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Wells Fargo, Morgan Stanley and Other UHNW FAs Warn of Dangers in Neglecting Estate Plans

By Miriam Rozen September 11, 2018

When clients hire financial advisors from Abbot Downing, an ultra-high net worth division of Wells Fargo, they have met a minimum requirement of $50 million in investable assets and acknowledged that they will also rely on trust and estates counsel to help them prepare their fortunes for the next generation.

The trust and estate specialists work in conjunction with the other advisors, says Lisa Featherngill, head of Abbot Downing’s Legacy and Wealth Planning unit.

Even more to the point, the Abbot Downing team of advisors, including the trust and estates counsel, meet annually, without the client present, to make sure they all stay on the same page, Featherngill says. Featherngill uses the annual meeting to ensure the financial advisors, lawyers and accountants are “united” on the client’s gifting, taxing and estate planning.

But many clients delay or entirely avoid seeking trust and estates counsel – even when wirehouses provide it without charging a fee for the service.

The cost of those clients’ postponements and dodging can be high, according to Featherngill, other financial advisors, and trust and estates lawyers.

“Financial advisors don’t bring in counsel early enough to really optimize tax mitigation for estate planning,” says Cindy Brittain, a partner with a trust and estates practice in the Century City office of Los Angeles-based law firm Katten Muchin Rosenman.

If trust and estates lawyers enter the scene after certain events in clients’ lives, it’s too late to maximize tax savings for heirs, Brittain says. Clients should be consulting a trust and estates lawyer if they anticipate buying or selling a family business, or expect to move across state lines – particularly to or from community property states, Brittain says.

Too often, financial advisors send their clients to Brittain after the clients have signed a letter of intent to sell their family-owned businesses. But from the Internal Revenue Service’s perspective, after that letter is signed, an asset's value is already baked in and it could prove problematic, Brittain says.

Had a trust and estates lawyer had the opportunity to offer strategic advice about structuring the sale before the letter was signed, often the clients’ heirs could have saved significant amounts in estate taxes, Brittain says. “Too many clients just focus on the dollar amount they are getting for their company and not the structure of the deal,” she says.

Marie Moore, a Morgan Stanley financial advisor with The Moore Group in Dallas, has a conversation with all new clients about the importance of proper estate planning and talks with existing clients “every time there is a change in their family – marriage, death, birth or a change in their permanent residence – or changes in tax code that effect estate taxes,” Moore says.

Moore persuades reluctant clients to take advantage of the estate planning services her firm provides by identifying the unfortunate scenarios that could result if they don’t have a plan in place.

Sheryl Rowling

“There are two main reasons why clients won’t engage an attorney: they don’t think about it and they don’t want to spend the money,” says Sheryl Rowling, the principal of Rowling & Associates in San Diego, which has more than $340 million in assets under management.

As their advisor, Rowling, who is also a CPA, says: “I want to find out they are doing a transition transaction well before it happens. The financial side doesn’t mean much unless you put in tax context.”

What’s the best way to prod clients to see a trust and estates lawyer? Rowling advises, “Play the Jewish mother and nag them.”

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Tags:  Estate planning , Family wealth/family office , Behavioral finance , Morgan Stanley , Wells Fargo

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