Estate Planning: 5 Seasonal Thoughts on Clients' Minds

An affluent family

You may want to remind clients that including a gift under their will or revocable living trust or naming a charity as a beneficiary of their non-probate assets present alternate avenues to advance the mission of their favorite causes. These actions can also potentially get clients inducted into the legacy societies at their favorite charities, putting them in community with like-minded individuals in a manner that can be a major point of pride among clients and their families.

3. Their Children

As clients warm their hands around the fire with their families, they may notice their children speaking more eloquently about current events or realize that their oldest will soon be getting a driver’s license. With reminders of how grown-up their children have become, clients may be more open to discussing a plan that empowers their offspring for greater decision-making.

There are a few ideas you can bring up that address clients’ children’s growth and ability to take on greater responsibilities. For example, if clients have set up a trust for their children under their will, they may consider naming each child the trustee or a co-trustee of an individual trust. In doing so, clients can grant their adult children greater autonomy over decision-making affecting their families’ financial futures.

This can be significant because many clients have been more comfortable naming close family friends and members of their respective age cohorts to manage their children’s trusts.

Naming close friends as trustees can provide clients’ estates with checks and balances but also occasionally brings unintended consequences. At the point their next of kin have proved capable of thriving independently, clients may be best served considering estate planning strategies that reflect their children’s capabilities.

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So, discuss who your clients’ current trustees are, and why. Often, there’s merit in exploring a refresh.

4. Their Grandchildren

Clients always love seeing their grandchildren running around — hopefully after, and not during, dinner. It may even be time for clients interested in investing directly in their grandchildren’s future to consider using their annual exclusion gift, which is currently $17,000 per year, to make lifetime gifts in a tax-advantaged way.

Section 529 plans are also increasingly popular to save money specifically for college, which, at more than $36,000 per year on average, is quite costly. For even larger gifts, it may be worthwhile to look at starting a gifting trust.

Beyond simple dollars and cents, the holidays are about giving, and someday heirlooms will need to change hands. By updating their wills to include gifts to their grandchildren — including who gets which family valuables — grandparents can exercise some discretion to make sure the most special presents are accounted for correctly.

5. The Daughter- or Son-in-Law

There can be divergent views about keeping assets within the bloodline, or letting the definition of family within an estate plan expand to reflect bringing new members into the inner circle. Clients may have varying feelings on this, which is why it’s worth raising the question as to how they view their in-laws, and how they should be accounted for in legacy planning.

Leaving assets in trusts for children under clients’ wills may be just the solution if the holiday gatherings have them thinking that they want to ensure that assets stay in their lineage. However, clients may realize that their son- or daughter-in-law has become a part of their meaningful traditions, and as these relationships deepen, clients may want to reflect this in a more tangible way.

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These relationships may encourage recommending that clients consider giving their children limited testamentary powers of appointment to redirect some of their inheritance to their spouses upon their passing.

Conclusion

The holiday season can bring a lot of celebration, but there’s also ample time to have important conversations that affect loved ones. As an unprecedented amount of wealth is set to shift from generation to generation, estate planning for clients over the next decade or so is at its most important point. Incorporating estate planning into the discussions this year in a directed way is something you and your clients should think about.

Allison Lauren Lee, Esq., is director of Trusts & Estates Content and Strategic Development at FreeWill.