Young celebrity deaths underline need for executor planning services

By Skip Rapp

Executor's Resource

Last month, I introduced a service concept I like to call "executor planning," where advisors help their clients address some of the practical aspects of estate planning from the perspective of the executors, personal representatives or trustees that will one day have to settle the estate.

Since that article was published, the deaths of Michael Jackson, Farrah Fawcett and Steve McNair have heightened public awareness to the eventuality that we all face and the events that occur when it comes to settling an estate.

If there were ever a time to introduce a value-added, practical executor planning service to your clients that also brings practice management benefits, it is now.

What is executor planning?

This month, I'd like to offer some deeper insight into what I mean by the phrase "executor planning" and how it can manifest into a service offering for your client base.

I do not mean activities that attempt to take the place of qualified legal assistance through an estate planning attorney. The very fundamental counsel that an attorney can provide continues to be more important than ever for families in all wealth ranges. Referring your clients to a qualified estate planning attorney remains an important part of your value.

Secondarily, the term "executor" does not apply in all situations. Personal representative is used in some states instead of the word executor. Clients who have trusts as the primary mechanism for settlement will have trustees. Regardless of language, when someone passes away, there will likely be a family member who will be responsible in some way for dealing with estate settlement issues, interpreting the instructions and wishes of the deceased and working hard to preserve the legacy of their loved one. When I use the phrase "executor planning," it is this family member to whom I refer.

With the nation on the cusp of the largest intergenerational transfer of wealth in its history, your baby boomer clients face this issue in two ways which lend themselves to your influence right now.
  1. They will likely be the future executor for their aging parents or a spouse.
  2. They need to address their own estate planning situation and choose their own executors, personal representatives or trustees.
What makes planning in light of who will serve as executor so important? As I discussed last month, a recent study demonstrated that families have an extremely tough time with estate settlement because the experience wasn't properly managed for them. Family members typically feel blindsided by the involvement required, have difficulty locating assets, liabilities and instructions and hold some negativity because they weren't communicated with ahead of time.

So when I say executor planning, what I'm referring to is helping your client have the discipline to address the practical aspects of his estate, both initially and on an ongoing basis, so that the settlement process is more efficient financially and less burdensome emotionally for the family.

Beyond the need for practical discipline, the main pillars of an executor planning service include:
  • Addressing the need for the legal documents that are appropriate for the situation and keeping them current throughout time.
  • Ensuring that beneficiary designations are correct and checking for consistency between how assets are titled given your client's wishes and their documented estate plans.
  • Organizing key legal and other documents such as wills, trust agreements, birth certificates, pet ownership papers, instructions to the safe deposit box.
  • Providing instructions for key contacts to the family, the locations of family heirlooms, preferences for a funeral, any desired giving to charitable organizations and other personal considerations.
  • Helping your client address his legacy -- all of those biographical moments that were and are key in his life.
  • Facilitating communications between the client and the family member who will one day be involved, not necessarily discussing specific instruments and who gets what, but communicating about what's important to consider and do when the time comes.
Your role in an executor planning offering

You may be surprised to learn that the role you can best play in an executor planning offering is that of the quarterback with a comprehensive view of the family's dynamic. In that light, you'd:
  • Identify potential gaps given the family situation
  • Recommend items for consideration
  • Assist with implementation (i.e., a birth in the family your client's remarriage means a meeting with the estate planning attorney to update legal documents, and with the insurance agent to address life insurance needs, etc.)
  • Refer to specialists (e.g., the estate planning attorney and other professionals) as appropriate
  • Monitor for changes in personal/family situation and the external environment
  • Provide discipline in process and review
  • Facilitate communication with family members
  • Make adjustments throughout time
Again, this does not mean that you as the advisor in any way attempt to provide legal advice or other counsel in areas outside of your expertise. It also does not mean that you or your staff has to assume the role of document organizer or personal historian.

So what is the highest and best use of your time in an executor planning offering? Be the coach and the voice of discipline over the long-term to address the practical issues so that your client, his future executor, and family may better manage the experience of wealth transfer. Doing so may help you reap benefits through a deeper client relationship, new referrals, and lower inheritor attrition rates at the time of transfer.

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