Baby boomers nearing retirement are causing a rise in demand for estate planning from banks and other financial services providers, according to industry players.
Clients are seeking help with both their own assets and those they inherit from parents.
Baby boomers are increasingly concerned about inheritance-related issues as they approach retirement, according to Jack Wolfe, a senior vice president and manager of investment management and trust at First National Bank in Fort Collins, Colo.
“The demographics are such that we’re starting to talk to more people about estate planning,” Mr. Wolfe said. The Sept. 11, 2001, terrorist attacks also played a role in compelling investors to think about estate planning, he said.
Taxation, too, is a significant concern for clients, particularly as federal estate tax laws diverge from state laws, said Darrell Behnke, a senior vice president at U.S. Bank, which is headquartered in Minneapolis. “Estate tax law is changing, and nobody can really be certain what it’s changing to,” he said. The bank offers various trust vehicles to limit tax liabilities.
First National can help clients get a broad overview of their finances to determine whether they require estate planning services, Mr. Wolfe said. The bank can also provide a comprehensive overview of an estate plan and offer recommendations for improving it, he said.
The bank has a staff attorney who can provide guidance on inheritance-related issues, and it can also recommend external lawyers with estate planning expertise.
Family issues are typically the most pressing for investors seeking advice, Mr. Wolfe said.
“Particularly in this era of divorces and remarriages, there are a lot of mixed families,” he said. “Clients ask, ‘How do we treat the various children from different marriages fairly and equally? How do we prevent conflicts?’ ”
Members of the baby boomer generation, many of whom have inherited large sums from their parents, are also concerned about how an inheritance will affect their own children, he added.
“They’re concerned that ...their child may receive an inheritance of $2 million or more at a relatively young age,” he said.
Understanding clients’ life goals is essential to helping them develop an estate plan, said Londa Dewey, the president of the private-client group at U.S. Bank, a subsidiary of U.S. Bancorp.
“You need to know what their assets are, and what are their goals for those assets while they’re living and beyond,” Ms. Dewey said.
A number of trust vehicles are available to help clients reach estate planning goals, Mr. Behnke said.
The qualified terminable interest property, or QTIP, is a trust vehicle that has become particularly popular because it protects children of a prior marriage or children of a current marriage if the surviving spouse remarries, he said.
Other trusts exist to help clients accomplish charitable goals while also providing for children, he said.
Insurance products such as annuities are also becoming increasingly popular with investors because they can offer a steady stream of retirement income while also providing a death benefit for the client’s heirs, Mr. Behnke said.
New York Life Insurance Co. has seen bigger demand for annuities with guaranteed death benefits, said Andrew Reiss, a vice president and national sales manager.
Legacy concerns are among the chief objections clients raise about investing in annuities, he said; many worry that their heirs will not have access to annuity benefits.
New York Life has introduced a variable annuity whose death benefit guarantee stipulates that if the policyholder dies before receiving a payout from the annuity the beneficiaries will not get less than the amount invested, less withdrawals and other charges.
