Jun 7th

Checklist for a Smooth Estate Transition

A 5-Point Checklist for a Smooth HNW Estate Transition
Not long ago, during an estate plan review for a prospective Whittier Trust client, the firm’s representatives discovered an important issue. The potential client’s child from his first marriage was set up to take over his business — in which he’d given his second wife voting control.

That situation could have led to serious interpersonal strife, not to mention expensive legal battles, after the potential client’s death. And it testifies to the need for iron-clad estate planning, which can make sure that such dangers don’t crop up.

“No one wants to talk about their will or what will happen when they die, but it’s imperative, especially when you have significant assets,” said Thomas Frank, Executive Vice President and Northern California Regional Manager for Whittier Trust.

Moreover, people should revisit their estate plans periodically, at least every three to five years, Frank said. That’s because people often forget certain provisions, such as bequests to people who are no longer alive or from whom they’re estranged, but also because conditions change. A document, Frank said, can become “stale,” neglecting to take into account changes in assets or tax laws.

Checklist for a smooth wealth transfer

That noted, here are five steps that high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals should take to help ensure a seamless estate transition:

  1. Cast a fine net. A review of your estate plan needs to catch all of its potential weaknesses and take into account factors that might not have occurred to you.
    International assets in particular can tend to slip through the cracks.”As our world becomes more globally connected, we run into clients who have assets outside of the U.S.,” said Frank. “The laws of other countries are very different, so people shouldn’t assume that the document that controls their U.S. estate plan will be effective in another country.”One client, who was born in Latin America but is now a U.S. citizen, assumed his estate plan covered the assets he owns in a Latin American country. It didn’t. When that client came to Whittier, Frank referred him to a specialist who handles cross-border estate planning.
  2. Tell your executor or successor where to find everything. Many people assume it’s wise to keep important papers, such as their will and trust documents, in a safe deposit box. That can be a problem, according to Frank, because those documents are often required to prove that someone has been designated as your executor.”It’s best when we know the combination to your safe and where to find your safe deposit box key,” Frank said. “Provide copies of documents to the people who will need them, including all of your power-of-attorney documents.”It’s also crucial to provide your executor with a list of your logins and passwords, along with an inventory of your assets.
  3. Limit surprises to your heirs. Possibly one of the most difficult decisions for wealthy families, according to Frank, is how much to tell their children about their estate plan — and when to do so.”In my experience, the more you can tell the heirs, particularly if the situation is complicated, the better they will receive it when the time comes,” he said.A third-party facilitator from the Whittier team or a trained psychologist can be helpful, especially if there are complicated family dynamics, Frank said.”If one sibling is in charge or one is dramatically favored, that can be a disaster that worsens family strains or creates one that didn’t exist,” said Frank.When it comes to dividing the estate, “fair” doesn’t necessarily mean “equal.” Whatever the particulars, previewing the plan is generally the best way to avoid triggering sibling or other rivalries.You don’t have to attach any numbers to the process, but initiating a conversation about your plans and then introducing your heirs to your professional team of lawyers, accountants, trustees and investment managers can help them know what to expect.
  4. Think about who will manage everything. The people or institutions you choose to fulfill executorship or trustee duties will be dealing with your assets and with your children and other heirs. A professional or institutional trustee can be less expensive in the long run if it helps you avoid intrafamily litigation, Frank noted.”It can be problematic to name your spouse who is a stepparent to your kids as executor, or to name one sibling to that role,” he said. “If you name a neutral professional third party as executor or trustee, then you can give one or more of your children the right to remove and replace that trustee to keep control in the family while limiting liability and keeping family tension to a minimum.”In one recent situation, a surviving spouse lacked the financial acumen to handle an estate’s business and real estate assets. Her stepson ended up suing her for control of the estate, at which point Whittier was brought in to manage the issues and communicate transparently with both the widow and her stepson.
  5. Choose the right location for your trusts and assets. Trust law is state-specific, with varied rules about how long assets can stay in a trust, whether changes can be made, how investments are to be handled and whether state income taxes are incurred on a trust’s earnings.”One California couple with about $80 million in assets had trusts set up for their two sons with the parents as trustees,” said Frank. “But we showed them that shifting the ownership to corporate ownership by Whittier in Nevada could save them the 13 percent California tax on income the trust generated.”Frank recommends working with a qualified attorney or CPA to understand the tax implications of your estate plan, especially given recent tax changes.”Wealth transfer isn’t a do-it-yourself exercise,” he said.High-net-worth families have much to lose when it comes to passing their wealth down through the generations. Given the complexities they face, they’ll find that the services of an expert management team pay for themselves — and foremost among those services is help drafting that sine qua non of wealth transfer, a watertight estate plan.

Written in partnership with Forbes BrandVoice.

Checklist for a Smooth Estate Transition


  1. Cast a fine net.
  2. Tell your executor or successor where to find everything.
  3. Limit surprises to your heirs.
  4. Think about who will manage everything.
  5. Choose the right location for your trusts and assets.

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