Written by: Matt Morris | EncorEstate Plans
For years, I've heard advisors share variations of the same conversation: the client is in their 50s to 60s, the kids are grown, and the planning question on the table is always pointed in the same direction: down.
“How do we protect the assets? How do we structure a trust? How do we keep the next generation from blowing it?”
Those are the right questions, but they are missing an obvious problem. What is happening to generation up? What’s missing is the conversation about the client's parents, in-laws, and aging relatives – and almost no advisors are having it.
Here is a recent exchange about why this matters thanks to Kristen Hull, Director of Financial Planning at Duncan Financial Group: "Everybody seems to talk about going 'Generation Down' in order to protect their assets. But when's the last time you went 'Generation Up' in order to make sure the estate your clients will administer is in order. Helping me with a plan is great, but if you help my family members, my kiddos or you help my parents, I will never forget that."
She's right to emphasize the estate planning problem advisors’ clients may inherit!
Here’s how to go “Generation Up” with estate planning as the grounding conversation:
1. Run a parent audit on every client. At your next review, ask one question: "Do your parents have a will, a durable power of attorney, and a healthcare directive?" If the client doesn't know (and most don't) they need to understand the reality of aging parents without a will, POA, or healthcare directive. One misstep by those aging parents could turn their lives upside down.
Jeff Clark of Pine Grove Financial Group insists on this approach due to personal experience. Early in his career, his father had an accident that left his dad incapacitated for 18 months. There was no POA or healthcare directive, so Jeff and his mother were left scrambling, spending hundreds of hours trying to sort out the health and financial realities that needed to be handled. Jeff now requires his clients to understand the status of their parents' estate planning. He also leverages estate planning software to, at the very least, provide POA and healthcare directives to his clients’ parents.
2. Build a "potential inheritance" line item into the plan. When a client mentions a possible inheritance, stop nodding and start asking, “How much of your inheritance will you be giving to attorneys?” Or said another way: “Do your parents have an up-to-date estate plan in place? Is it properly funded? Is the house titled correctly?”
Gaps in their parents' estate planning will be a hassle your clients will be left to sort out. Educate them on avoiding pitfalls that their parents' incomplete planning will require of them.
3. Build a three-generation map of relationships. An estate plan is a map of relationships. Pulling out that map reveals guardians, trustees, executors, healthcare agents, and beneficiaries. What is your client's role in their parents’ estate? Are there pitfalls in sibling relationships that the parents’ planning and documentation of decision could avoid for your client?
What are the conversations they should be having with their family to avoid unnecessary issues in the future? Can you help by participating in these conversations? If you deliver value, it’s likely one more of these relationships will engage your services.
4. Ask yourself this question. “Why bother, does this matter to me?”
It’s not likely you want to be an unpaid resource that your clients come to for help administering their parents' poorly funded estate. The tens of thousands of dollars spent unnecessarily in attorney fees could instead be assets that you manage. There are probably others involved in this family and relationship tree with assets to manage who would benefit from an advisor that uniquely steps into these estate planning gaps. Yohance Harrison of Money Script Wealth Management has generated hundreds of high-quality referrals from estate planning efforts and shares his estate planning referral playbook here.
Procrastination is the #1 reason estate plans do not get completed. When your clients consider the impact poor planning will have on them, it should motivate them to take action to minimize these problems for their loved ones.
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