She adds that another great byproduct of the pandemic was flexibility. “Out of necessity, we started ‘drive-through signings’ almost immediately. We had cars lined up in the circle driveway. I only wish we had found a way to offer a ‘side of fries’ with that!”
She also observes that during the pandemic, people “became much less attached to ‘stuff’ and started thinking about who was going to have to deal with that stuff. Instead of creating a list of people on which to bestow family china or photographs, people started including ‘donate or dump’ clauses to their plans to make sure that downsizing or sale could be easily accomplished.”
But the crisis has also created new challenges that can be overcome with good traditional planning tools. Martin’s team at Essex found new value for trusts. “Asset titling, and the use of trusts in particular, are key considerations in every estate plan,” she says. “The pandemic has caused significant delays in probate and other legal proceedings, making the use of trusts and other legal structures as a vehicle for continuity of asset management paramount for wealthy clients.”
Essex is the executor of a New York estate that owns a condominium. Pretty simple, right? Wrong. Because of delays due to the pandemic, the New York Surrogate’s Court still has not opened the estate more than a year after submission of the will, meaning the estate and its beneficiaries are missing out on the hottest real estate market in decades. Says Moira, “Had that condo been in a trust set up by the deceased, there would have been no delay in selling nor the added costs of carrying the real estate while the family very impatiently still awaits the court decree to open the estate.”
Martin cautions that the markets haven’t helped all clients, such as those who own closely held businesses. However, she adds, “historically low interest rates combined with pandemic-related declines in closely held business valuations and a possible expiration of historically high estate tax exemptions make for a perfect opportunity for business owners to take advantage of sophisticated gifting strategies to transfer wealth before the end of 2021.”
Many clients got a new view of their financial advisors during the crisis. Were they nimble in adopting technology to connect with clients? Could they engage in the virtual world? Were they proactive? Did they probe for changes in client priorities? Some recent industry data from our friends at Age Wave suggest that as many as 25% of clients may have changed advisors. Wow!
Cumello’s team of more than 20 advisors have engaged with clients now keenly aware of three issues—unexpected severe risks, tax policy … and estate planning. “Anything can happen at any time, and it may happen fast. Clients that don’t have a will—and there are many, and not all are younger—now know they need one ASAP. For clients with estate plans, the pandemic has motivated them to revisit their plans. Many people haven’t looked at them in a very, very long time. This review also covers wills, not just more advanced or complicated estate planning strategies. Kids are older/no longer kids. Trustees appointed 10 years ago may not be the right choice now. Property ownership and eventual distribution may also look different now.”
And never count out the government to keep clients on the edge of their seats, he adds. “Complicating these very important efforts is the absolute uncertainty coming out of Washington, D.C. I cannot remember there being a time when so much was up in the air and with so much potential large impact for our clients. All of our high-net-worth clients need to plan for those possible changes as best they can with their financial advisor and their trust and estate planning attorney.”
West has the parting shot. “Covid has certainly made many senior Americans sense a vulnerability and anxiety that they didn’t feel in years prior, both for themselves and for family and friends. It is the job of a financial advisor to help their senior clients sort out their new priorities in the real world that we live in today and support their decision-making process to drive the best outcomes.”
Steve Gresham is CEO of the Execution Project, a firm focused on reimagining “retirement,” and he is also managing partner of Next Chapter. Formerly the head of Fidelity’s Private Client Group, he is also a senior educational advisor to the Alliance for Lifetime Income. See more at theexecutionproject.com.