Helping your clients do more for their loved ones while avoiding common beneficiary mistakes
You've all heard the cautionary tales.
An ex-spouse collects a death benefit intended for the current spouse. Assets for the kids are forced through a costly probate process. Unintended heirs receive an inheritance; intended heirs are accidentally disinherited. Along the way, fights break out. Lawsuits happen. Family members stop talking.
And the biggest irony? The person who left behind the money, did so as an act of love. They never imagined that such chaos would ensue. Or maybe they mistakenly believed that their will would cover all of their assets, and handle who gets everything in the end.
It’s important to remember legacy planning is dynamic — not “set it and forget it.” Clients have changing lives. They marry. They divorce. Children and grandchildren are born. Sometimes, loved ones experience physical and mental challenges that require special accommodation. And unfortunately, some heirs pass away early and unexpectedly.
As you help your clients, it’s important to know:
- Who are currently the most important people in their life, and
- How they want to be remembered by those people
A short conversation. With a lasting impact.
It's this simple. If you reach out to your clients annually to review their beneficiary designations, unnecessary hardship and misunderstanding can be avoided.
You can verify their intentions are still on track, or examine changes to their family situation, health or career that necessitate a fresh look at their legacy planning.
But more importantly, these reviews can uncover potential titling problems that can be remedied before the client passes away (at which point, these potential problems often become permanent problems) —not just for assets held with you, but also for accounts held elsewhere.
The holidays are a great time to discuss this, because loved ones are often top of mind. A beneficiary review can go a long way in helping your clients ensure that the legacy they envision for their loved ones is in good order.
An introduction to the next generation
Research says over 70% of financial professionals meet with a client’s children once a year or less, and almost 18% admit to never meeting with their clients’ children. So it should come as no surprise that 66% of children move on to a new financial professional once they inherit wealth.*
A beneficiary review can be an opportunity to connect with the next generation, and demonstrate the knowledge and skill you can bring to their financial planning after Mom and Dad pass away. Important topics include tax consequences from different inherited assets, the impact of new legislation on inheritances, and the benefits of creating a tax-efficient lifetime income stream.
Top 5 reasons why clients should update beneficiaries
- Their money might not go to whom they intended
- Their will does not always control who gets the money
- They may have forgotten to add (or subtract) a beneficiary
- They may not realize which life changes necessitate a titling update
- Their beneficiaries may be hit with a larger tax bill than necessary
*Skinner, Liz. “Great Wealth Transfer is Coming, Putting Advisors at Risk,” InvestmentNews, July 13, 2015.
For over 17 years, Bob Vashko, JD*, CFP®, CFS® Advanced Sales Consultant - Variable Annuities has helped advisors and their clients accumulate, distribute and transfer wealth in accordance with the clients’ goals.
Bob began his legal career in 1997, practicing law in New Orleans with a focus on intellectual property and estate planning. In 2008, he transitioned to the financial sector as a Director of Advanced Markets, where he was in high demand by annuity wholesalers across the country as a partner on complex income- and estate-planning issues. He was often called upon to confer directly with clients’ CPAs and estate planning attorneys, and was a frequent speaker at industry conferences and top-producer sales meetings for some of the largest financial services firms in the country.
Bob strives to be a trusted and valued resource to financial advisors through his deep knowledge of the tax- and estate-planning opportunities available through the use of variable and fixed annuities. He takes pride in being able to explain advanced sales strategies in simple terms that both advisors and clients can easily understand.
Bob holds a B.A. in political science from Western Illinois University, and a J.D. from Loyola University-New Orleans, where he continues to reside with his wife and their three children.
* licensed not practicing