Four of the Latest Trends in Estate Planning

Over the past few years, I have noticed a several notable trends in the estate planning process that just a few short years ago weren’t even part of the main conversation. These developments, however, have been occurring with increased frequency and will likely continue that way in the future.  

  1. The Increased Importance of Competence Planning
  2. What would you do if:

    1. A son came to you and asked you to represent him in a court proceeding to put his father under guardianship for lack of competence, so that the son, once he became guardian, could obtain a divorce for his father, and implement the terms of the prenuptial agreement? And now that his father “no longer knows who he is or who he is married to,” the inheritance will be preserved for the son and his siblings?
    2. A daughter came to you knowing that when her father dies there will be a will contest and therefore wants to bring up the fight now while there are witnesses?
    3. A son who tried many times to talk to his father about his declining competence, and out of concern for the father and very frustrated with his father’s inability to deal with the subject, came to you for help in becoming his father’s guardian?

    Father and son image

    During the past two years, I have taken on cases with these exact scenarios. Each is complex for a variety of reasons, but each highlights the growing importance of competence planning. Simply stated, you need to put in place the legal mechanisms so that you can be taken care of the way you wish.

    It’s like the instructions you get from the flight attendant who tells you to put the oxygen mask over your own face first – after all, it is only when you put the mask on your own face that you then have the ability to protect others. In other words, protect yourself first.
    Make sure the documents that will protect you if you are unable to care for yourself -Health Care Proxy and Durable Power of Attorney – are up to date and accurately reflect your wishes. It is also critical that there is coordination between those who are in charge of your personal health care decisions and those who are in charge of your finances, and that you do whatever you can to minimize any conflict between those roles.
    Now, more than ever, it is critical to understand that estate planning is much more than planning for what happens when you die. In an increasingly aging population that is living longer, it is essential to include disability or incapacity planning as an integral part of the estate planning process.

  3. Rise of the Influence of Women in the Estate Planning Process. Statistically, women outlive men. That means that many baby boomer women will inherit money twice – once from their parents and once from their husbands. A tremendous amount of wealth will pass into and through their hands. Many of these women, however, were never primarily responsible for managing the household finances nor involved in the family’s wealth management plans.  Education leads to empowerment. Empowerment leads to action. Once this phenomenon is clearly understood, I recommend that financial, legal, and wealth advisors develop strategic programs to assist with that process.
  4.  

  5. Increases in Estate, Probate, and Trust Litigation.
  6. What would you do if a new client came to you with any of these scenarios:

    1. A shopping mall was put in a trust many years ago, and the trust mandated income to be distributed to the beneficiaries. As trustee during turbulent economic times, your client made the business decision to withhold income distribution in order to maintain a proper operating reserve. As a result, a cousin/beneficiary is suing your client to compel full income distribution. What does income mean? Does it mean trust income? Accounting income? Distributed income? Does the trustee have the right to withhold income if the document is silent on that point?
    2. A new client believes that his sister took financial advantage of their mother and would like to challenge the mother’s will. But the will contains a clause that if anyone contests the will his/her beneficial ownership interest is forfeited. What would you say to him?>
    3. A will names the oldest brother as trustee of the family business enterprise. The other siblings have never trusted him and come to your office with the request that he open the books and provide some transparency they can see for themselves how the affairs are being handled, and that he is telling the truth when he states that he is distributing all the funds to his siblings he is supposed to. This is one step short of litigation. How can this situation be diffused?

    These are actual examples of some of my recent cases. I have noticed that during turbulent economic times, patience is at an all-time low and heightened financial stress has forced challenges and court actions that, in the past, may have been otherwise resolved. I believe this trend is here to stay and that it is important to contemplate this when designing and implementing the business and estate plans for families today.

  7. Increased Client Need for Transparency, Simplicity, and Collaboration.  We live in an increasingly complex, post-Madoff world.  People do not know whom to trust with their wealth. They do not understand their estate planning documents. They do not understand or contemplate how the system of financial planning, estate planning, and wealth management works. Old assumptions have eroded. Transparency is critical. People do not want to do something they do not understand. Vetting and supervising wealth managers is increasingly complex. Many families have multiple advisors – wealth managers, accountants, lawyers, and trust officers. In this complicated time if the right hand does not know what the left hand is doing, the result may be a disaster. As advisors, it is important that we keep this in mind and develop strategies to take these needs into account. 

These trends have been occurring with increased frequency, which is a strong indicator that we, as advisors and counselors, should pay close attention to how we can provide our clients with the tools and information they need to best care for themselves and their loved ones.

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Comments

  1. Great article, Patricia.
    Complementary to your 4 trends, I’d like to add a 5th.
    With people living longer, more “stuff” gets accumulated, across the board, and that “stuff” too quickly gets forgotten and lost. Between $35 and $400 BILLION dollars is escheated (confiscated) by US state governments because people don’t know that their loved ones have/had assets and if they do know it, they don’t know where they are. I push the concept that part of good estate planning is having a digital “roadmap” that is continually updated and can be worked on, as a family. It’s so important, for example, to not only know the medical histories of parents and grandparents, but also to be aware of online accounts, passwords and purchased URLs, all of the insurance policies, contracts, service providers, home inventories and other information that, with proactive organizing, can be quickly accessed and seamlessly transitioned from one generation to the next, all the while having the important information right at your fingertips so that when, not if, a medical or natural disaster occurs, everyone has the information to make informed decisions. Hopefully, together.

  2. This is a great post, Patricia. I find it interesting that the rise of some of these issues- lack,of up to date POA and increased estate litigation would be coinciding with the rise of DIY legal document generation sites like Legalzoom. I don’t this there is a measurable cause and effect correlation (although I’m sure there is a relationship). What I find interesting is the public’s increasing comfort and insistence with the DIY model while at the same time crying foul to attorneys when those solutions don’t work who then have to clean up the mess.

    Your point about women is also a great one to which I had not given much thought, but I think it’s spot on that planners remain mindful of that reality.

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