Ask better questions to protect clients’ estates

By Rick Gilmour | November 28, 2014 | Last updated on November 28, 2014
3 min read

Much of clients’ estate value will be destroyed by the time it is transmitted to the third generation. Yet you can avoid this wealth degradation among your multigenerational households by being active and authentic when working with them.

One way to do this is by asking the right questions during estate planning discussions.

Questions beginning with “how” elicit tactical responses that usually don’t address the client’s goals and objectives. Instead, you should ask questions that start with “why” to ensure that virtually every decision, conversation and interaction begins with the end in mind.

Consider this situation: in a routine conversation, you ask clients whether they have updated their wills and Powers of Attorney. The clients respond positively and agree to provide copies of the documents. And that’s the end of the conversation. The only new information is statistical, and yielded almost nothing about the client’s personal situation and planning needs.

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Yet even though estate documents are personal and important documents, many are simply routine distributive tools that don’t establish “why” the testator wants assets distributed a certain way.

This is unfortunate, but it provides great advisors an opportunity. Here’s a better way to have the estate conversation.

Advisor: Do you have up to date wills and Powers of Attorney?

Client: Yes. We recently re-did them with our lawyer.

Advisor: Tell me why you made the changes.

Client: As you know, our daughter, Ellie, has married. She and her husband were considering moving to the United States for her work. They were also expecting their first child. It was time to make changes and we hadn’t updated our estate documents since the kids were babies.

Advisor: What kinds of changes did you make?

Client: Well, we wanted to make sure their child, Georgette, was taken care of if our daughter died. There is a trust for Georgette if Ellie dies. We really just did that first will because we were young and needed to appoint a legal guardian.

Advisor: So to confirm, your new plan is different than your original will plan?

Read: Homemade wills often require interpretation

Client: Oh yes. We created that so long ago. However, our lawyer told us that if Ellie survived us, she would get her inheritance outright — and that was something we wanted to change.

Advisor: Can you tell me more about that change? I’d like to know more about the shift in focus.

Client: After what happened to our son Korey we really wanted to be careful with Ellie. He had received an inheritance from my mom and it somehow went to his ex-wife in the divorce. His three daughters will never see a penny of that money from their grandmother.

Advisor: Is passing wealth to the grandchildren an important part of estate planning in your family?

Client: Very much so; it’s a tradition, really. I received our cottage from my grandparents and we still keep it. I had my university education paid for with money I received from a trust from my grandparents. It’s something I really believe in.

The advisor could have jumped to many incorrect conclusions based on the facts. There’s a U.S. person in the mix? The advisor could have surmised that tax planning set the new wills in motion. Their son got divorced? The advisor could have determined this was defensive planning to avoid a similar outcome.

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However, by asking probing questions and listening for deeper meaning, the real narrative is revealed: the “why” in this client’s planning is sustaining wealth between three generations. A trust is just a tool to work towards that goal. The U.S. tax risk actually means potential wealth diversion from the intended recipient. The grandchildren are the “why.”

This is powerful information. Planning for this client can now become more purposeful as the goal has been identified. From there, the advisor can come up with meaningful strategies and deploy tactics to ensure the goal is reached.

Rick Gilmour is a professional who works with , a website committed to providing a platform for innovative, purposeful and sustainable intergenerational wealth concepts for advisors. Rick Gilmour is a pseudonym.

Rick Gilmour