The traditional family structure of two heterosexual parents and a few children no longer applies to a large portion of the high net worth population. In a new study, UBS examined modern family structures and analyzed how they affect estate planning concerns.
Shifts in American family structures make it clear that financial professionals need to cater their services to the specific needs of each individual client rather than applying a one-size-fits-all approach. As new family structures become even more common, financial professionals may need to adjust their strategies even further.
According to UBS, 70 percent of people in modern families feel financial planning options are not designed with them in mind. Financial professionals who fill this gap can boost their client base and help a huge portion of Americans feel confident about their finances.
The new normal
The modern American family is defined by variation. Structures include homosexual parents with adopted or biological children, older couples who have only recently become parents, families created when people remarry after death or divorce and single-parent homes. Each of these situations requires a different approach to estate and legacy planning.
It’s extremely clear, however, that modern families requires financial guidance it is not receiving. The majority of people in traditional families know how they will pass on their wealth, while 67 percent of people in modern families are still unsure. This is due, at least in part, to the difficulty in dividing up assets in situations where heirs are in conflict with one another. According to UBS, 31 percent of people in modern families noted conflict between their heirs was making estate planning harder.
As of June 2015, same-sex marriages are legal across the U.S., according to NPR. That will change the retirement and estate planning picture for countless couples who now have a legally protected connection that did not exist before. Financial professionals who work with clients in same-sex relationships should conduct policy reviews to ensure that the couple’s retirement plan is still properly designed. The new legal status of these couples will change several parts of estate planning and may make it easier for these couples to adopt children and pass along their savings.
Because modern family structures may involve more complex networks of relationships than traditional nuclear families, financial professionals should conduct regular reviews of financial plans to identify a client’s priorities and ensure that his or her estate planning strategy can make those goals a reality.
That’s especially true of blended families that combine parents and children. UBS noted that couples in these situations may avoid updating wills and other critical documents because they are worried about complexity. A financial professional can work with these individuals and guide them to life insurance and other estate planning options that will provide for their children in the long run.