How to Address Four Common Estate Planning Concerns

Michael Winn, Business and Estate Planning Specialist, First Republic Securities Company
September 8, 2017

When envisioning their legacy, many wealthy families and business owners desire to plan an effective transfer of assets to future generations and to incorporate their philanthropic goals in a powerful, meaningful way. However, this planning is often easier said than done. When getting to the nuts and bolts of creating an efficient estate plan, many clients encounter questions and concerns that, if not properly addressed, can leave them frustrated and confused, with a plan that does not truly address their long-term goals.  

Developing a strategic, high-level approach to the process that is unlike the more traditional, academic experience can be invaluable to the ultimate success of an estate plan. Intimate discovery sessions with key advisors, driven by thoughtful questions that seek to truly understand the unique business and wealth dynamics that drive each family, can help pinpoint precise and detailed objectives. In uncovering these details, it can be possible to create an efficient planning blueprint that guides the advisor team to take action with complete clarity. In this way, both the technical and “soft” issues get addressed, creating a balance between tax savings, flexibility and family harmony. Shorter, more focused working time can also help streamline the process and avoid the long, overly complex meetings that many families experience otherwise.

Assembling an efficient team of advisors can bring a human touch to what can be a difficult and sometimes overwhelming experience, helping families stay focused on the end goal. In addition, this process can help tackle four important questions that are typically top-of-mind for high-net-worth families and business owners, including:

1.  What if I leave too much?
Many wealthy families want to ensure their heirs are motivated to work hard and uphold the family’s values and don’t want to risk hard-earned assets being squandered by future generations. Estate planning specialists can guide clients through various planning strategies that can limit access to assets or incentivize beneficiaries to live and spend responsibly.

2.  What if I leave too little?
Conversely, some clients wonder if they’re leaving their heirs enough to sustain them financially over what could be many decades, or if their plan is properly structured to address the tax bill that could be due upon their death. This is of particular concern to families who hold large real estate portfolios or who wish to leave a sizable portion of their estate to charity. That gift of $5 million incorporated into a plan at today’s dollars could grow exponentially, resulting in the majority of a client’s estate going to charity instead of to their heirs. As with the first item above, an estate planning specialist can help design a plan that provides enough liquidity to pay potential taxes without the need to liquidate property or assets and that maintains the balance of giving intended.

 3.    What if tax laws change?
The prospect of changing estate tax laws may cause uncertainty and inaction for many wealthy families. While no one can predict what estate taxes will be in the future, it is possible to build flexible plans that can be adjusted to account for estate tax changes. For example, a Trust Protector can be named to an Irrevocable Trust and granted the authority to alter trust provisions due to unexpected circumstances, such as tax law changes.

 4.      What if my legacy doesn’t become reality?
A premature death or unforeseen life event can derail even the best-laid plans. Estate plans must be created with the assumption that unexpected events will happen. Working closely with a team of advisors all aligned to address the end goal of a plan will ensure that all the key steps are taken to protect loved ones. All existing documents should be reviewed to confirm that trusts have been set up and funded properly, assets have been correctly re-titled and that the mechanics of the estate plan have been completed.      

Estate planning is a critical priority for wealthy families and business owners, but it can also be a complicated — and emotional — endeavor. Coordinating with a team of advisors dedicated to simplifying the process and seeing the plan through to completion, however, can be a powerful catalyst to getting a truly effective plan design in place.

The strategies mentioned in this article may often have tax and legal consequences; therefore, it is important to bear in mind that First Republic does not provide tax or legal advice. Investors' tax and legal affairs are their own responsibility and readers should consult their own attorneys or other tax advisors in order to understand the tax and legal consequences of any strategies mentioned in this document.

This article is presented as-is.

© 2017 First Republic Securities Company