Posted by Robert L. Arone –

2017 is fast approaching – my is time flying by. It seems like only yesterday we were in the midst of primary debates and a long election season. But with the new year comes a chance to recalibrate how you serve your clients and help them deal with the inevitable changes of life. The more you can meet their needs in a holistic fashion – even when that means working to get things done for them that are outside your core responsibility – the better and deeper relationships you’ll enjoy.

To that end, consider segmenting your clients and prospects so you can meet them “where they’re at.” Here are four types of clients you likely serve. Let’s think about how to approach them about estate planning and related needs in 2017…

Your Four Types of Potential Estate Planning Clients

Category 1: People who believe they have nothing to pass to their heirs.

These people might say things like, “I don’t need estate planning because I don’t have an estate.” In their minds, they have disqualified themselves.

Your approach: Get them to focus on the future. They want to protect their legacies and leave assets to their kids and grandkids—but they’re unsure whether they have even accumulated enough wealth to need to build a plan for the long term. They’re probably overwhelmed. You can assist by educating them to think in this way:

• Does a client have children? Ask whether she has appointed a guardian for them. If she gets sick or dies unexpectedly, a guardian nominated by a parent has an easier time assuming responsibility and obtaining legal authorization to care for the child. This conversation can open the door for discussing the many non-tax and non-financial reasons for having a will and trust.
• Offer to strategize to make the client’s income stretch further, creating a surplus that she could save or invest.
• Almost everyone has something they’d like to keep from going through the hassle and expense of probate. Work with us to give these clients insight into how to structure bank accounts, vehicle titles, and other assets so they can pass directly to an heir without being probated.

Category 2: People who think they don’t have enough assets to bother with estate planning.

These people have some assets, and perhaps a will, but they don’t believe their holdings are sufficient to justify comprehensive planning. A common objection: “Estate planning or trusts are for the wealthy, and I’m not wealthy.”

Your approach: People in Category 2 have a limited understanding of what constitutes “estate planning” or have a mistaken impression about the importance of trusts. Trust-based estate planning can protect assets against excessive taxes, creditors, probate expenses, guardianship or conservatorship court control, unwise spending by beneficiaries, family disputes, and more. In virtually every way, a trust is a better tool than a will, but many people in Category 2 (and the other categories as well), simply don’t know this. Here are a few suggestions for talking with people in Category 2:

• Coordinate with us to review the client’s will and general long term financials, and collaborate to suggest changes that improve client results.
• Do they have life insurance coverage? If not, remind the client that this would be an additional asset for the estate that must be coordinated with the estate plan. You can also offer to review the insurance plan to ensure it still achieves their goals, if you offer insurance policies.
• Could tax changes affect the client? Offer to review any investment strategies to recommend ways to lessen the tax burden.
• If you’re comfortable, ask about the client’s beneficiaries’ finances. Do their kids carry a lot of debt? If so, creditors may file a claim on the inheritance or it can be seized by a divorcing spouse or bankruptcy court. Trust-based inheritances reduce this risk and can protect beneficiaries’ inheritances from creditors, divorcing spouses, and predators looking for an easy payday.

Category 3: People who feel estate planning is too difficult or expensive.

People in Category 3 have assets, but they’re either “too busy” or cash poor to address estate planning.

Your approach: Educate these people about the costs of a lack of planning. Remember the adage – an ounce of prevention is worth a pound of cure.

• Ask whether family disputes over assets or debts might erupt after the person dies. Even if the answer isn’t an emphatic “yes,” the best way to avoid conflict and family turmoil is through comprehensive trust-based estate planning. Brainstorm with your clients and us to mitigate against risk and identify possible points of conflict. Inaction can result in a client’s children paying the price in the form of a lawsuit.
• Is the estate at risk of high taxation? Although the estate tax is largely no longer an issue for most Americans, the income tax is alive and well. Older or nonexistent estate plans may not be income tax optimized, resulting in unnecessary taxes. Also, stay in touch regularly with us and your clients to recommend tax saving strategies that take advantage of new laws and developments we’re expecting in 2017.

Category 4: People who believe they’ve already done all they need to do.

These people believe they have “finished” their planning.Their set-it-and-forget-it mentality, however, can be dangerous and lead to obsolete estate planning strategies, surprise taxes, and family disputes.

Your approach: People in Category 4 have something to lose, and yet they may be operating under a false sense of security.

• Bring up expected changes to the tax laws in 2017 that might affect the estate tax and the income tax. Remind the client that estate plans can become obsolete because Congress, state legislatures, and the Courts are constantly meddling with the law. Estate planners work to keep their clients ahead of the changes, but you and your clients have to take action to update their plan.
• Has it been longer than a year or two since the client assessed the estate plan? We can help modernize old plans so clients can rest easy knowing they have a plan that will work exactly the way they want.

We are here to help.

The beginning of a new year presents a great opportunity for you to reach clients and serve them more fully. We are here to answer questions, address concerns, and provide up-to-date resources to help you serve your clients. Call or email us when you and your clients need insight. Here’s to a happy holiday season and prosperous start to 2017!
This newsletter is for informational purposes only and is not intended to be construed as written advice about a Federal tax matter. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.