As Valentine’s Day brings heart-shaped chocolate boxes and roses by the dozen into your clients’ imaginations, seize the moment to educate them about the drawbacks of “I love you” wills and introduce them to the estate planning move that’s actually going to ensure they do well by their loved ones: a lifetime beneficiary trust.
As a financial advisor, you may already be well aware of what estate attorneys call “I love you” wills. You can recognize these wills because they are often short and their hallmark is that the maker of the will leaves everything, outright, to his or her surviving spouse. Hence the “I love you” name: “I love you so much, I’m leaving everything to you.” But this all-too-common approach creates significant risk for beneficiaries and, contrary to their name, is often not the most caring of estate planning gestures. These types of wills are an excellent opportunity to take action on behalf of your clients’ best interests while providing extra value that will enhance your career as well.
Few aspects of estate planning bring out as much emotional decision-making as the division of assets in a will or trust, and that puts you in the perfect position to guide your clients away from these wills and toward a more caring solution. In order to help them understand why “I love you” wills are not a good estate planning strategy, here are a few helpful points.
Say your client Bob wants to make sure his wife, Lisa, gets access to his wealth upon his death. In the case of an “I love you” will, Lisa receives the assets outright and, initially, it looks as if those assets will be handled according to Lisa’s current estate plan when she dies. However, Lisa could alter her estate plan at any time — meaning any verbal agreements she made with Bob about what will be done with those assets could go out the window, contrary to Bob’s wishes.
Here are several other points you can use to help clients like Bob see “I love you” wills for the poor planning strategy that they are.
A lifetime beneficiary trust is a better option than outright inheritance because it avoids all the pitfalls of “I love you” wills. Introduce us to any clients who might be operating under false assumptions regarding their “I love you” wills. Not only will they now know they can rest assured with their assets managed precisely according to their wishes through a comprehensive estate plan, but they’ll also have redoubled faith in you as their trusted financial advisor. You’ll also gain an opportunity for long-term management of assets held in these trusts, since you can be introduced to the next generation of beneficiaries.
Opening the discussion about lifetime beneficiary trusts now can be an important relationship-building effort with downstream beneficiaries whose accounts you might acquire as well. Take the first step by giving us a call today to learn more.