Estate planning roadblocks: Why clients resist and how to help them think about the future

As a financial advisor, you may encounter estate planning roadblocks with clients. The client may say something like, “I don’t need to write a will. Everything I have will go to my spouse and vice versa.” Or they might say, “My estate is not large enough to create estate tax issues.”

The thinking behind these types of statements is that the client is only considering what happens if they die with only the assets they have now. They’re not thinking about what would happen if they enjoyed a long life, living another 40 years, which is possible for a 45-year-old client. What might their estate look like if they lived several more decades? With you as their financial advisor, in fact, you hope their estate grows!

Consider the magic of compound interest

Ask your clients to imagine they have $250,000, with 60% in stock and 40% in bonds with a median return of 7.8%. Using a compound interest calculator, you can show the client how that money might grow to more than $5 million in over 40 years! Now does it sound like estate taxes or inheritance might be an issue?

Calculate other assets

Your client’s future wealth isn’t simply how much money they have in the stock market. What about their home? They might tell stories about how their parents paid almost nothing for their home and now it’s worth a fortune. What might your client’s home be worth in 40 years? Do your clients have or plan to buy any income-producing properties? How might the value of those increase?

In addition, your client might be a collector and have some nontraditional assets, such as jewelry, artwork, stamps and precious metals. What will their collection be worth in the distant future? No one knows, but every episode of “Antiques Roadshow” highlights people getting lucrative surprises.

Plan to prosper

As their financial advisor, help your clients think optimistically about a future where they may be worth much more than they are now. Besides doing a lot of good with their wealth, they would certainly want to pass as much as possible to their heirs and to minimize estate taxes.

This is an area where it makes sense to start planning as early as possible. This is where a financial advisor helps. We know we are all going to die someday. What will happen, though, if clients die with more assets than they have today?

Bryce Sanders is president of Perceptive Business Solutions Inc. His book, “Captivating the Wealthy Investor,” is available on Amazon.

For more ideas about helping clients see the value in estate planning

• Read “Estate planning — even if there is no estate tax” (MDRT member exclusive)
• Watch “The value of financial advisors” (MDRT member exclusive)
• Read “Unlocking the legacy”