“A" stands for the Accumulation of asset values

As we stated in our prior post, estate planning really begins with the Accumulation of asset values. That is what we all spend a good part of our lives trying to accomplish, some of us more successfully than others; but all of us have undoubtedly been successful at least in creating an estate at our deaths by purchasing the life insurance necessary to meet our needs and desires for our families.

Planning for young couples

For young couples, life insurance provides essential family protection in the event of premature death and builds an instant estate. It thus represents the first essential step in the client’s overall estate planning process. In order to provide the largest death benefit with limited available funds, most life insurance purchased in these situations is, quite properly, term insurance, but it is always a good idea to try to incorporate some permanent coverage into the package as early as possible, perhaps a carrier- guaranteed universal life policy.

The beneficiary designation

Regardless of the type of policy, however, all too often not nearly enough attention is paid to the policy’s beneficiary designation, even though that designation represents the estate plan for what is typically the client’s single largest estate asset. How often do we simply name the spouse as primary beneficiary and the children as contingent beneficiaries, without giving adequate thought to how this large sum of money will be managed if both the insured and the spouse die leaving minor children? Without other proper arrangements made in advance, this will generally result in a court-appointed guardian, which is not only expensive, but also very time-consuming and cumbersome.

Living trusts or wills with testamentary trusts

In these situations, then, should we not suggest a living trust, or at least a will containing a testamentary trust, with the trust named as contingent beneficiary if not sole beneficiary? After all, the living trust or testamentary trust instrument will contain the couple’s overall estate plan, and it makes perfect sense to incorporate their largest asset at death into that plan. And as a stop-gap measure if, as is likely, the clients do not already have these basic estate planning documents in place, should we not suggest a Custodianship under the applicable state’s Uniform Gifts (or Transfers) to Minors Act, which is somewhat akin to a statutory trust for the minor children?

Working with other professionals

By following these suggested procedures, we will be helping our clients become aware of the critical importance of estate planning, regardless of their position in life; and since we will often be referring them to the estate planning attorneys we know, the process can only help us to strengthen and build our relationships with these other estate planning professionals.

Fulfilling the client’s asset accumulation objectives

Of course, many of us also sell investment-type products as part of our practices, which puts us right in the middle of our clients’ asset accumulation strategies. We need to be aware, therefore, of the many tools available to us that can help us help our clients achieve their objectives in these areas, and we must also pay careful attention to how these assets are titled and how they are integrated into our clients’ overall estate plans.

In essence, then, almost everything we do in our businesses directly or indirectly relates to our clients’ estate planning. It behooves us, therefore, to become as familiar as possible with all aspects of the estate planning process.