"Whatever can go wrong, will go wrong."
Murphy's Law applies itself with surprising vigor in the estate planning field. If your clients are leaving outright, no-strings-attached inheritances or gifts to their beneficiaries via wills, trusts and beneficiary designations, they are practically inviting disaster. But, there's hope. A properly designed estate plan protects a client's beneficiary and can help grow your business.
How Proper Planning Benefits Your Practice
An inheritance that goes outright and into the pocket of a spouse, child, or grandchild will very likely leave your office. On the other hand, an inheritance left inside a trust (such as a "Lifetime Convenience Trust," more on that below) has a better chance of staying because:
- If assets managed by you are left outright, they can easily be transferred away by the beneficiary after the client dies.
- You have time to build relationships with the beneficiary while your client is still alive and well.
- Your client may be inclined to recommend that the trust assets be managed by you when you are proactive in the planning process and demonstrate that you have expertise in overseeing the investments for loved ones in Lifetime Convenience Trusts.
Understanding the benefits of leaving an inheritance in a Lifetime Convenience Trust for a responsible, adult beneficiary can help build your client's confidence and trust in your relationship. Ultimately, this positions you as the trusted advisor for the client's heirs.
What Can Go Wrong with Outright Distributions or Gifts?
There are many perils with outright distributions or gifts. Here's a short list of what can (and, in many cases, will) go wrong:
- Judgment creditors can seize or garnish a beneficiary's inheritance to satisfy their claims (even if it's a "frivolous" lawsuit).
- Bankruptcy courts can seize a bankrupt beneficiary's inheritance to pay creditors and costs. This applies to inherited retirement accounts too.
