The Estate Plan Phil Jackson Wished He Had
Today has been a lovely day. In fact, I’m having a hard time containing my smile right now. After three years of futility, my beloved New York Knicks have finally decided to part ways with the Zen Master – Phil Jackson.
In case you aren’t a Knicks fan, Phil Jackson, the basketball coach who coached Michael Jordan, Scottie Pippen, Kobe Bryant, Shaquille O’Neal, among other hall of famers, to NBA Championships, was hired as the Knicks President three years ago by the Knicks owner, James Dolan. Back then we were all hopeful that the Zen Master would guide our team back to respectability.
Alas, it was not to be. Jackson compiled a record of 80-166 in his three years as President. He was an absolute train wreck (I’m being kind) and infuriating to follow as a fan. His best quality was that he was not Isiah Thomas, but that’s another story.
All of this having been said, Jackson’s leaving reminds me of an estate planning technique that many of my clients have been asking me about – The Revocable Living Trust (RLT). Phil Jackson will probably want to have owned his New York property in a RLT, assuming he’s moving back to Montana (or Los Angeles?).
Let’s talk about trusts. I’ve heard a trust described as a contract between various parties to benefit other parties, but I find definitions like that hard to conceptualize.
Instead, thanks to my Partner Erin Calpin, I like to think about a trust as a box. Whenever there is a box, there are people involved with the box. There’s the person (or people – but I’m going to use the singular for simplicity) who creates the box – that person is called the Grantor or the Settlor. There’s the person who manages the box, that person is the Trustee. And then there is the best role to play, the person who benefits from what’s in the box, that’s the beneficiary.
The unique thing about a RLT is that (in most instances) the same person who creates the box is the same person who manages the box who is the same person who benefits from the box, i.e. the Grantor, Trustee and Beneficiary are all the same person.
If you create a RLT there is no tax benefit because for all intents and purposes the box is you, i.e., the assets can be managed just as easily as if they were in your own name. A RLT also does not have a separate Social Security Number. You can put things (or assets) in the box, you can take things out of the box. You can chuck the box entirely.
You must be wondering – if there is no tax advantage, then why would you want to create this magical box?
Great question! There are three main reasons to create the RLT. The first has to do with Incapacity. Specifically, as mentioned above, you are all three roles (Grantor/Trustee/Beneficiary) for the RLT. But, if you become incapacitated, your “successor trustee” can easily step into your shoes and manage your assets for you. Some banks would much rather your assets be in a RLT and your successor trustee step into your shoes to manage those assets then be forced to use a Power of Attorney. If you have ever had a Power of Attorney rejected from a bank you know what I’m talking about.
The second reason has to do with Privacy. A Will is a public document. You can easily find David Bowie’s or James Gandolfini’s will, because their wills are public documents. However, anything mentioned in a RLT is private. No one will gain access to the contents of the Trust because it’s private.
The third reason to create a RLT brings us back to our good friend Phil Jackson. The third reason to have a RLT is to avoid the probate process. Without getting into a much longer digression, anything in your individual name (that does not have a beneficiary form) will transfer to your beneficiaries through your Will. In order to probate (or to use) the will your executor has to qualify as the executor and then go through the probate process to make the necessary transfers. If all of your assets are in New Jersey, then it’s not that difficult.
But imagine this scenario. Phil Jackson names Jeannie Buss as his executrix. And Phil has property in Montana, New York and Los Angeles, and everything is owned in his individual name. When Phil dies, Jeannie has to qualify in Montana, New York and Los Angeles Surrogates Courts, paying the filing fees in each state (perhaps even having to make an appearance in each location) in order to transfer all of these homes to Phil’s beneficiaries. However, if Phil had his properties owned in the name of his RLT, Jeannie could deal with all of Phil’s properties in the comfort of her office at the Staples Center.
Similarly, if you live in New Jersey (New York is an altogether different story, we recommend all of our New York clients have RLTs) and you have properties in other states, you’re going to want to own them in the name of your Revocable Living Trust. You might also want a RLT for incapacity purposes, but especially if you own multiple properties in multiple states.
Unfortunately, I’m sure estate planning is the last thing on Phil Jackson’s mind. Fortunately, now that he is gone, Phil Jackson will be the last thing on my mind. Go New York Go New York Go!
Solving Your Biggest Client Issue May Be at Your Fingertips
Written by: Shileen Weber
When the American Funds’ Capital Group asked 400 advisors last year to name the biggest issues they face in their businesses, it wasn’t the DOL, market uncertainty or the economy that sat in the center of the idea cloud of answers.
It was client issues.
At a time when regulatory concerns and market turbulence would seem to be at all-time highs, the advisors who answered the survey were most concerned about servicing their clients as well as ways to find new ones and grow their businesses.
It’s one of the ironies of the business, that the things most people find so hard to manage – creating financial plans, managing assets and staying ahead of events – are what advisors find to be the easiest parts of the business. Marketing - the business of selling themselves – can be the area advisors find the hardest elements to master.
In this age of instant communication, it can be even more intimidating to market your practice, especially to younger clients for whom many traditional methods like newsletters, postcards and phone calls don’t work anymore. For them, email is the preferred way to get information, and, if it’s important, they are more likely to respond to texts, not phone calls.
But, it doesn’t have to be that hard. The digital age gives you access to ideas and content of all kinds you can use to touch your clients in a way that positions you as a valuable resource. The key is to keep it simple, stick to some basics and create consistent outreach that clients and potential clients are interested in and will appreciate you sharing with them.
Here is a common-sense approach you can take that will not require you to hire an expensive agency or take valuable time away from managing your clients’ assets and running your business.
Content is King
Create a content calendar for the year: Think about reasons to touch a client 13 times during the year – that can be once a month and on their birthday. (The common rule of sales is that it takes at least 7-13 touches to make a connection.) The number is limited and keeps you from inundating the clients who likely already feel inundated with content. You can take the seasonal approach – tax planning in the fall, January for account review content, college financing in the spring – and supplement it with topical events during the year. Creating a calendar will help you stick to a plan. Here’s one resource for a content calendar.
Review what content is already available to you: Basically, this means finding the resources you already have and determining what pieces will be most valuable to your clients. Start first by checking out content your broker-dealer already generates that you can personalize. Many firms have economists who write regularly about the market. That’s content you can pass along to keep clients up-to-date they would not have access to anywhere else. In addition to your broker-dealer, mutual funds, your clearing firm, and money managers are all excellent sources of informative and even analytical content.
Personalize the content you use: Add your name, the client’s name or some way to avoid making it feel like canned content that you are using just to check the outreach box. See what capabilities your email program may have to help you.
The birthday strategy: One advisor used clients’ birthdays in a new way. Instead of the card or lunch date, the advisor asked the client’s spouse for a list of friends he could invite to a birthday lunch and made it a memorable event that was also a soft approach to getting referrals.
Become a curator of good content: What your review will show you is that you don’t have to generate the content yourself. You can point clients to pieces you find insightful. You are likely already doing this every day just to keep yourself informed. The next step is to compile it and send out the very best pieces to your clients, again, with a note with your own thoughts about why you found it valuable.
Find out what is working and do more of it: Use your client interactions, in-person and online, to find out what types of content clients liked and any they didn’t. You can use tracking on your emails to see how many were opened as a measurement tool, but the personal interactions tend to provide more insight than raw data.
Be disciplined about your execution: Get help from an office assistant or schedule the time each month to do the content development and outreach. As any good strategy, if you make it a habit, it won’t seem so hard.
Most importantly, be yourself and be personal: You may want to regularly get personal by talking about your family and hobbies. The ultimate is if you can provide content that is personal to your clients, not just about their investments – they get that from their statements, apps and online portals. Think alma maters, hobbies, children and parents.
Of course, as a disclaimer, you have to make sure all content and communications are complying with regulations and the rules of your own broker-dealer.
The process of creating a plan will get you thinking about your clients in a new way. That exercise alone can re-energize your business and get you seeing marketing opportunities in places you may never have seen them before.
Shileen Weber is Senior Vice President of Marketing and Communications at GWG Holdings. She was previously Director of Online Strategy and Client Experience at RBC Wealth Management, where they placed first in two JD Power and Associates U.S. Full Service Investor Satisfaction Study (2011 and 2013).
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