Estate planning helps preserve a client's bequests, but an adviser's role doesn't end at death. Reps can provide a lot of help to heirs in sorting out the assets. Account transfers, tax issues and trading advice are just a few of the logistical areas you can address.
Then there is the soft side. "Advisers can play a role by just being there," says Gary Schatsky, chairman of the National Association of Personal Financial Advisors and an adviser at Independent Financial Counselors in New York. "It's certainly a time when you can go the extra yard to make the process a lot simpler."
Attorneys have often been the shoulder to lean on, serving as executors of wills, trustees and guardians. But as more wealth is held in securities, the financial adviser's role has gained prominence, says Mike Janko, executive director of the National Association of Financial and Estate Planning in Salt Lake City. "Attorneys are not out there calling on clients every day and looking at financial plans and assets," he says.
Brokerage firms usually don't allow their registered reps to be executors for clients. "The fiduciary responsibility is too big," says Nancy Lininger of The Consortium, a Camarillo, Calif., compliance consultant. She says that being a trustee or an executor gives the broker custody of clients' assets. Having custody as a fiduciary while getting paid for transactions and asset management is too much of a conflict. "Most firms don't want the burden of compliance and the liability," Lininger says.
Nevertheless, there are several things you can do to aid in estate settlement.
Where to Help Phil Brewster, a broker with First Union Securities in Seal Beach, Calif., says reps can ensure that when an account is transferred into an executor's name, the account is set up properly. Custody relationships, account values and paperwork have to be organized, dated and reclassified to name the executor. The work can't be ignored. "You have nine months to resolve valuation matters after death," Brewster says.
A deceased client's investment policy may no longer apply. Often, assets will be placed into Treasury bills while matters of probate are resolved. "You don't want beneficiaries lookingat the account and seeing losses and then turning to the executor and asking, 'What happened?'" Brewster warns.
Estate planners emphasize the importance of setting up accounts and readying trusts ahead of time to avoid tax and investment losses. But a continual problem is adequately funding trusts.
"A lot of people go to these seminars and pay 1,200 dollars to set up a trust, but then they never transfer assets inside," Brewster says. "Or not all of the assets are transferred in time. We can help with that."
Another piece of required paperwork is an affidavit of testamentary, which allows the estate to be dissolved or distributed. It is part of the last will and testament. The brokerage firm housing the assets is usually required by state law to provide the affidavit.
Karen Altfest, an adviser with Lewis J. Altfest & Co. in New York, says she sits down with clients and goes over a prepared checklist of items (see "Post-Death Checklist," right). "Then we contact the accountants, the attorneys and get all the paperwork together," she says. "We get hold of a lot of death certificates--and they have to be originals--to settle and change accounts." The trustee or executor of the estate handles settling debts.
Financial advisers can help in consolidating and figuring distribution of investments. "We just had a family in and the account had to be divided among three beneficiaries," Altfest says. "It was stock, so we had to find the fairest way to divide that equally among the three--sell it or not." Altfest says issues of asset transfers are plainly stated in wills or trusts in most cases. But there are exceptions.
"In one case, a beneficiary was tenants in common with his siblings on a property and he wanted to [sell it] to pay his taxes," Altfest says. "But when we looked at it, we found that his siblings would [incur further tax liability] to help him pay his taxes, so it wasn't fair."
Doing estate planning prior to death naturally leads into helping heirs through the settlement process. For example, Schatsky says he is often asked to meet clients' spouses for the purposes of estate planning. He suggests clients introduce him to family and beneficiaries as well.
"If nothing else, it can make things smoother if they know whom to call and know who I am," Schatsky says. "I can get a sense of them, too. It's a great opportunity to do something very good at a very bad time."
This checklist for survivors and heirs will help them during a difficult time.
1) Make an accurate list of all assets and liabilities of the decedent.
2) Determine where the assets are.
3) Open the decedent's safe-deposit box.
4) Have the assets of the estate appraised and analyzed.
5) Consider whether you have to liquidate some or all of the assets.
6) Meet with the attorney and other advisers for the estate.
7) Decide how long to keep the estate of the deceased functioning.
8) Request many originals of the death certificate.
9) If the decedent was your spouse and had an IRA, consider making it your own.
10) If the decedent was your spouse and employed, call the human resources office at the workplace and determine your eligibility for continued health insurance and other benefits.
11) Consider disclaiming amounts left to you.
12) Retitle bank, brokerage and credit card accounts.
13) Close all accounts, including brokerage, telephone, electricity and cable, that are no longer needed.
14) Contact Social Security.
15)Consider writing a new will and naming new beneficiaries if the deceased was named as one of your heirs, trustees or executors.