3 Biggest Barriers to Successful Estate Planning

FROM FINANCIALPLANNING.COM

Estate planning requires clients to prepare for a future they won't be here to see. That idea can be disconcerting, so it's no surprise that advisors say the largest obstacles to successful estate planning revolve around clients' anxieties about what the world will be like without them.

Those fears can lead to procrastination, indecision and inattention.

"The first barrier we run into is people ignoring doing estate planning at all," says advisor Stewart Welch, founder of the Welch Group in Birmingham, Ala. "They don't have a will, or it's 15 years old – they just don't do anything."

PROCRASTINATION

Fear is a big cause of procrastination. "Many people have a psychological barrier in dealing with their own mortality," says trusts and estates lawyer and CPA Gideon Rothschild. Additionally, the demands and pressures of living – and earning – in the here and now distract many people from planning for when they'll be out of the picture, says Amy Jucoski, national practice manager at Wells Fargo's Abbot Downing Group.

Instead of allowing fear and distraction to lead to avoidance, advisors should get clients to understand that they have the most to fear from doing nothing.

"Fear can be a great motivator," says Jucoski. "It can lead to urgency for action."

Of course, it's crucial not to raise the kind of fear that causes further paralysis. Instead advisors should break down estate planning into a smaller steps that are more easily digested and acted on, and work with lawyers and other professionals to make sure that clients take action.

Still, clients will put off action.

"You run into procrastination in contacting the attorney," says Welch, also the author of J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning. "And then they do contact the attorney, but we'll find that the barrier is that they just keep waiting to go in and sign." Welch says the solution is for the advisor to be in charge, to hand hold and guide clients so they don't become stuck. "If you don't do that, you can go through everything, but if you just leave it with the clients, 50% of the time it won't get done – you have to drive that process."

INDECISION

Clients often put off action because they are choked by indecision at the most emotional and basic levels. Frequently, the problem is that the client can't decide who should be a guardian. "They may not have a whole lot of assets, so that may be the most important decision in their will at that juncture," says Rothschild, who heads the trusts and estates and asset protection practices at Moses & Singer in New York. "But as a result of the indecision, the client does nothing." Or clients may be so worried about giving money to kids who aren't ready for it that they make no plans at all.

Advisors can combat indecision by emphasizing that choices can be changed, so that clients don't feel anything is written in stone.

"Estate planning is a process, not a one-time event," says Abbot Downing's Jucoski.

INATTENTION

But the ongoing aspects of estate planning can also be a source of another major obstacle – inattention. Outdated plans as a result of client inattention are one of the largest problems in estate planning, says Jucoski.

If clients don't revisit and make necessary updates, estate plans can become obsolete. Sometimes the complexity of constantly changing tax laws, as well as changes in the lives of clients themselves, can lead to what's been called "estate planning fatigue" in which frustration and anxiety cause clients to avoid taking action or to return to procrastination.

"Our role has to be to make it easy for clients," says Jucoski. By figuring out the clearest way of illustrating changes and their impacts, managing harmonious relationships with lawyers, accountants and other professionals, and showing a clear understanding of client goals, advisors can keep clients from becoming frustrated and doing nothing.

Providing an annual detailed analysis with a current snapshot and projections of total assets available for heirs in the future can also keep clients interested and positive about updating estate decisions, says Welch. Each year, clients can revisit how much they want to apportion to heirs. "You're not making lifelong decisions, you're making decisions 12 months at a time," says Welch. "What's important is that you are 're-comforting' them every 12 months. They feel better that they're on track and that everything's fine."