As an estate planning attorney, clients trust you to manage their precious assets.
Though it seems like a straightforward process, you may encounter issues along the way.
For instance, parties with a potential interest in your client’s assets may surface at some point.
Disgruntled heirs and disinherited family members are two examples.
Because we know you have your client’s best interests at heart, here are three ways you can help protect their wealth.
1. Put beneficiaries in writing
Estate planning attorneys need clients to see how important beneficiary forms are.
In a recent Forbes article, financial planner Jeffrey Levine noted that a will often covers an individual’s personal property, such as jewelry and other possessions.
It does not, however, cover real property, bank accounts, or retirement savings.
“A will only controls assets that pass through the probate estate,” Levine said, “but many assets avoid probate altogether and pass by contract or operation of law.”
With this in mind, IRAs, Roth IRAs and 401 (k) accounts should all have beneficiary forms.
The forms generally supersede a will, he said, “even if it clearly states you hate John and want all your assets to go to Jane.”
2. Consider a no-contest clause
Here is another tool estate planning attorneys can use to shield their clients’ assets:
Put a no-contest clause in their last will and testament.
According to personal finance website the Balance, if this clause is present, a beneficiary who unsuccessfully challenges a will in court will likely lose his or her inheritance.
However, this process can vary by state. Some may not enforce no-contest clauses.
3. Create a living trust
A third option you and your client could consider is a living trust.
According to the American Bar Association, a trust can address a variety of estate planning issues that cannot be tackled in a will.
What’s more, your client can manage their assets and protect them in the event they become injured, ill or disabled.
Most trusts are set up to allow the client to revoke or amend them whenever they want.
While a living trust is subject to estate taxes, it can help your client avoid probate proceedings.
Keep in mind, though, an irrevocable living trust may not be revoked or modified. These are designed for tax and asset protection purposes.
Shaking a financial FIST
Do you have a client who is passing on wealth on to another generation of their family?
This requires especially careful planning, as explained in a recent Wealth Management article, This FIST Can Knock Out Multigenerational Family Wealth.
Here’s what FIST stands for:
Family units supported by the family wealth (number of)
Inflation, which eats into wealth over time
Spending rate (percentage of assets being consumed by the family)
Taxes, including income, capital gain, estate and gift
Some final thoughts…
As an estate planning attorney, your clients rely on your knowledge and expertise to make the most of their life’s assets.
Depending on the situation, one or more of the courses of action identified here may be appropriate.
The only way to know for certain is to ask your clients.
If you have not discussed any of these scenarios with them, you have a very good reason to initiate a conversation.
And click here if you would like to learn more about our client acquisition services for estate planners.