Surveys

Advanced HNW Planning Benefits "Negated" By Outdated Estate Plans - New Study

Eliane Chavagnon, Reporter, 26 September 2012

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Three-quarters of estate plans relating to HNW clients are at least three years old, yet an overwhelming 95 per cent of these clients have experienced “significant changes” since the plans were drawn up, a new study shows.

Although three-quarters of estate plans relating to high net worth clients are at least three years old, an overwhelming 95 per cent of these clients have experienced “significant changes” since the plans were drawn up, according to a new study by professional services firm Rothstein Kass.

In terms of the primary reasons why wealthy families do not have up-to-date estate plans, 42.9 per cent of 56 single-family offices said they “do not see the need,” while 26.8 per cent cited “lack of time” and 21.4 per cent said the topic was “too difficult to address at this time.” Under 10 per cent (8.9) cited “other.”

“Although many HNW families let plans become outdated due to time constraints or not seeing the need to update them, it is critical to do so, otherwise the benefits of advanced planning will be negated,” said Rick Flynn, a principal and head of the family office group at Rothstein Kass.

The study, Missing the Mark, surveyed 74 single-family office executive directors and also revealed that nearly 53 per cent of wealthy families do not have formal asset protection plans in place. In this respect, 41.1 per cent of 39 single-family offices “do not see the need,” while 35.9 per cent cited “lack of time,” 17.9 per cent claimed it is “too complicated” and 5.1 per cent said it was illegal. 

The study may fuel debate on how effective wealth advisors are in ensuring their clients keep their estate plans up to date, particularly at a time when tax and regulatory changes are happening with increasing frequency.

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