Many estate planners these days see the estate planning marketing glass as half empty … and leaking. An ever-increasing portion of their clients and prospects — even the wealthy ones — simply don't find traditional estate tax planning either necessary or desirable. How could it be otherwise? Proposed estate tax reforms (forgetting outright repeal) would still leave more than enough for clients' children. But perhaps more to the point, clients are warned daily (maybe even hourly) to reduce their expectations for market returns and to increase their expectations for their life spans. Naturally, they are more concerned about the risks of living longer lives with lower investment returns than they are about estate taxes that their children (and not they themselves) might pay on their inheritances.

What can these planners do to get a whole new perspective on the marketing glass? They can focus where clients themselves are focusing — and consider including a memorandum of instructions in estate plans.


For decades, financial and estate planners have used the concept of “life cycle stages” to locate the client financially, and properly match them with the right products and services. The most commonly used life cycle stages are accumulation, conservation and distribution.

In the accumulation stage, the focus is (at least theoretically) on capital formation. While attention is paid to prudent risk management, it's only to the extent necessary and certainly at the lowest possible cost. There is little if any emphasis on investment income, liquidity and retirement planning. Estate planning, if done at all, is primarily driven by non-tax testamentary concerns.

Conservation is the next stage. Here, the proverbial light has turned from green to yellow. There is greater emphasis on the preservation of accumulated capital and its purchasing power. Yes, accumulation is still taking place, but somewhere in this stage, planning focuses pretty intently on whether, how and when unearned income can replace earned income. Historically, conservation has been the concern of someone perhaps in his late 50s to early 60s, who had every reason to plan on a pension, a payout from a profit-sharing plan, an individual retirement account (IRA), Social Security, some investments, postretirement health care and a postretirement life expectancy of 15 years, give or take. Today, this same someone may now be losing sleep about an underfunded pension, the plummeting of the value of his 401(k), something called “reversion to the mean” where his investment returns come back to more historical norms, the potential for disentitled entitlements, escalating health care costs, and a postretirement life expectancy of 20 to 30 years. Every time the conservation-stage client picks up a magazine these days, he reads about another company revamping its pension plan or how he should expect to withdraw even less from his accounts every year — lest he run out of money before he runs out of breath. On paper, this guy appears to be in great shape. But sit down and talk with him, and you'll hear real concerns and abiding fears about his future.

In the distribution stage, clients are rounding third and coming into home, as it were. When I started out in this business 30 years ago, the conventional wisdom was that the client's emphasis during this stage was on passing wealth to his next generation(s) at the least tax cost. And this has been our whole business. Distribution is where estate planners and most life insurance agents have spent their careers and offered value. It is also where they have invested the most time and money in mechanizing their practices. But, now, an ever-expanding proportion of well-heeled, well-informed clients are no longer finding value or relevance from many of the traditional services we offer in the distribution stage. Chances are that they see themselves as having only two life cycle stages: accumulation and conservation. Then they will die. All they think they really need is a will, some beneficiary designations to get the right things to the right people and the usual complement of powers and proxies.

Here's the good news: Estate planners can add tremendous value even when clients place a higher priority on conserving their own long-term financial security than on transferring a large estate to their children. In fact, I believe that estate planners are needed now more than ever before — but just not for estate tax planning. Estate planners are needed to help clients cross the bridge from conservation to distribution, that is to say helping clients “keep it,” as much if not more than “give it away.” And the better estate planners become at describing their services in this context, the more they will be able to cope with the loss of interest in estate tax planning. We have to change, or we will lose them.

Take a cue from the insurance industry. Look at its advertisements. They focus on income planning and financial security for those decades in retirement. That's smart.

How can estate planners mimic the savvy client-service approach of the life insurance industry? Easy. Give clients a choice.


Consider the typical initial estate-planning meeting with a typical upper-middle class, executive-type couple. Once the estate planner becomes familiar with the couple's financial picture, he launches into the usual explanation of the usual “A/B” estate plan, perhaps augmented by an irrevocable life insurance trust. The explanation is accompanied by an exhibit that depicts the potential estate tax savings from this type of plan.

But here's the rub. The spouse, a well-educated, well-read woman, sees the couple's money as “theirs” while they are both alive and “hers” if her husband predeceases her. She listens closely, and asks some pointed questions about those trusts:

  • How much control will I have over the money that was “ours” and will become “mine”?

  • How will the trust funds be invested; that is, what will be the investment objective?

  • Why will the funds be invested in that fashion? Will I be consulted? Can I have my own investment advisor involved in the management of the funds?

  • What if I need or want more income? How do I get it? Is there some reason (in fact, any reason at all) that I might not be able to get it when I want it?

  • You say that the trust can instruct the trustee to be “liberal” in choosing to make discretionary payments to me. Can I really count on this? What happens if the trustee and I have different definitions of “liberal”?

  • What if in 20 years I really don't think the kids should get the money when I pass away? What if I don't like whom they marry? Can I change the distribution any way I want? Can I leave the children out altogether?

  • Would I be more comfortable if I were the trustee or would I still have some of the same issues?

What the savvy spouse has picked up on is that the typical traditional plan is built upside down. In the pursuit of estate tax savings that may be illusory, the plan runs a high risk of overriding her needs as an individual and as a parent. In a very real and unsatisfactory sense, it seems to bypass that period of time called the rest of her life, during which, as a “surviving conservator” she is likely to want every bit of control over “her” money as she can get.


If the standard estate plan is largely a nonstarter for this couple, is the scope of the estate planner's engagement sharply curtailed? Not at all. I suspect that this couple's concerns as conservators aren't the only things on their minds. The wife may well have seen what her mother went through when her father died, or she's been talking with some recently widowed friends who, utterly unprepared for what befell them, struggled terribly with money and people issues after their spouses died. I wouldn't be surprised if this woman would reorder the objectives of the estate plan, placing top priority on dealing with her and her husband's needs in case either has to live dependently, then her needs as a surviving spouse, and lastly on the children.

So, how does the estate planner, whose business is primarily estate (meaning distribution) planning, serve these clients? By starting with life, not death. By bridging from conservation to distribution in the same estate plan. And the best bridge that I can think of corresponds to what, in my view, is the most conspicuously missing link in most estate plans today: the memorandum of instructions.

While not a formal document like the will or trust, the memorandum of instructions may be every bit as important as any other element of the estate plan. This memorandum is a comprehensive document that, at a minimum, tells the surviving spouse:

  1. what they own, where it is and how each item should be handled;

  2. the legal and accounting steps that have to be taken when one spouse dies, the decisions that will have to be made, and whom to call for help about each of those matters;

  3. What life insurance proceeds will be available and whom to call to receive them;

  4. what benefits are available through the deceased's employer(s) and/or the government and whom to contact for each type of benefit;

  5. What steps to take with items such as a 401(k) and IRAs, and whom to call;

  6. a clear, albeit interim, plan for investment of life insurance proceeds (or reinvestment of other funds) that can be implemented after one spouse dies without delay, decisions or stress;

  7. on whom the spouse should depend as the coordinator of all of the above.

Most estate planners with whom I've spoken on this subject would very much like to incorporate a memorandum of instructions in their estate plans. But they are concerned about practice economics; that is, can they or their staff produce the document for a fee that the traffic will bear?

Here are a couple of suggestions to make such memoranda economical.

  1. You can provide the clients with a template and guide them to the finished product.

  2. You also can give the clients a choice. Expand the menu of services you offer beyond the traditional fare of wills, A/B trusts, durable powers and so forth to include the memorandum. I suspect that the savvy spouse would choose to allocate her and her husband's estate-planning dollars away from a comprehensive (and expensive) A/B trust towards a comprehensive memorandum of instructions.

I also suspect that once this couple believes that the estate planner has addressed their real concerns, they may well see value in having their own revocable trusts for all the right reasons.

Clearly, not every client needs such a memorandum. Many spouses handle their own money and don't need all of the information or basic coaching offered by a memorandum. And, in some situations, the traffic will simply not bear the fee.

But by incorporating a memorandum of instructions in the estate plan, planners will not only be more responsive to more clients, they also will have more reason to confer with and thereby network with other key professionals, such as clients' accountants, insurance agents and investment advisors. They will learn more about personal financial planning, which will make them better estate planners, better listeners and better marketers. Bottom line, in light of how more clients than ever before see their future, it couldn't hurt for planners to make that memorandum available as part of their suite of services.