Advice Beyond Investments April 2023

Financial planning tips beyond our investment and market insights
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Erik Fromm, Vice President of Wealth Management and Financial Advisor at CSG, recently had the opportunity to chat with Adam Abramowitz, Partner/Principal with Stein Sperling. Adam was recently voted “Best Estate Attorney” by the readers of Bethesda Magazine, and he has become a trusted resource for our team and our clients. I wanted to get his take on trends that he is seeing in the planning arena, examining conversations and questions that clients are bringing to him as well as conversations that he may believe are not getting the attention that they should, given the impact that he sees them have in client outcomes. A paraphrase of our conversation:

What trends are you seeing?

People seem to be paying more attention to their planning, which is a great thing. We’re not sure whether it was being locked up through Covid or if our network of clients and contacts have had a season of dealing with issues within their families or they’ve seen friends having issues around health or the administration of an estate, but whatever the trigger, more people seem to be engaged in the conversation.

Erik's thoughts: CSG is seeing this too – clients have been more receptive to us bring more advanced, long term planning items to them and they are increasingly beating us to that punch and bringing it up to us. A significant number of our clients are moving their focus past retirement to ‘What’s next? /What else?’. Many of them are helping aging parents organize finances, real estate, healthcare.

Conversations in the previous decade or so tended to be a bit more straightforward with clients having two primary objectives – move assets efficiently and avoid taxes. More recently, we are dealing with more complex family dynamics. Strained relationships have been a common hurdle, particularly between siblings. Who is in charge, who is making decisions for others? These questions, if not answered harmoniously, can cause a lot of issues and one unfortunate outcome that we have seen is an uptick in litigation. We’re working diligently to ensure that intentions are made clear and are properly articulated in drafted documents so that we can minimize any ambiguity. Also, the use of corporate, independent trustees and fiduciaries seems to be increasing. A third party may mitigate some of the tension between family members (or at least lets someone else be the bad guy in certain circumstances) but the reality is that adult children are busy, and the management of a family trust and estate is complex and can take a lot of time and attention. 

Erik's thoughts: It’s unfortunate how frequent family infighting can pop up, but we see it when we are settling estates. This is mitigated quite a bit when the patriarch and matriarch of a family 1) have a clear plan that is laid out in updated documents 2) have included commentary on the values that they would like to pass down to children and their values around how the family wealth is to be used across generations and in the community and 3) when the patriarch and matriarch of a family have talked openly and frequently with their children about #s 1 and 2.  

Are you seeing any shift in more dialogue between generations?


There is a lot of focus on multi-generational conversations. Not a seismic shift in older generations willing to share all with kids but especially as parents age and their kids are in their 50s and 60s, those kids are going to their parents with more pointed questions. As people live longer and the increase in folks living to an age where mental sharpness wanes, adult children will likely have more and more active involvement in parents’ affairs while they are still living so these conversations need to be had, sooner than later. Particularly with 2025/2026 Estate Tax changes, (exemption amounts are set to be cut in half thus bringing many more estates into a federally taxable level) those in their 60s and 70s that haven’t had estate taxes on their long-term radar need to understand how they may be impacted by their net worth’s compounding over the next 20-30 years.

Erik's thoughts: One of the most consistent themes for our team in the last few years has been our clients in the normal retirement window of early 60s to early 70s asking us to review their parent’s estate and investment strategies. That includes a simple ‘second look’ at what they have in place through us pulling the parents’ assets to Janney so that a multi-generational plan is being executed cohesively. Adam alluded to a lot more focus on planning – we’re seeing clients complete updated estate plans for themselves and immediately take that conversation to their parents, inquiring how they have things set up, seeing if updates are needed. For corporate trustees, one of the biggest hesitations we’ve seen families face in bringing a trust company into the conversation in this capacity is when a trustee would have to take custody of assets and manage the family’s accounts. At Janney, we’ve partnered with a number of corporate trustees that allow us to remain the managers/advisors for everything except the trustee’s administrative functions so that the family can retain continuity with our team.


And when someone goes through the process themselves, they get a better scope of what roles that they may be filling for their parents. It’s the perfect time to go to your parents and spark a conversation. When the family is talking across generations, more efficient strategies around trusts and gifting within the family and gifting to charity can come to light that may not if the generations keep planning within silos. You don’t need to share everything, but you should know if your parents have things in relatively good order.


Any common surprises or misconceptions that you come across?


We’re consistently surprised that many wealthy families do not think they have ‘enough’ to start to execute a higher-level plan. Increasingly, this isn’t a matter of cost, in fact, there seems to be much more willingness from clients to get the right plan in place versus them being more cost conscious. The ‘right’ set of documents that covers prudent topics, contingencies, and structures is more valuable than a ‘cheap’ plan that leaves holes in the plan. Clients are telling us to go do what is best for them, not squeezing us on cost, the bigger issue is more getting families to the table in the first place because they are unaware that they need more than a sweetheart will between spouses.

And once your documents are completed, fund your trusts! Regardless of how perfect your documents are, if assets aren’t moved into the various trusts designed, it’s just an expensive piece of paper.


Erik's thoughts: Many of our clients are the first generation in their families to break into higher net worth, many simply don’t identify as wealthy, rich, or ‘those people that need trusts’. The notion that estate planning is only for the ultra-wealthy simply isn’t accurate, everyone should have a plan in place. Clients that have had to settle parents’ estates that weren’t as organized or clear as they could have tended to be the exception to this. They see that having accounts and assets scattered across firms, having real estate in multiple states not in trusts (opening them up to probate in multiple states), or dealing with an outdated beneficiary designation can cause such a headache at a time when the family is dealing with the loss of a loved one. When families have planning in place and up to date, there are still administrative hoops to jump through but there is a feeling of confidence and comfort that things are set in motion in an orderly fashion. The scramble to get your hands around an unorganized estate can be overwhelmingly stressful. Planning for your incapacity or death isn’t pleasant, it’s easy to put off until you’re not busy, but really, when will that be!?

Our team and trusted resources like Adam are here to help you navigate these conversations for your family.  

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