Estate Planning? How to Know Your Financial Adviser Gets It

An older couple looks at a tablet held by an estate planning financial adviser.

(Image credit: Getty Images)

published 20 January 2023

Seriously considering your mortality is difficult, but a good financial adviser can be a key partner in helping you with estate planning. Not only can they help you plan your future while you’re still here, but they can also provide critical support to ensure your legacy is smoothly passed to the people and causes you love when you’re gone.

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Understandably, you may have some concern that — in the process of coming into wealth suddenly — your heirs may not have the financial planning wherewithal to make the most of their inheritance. Millennials, for example, have been widely reported to forgo financial planning professionals in favor of robo-advisers or doing their own stock picking and investing heavily in risky asset classes.

But, according to a recent survey conducted by FreeWill, many heirs set to come into money may actually be more likely to work with an adviser once they inherit. In fact, 43% of respondents indicated they’d be inclined to retain their family’s financial adviser under one condition: if they are knowledgeable about estate planning.

So, how can you tell that your financial adviser has the estate planning expertise to guide your family through this important transition?

Here are three ways you can secure peace of mind that this is not their first (estate planning) rodeo:

1. They Don’t Assume You Want Your Assets Passed Directly to Your Loved Ones.

Estate planners often encourage their clients to consider lifetime trusts to manage their loved ones’ inheritance. These types of trusts don’t terminate at a set age (like 25) or upon a certain event (like the beneficiary’s college graduation). They can offer protection from creditors, important tax benefits and more.

Savvy financial advisers are aware of the advantages of setting up a trust to pass on their clients’ wealth. In fact, maybe your adviser has already helped you implement this strategy.

A competent financial adviser will know to ask how your beneficiary will inherit — and not just how much. If they’re to guide your loved ones when you’re gone, this information is critical to making an appropriate recommendation down the road.

For example, say your beneficiary doesn’t have the authority to give away the property in their own estate. A well-informed adviser can ensure this property isn’t included in their will. Without this guidance, purporting to give away property your beneficiary doesn’t actually own can lead to confusion, delay and unnecessary expense when it comes time for their loved ones to administer their will.

2. They Spend (What Feels Like A LOT of) Time Going Through the Beneficiaries of Your Non-Probate Assets.

The average U.S. adult has multiple non-probate assets, or property that doesn’t pass under a last will and testament, like life insurance policies. But most Americans have not properly designated beneficiaries for one or more of these assets. If neglected, the consequences can be both serious (like a former partner inheriting instead of a preferred family member or charity of choice) and expensive (like extra administrative costs to deal with an inaccurate or incomplete form).

An experienced financial adviser is well aware that most Americans have difficulty keeping track of their non-probate assets — especially when it comes to setting their beneficiaries or updating them to reflect changed circumstances. Many people find the process complicated, tedious or distressing (since considering the ultimate payout means thinking about death).

These advisers are uniquely positioned to help in this process; even a client’s estate planning attorney won’t have the up-to-date financial information that a financial adviser has at their fingertips. They might be the first to catch if an insurance policy is owned by the client instead of an irrevocable life insurance trust (which might help save on estate taxes) or if a brokerage account has yet to be transferred to the client’s revocable living trust.

If you properly set your beneficiaries of your non-probate assets (and keep them current), you can help ensure that your affairs are settled and your last wishes are met without hiccups. And a good adviser can — and should — be a part of the process.

3. They Want to Meet With Your Loved Ones.

If your adviser expresses any interest in getting to know those who your assets may someday belong to, take them up on it! Chances are, it won’t cost you anything, and it will help get your family thinking about financial planning and financial literacy. This can ultimately help foster good financial habits well ahead of inheriting assets, while also streamlining the estate planning process.

Takeaway

If you work with a financial adviser, now is as good a time as any to familiarize your family with the practice of planning — particularly if you have Millennial heirs.

While Millennials agree on the value of seeking professional guidance to help manage their financial affairs, many of them have clearly defined what it would take for them to both seek professional guidance and meet with their family’s current financial adviser. And that is a financial professional who understands estate planning.

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Knowing that your adviser understands the value and mechanics of estate planning can provide you and your loved ones with peace of mind. Not only will you know your wishes will be honored, but you can be proud of what the future will look like for your heirs thanks to your foresight and contributions. If your financial adviser is forward-thinking, they’ll demonstrate their expertise by guiding your estate planning efforts and cementing a relationship with your heirs.

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.