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Estate Planning Teams: Key Questions to Ask

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Financial advisors often act as general managers for their clients, assembling a team from among the large universe of attorneys, trust companies and others to craft, implement and monitor appropriate estate planning solutions to serve their clients' needs.


As many sports fans know, the use of so-called "advanced analytics" has exploded over the past ten years as general managers in every sport seek out any possible edge in building more efficient and successful teams. A deeper level of analytical rigor can be extremely useful for independent financial advisors who are looking to strengthen their capabilities in estate planning, as well.

Here are a few key questions to ask as you gather your data and build your team.


Attorneys' role in developing clients' estate plans may seem fairly obvious -- they draft the documents that translate a client's wishes for transferring assets to the next generation into reality.

In fact, though, the estate planning attorney's function is much more complex. Attorneys who add the most value as team members for financial advisors and their clients are those with a strong understanding of the precise coordination needed to ensure a smooth estate planning process, and who can interface closely with advisors, trust companies and others to help them head off problems before they arise.

Key questions that will help you gauge an attorney's ability to contribute to an advisor's team include:
How would you handle…? Ask estate planning attorneys to run through some hypothetical estate planning "case studies," both to assess their competence and to understand their potential fit. You might start with a basic scenario -- a married couple in which both spouses are still living -- to see how the attorney would handle a simple transfer of assets in the event that one spouse died or became incapacitated. The aim at this stage would be to make sure the attorney's approach is appropriately tailored to the client's situation without adding unnecessary complexity or cost. From there, advisors can scale up the case studies to include more complex scenarios -- for instance, the transfer of a closely held business, in which precise coordination with the financial advisor, tax advisor and other members of the team would become critical.

What's your overall philosophy? To make sure you have a fit, advisors may also consider checking with the attorney on various specific trust structures. When would he or she use a dynasty trust? A distributive trust? A credit shelter trust? What are the pros and cons of each? This can help an advisor assess whether the attorney's approach to common estate planning challenges is similar to his or her own; it should also provide a sense of the attorney's ability to develop creative solutions for clients.

Can you please explain …? Throughout the process, advisors should be attentive to the attorney's ability to explain complex concepts in relatable language. As advisors know well, it is easy to hand a client a binder full of complicated documents detailing a plan or investment strategy; helping them truly understand and feel ownership of it is much more difficult -- and much more important.


Another key component of an advisor's estate planning team is the trust services company. While many broker-dealers and banks have in-house trust companies, advisors are not always bound to work with the in-house option; in many cases, an outside provider may be the best solution.

When making this crucial decision, advisors should keep in mind that headline stats such as total assets under administration are rarely the best indicator of the experience to expect from a given trust company. Digging a bit deeper, the key factors to consider are:

How flexible are you? Many trust companies can seem more concerned with maintaining consistent policies and minimizing their own risk than developing creative solutions for clients. In practical terms, this can lead them to pressure clients to structure assets in ways that may not always be appropriate -- insisting that clients break up large single stock holdings, for example, even when doing so would incur significant capital gains taxes. Moreover, many trust companies will not custody that non-financial assets -- real estate, jewelry, even baseball cards -- that may be important components of a client's estate.

Whose team are you on? Develop an understanding of the full breadth of services offered by a given trust company. Many trust companies compete with independent advisors by offering investment advice themselves, leading to conflicts of interest that can undermine an advisor's client relationships and make the execution of the estate plan much more complicated. Ask tough questions during due diligence to make sure the trust company has the advisor's best interests at heart. Does the trust company understand that its relationship is with the advisor -- not with the client directly -- and operate accordingly? Has the trust company ever encouraged a client to shift to another advisor?

How broad is your reach (and experience)? Estate planning is largely governed at the state level. So some basic considerations, such as a trust company's expertise in estate planning laws across all 50 states -- and their ability and willingness to explain those laws clearly -- should be at the top of an advisor's due diligence list.

Building a championship-caliber team to address clients' planning needs is a complicated endeavor, requiring in-depth due diligence and a commitment to staying up to speed on core planning concepts and developments.

By looking beyond simple "top-line" numbers -- an attorney's number of years in business, for example, or a trust company's total assets under administration -- independent financial advisors can develop a more robust view of the factors that enable trust companies, attorneys and other key team members to work together to deploy and execute effective solutions for their clients' estate planning needs.

Robert W. Bruderman is chairman and co-founder of Premier Trust. Jeffrey Rosenthal is senior VP and chief marketing officer of Triad Advisors, the hybrid RIA-focused independent broker-dealer. Both firms are wholly-owned subsidiaries of Ladenburg Thalmann.

Read more: 

· Estate Plan Design: 5 Key Questions for Clients


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