The Independent Advisor's
Succession Plan

Estate Planning Tips for Financial Advisors


Estate planning is essential for anyone who plans to leave assets to their family, friends, or charity after they pass away. While many people prefer to avoid thinking about estate planning in fear of death, just like a succession plan, it is best to think about your plans now than deal with the consequences in the future. As a financial advisor, an important part of your estate planning will involve implementing a succession plan. While we work with financial advisors to implement a succession plan for their retirement, unfortunately, they may pass away before they actually get to retire. Life is unpredictable, so it is prudent to put together a succession plan now rather than wait until closer to retirement.

As a financial advisor, there are also other things to keep in mind when it comes to estate planning, both for yourself and for your clients. Estate planning isn’t a one-time activity; your estate plan should be periodically updated throughout your life as circumstances change. Here are some considerations that you should make, both when planning your own estate and when working with your clients.

Mistakes to Avoid

When reviewing an estate plan, avoid these mistakes:

  • Failing to check the beneficiary designations on retirement plans, life insurance policies, and annuities. The beneficiary designations for each of these will overrides anything in the will to the contrary.
  • Not leaving important written documentation of all assets and accounts, including usernames and passwords and where to locate estate planning information.
  • Failing to update the estate plan over time. Estate plans need to be updated periodically to reflect changes in life circumstances.
  • Failing to retitle assets to a trust after establishment.

Here are some points in a person’s life when they should re-evaluate their estate plan.

A New Baby

Whether a new baby is born into your family or is adopted, it is important for parents to promptly put a will in place. It doesn’t matter if you verbally ask someone to be the guardian of your child; this does not necessarily mean your wishes will be respected if you pass away. A written will is important to make sure that your children are taken care of in the event of your death.

Marital Status Change

When you get married, there are a lot of things that need to be changed, including beneficiary designations on your retirement accounts and life insurance. You may also need to change the title of your home to reflect joint ownership. Finally, your will should also be updated to reflect whatever assets you wish to leave behind to your spouse should you pass away.

When you get divorced, you may need to alter your estate planning documents if you updated them after your marriage. You may change any beneficiary designations from your former spouse to another person, such as your children or a different relative.

Financial Status Change

Over time, perhaps you have been successful in your career and have started to accrue more wealth, or maybe you have received an inheritance or invested wisely. Regardless, an increase in wealth is a good moment to revisit the estate plan, as it may be more complicated.

On the other hand, a loss of wealth may require revisiting the estate plan to simplify things.

Beneficiary Status Change

It is possible that after you have set up your estate plan, the life circumstances of one of your beneficiaries has changed. For example, if you intended to distribute your assets evenly among your children, but one has become independently wealthy, they may prefer that the other siblings receive the assets as they have greater need. Other circumstances may be that a beneficiary has decided they are uncomfortable receiving one lump sum of money; in this case, you can work out a different arrangement that will benefit them while helping them save. Finally, if a beneficiary has passed away, the estate plan must also be updated.

Selling or Buying a Business

In the event of buying a new business, it is important to update the estate plan to include provisions that allow heirs to benefit from the value of the business. A buy/sell arrangement, funded by insurance, may be one way to accomplish this. This basically provides value to heirs without taking away from remaining partners of the business. The specifics of this arrangement will vary according to the specific circumstances.

In the event of selling a business, it may be that you have reached a new level of wealth that requires alterations to the estate plan.

We have ideas about what we would like to happen to our assets in the event of our deaths, but many people are not proactive about putting an estate plan in place. However, estate planning is the only way to ensure that your wealth and possessions are left to their rightful owner. Whether you need to compose an estate plan yourself or you need to inform your clients of this important financial issue, keep in mind estate planning during these critical times in a person’s life.

When you need a financial advisor succession plan, you need guidance from an experienced source. At advisorRETIRE™, we have helped countless financial advisors put succession plans into place to help them transition into retirement. Implementing a succession plan might seem overwhelming right now, but we can help you through the process to ensure that your business is left in good hands when you are ready to move on. Contact us today to learn more about what we can do for you with our financial advisor succession plans.

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