The new Advisor-Friendly Trust Companies list is out and available HERE. Have you downloaded it yet? The clock is ticking.
When the great Mark Tibergien was running Pershing, he used to say that advisors who wanted to stay relevant across multiple generations need access to the client will vault where all the estate planning documents live. It’s true.
The problem is that those vaults are locked up most of the time. But once or twice a decade, the tax code shifts far enough to give the accounts a reason to change with the times . . . and the vault doors swing open.
Some of our favorite independent trust companies are already hearing the first alarms ringing in the distance. A few months from now, they’re going to be processing more trust documents.
After all, even if Congress finds a way and a reason to make the 2017 tax cuts permanent, estate exemptions are always a moving target. Married couples that can currently pass on nearly $25 million tax free will need to find ways to shield almost half of that wealth from the IRS.
In other words, a lot of families that haven’t felt the urgent need to create trusts might not have much time to open the will vault and complete all the paperwork. And this is not an industry known for speed or even a lot of onboarding capacity.
Trusts just don’t get created overnight. People who delay are going to miss the deadline and lose their exemptions. The bigger and more complicated the asset mix, the longer it takes.
You know where this is going. People like your best clients are reevaluating their estate plans now. They have millions of dollars to lose. Their heirs have millions to gain if you take an active role and get the wheels turning early.
If you don’t do it, someone else will. The bankers will recommend themselves as administrators and take over management of the portfolio. The lawyers will probably find a bank, which means the scenario plays out largely the same way.
The heartbreak here is that your clients like the way you run their assets. That’s why they’re your clients. If they knew they could keep you in that role for generations to come, they’d probably sign up on the spot.
And that’s exactly what happens when they write you into the trust documents. When your clients die, the trust goes on as your client. The AUM and the associated fees remain on your books.
Meanwhile, a lot of existing trusts need to be amended. Maybe they were created in the chaotic lockdown era when a lot of older investors rushed their paperwork because mortality felt imminent and industry resources were stretched past their limit.
That was three years ago. Life can change a lot in three years. The way the markets have swung in that timeline, the asset mix has probably gotten at least a little distorted.
The family’s needs have changed also. A lot of kids and grandkids have been born. Older heirs have started businesses, gotten married and divorced, moved across the country. Careers have taken rollercoaster turns.
And that’s just the “recent” wave of trusts. As long as your clients are alive, these are living documents, not something that gets written once and sealed away forever.
All estate plans need regular review. You can drive that conversation from a financial point of view. The looming sunset of the Trump era rules creates an occasion to do that . . . and a little urgency.
After all, any reason to get in front of your clients with valuable insight is good, right? Talking about their goals for their legacy opens the door to that vault. Some advisors get shy here. You don’t have to hold back.
Remember, this is a financial concern. You’re the financial advisor. This is part of your job description. And the earlier you know who the heirs will be, the more time you have to build a real relationship with them.
One day, they’ll be the generation calling the shots. Ideally, they’ll be the clients.
WAITING FOR WASHINGTON?
Maybe Congress will keep the estate tax limits where they are. In that scenario, your clients have dodged a short-term bullet but Washington has unlimited ammunition. Sooner or later, the rules will change for the worse. Loopholes will close.
You know the rule. You control what you can control. You lock in what you can before the opportunity passes. Seize the day.
No family, no matter how wealthy, has ever achieved complete control over its own destiny. But with the right advisory relationships, your clients can still anticipate and avoid threats. That’s why the disciplines around wealth management emphasize “planning.”
And after years of shocks, upheaval and what sometimes feels like endless volatility, it’s worth revisiting that essential planning perspective whenever the storm passes and we can take a moment of relative calm. We can’t control the markets. We can’t control the tax code or the geopolitical landscape or interest rates or any of the other vast imponderables that weigh on client outcomes.
But we can anticipate broad patterns. Every individual you’ve ever had as a client will die. When that happens, legal machinery exists to transfer the assets and liabilities to the living from the dead, based on the instructions left behind. New people come into the family via birth and marriage, subject to their own framework of rights, risks and responsibilities.
We all hope for the best. Professional advisors plan for the worst. Financial planning revolves around making sure income matches expenditures across a wide range of more-or-less hypothetical scenarios. The goal is to keep cash flowing as long as possible in an uncertain world.
Estate planning happens when we extend the calculations across generations: birth, marriage and death. On that timeline, the investment cycle smooths out. Taxes and inheritance rules become a bigger concern. The right planning structure can preserve wealth for decades, centuries . . . even, theoretically, forever.
Surprises and shocks aren’t eliminated. Life in all its messy unpredictability still happens around the estate plan, forcing periodic reflection and revision as your clients’ needs change. Opportunities and threats emerge and recede. In a transient world, a good estate planner works hard to capture the opportunities to shield client wealth from the threats.
Every advisor can think along these lines. Market moods ebb and flow . . . but whoever manages the estate will maintain the AUM and associated fees for generations to come.
That’s the prize at stake here. You aren’t just thinking about your clients’ posterity. Your own professional legacy is on the line as a generation of wealth creators inches toward an exit to make way for their heirs. A little care toward structuring the inheritance creates comfort that you’ll remain in the mix.
And money is moving. Water rolls downhill and money moves where it can do the most work without too much friction from outside obstacles. People in high-tax “blue” states are already transferring funds to traditional low-tax trust havens like Nevada, South Dakota and Delaware — not to mention up-and-coming states like New Hampshire, Tennessee and Wyoming.
New rules around pass-through businesses are already driving incorporation in those states. Tying trust to those entities is a natural conversation. We’re going to be spending a lot more time later in the year weighing the balance of jurisdictional gravity.
Politics doesn’t really change this calculus much. Talk about wealth taxes in California and elsewhere will accelerate capital flight to places like Texas, Florida and, yes, Nevada. As tax cuts roll back, the struggle to find cheaper havens is already intensifying.
TIME FOR THE TRUST BOTS
By integrating advanced artificial intelligence, the next iteration of the Advisor-Friendly Trust Companies handbook (download it HERE) not only offers insights into corporate trustee selection but also extends its capabilities to match financial advisors with competent estate planning attorneys.
This dual-service approach, provided at no cost, is a groundbreaking step in ensuring comprehensive and efficient estate planning solutions.
The AI will be deployed in two unique and essential ways:
Estate Planner Matching Service considers various factors such as expertise, geographic location, client reviews, and specific legal specializations to ensure a suitable match with skilled estate attorneys.
Corporate Trustee Selection will assist in selecting the ideal corporate trustee from the companies showcased in the guide. It will analyze each company's profile against the specific needs and preferences of the financial advisor and their clients, ensuring a tailored match.
The methodology revolves around a “tell me about your client” interface that prompts each advisor to talk a little about the situation . . . but not enough to breach any kind of veil. While more detail can always help the assistant provide more tailored responses, the technology is already smart enough to extrapolate from common patters.
Consider it a concierge. You have a problem. It suggests some possible solutions. You weigh them yourself and push back if you’re still having trouble making a decision. The added prompting teaches the system more about how you think. It learns.
For advisors pressed for time, overloaded with clients who need estate plan review and maybe not quite up to the intricacies of the field, it’s great to be able to identify both a competent estate planner and a corporate trustee.
The algorithms are designed to learn and adapt, offering highly personalized matches that align with the specific requirements of each financial advisor. The more you use it, the more it learns.
Needless to say, the process of finding the right estate planning attorney and corporate trustee is significantly streamlined, saving valuable time and effort. You can actually run complimentary estate plan reviews for all clients and prospects, finding trouble spots and then suggesting actionable solutions.
We like to think we give advisors access to a wide network of estate planning attorneys and corporate trustees, expanding your options beyond traditional limits. The outside experts opt in. They want to talk to you. The estate companies are vetted as “friendly,” without a strong urge to compete with the wealth managers who bring them accounts.
They’re happy to let you keep running the assets while they look out for the trust. While the all-new TheTrustAdvisor.com isn’t quite ready to open the doors yet, bookmark that page now and get ready for the official announcement.
Initial testing has been extremely encouraging and a lot of advisors have already signaled interest in becoming power users. Get ahead of the crowd when you can by downloading the guide first so you know who the players are.
