Elder Law Update – Financial Advisor’s Edition May 2009
Financial Advisor’s Can Instill Hope and Consumer Confidence. There is Still A Lot to Protect Out There. Why not Grow Your Business? At The Law Offices of Anthony B. Ferraro, LLC, we have taken a number of steps over the years to try to help Financial Advisors round out and deliver services to their clientele. In our opinion, the most important thing you can do in this depressed economy, in our humble opinion, is to create a very proactive message and let your clients know “We are out here, and we can take steps to protect your assets.” Financial advisors can take the very deliberate step of helping clients protect their assets through the usage of several simple techniques that I will talk about in this update. Remember, these strategies are designed to provide peace of mind to clients who feel that everything else is working against them. As an advisor, I would offer my clients the following:
- Trust Protector for Existing Trusts. You may want to have all clients consider adding a Trust Protector to their existing trust or trusts. This Trust Protector can do a couple of different things. First, in connection with irrevocable trusts, the Trust Protector can provide discretionary asset distribution that the Trustmaker himself cannot undertake. Second, the Trust Protector can make changes to the trust provisions that, again, the Trustmaker himself cannot make. This creates flexibility and peace of mind for clients.
- Dynasty Trust Planning. This is not just for the Rockefeller’s and Carnegie’s. Let’s assume you have a client that desires to deliver an estate of $300,000, $500,000 or $700,000 to their children. The problem is that the client doesn’t trust their daughter-in-law or son-in-law, or for that matter, they may not trust their child. A Dynasty Trust is a way of holding back a trust distribution at the death of the parents. This enables the monies to be available for the children or grandchildren, but does not distribute outright all at one time. This gives parents the peace of mind of knowing that everything that they strived and worked for to accumulate over the years will be available for their children and not squandered shortly after their deaths. This type of planning may also afford you the opportunity to obtain an introduction to the next generation or two of your client’s family.
- Grantor-Type Trust. Explain to clients that grantor-type trusts are advantageous because they will not result in having to file an additional tax return during the life of the Trustmaker (Grantor). Also explain that a grantor trust is something advantageous and that can be toggled on and toggled off at different points during their life such as for example in connection with planning for veterans benefits. This is another widely used tool offering protection for clients at a time when all clients are looking for ideas regarding protection.
- Multiple Trusts. Sometimes a trust is a great idea. Sometimes that idea no longer works. It is a shame to terminate a trust simply because one idea does not work. Perhaps having several trusts with slightly different objectives can avoid the need to totally eliminate otherwise perfectly valid trusts.
- Trust as a Beneficiary. Either in connection with beneficiary designation assets or tax-qualified assets such as IRAs or 401(k)s, a lot of work needs to be done in connection with beneficiary designations. It really does not matter what is written into wills or trusts if the beneficiary designations are inconsistent with the client’s objectives. You have a lot work to do as an advisor in connection with beneficiary designations, so let your clients know that you care enough to have reviewed such designations and will even go through the expense of preparing new ones, if necessary.
- Second Marriages. These are very common in our society. A second marriage raises a whole host of issues on which the client needs counseling. In order to provide protection to the client, the issues associated with second marriage need to be understood and discussed with clients. This is fertile ground for advisors to be adding value to clients and how they perceive your services. Please give consideration to second marriage planning as a special niche.