Wealth Transfer: Empower

Help empower your clients to discuss wealth transfer

Modest Lifetime Gifts

Giving lifetime gifts has long been a strategy suggested to clients when estate planning for tax purposes. But, for many of your clients, the non-tax related benefits may be just as important. By making modest gifts earlier in their lives, many clients feel a sense of enjoyment as they are able to witness how the recipients benefit from their generosity. Other clients may use modest lifetime gifts as an opportunity to gauge the emotional and intellectual maturity of the recipient, depending upon how the funds are used. Poor decisions regarding modest wealth transfers can provide clues regarding how to structure larger gifts of inheritance.

Appointing Executors, Trustees and Agents

Making a mistake in the representatives your clients choose as their executors, trustees and agents could prove more harmful in the long run. Obviously, they want to choose someone who is smart, reliable and trustworthy. Those characteristics go without saying. But there are several other characteristics that are very important that are often overlooked by clients.

  • Consistency – Naming the same person on a health care proxy and the durable power of attorney can help avoid potential conflicts. By doing so, the person making medical decisions will be the same person who pays the medical bills.
  • Singularity – Unless there are unique circumstances, one appointee is usually better than multiple appointees. Sometimes parents will name all of their children appointees as a way to avoid hurt feelings among the family. Instead, thought should be given to who is the best choice. One potential problem that could arise with multiple representatives is how disagreements are handled. Not only can these disagreements cause friction among siblings, but they also can result in additional costs and delays in the handling of your affairs.
  • Informed – It’s important to encourage your clients to inform their representative of their choice along with the necessary coaching on what he/she will need to do to satisfy their responsibilities. It’s also important to provide an opportunity for the representative to decline the appointment. Becoming aware of an appointment only after the fact or not being prepared is a very difficult situation for a family member to find themselves in.

Business Succession Planning for Your Clients

Less than one-third of family businesses survive into the second generation, and only 13% make it to the third generation1. Thorough succession planning can help to increase the survival rate of your client’s business by implementing three different phases:

  • Phase 1: Pre-Boarding: Consider ideas like making sure that a child obtains outside experience prior to joining the family business.
  • Phase 2: On-Boarding: Once the child joins the family business hire them in to an existing, defined job.
  • Phase 3: Post-Boarding: Make sure an exit date for the parent/owner and stick with it.

Download our Great Wealth Transfer Implementation Guide for best practices and additional ideas to empower your clients when discussing wealth transfer.

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Source: 1 The Family Firm Institute, “Family Business in Transition: Data and Analysis,” 2016.

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