A staggering 87% of estate planners said they made changes to their clients’ estate plans due to their new financial situation, according to a recent survey by TD Wealth. Many of these customers were negatively affected in the past year by job losses, retirement or a decline in salaries as a result of the COVID-19 pandemic.
Kalimah White, vice president and wealth strategist at TD Wealth, said, “It is no surprise that women’s estate plans have been dramatically affected by the pandemic, as women overall are disproportionately affected by what we consider the ‘you assignment’.” especially in relation to her career. “
Threats to Estate Planning
The rise in health care costs and increased life expectancy also have a big impact on estate planning. In fact, the survey found that these two factors are viewed as the top threat to estate planning today. Market volatility, political conflict and tax reforms followed closely behind. Meanwhile, the family conflict, the biggest threat to date, fell by more than half in 2020.
The reason for the postponement, says White, is because “the priorities have been shifted, divorce rates have skyrocketed, and difficult family decisions had to be made and not avoided this year,” with the pandemic “highlighting the need for a long-term estate. and budget accelerated in case of uncertainty. She adds that “customers have seen firsthand the immediacy and importance of planning for the unpredictable and ongoing review of estate plans. “
Dealing with mixed families has become the most common cause of family conflict. Other common causes of family conflict include failing to communicate estate plans to family members, designating beneficiaries in retirement accounts, resisting creating an estate plan, and designating a minor’s guardian in a will.
Finally, unsurprisingly, 25% of respondents said that tax reform is paramount under the new administration, prioritizing planning to minimize future tax ramifications for capital gains, as well as planning charitable measures to reduce the estate size and lower income tax liabilities.
“The best advice a financial advisor can give to a client is to plan early and review your plan frequently. The sooner you plan, the more likely the plan is to succeed as you have more time to grow and adapt. It’s also important to periodically review an estate and / or financial plan to see if changes in tax law or family circumstances are affecting the current plan, “says White.
“A lot of clients want to pin it and forget it because working with attorneys or CPAs can be costly. It is better to pay the planning costs upfront than to pay unnecessary taxes or create avoidable conflicts with loved ones at a later date – the latter is usually more expensive, ”she continues.
According to White, it is better to start now than to do nothing, even if a customer has nothing planned beforehand. Discussing your estate and financial plans with your family is also critical to a successful implementation.