Why Your Financial Advisor Should Help With Your Estate Plan

Two Case Studies Showing How It’s Helpful to Have a Great Financial Advisor Help With Your Estate Planning

You’ve “planned” your estate. You think you’ve considered every detail. Your will has been updated, and maybe even a trust has been established.

Once you reach that point, you think you are done, but are you really?

Today we’re going to look at some estate planning case studies, which will hopefully help you not make the same mistakes…

A Common, Yet Devastating Mistake: Not “Funding” a Trust

In creating his estate plan, Phil thought those who were responsible for taking care of him would be taken care of. He went to an attorney he trusted and set up a trust for his farmland. He had three children – two daughters and one son. When Phil was sick, his son was the one who took care of him. His daughters didn’t communicate with Phil the entire time he was sick. This was during the last part of his life. Phil’s trust made arrangements for the daughters while leaving the farmland – the family legacy – solely to the son.

When Phil died, his children found that the trust had not been properly funded. Basically, that means that the farm was never properly titled to the trust. That mistake made the trust useless.

Phil wanted his son to own the farm outright. But that didn’t happen. Instead, Phil’s son owned 1/3 of the farm, which was an asset he relied upon for income. His son didn’t have the best relationship with his sisters. As a result, his two “new partners” weren’t sympathetic to his problem. In fact, they wanted to sell their 2/3 of the land. And they did sell it to someone else without the son’s input or approval.

This sad story is true, not hypothetical. Phil had great intentions, but he simply left out the most important step. This step was putting the farm in the trust.

This mistake isn’t uncommon. (In fact, many people see not properly funding a trust as a dirty little secret of the estate planning industry.)

My mother (Steve) did the same thing. She set up a trust and didn’t put the land into it. As a result, the trust was effectively blank. In our situation, it worked out okay, because all the kids were able to agree.

A Single Brokerage Account Can Simplify Things for Your Loved Ones

John’s uncle Rick properly set up a trust for his niece and nephews. He had numerous investments spread around multiple mutual fund companies. Unlike Phil, Rick properly changed the owner of the investments to his newly set up revocable trust. So far, so good – way to go, Rick!

However, when Rick passed away, the executor of his will had the task of working with SEVEN different mutual fund companies. This required multiple phone calls and seven sets of completely different paperwork. In short, while Rick had properly funded his trust, his executor faced the monumental task of moving the assets from his trust to multiple heirs.

What Rick, or really his financial advisor, could have done was suggest that Rick open a brokerage account and move all the assets into one account.

The executor of the estate, John, would only have had to deal with one company instead of seven. Nevertheless, it was a significant amount of time and money wasted.

How a Great Financial Advisor Could Have Helped Phil and Rick Improve Their Estate Planning

These two cases are real life and happen pretty regularly. In both cases, the clients did nothing wrong. On the contrary, they made a lot of correct decisions. However, a more thoughtful financial advisor could have gone the extra mile to help them.

These cases should make you think about your own estate plan:

  • Do you know what would happen if you died?
  • Are your assets far flung like Rick’s?
  • If you have a trust, have you actually put your assets into the trust?

Phil and Rick’s legal counsel should have been more diligent. Not funding a trust is a common mistake. On the other hand, Rick could have tried to put himself in the shoes of his future executor mentally walking through the process himself to see if there were any potential problems.

These two case studies highlight the importance of including your financial advisor in the process of creating your estate plan. Great financial advisors walks themselves through the process of finalizing your estate. They could also provide suggestions and be a liaison to the new heirs.

If you have any questions or want to discuss your account or estate plan with Steve or Robbie, feel free to reach out via phone or email. We’re always happy to chat!

Give us a call at 217-824-4211 or 573-808-1959 with any questions or concerns you may have about estate planning and how it can impact your loved ones’ futures. To continue learning more about how estate planning and financial planning go hand in hand, check out our blog and click on Estate Planning.