A Recipe for Estate-Planning Failure

Many wealthy people put their lifestyles first when it comes to financial planning. That's where a good adviser comes in.

I was visiting with an attorney in Florida recently. He was explaining his frustration in regards to a client of his, a fellow "who's worth about $50 million, and I've never been able to convince him to do any estate tax planning," he said.

I said to the attorney: "You're a pretty sharp guy. You must have shown him strategies that would reduce the taxable estate and leave more money to his family!"

He said, "I have. But I've failed to get him to implement any of them."

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

So I asked the counselor, "Did you do a cash-flow analysis showing him how much money he needs to protect his lifestyle?"

"Bruce, he's worth $50 million. I think he knows he has enough money to protect his lifestyle," the lawyer responded incredulously.

"That's why you can't get your client to do any planning. He really likes that," I replied.

"What do you mean?" the lawyer said. "Likes what?"

"Knowing he has enough money to live on—he really likes that. You're showing him all these great ideas that move his money out of his estate and into a trust for his kids where it won't be taxed, and he's not so sure that by the time you're done doing that, he's still going to have enough left to protect his lifestyle."

"And another thing," I continued, "the lifestyle he wants to protect is his lifestyle, not yours. For example, I belong to a nice country club, which costs me about $1,000 per month, on average, for all the things I do there. I have a client who has a condo on a cruise ship. His minimum is $65,000 each month. That's the lifestyle he wants to protect, not mine."

The attorney paused: "I never thought of it that way."

Almost without exception, regardless of the size of the estate, it has been my experience as a financial planner that people's number one goal is protecting their lifestyles. If you're not confident about that, it's very unlikely that you'll have the confidence to do the things necessary to create an effective estate plan.

Many attorneys aren't well-versed at financial planning. So, it's really necessary for you to get all your advisers to work as a team in a framework that seamlessly integrates all of their skills for you. Without a solid financial plan, it's unlikely you'll wind up with the most effective estate plan.

By the way, the attorney in my true story called me a few days after our meeting. "Bruce, you were absolutely right," he said. "He was too nervous about his own financial security to implement the asset transfers required to complete an effective plan. And, for the first time, he's excited about completing an estate plan that protects his financial security and reduces the tax burden on his estate while providing for the people and organizations he cares about."


Disclosure: The example presented is applicable to the individuals depicted and may not be representative of the experience of others.

Bruce Udell has more than 40 years of experience in the financial industry. He designs solutions for wealth accumulation and enjoyment for high-net worth individuals.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Bruce S. Udell, ChFC, CLU, MCEP
President, Udell Associates

Bruce S. Udell has more than 40 years' experience in the financial industry. He designs solutions for wealth accumulation and enjoyment for high net worth individuals. Bruce is sought-after for his easy-to-understand approach and his special talent in creative estate planning. He is the inventor of The Wealth Enjoyment System®, an innovative approach to estate planning.