Estate planning is a critical component of comprehensive financial advising. As a financial advisor, you play a vital role in helping clients plan for the distribution of their assets after they pass away. To make this process smoother and more efficient, leveraging the right estate planning tools is essential.
1. Wills and Trusts: The Foundation of Estate Planning
Wills and trusts are fundamental estate planning tools that outline how assets will be distributed. As a financial advisor, helping clients understand the difference between these two is crucial.
- Wills: Simple documents that specify asset distribution, guardianship, and last wishes.
- Trusts: More complex arrangements that hold assets for beneficiaries and can help avoid probate.
- Recommendation: Use digital platforms like Trust & Will or LegalZoom to streamline the drafting process.
2. Power of Attorney (POA) and Healthcare Directives
These legal documents designate someone to make financial or medical decisions on behalf of the client if they become incapacitated.
- Power of Attorney: Grants authority to handle financial matters.
- Healthcare Directive (Living Will): Specifies medical care preferences.
- Recommendation: Utilize software like Quicken WillMaker & Trust for easy customization and drafting.
3. Digital Estate Planning Tools
In today’s digital world, clients often have online accounts, social media profiles, and digital assets. Managing these requires specialized tools.
- Digital Vaults: Securely store important documents and account information. Examples: Everplans, Legacy Locker.
- Password Managers: Keep track of digital accounts and ensure executors can access them. Example: LastPass.
- Recommendation: Encourage clients to update digital asset information regularly.
4. Financial and Asset Management Tools
Keeping track of assets, liabilities, and investments is vital for effective estate planning.
- Wealth Management Platforms: Use comprehensive tools like eMoney Advisor or Orion to consolidate financial data.
- Estate Planning Software: Programs like Naviplan help visualize estate distribution scenarios and tax implications.
- Recommendation: Integrate these tools into your practice to provide clients with clear, data-driven insights.
5. Beneficiary Designation Review
Many clients forget to update beneficiaries on accounts like IRAs, insurance policies, and retirement plans.
- Automated Review Systems: Use software that periodically checks for outdated or incorrect designations.
- Client Communication: Regularly remind clients to update their beneficiaries after major life events.
6. Tax Planning and Mitigation Tools
Effective estate planning requires minimizing the tax burden on beneficiaries.
- Estate Tax Calculators: Tools like CCH Axcess Tax help project potential estate tax liabilities.
- Charitable Giving Strategies: Platforms like DonorPerfect can assist clients in setting up charitable trusts or foundations.
- Recommendation: Stay updated on federal and state tax changes to provide accurate advice.
