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Estate Planning: An End-of-Year Checklist for Advisors


The end-of-year financial planning conversations with clients have already begun. As you continue to check in with clients this month to make sure they are still on track toward their financial and life goals, it is just as important to revisit their estate plan.

Or, it is the perfect time to create one, if they don’t already have one in place. Helping clients to begin and work on their legacy plan is one of an advisor’s most important jobs. Shockingly, according to Gallup’s research, slightly less than half of U.S. adults (46%), have a will that describes how they would like their money and estate to be handled after their death. (On the bright side, since 2019 we have seen encouraging growth in usage of the estate planning capabilities offered across our ecosystem, with an increase of more than 50% for the 20-39 age group and nearly 30% for those between the ages of 40 and 55 during that time period.)


Updating Existing Estate Plans: A Checklist for 2021 Changes

We are living in a “new normal.” The ongoing pandemic has impacted many people’s lives in countless unexpected ways, causing changes in their personal lives and making them reflect on and, in some cases, reprioritize their personal objectives. While you are likely working with clients to update estate plans throughout the year, now is the perfect time to review with them the key tenets of these plans, and to update accordingly given the rapidly changing times we are living in.

Here are some examples of the types of changes in personal and family circumstances that can have a direct impact on a client’s estate plan.

o   Marriage or divorce;

o   Birth or adoption of a child, grandchild or great-grandchild;

o   Retirement or loss of job;

o   Death of spouse or other family member;

o   Illness or disability;

o   A child or grandchild reaching the age of majority;

o   Significant changes in the value of a client’s portfolio and other assets; and

o   Purchase or sale of property.

Now is also a good time to review whether updates are needed to a client’s will and living will. Are any updates needed in their designated trustees, financial and health-care powers of attorney and/or guardians? On the subject of health-care, while everyone is in the planning spirit, it is also a good time to have a conversation about how potential unexpected health-care costs could impact your client’s financial and estate plans.


The Spirit of Gifting

Depending on the shape and status of their overall financial plan, it may make sense for your client to consider charitable giving this year. This is another recommended topic to visit during the estate planning conversation. The 2020 Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) encourages additional charitable giving, and the charitable giving provisions were extended and some of the benefits expanded through the end of 2021 by the Consolidated Appropriations Act passed on December 27, 2020. Among other things, it increases the charitable deduction adjusted gross income percentage cap from 60% to 100% for certain contributions by taxpayers who itemize, and increases in the corporate deduction limit from 10% to 25%. [LINK:]

The timing may also be right for your client to consider transferring some assets early as a gift to their loved ones. Remind clients that any individual can transfer up to $15,000 as a gift and the recipient won’t owe any federal taxes to the IRS on the gifted cash or assets. (In 2022, this increases to $16,000. In 2021, the IRS made the lifetime amount $11.7 million for a single taxpayer or $23.4 million for a married couple.) [LINK:]


Preparing for 2022 and Beyond

This past year has also been a time of great change in Washington, DC. Now is a good time to alert clients of potential tax changes that may be on the horizon in the year ahead that could impact their financial and estate plans.

Paying close attention to these factors now can help enable your clients to kick off the New Year with peace of mind when it comes to daily financial transactions, as well as confidence in their financial futures. Indeed, this is what great financial advice is all about; and it is a major shared goal among all advisors. In other words, end-of-year estate planning can be a win-win for you and your clients.

Rose Palazzo is Group Head at Envestnet | MoneyGuide, which is fully vested in its financial wellness ecosystem for enabling people to live an intelligently connected financial life.


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