Building Your Estate Planning Dream Team

It’s often to build the perfect team for your clients in the estate planning adviser arena. Here’s some tips for how to build the best estate planning team for your firm.

An Attorney’s’ place in the estate planning arena may seem fairly obvious—they develop clients’ estate plans and draft the documents that ensure the client’s wishes for transferring assets is legally enforceable.
But in reality, the estate planning attorney’s function in this team is much more complex. Attorneys who add the most value for financial advisors and their estate planning clients are those attorneys with a strong understanding of the precise coordination that is required to ensure a smooth estate planning process, one who can interface closely with financial advisors, trust companies and other pieces of this complex puzzle to make sure that problems are addressed—hopefully before they even arise.
Gauging an attorneys’ ability to contribute to an estate planning advisor’s team include:

  • How would you handle the following situation?

Ask your pool of estate planning attorneys to run through hypothetical estate planning ‘case studies.’ This allows you to asses both their competence and also to understand their potential fit. You could start with a basic scenario, such as a married couple (both are living), to see how the attorney handles a simple transfer of assets in the event that one spouse died or became incapacitated.  The goal here is to make sure that the attorney’s approach is appropriately tailored to the client’s situation without over complicating either details or cost. Such traits will offer your financial advisor the ability to scale up—in which, the precise coordination between the financial advisor, tax advisor, and other estate planning team members is obtainable.

  • What’s your overall philosophy?

In order to make sure you have a fit, financial advisors should also consider checking with the attorney on specific trust structures. When would they use the following:

  • A dynasty trust?
  • A distributive trust?
  • A credit shelter trust?

What are the pros and cons of each? These conversations help an advisor assess whether the attorneys’ approach to common estate planning scenarios is similar to the firm’s philosophies; it also gives a sense of the attorney’s ability to develop creative solutions for their clients.

  • Can you please explain the following?

Throughout the vetting process, advisors should be attentive to the attorney’s ability to break complex concepts down into understandable and relatable language. Financial advisors know this well—it is easy to hand clients a binder full of complicated documents that detail a plan or an investment strategy
helping them understand and feel comfortable in ownership of these documents is an entirely different thing altogether—not that easy and very important.
The next key component of the financial advisors’ estate planning team is their trust services company. Many broker-dealers and banks have in-house trust companies. That said,financial advisors don’t always have to work with the in-house option and in many cases, an outside provider may be the best solution for clients.
Advisors should also keep in mind that measures such as total assets under administration are very rarely the best indicator of the trust services company’s experience. Digging a bit deeper, here are some key factors to consider:

  • How flexible are you?

Trust companies can often seem more concerned with maintaining policy consistency and minimizing their company’s own risk rather than developing creative solutions for clients. This can lead them to pressuring clients into asset structures that could possibly be harmful and inappropriate—for example, insisting that clients break up large single stock holdings even when doing so would cause the client to incur significant capital gains taxes.

  • Whose team are you on?

It’s crucial for financial advisors to develop a full understanding of the entire breadth of services offered by a given trust company. It’s not uncommon to find trust companies competing with independent advisors by offering investment advice themselves and leading to conflicts of interest—possibly undermining the advisor-client relationship and this can make the execution of the estate plan much more complicated.

  • How broad is your reach?

Estate planning is largely governed at the state level. Hence, there are some basic considerations that you must take—such as a trust company’s expertise in estate planning laws across the country (all 50 states)
and their ability and willingness to explain those laws clearly should be at the top of a financial advisor’s list during the vetting process.
Building your perfect estate planning team, especially to be the best to address your clients’ needs is, indeed, a complicated endeavor that requires an in-depth vetting process and a commitment to remain an expert on core estate planning concepts and developments.
A good financial advisor looks beyond simple top-line numbers such asyears in business, a trust company’s total assets under administration, etc., and can develop a more comprehensive view of factors that enable their team to work together to deploy and execute effective strategies for the clients’ estate planning needs.