4 Questions to Test Your Financial Advisor about Tax and Estate Planning
Learn Why Any Ol’ Advisor Isn’t Good Enough for Ultra-High Net Worth Households
As a high net worth or ultra-high net worth household, your financial complexity and the expert service you need to manage it have little in common with average investors. One of the greatest needs faced by most high net worth households is tax and estate planning.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
But how many financial advisors or even wealth managers really know their stuff in specialized but critical areas like this?
Poor tax planning can cost you millions. Poor (or lack of timely) estate planning can cause your heirs to miss out on massive chunks of your hard-earned wealth.
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This is not something just any financial advisor can handle. They don’t possess these skills when just starting out. But even experienced advisors – if they haven’t worked with high net worth households and navigated complex tax and estate planning scenarios – will not be up to the task of serving your interests.
Here are four questions about tax and estate planning you can use to test wealth managers you’re considering working with:
1. When and How Should I Liquidate My Company Stock Options?
Even a wet-behind-the-ears advisor who has never heard of phone booths probably knows it’s unwise to have a large portion of your net worth tied up in a single company, whether you work there or not.
But far fewer advisors can rattle off their criteria for when to sell off your stock options. Fewer still can quickly explain the various options for how to do it safely so you minimize taxes, maximize value, and avoid the ire of the SEC.
The fact is few wealth managers are up to the task. If you feel you’re not being given the best tax advice from yours, it may be time for a call to Hutch Ashoo, CEO and Co-founder of Pillar Wealth Management.
With his 30-years of wealth management experience, part of Hutch’s unique expertise is helping high net worth investors through the tax and estate planning gauntlet.
2. How Might Rule 144 Apply to Me?
This is a terrific question to ask, especially if you do have company stock options. Just say, “I read something about Rule 144 but didn’t really get it. Can you enlighten me?”
Keep it vague like that, because if you get a deer in the headlights look from your advisor, that’s your signal to start running. Any wealth manager worth your time should have intimate knowledge of this rule and how it applies to you.
3. Give Me a Few Estate Planning Options to Lighten the Tax Load for My Heirs
If their answer includes is you should talk to a lawyer or a general lists of things like “trusts, charities, things like that,” then you need to press them on specifics. What kinds of trusts do you use the most? Why those?
Again, if they can’t come up with specifics, then you know this wealth manager isn’t up to the challenge of expertly managing your financial affairs.
Just to give you a sense of how many options there really are, a few types of trusts we turn to depending on the needs of the client include Crummey trusts, defective trusts, generation-skipping trusts, irrevocable life insurance trusts, and charitable remainder trusts.
And to be clear – this is not an exhaustive list of trusts, let alone all the other estate planning and tax minimization strategies that might be available to you. Explore 7 estate planning trusts
4. How Can I Save on Taxes in My Portfolio?
We could come up with dozens more questions like this, but again, what you’re looking for is an experienced wealth manager who can speak confidently and specifically about questions like this, off the cuff, without any preparation. They should know and use a variety of strategies depending on the situation. They should have examples of recent clients they have used these strategies to help.
You only get one shot at this.
One more thing. Just make sure you don’t end up being the ‘first’ high net worth client of your financial advisor.
When it comes to taxes, experience is a must. So, if you’re in the high net worth league of investors and you don’t feel you’re being given the best tax advice, a call to Hutch Ashoo, CEO and Co-founder of Pillar Wealth Management is highly recommended.
It’s a decision that could ultimately save you millions in taxes.
See How Pillar Wealth Management Answers These Questions