Annual Survey explores challenges and conflicts of estate planning in 2020
CHERRY HILL, N.J. and NEW YORK, Feb. 6, 2020 — A trend known as “gray divorce,” the increasing rate of divorce for those over 50 years old, along with prolonged life expectancy and rising healthcare costs, are impacting financial planning, specifically estate planning. A recent survey conducted by TD Wealth at the 54th Annual Heckerling Institute on Estate Planning found that 40% of respondents, comprised of estate planners and attorneys, said that gray divorce is causing a rise in family conflict, already a significant challenge within estate planning.
A New Layer Of Complexity
“In addition to prolonged life expectancy and rising healthcare costs, this upward trend around couples divorcing over the age of 50 has created a recent swirl among the estate planning industry,” says Ray Radigan, Head of Private Trust at TD Wealth. “Gray divorce is adding another layer of complexity to the estate planning process that already arises with blended families, designation of heirs and the ever changing domestic structures. As a result, it’s more important than ever to proactively review and discuss the estate plans with our clients and their families on an ongoing basis.”
Furthermore, 39% of survey respondents identified retirement planning and funding as a highly impacted factor of estate planning for those divorcing over the age of 50. Gray divorce is also having an impact on determining who will be responsible for enacting power of attorney (7%), determining appropriate social security benefits (6%), and drafting of a will (5%).
In addition to the impact of gray divorce, the TD Wealth survey also explored the more traditional causes of family conflict when engaging in estate planning and found that not communicating the estate plan with family members is the most common cause of conflict (43%), followed by dealing with blended families (29%). Only 13% of respondents cited designation of beneficiaries as a cause for conflict in 2020, compared to 30% in 2019.
“There are a number of external influences that we must keep in mind to ensure effective estate plans,” Radigan adds. “While the purpose of estate planning is concrete, the factors and threats involved are far from it. The goal for any estate planner should be to effectively cut through the noise and distractions to build stable plans with our clients and their loved ones.”
Tax Reform and Rising Healthcare Costs Join Family Conflict as 2020 Threats to Estate Planning:
For two consecutive years (2018 and 2019), family conflict was identified as the leading threat to estate planning, however, 2020 proved to be a different story. This year’s survey revealed that estate planners are split among multiple concerns that include: family conflict (25%); tax reform (25%); prolonged life expectancy and increased healthcare costs (25%), respectively.
As the Tax Cuts and Jobs Act continues to have a real wide-spread effect on estates and trusts, estate planners are reconsidering the implementation of traditional strategies to work with the exemption, rather than treat it as an obstacle. Thirty-nine percent (39%) of respondents suggest to clients to gift now when exemption is high. However, 23% of respondents suggest advising clients to consider trusts to protect assets from future claims, and 20% suggest planning to minimize future capital gains tax consequences.
“With changes among family structure and tax policies, paired with the fact that people are living longer with rising healthcare costs, the estate planning industry has to reflect these factors in their approach,” Radigan says. “Even though there is a higher exemption on ‘gifting’ now, we are advising some clients to consider retaining more now because people are living longer, and those associated costs are impacting their estate plans.”
The total sample includes 112 survey respondents who attended the 54th Annual Heckerling Institute on Estate Planning, including attorneys, trust officers, accountants, charitable giving professsionals, insurance advisors, elder law specialists, wealth management professionals, educators and non-profit advisors. The survey was fielded January 13-14, 2020.
About TD Wealth
Through TD Bank N.A.,TD Wealth’s Private Client Group and its affiliates work with mass affluent and high net worth individuals and institutions to help build, preserve and transition wealth. TD Wealth is committed to helping personal investors, institutional and non-profit organizations gather and potentially grow their assets by building long-lasting relationships, and is affiliated with one of the 10 largest financial institutions in the U.S., TD Bank, America’s Most Convenient Bank®. From private banking, securities, investment advisory services, private trust, and estate planning, to institutional trust, including retirement planning, captive insurance and trustee services, TD Wealth creates and delivers customized and integrated wealth management solutions. Banking, investment and trust services are available through TD Bank. Securities and investment advisory products are available through TD Private Client Wealth LLC, member FINRA/SIPC (TDPCW).TD Wealth is a service mark of The Toronto-Dominion Bank. For more information, visit http://www.tdbank.com/investments.
TD Wealth is not a tax or legal advisor. You must consult with your own tax and legal advisors for specific advice pertaining to your estate planning needs.
About TD Bank, America’s Most Convenient Bank®
TD Bank, America’s Most Convenient Bank, is one of the 10 largest banks in the U.S., providing more than 9 million customers with a full range of retail, small business and commercial banking products and services at more than 1,200 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Bank and its subsidiaries offer customized private banking and wealth management services through TD Wealth®, and vehicle financing and dealer commercial services through TD Auto Finance. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Twitter at www.twitter.com/TDBank_US.
TD Bank, America’s Most Convenient Bank, is a member of TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services company in North America. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol “TD”. To learn more, visit www.td.com/us.