What Estate Planning Topics Should You Be Talking To Your Wealth Management Clients About?

Your failure to instill in your clients your ability to lead a discussion about important estate planning topics is costing you business. To grow your business, you need to expand your estate planning expertise. You should be giving your clients guidance on general estate planning and tax strategies.

You should talk to your wealth management clients about estate planning issues. If you are not talking to them about estate planning issues, it's likely that no one is. Or, worse yet, if you do not bring up estate planning issues to your wealth management clients, then your competitor may be discussing these issues with your clients.

Your estate planning conversations with your financial planning clients must be meaningful enough to have impact. The conversations should not be esoteric conversations that consist of technical legal strategies for the super-wealthy.

Many wealth managers mistakenly feel that they have to show off their estate planning technical expertise by talking to their wealth management clients about things like:

  • Charitable remainder trusts
  • Irrevocable life insurance trusts
  • Intentionally defective grantor trust
  • Qualified personal residence trusts
  • Qualified terminable interest property trusts
  • Crummey trusts
  • Credit shelter trusts
  • Generation skipping transfer tax

But people don't want to discuss the above-described items when they are talking to a professional about their estate. You'll be better off having conversations that start like:

  • What's most important to you about setting up your estate?
  • What in your past impacts how you want to set up your estate?
  • What individuals and organizations do you want to include in your estate plan? Why?
  • What will your children think of you if you set things to make it easy for them?
  • What will your children say about you if you leave them a mess to settle?

As you clients answer these initial questions, you should ask follow-up questions like:

  1. Why did you mention that? Or
  2. Tell me more about that answer.

Listen very carefully to their responses, and then give me a call to set up a time where we can all get together to talk more in-depth about their family. You'll likely be the first person to have a meaningful conversation with them about their estate, and you'll be one step closer to preserving your client's business, and even keeping the business after your client passes away.

Now go leave a legacy!

Grantor Trust Accounts Do Not Need Their Own Tax ID Number or EIN

There can be much confusion between an account owner, their wealth manager, and the estate planning attorney when someone forms a trust and attempts to open a trust account at their brokerage firm or their financial institution. All of this confusion can be eliminated when the parties involved understand the Grantor Trust rules for income tax reporting.

While there are many different types of trusts, two of the most common types of trusts that individuals establish are:

  1. The revocable living trust (for probate avoidance purposes); and
  2. The irrevocable income only trust (for probate avoidance and Medicaid qualification purposes)

Other trusts formed by the wealthy for gifting purposes and to exclude assets from the taxable estate are typically not Grantor Trusts, but these types of trusts are fewer since married couples can exempt more than $10 million from the estate tax.

The one key thing that all parties should be aware is that the IRS does not require or recommend obtaining an EIN/Tax ID Number for “Grantor Trusts.” The client can use their own social security number when they open the account, because income from the account is to be reported on the individual income tax return of the Grantor (the person setting up the trust), even if the Grantor Trust is an irrevocable trust.

"Grantor trust" is a term used in the Internal Revenue Code to describe any trust over which the grantor (also called a “Settlor” or "Trustor") or other owner retains the power to control or direct the trust's income or assets. If a grantor retains certain powers over or benefits in a trust, the income of the trust will be taxed to the grantor, rather than to the trust.

All "revocable trusts" are by definition grantor trusts.

An "irrevocable trust" can be treated as a grantor trust if any of the grantor trust definitions contained in Internal Code §§ 671, 673, 674, 675, 676, or 677 are met.

If a trust is a grantor trust, then the grantor is treated as the owner of the assets, the trust is disregarded as a separate tax entity, and all income is taxed to the grantor.

26 USC 677. Income for benefit of grantor

(a) General rule:

The grantor shall be treated as the owner of any portion of a trust, whether or not he is treated as such owner under section 674, whose income without the approval or consent of any adverse party is, or, in the discretion of the grantor or a nonadverse party, or both, may be—

(1)distributed to the grantor or the grantor’s spouse;

(2)held or accumulated for future distribution to the grantor or the grantor’s spouse; or

(3)applied to the payment of premiums on policies of insurance on the life of the grantor or the grantor’s spouse (except policies of insurance irrevocably payable for a purpose specified in section 170(c) (relating to definition of charitable contributions)).           

Some financial institutions have, as their policy, that if the trust is "irrevocable", the trust must get its own Tax ID#. Rather, the better policy should be that if the trust is a Grantor Trust, even if the trust is irrevocable, then the Grantor who is establishing the account should be able to use their own social security number on the account application, and all income should be reported to the social security number.

How Your Wealth Management Clients Should Leave Charitable Bequests

Many of your wealth management clients would like to enjoy the benefits of leaving a charitable bequest, but since no one has had a meaningful discussion about it, they never follow through with it. There are many benefits that your wealth management clients will recognize from making a charitable bequest. These include:

  • You'll help your clients determine the legacy that they leave behind.
  • Since charitable bequests avoid estate tax, and in many cases, income tax, your clients will leave more of an estate to have an impact on the people and the organizations that they leave behind.
  • Your clients' charitable bequests from their estate will often be larger than a charitable donation that they make during their lifetime. Thus, the charitable bequest will have more impact.
  • Your clients will have one last opportunity to demonstrate their values to their children and grandchildren.

You can start your conversation about this with your wealth management clients by asking a simple question like, "Would you prefer to leave your entire estate to your family, or would you prefer to leave some portion to charities with the remainder going to your family?

Or, for the client who detests paying taxes, you could ask, "If leaving a charitable bequest helps your estate and your family avoid taxes, would you like to have a conversation about that?

If your investment clients want to discuss more about the right way to make a charitable bequest, you may want to set up a time where you and your wealth management client can have a meaningful conversation with me (the estate planning attorney) to determine the structure of their estate and their charitable bequest.

I've seen lots of mistakes made by attorneys who do not know how to advise their clients how to make charitable bequests. Here are a couple of issues that come up:

Where Assets Should the Charitable Bequest Come From?

Most of your wealth management clients have different types or classes of assets. Some have IRAs, 401(k) accounts, annuities, an investment portfolio, real estate, and cash. Some professionals don't know to put careful thought into where the charitable bequests come from. So, if your client writes in his Will or Trust: "I leave $100,000 to ABC Charity," then this may have cost the family $40,000 or more.

You see, if the charitable bequest had come from the client's IRA, and if the client had allowed the family to inherit the non-IRA assets, then there would be big-time tax savings. When the client leaves all or a portion of his IRA to charity, then the charity does not have to pay income tax on the distribution that goes to the charity. This can be a great tax-savings tool. And with the rest of the estate going to the family, and since an inheritance is income-tax-free, considerable tax savings results from providing that the charitable bequest comes from the IRA.

Another issue that does not get the proper attention is the proper restricting of the charitable gift. Some people want to leave a charitable bequest to their favorite college, but they don't know that they could, for example, restrict that gift for, for example "an engineering scholarship." Your wealth clients may prefer to restrict their charitable bequest for certain purposes, rather than have it go to the university's general fund.

If you have wealth management clients who are serious about recognizing the benefits of leaving a legacy through charitable bequest, then let's have a talk to determine the way that will truly be a win-win-win. A win for the charity that benefits from the bequest; a win for the client who recognizes the benefits of the charitable bequest; and a win for you by enhancing your relationship with your client.

Use Joint Webinars With Estate Planner To Grow Wealth Management Practice


Utilizing webinars to grow your wealth management is a smart business development strategy. They are a powerful tool to educate and nurture existing clients and also to attract new clients that can help grow your business. To make it easy to get started, you can co-host a webinar with me that is marketed to all of your clients, prospective clients, and any other contacts you have that can help you grow your business. You could be the co-host of one or many webinar presentation programs along with an estate planning attorney who will organize the event. The webinars will require minimal time and effort since you can simply access our webinar program from a remote location and engage in a conversation with existing and potential clients along with the estate planning attorney. We are experienced in the technological aspects of webinar presentations and will provide the necessary training to participate as a co-host.

The many benefits of hosting a webinar include:

• You can develop authority and trust as a host.

• The attendees have time to get to know you and become emotionally invested in you and your business.

• The interactive nature of a webinar allows you to understand your audience.

• There is an unlimited capacity for attendees and business can quickly generate revenue.

• The registration process allows you to collect lead information.

• You can re-purpose the script by converting the presentation to a blog post series.

• The financial advisor experiences no cost for co-hosting the event.

Suggested topics for these events which will allow you to showcase your expertise, products and services include:

• How to title your investment accounts and designate your beneficiaries for ease of transfer at death.

• How to structure your investment portfolio and work with an estate planning attorney to protect your special needs children.

• The five ways to avoid gift and estate tax.

• How to protect your IRA and other retirement accounts for your heirs, from the perspective of a wealth manager and an estate planning attorney.

Simply contact me to have a conversation about how to start co-hosting webinar events to show that you care about your clients and their ability to transfer their wealth to the next generation. This activity will create the necessary buzz in your community so that your new business and referral activity will build up. You'll also score big points with your existing clients, enabling you to increase the amount of business that you do with existing clients.

So, what do you have to lose? Get started planning your first co-hosted webinar and leave a legacy!

Attention Wealth Managers: Be Careful of the "All Outright to Spouse" Estate Plan

One of the decisions that your married investment clients make is how to leave their estate to their spouse. This decision is often over-looked because married couples often don't like to talk about the possibility that a surviving spouse might remarry. Or perhaps the couple does not want to talk about how their spouse might be restricted from using the assets of the first spouse to die. But when someone guides them through a meaningful conversation about how to leave their estates to each other, and then to the heirs after both spouses die, the couple usually has a great deal of peace of mind after the conversation. Here are a few of the estate planning legal issues that pop up when married couples have an estate planning legal program that leaves everything to the surviving spouse.

Outright to Surviving Spouse

Generally, a married person can set up their estate planning legal program so that when one spouse dies, all of the assets that either spouse owned are ultimately owned and controlled by the surviving spouse. Typical examples of this include:

  1. The "I Love You" Will where each spouse leaves everything they own to the surviving spouse.
  2. The revocable living trust which remains fully revocable by the surviving spouse after the death of the first spouse.
  3. Each spouse names their spouse as the designated beneficiary on their life insurance, annuity contracts, IRAs, and other retirement accounts.

Many of your wealth management clients will like this approach because it seems simple. After the death of the first spouse, neither the children, the grandchildren, or indirectly, the spouses of the children and grandchildren, get involved. It's particularly simple when all of the assets are fully accessible by the surviving spouse without having to go through probate. The surviving spouse is free to spend the money as he or she sees fit and sell the house or other assets without having any accountability to the children or future heirs.

Some of your wealth management clients, however, will consider the structure of their estate planning legal program where everything is owned outright by the surviving spouse to be inappropriate. Some married people want some protections in place for the children. Some married people fear that if all is left to their surviving spouse, and then the surviving spouse:

  • remarries and leaves their estate to their new spouse;
  • gets irritated by one or more of the children and excludes them from the estate; or
  • gets adversely influenced in the surviving spouse's later years;

If any of the following three occur, then the heirs or children of the first spouse to die may wind up with nothing when the surviving spouse dies. There is even greater potential for problems in blended family situations when each spouse ahs children from a previous marriage or relationship.

Example: Husband and Wife each have two children from prior marriages. Husband dies leaving his estate to Wife. After Husband dies, Wife amends her estate planning legal documents to leave her estate to Wife's two children when Wife dies, Husband's two children never get anything.

If you are a wealth manager working with married couples, know that every single one of them is thinking about what their spouse will do with their estate after the first spouse dies. You can tactfully and professionally have the right kind of conversation with them that starts a meaningful deliberation about what they expect in the future. This will likely increase your value to them and increase your referrals.

Our legal work that we do counseling married couples includes having these necessary in-depth and meaningful conversations with clients about what happens when the first spouse dies. If your clients could benefit from that, give us a call and let's schedule a time when we can all sit down and have the kind of discussion that your clients have never had before, but will be glad they did, and they will appreciate your starting the conversation.


Focus on the Estate Planning Niche to Grow Your Financial Advisory Business

Gone are the days where a "generalist" can get ahead in the marketplace. Everyone is looking for a specialist. The general financial planners are a "dime a dozen." But according to a CNBC study, 38% of those with investable assets have not used a financial expert to establish an estate plan. So, if you can establish yourself as a financial expert who helps investors protect their estate and leave a legacy for their family, you will stand out and attract some of the 38% of America who has $1,000,000 or more in investments to your office.

So, how do you develop yourself as an investment advisor who has developed a differentiating niche in wealth transfer and estate planning? Well, you can do the following:

  • Reach out to me and offer to be a Guest Blogger on my website's blog page. Our website gets viewed thousands of times each month so you will be perceived as an investment advisor who knows how tohelp investors prepare for their wealth transfer;
  • Comment regularly to my blog posts on my website's blog page. Again, with thousands of views monthly, you'll get recognition toward your niche;
  • Host joint workshops and seminars with me so that you increase your wealth transfer and expertise, and you show your clients (and the friends, family members, and colleagues of your clients) that you are a trusted advisor they can turn to assist with wealth transfer strategies;
  • Present a joint estate planning webinar to your contacts. I have all of the necessary webinar presentation software all lined up. All we have to do is let your contacts know about the webinar. Just the simple act of inviting your contacts to a webinar that you initiate where you discuss important wealth transfer strategies, will be enough to be perceived as a wealth manager who has developed the niche of helping high net worth individuals protect their estate from the government and for their heirs.

Take the first step today toward developing your wealth transfer niche and becoming the wealth manager in your community who is known for helping its clients preserve their wealth, and protect it for their heirs.

Your Clients Should ReThink Their Estate Plans To Utilize The Double Step-Up in Basis

The federal estate tax is no longer the biggest worry for people who want to avoid taxes when they leave their estate to their family. With the estate tax exemption at $5.45 million for single people (and $10.9 million for married couples with some relatively simple estate tax planning utilizing tax deferral and portability), the main taxes that will eat at the family legacy are the income tax and the capital gains tax.

The income tax is a factor when your wealth management clients leave their estates to their families because so many people these days have their IRA as their major financial asset. Whenever distributions come from an IRA, the recipient must include the distribution as part of their taxable income.

But the other big, hidden tax that families unknowingly incur when they pass their estate to their survivors is the capital gains tax. Your clients may need to do a complete "about face" with their estate legal plan in order to perhaps preserve the "double step-up in basis" (referred hereinafter as the "DSUIB")

Just a few years ago, the DSUIB was an after-thought. The focus was to keep the assets of the first spouse to die out of the estate of the surviving spouse. The focus was on reducing the size of the taxable estate of the surviving spouse. Now, at least for married couples that have an estate that does not exceed $10.9 million, the size of the taxable estate of the surviving spouse may be irrelevant. Today, many families will want to INCREASE the size of the taxable estate of the surviving spouse because all assets that are in the taxable estate of the surviving spouse get ANOTHER step-up in basis upon the death of the surviving spouse.

The traditional QTIP testamentary trust that many of your clients have in place will not permit their survivors to take advantage of the DSUIB.

Example. During Peter and Martha's lifetime, they acquired 10,000 shares of stock with a basis of $5 per share. When Peter died, the stock was valued at $30 per share. If Peter was domiciled in a community property state (like Louisiana or Texas or California), all of the stock would get a step-up in basis when Peter died. Under the traditional estate plan where Peter left his stock to a QTIP trust, Peter's 5,000 shares would not get another step-up in basis when Martha died. When Martha died, the stock was worth $75 per share. Since Peter and Martha's estate legal plan did not consider the DSUIB, their children incurred an extra $56,250 in capital gains tax when the children sold all of the stock after Martha's death, because Martha's taxable estate (for estate tax purposes) did not include Peter's half of the stock - this stock did not get another step-up when Martha died.

If your wealth management clients have a desire to reduce or eliminate the amount of tax that their heirs will have to pay, you may want to give me a call to discuss how an estate legal program can be set up to preserve their DSUIB. As you can see from the example above, a modest estate can save more than $50,000 in tax (keeping this amount in the family and away from the government) by structuring the right estate legal program.


Joint Educational Seminar With Estate Planning Attorney To Grow Your Wealth Management Practice

Financial advisors continually pursue new ways to thrive and expand their business in a highly competitive market. The growing competition from virtually all other sectors of the financial industry requires that you find a compelling means of diversifying and separating yourself from the competition. Not doing so could drastically affect your ability to maintain and cultivate your client base, which in turn will impact your bottom line and affect your opportunity to maintain the standard of living that you desire.

One of the ways that you can build your business by improving your relationships with your clients' family members, and to gain new introductions and referrals, is to host joint educational workshops with an entertaining and informative estate planning attorney.

The wealth management business is a relationship business, and there is no better way to form the right kind of relationships with ideal client prospects is to host an event to show your wealth management expertise, and to show that you care enough about your clients that you are working with an estate planning attorney to help your clients leave their legacy to their survivors.

Taking a relaxed approach to building your business by waiting on your friends and colleagues and clients to refer business to you, or by doing the old-fashioned networking events, doesn't work anymore. The most successful wealth managers are those who pro-actively educate their clients on wealth and estate related matters important to them. These days, it's hard for your clients to get solid, accurate, state-specific estate planning legal information. By hosting an educational workshop or seminar with a successful estate planning attorney, you will differentiate yourself from your competition.

The beauty is that you don't have to spend years trying to learn all of these difficult esoteric estate planning concepts prior to hosting an estate planning event. You just need to have the right relationship with the right estate planning attorney what wants to work with you to educate your community and grow your business.

Here's One Scenario To Start Growing Your Business

You will be the host of four live estate planning events which will include an estate planning attorney as a guest speaker. Since I am accomplished at attracting and retaining a significant client base through public speaking, this program will separate you from your competitors who typically host events to discuss topics such as savings and investment fundamentals, investment strategies for retirement, managing risk and market fluctuations, or tax planning strategies. You can differentiate yourself as a comprehensive wealth manager by hosting events that inform and educate the public on the essential components of estate planning.

Each invited attendee will receive four tickets to share with friends, colleagues, and family members. By inviting your existing clients, you will be supporting and nurturing those longstanding relationships. By encouraging your current clients to invite their friends, colleagues, and family members, you will have the opportunity to meet and develop new prospective clients.

Live events are a dynamic and useful tool to aide in establishing and building relationships by:

  • Making face-to-face connections.
  • Increasing your visibility.
  • Building trust with the audience.
  • Positioning you as an authority on a topic.
  • Providing uninterrupted attention with the audience.
  • Generating new business leads and the opportunity to earn referrals.
  • Utilizing a professionally prepared evaluation form for clients to express their interest and provide contact information.

Suggested titles for these career-enhancing, client-attracting programs include:

• How to avoid probate and government interference by working with the right financial advisor and estate planning attorney.

• How you, your family, and loved ones can avoid taxes at death by working with a team of professionals.

• How to work with an estate planning attorney and an investment advisor to make your children’s inheritance divorce proof.

• Four ways to utilize financial and legal strategies and avoid nursing home poverty.

Contact me to start a conversation about how easy it is to start and maintain this critical component of your wealth management practice. I look forward to working with you to help you grow your business the right way.

Leave a Legacy!

Discuss How Your Clients Should Leave Their Estate To Their Children

Clients need an advisor who, in looking out for their long term interests, brings the importance of estate planning to their attention. Your estate planning conversations with your clients should not be esoteric conversations about legal strategies for the super-wealthy.

When you expand your investments practice to include wealth transfer strategies, you will:

  • Make yourself more valuable to your clients, solidifying client relationships and growing your business;
  • Differentiate yourself from competition who focus on the more narrow investment plan;
  • Form relationships with the trustees, executors, and other fiduciaries of your clients furthering your likelihood that you will retain the business after your clients pass away.

One of the areas where you can make yourself more valuable with your clients is by having a meaningful conversation with them about how they will leave their estate to their children. Your clients will have often have worked for decades building their estate, and it's likely they've never had an in-depth conversation with anyone about how they feel about what they leave behind for their children and grandchildren.

Here are a few conversation starters that will help you emotionally connect with your clients, resulting in your clients more valuing your relationship and your wealth management services. Questions you could ask your clients include:

  • How important is it to you that you leave your children an inheritance?
  • Do you want to leave your estate solely to your children? Or would you like to include your grandchildren in your estate.
  • Are you concerned that your children will not use their inheritance the right way? Or would you prefer to set things up so that your children will receive their inheritance in stages, as opposed to a lump sum?
  • Are you concerned that the spouses of your children will exert influence over your child in a way that your estate will not be used the right way?
  • How will your children feel about you if you have an entire estate program all set up to make it easy for them when you die?
  • How will your children feel about you if you leave them a mess that has to be sorted out in the courts?
  • Do you want to designate a certain child to be in charge when you die? Or are you concerned that you might be showing partiality by naming only certain children to be handling things.
  • What would you expect your children to do with their inheritance once they receive it.
  • Have you had any in-depth discussions with your children about the legacy you are leaving them? If not, would you like me to facilitate a discussion with you and your children about your estate?

These are the things that your clients are thinking about as they ponder how they will leave their estate to their children and grandchildren. By simply asking the right questions, and listening closely to their responses, you will increase your wealth management value to your clients.

It's likely that once you and your clients start meaningful conversations about these issues, your clients will realize that they will need to work with an estate planning attorney to put and keep things in place so that they can leave the right legacy to their family. Simply contact us and bring your client to our office to start a conversation about how simple it is to properly address this important estate planning aspect of a wealth management practice.

How Investment Accounts Should Be Titled For Estate Planning Purposes

How investment accounts are titled can make things really simple or really difficult upon the death of an owner of investments. Typical options for titling an investment account include:

  • Separate Property
  • Community Property
  • Transfer on Death (TOD)
  • Payable on Death (POD)
  • Joint Tenancy With Rights of Survivorship (JTWROS)
  • Tenancy By Entirety
  • Tenancy In Common (TIC)
  • Trust Account

Most of our clients who have trusts title their investment accounts in the name of their trust, in order to provide for continue access by family members, and for probate avoidance purposes.

Tenants in Common Example. Fred and Rita establish an investment account with their investment advisor, and they title their account, "Fred and Rita, Tenants in Common." When Fred died, his portion of the account was frozen and Rita was required to complete Fred's probate to gain access to those investments. Then, when Rita later died, Rita's heirs (her children) were required to go through probate again to gain access to Rita's account, which the investment company was required to freeze once Rita died.

Trust Account Example. Ben and Carolyn establish an account with their investment advisor. Since Ben and Carolyn had previously established a revocable living trust, Ben and Carolyn titled their investment account, "Ben and Carolyn, as trustees of Ben & Carolyn Revocable Living Trust." When Ben later died, the account was not frozen. Carolyn, as the trustee, continued to have access to the account. Then, when Carolyn later died, the Successor Trustee that Ben and Carolyn had named in their Revocable Living Trust, would continue to have access to the account so that she could distribute the assets to the principal beneficiaries named in the trust (often the children of the couple that sets up the trust).

Many individuals, couples, and financial advisors do not give much thought regarding how investment accounts should be titled. But doing this correctly can save a significant amount of time and money upon the disability or death of one of the account holders.