Tax pros and the Great Wealth Transfer Opportunity

Executive summary

• Trillions of dollars in assets will shift from boomers to younger generations over the coming decades.
• Most Americans are unprepared, both as givers and receivers.
• As one of your clients’ most trusted advisors, you have a unique opportunity to assist your clients with their wealth transfer and estate planning needs.

For better or worse, HBO’s hit drama “Succession” has raised the nation’s consciousness about the once sleepy topic of estate planning. According to Cerulli Associates, an estimated $68 trillion in assets will shift from Boomers to younger generations in the coming years. Meanwhile, LegalZoom research found that nearly 56% Americans believe that estate planning is important, but only one in three (33%) have documented their end-of-life plans.

Your clients may not have billions at stake like the fictitious Roys in Succession, but this massive transition and lack of preparation for it represents a unique opportunity to provide clients with highly valued estate planning guidance, offering what I refer to as a “Family Office Level of Care.” We are seeing a democratization of the family office model, with tax and accounting firms integrating forward-looking services such as tax planning, financial planning, and estate planning.

Why don’t more Americans have an estate plan

A Caring.com study revealed that two thirds of high-income individuals tend to delay the estate planning process due to the reluctance to meet with, and pay, high-priced attorneys, as well as the morbid topic of death and a significant amount of paperwork involved.

However, technology is now offering a solution and opening the door for wider adoption. By embracing these technological advancements and incorporating them into their practice, you can simplify the often complex and daunting estate planning process for your clients. 

Digital platforms, such as Trust & Will, have streamlined the estate planning process and offer a user-friendly digital experience, enabling lay people and their advisors to complete basic estate plans on their own. As your client’s most trusted advisor, you already have much of the financial information required to complete the plan on these digital platforms.

An estate plan is recommended for anyone who owns assets, such as real estate, cars, cash, or other property, regardless of the size of those assets. And it is not only for the wealthy; everyone has an “estate” to some extent and can benefit from careful planning. But Caring.com found that one third of Americans believe they don’t have enough assets to pass on to their heirs. If your clients have a home, tangible assets, or children, an estate plan can ensure their desires for the future are clearly outlined and legally protected. Even if they don’t have substantial assets or children, an estate plan can still be beneficial. For example, it can articulate a client’s wishes through healthcare directives and even indicate guardianship for a pet.

Trusts over wills

Having a will is preferable to having no estate plan at all, since a will allows you to outline your wishes clearly. However, wills must pass through probate court, a public, time-consuming, and costly process. In contrast, trusts provide a more efficient, private way to transfer assets to heirs, bypassing probate court’s complications.

Minimize estate tax and lifetime exemption

Proper planning is crucial for preventing estate taxes from significantly depleting the estates of high net worth clients with assets exceeding $12.92 million (individual) and $25.84 million (couples) as of 2023.

Renowned advanced estate planning strategist Randy Fox of Two Hawks Consulting recently stated on my podcast that people don’t understand they have three possible beneficiaries of their assets: their family, charities, or the government. If they aren’t charitable, the government essentially becomes their beneficiary. This underscores how tax professionals can help their clients use strategies such as charitable giving to reduce income tax liabilities and protect a client’s legacy.

Clients want advice

A study from the Insurance Network of Fiduciary Advisors shows that nearly all clients (96%) want wealth transfer advice (divorce, death, and inheritance) but only 25% are receiving it. Why don’t financial professionals do a better job helping clients navigate these issues?

As Julie Johnson of XY Communication said on my podcast, “Clients want support and assistance to make sure that their family’s financial futures are stable and are planned for. Women and young people under the age of 55, are going to be the most dominant holders of investable assets by 2030. Financial professionals who can established trust with women and younger generations, and “meet them where they want to be,” will be best positioned for success, she said.

According to Johnson, an expert on intergenerational and gender communication, financial advisors and estate planning attorneys are largely not meeting their clients’ expectations when it comes to estate planning and their bigger financial picture. She said there’s an opportunity for tax professionals like you to step in and fill the void. By facilitating the estate planning conversation with your clients, Johnson said you can position yourself as a valuable resource and trusted advisor in this crucial area. At a time when 70% of heirs will fire or switch financial advisors after inheriting their parents’ wealth, this represents a significant opportunity for tax professionals to expand their practices.

Next steps

With the tidal wave of wealth transfer well underway, tax professionals have a unique opportunity to provide guidance, leverage technology, and fill the gap when it comes to their clients’ complex estate planning needs. Contact me any time to discuss ways to integrate financial and estate planning into your practice through our CPA partnership program. You’ll get to know your clients in a whole new way and deliver more value with less stress than you ever thought possible.

Editor’s note: Check our Rory Henry’s article on how to communicate large tax bills to your clients.