lawyer to bring their documents up to date.

Serious medical diagnosis

As you check in with your client periodically, you may discover that they or their spouse has a serious medical condition. When a client has a serious diagnosis, it’s critical that they review their estate plans to make sure everything is in place, so their wishes are carried out. An estate planning lawyer can not only handle reviewing trust documents and wills, but they can also draw up medical powers of attorney to appoint a fiduciary to act on the client’s behalf.

If you want to automate most of the estate planning processes mentioned above with the help of technology, get in touch.