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Financial and Investment Advisor Role in Estate Planning

Financial and Investment Advisor Role in Estate Planning

Money Matters Radio – Estate Planning Q&A with Gary Goldberg

By: Martin M. Shenkman, CPA, MBA, JD

What You Should Ask Your Financial Planner about Your Estate Planning Money Matters Radio – Estate Planning Q&A with Gary Goldberg By: Martin M. Shenkman, Esq. Introduction/Overview: Everyone, not just the Rockefeller’s, needs an estate plan. It’s not just about taxes and wills, it's about protecting you and your loved ones while you’re alive, not only when you die! Your investment adviser is key to your planning but most people think the “estate planning conversation” is only for their lawyer. Not! Talk to your financial planner and investment adviser too!
question
What is the most important but neglected issue an investment adviser can help clients with concerning their estate planning?
answer
The Big Gorilla, for many, is the title to their accounts. How an account is set up can have a world of importance to asset protection and tax planning:
  • If one spouse is a physician and the other a teacher, perhaps liquid non-retirement assets should be in the teacher’s name rather than the physician’s name.
  • Identity theft is a big issue and risk, yet so many clients have all their investment assets under one Social Security number. Why not divide assets so that there are funds under each spouse’s Social Security number? It might be practical to set up a revocable living trust with its own tax ID number. All this might assure that some assets are safe if one ID number is scammed. This can provide for living expenses while the mess is sorted out.
  • Basic estate tax planning calls for funding a trust under the will of the first spouse to die. Yet if all assets are solely in one spouse’s name, or in joint ownership, the will may be irrelevant and that tax oriented truest never funded.
question
Most people miss the importance of financial planning as the base of an estate plan, can you explain it?
answer
Absolutely. No one can really do a proper estate planning without some understanding of their financial plan and budget. Many people worry about estate tax when they are burning through their assets so fast that they’ll likely run out of money before they die. The financial plan assures that you’ll have money to address under your will. A financial plan can help you determine if you can really afford to make gifts.
question
Are there other estate planning issues a financial planner can help with?
answer
Lots of them! What about life insurance? Life insurance is a key to many estate plans. However, the financial plan is what often is at the core of determining how much life insurance you need, and just as importantly, how much you can afford. Your estate planner can help you create a trust to own the insurance (really important!) and plan for the use of insurance to pay estate tax, and address the gift tax consequences of paying for life insurance. But the core decisions should start with a budget and financial plan all of which are in the purview of the client’s financial planner or investment manager.
question
Is life insurance the only insurance consideration?
answer
No. For those working disability insurance may be the most important insurance they can buy. As you age, long term care coverage might make sense to consider and perhaps buy.

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