Advisors who neglect estate planning as a core service may find themselves at a competitive disadvantage, according to Vanilla’s second annual State of Estate Planning report. The survey revealed that 93% of respondents believe discussing estate plans with loved ones is important, and 80% expect their advisor to offer estate planning support. Gene Farrell, CEO of Vanilla, emphasized that advisors not providing estate planning services are missing out on business opportunities, as clients are increasingly seeking advisors who offer these services.

The report also highlighted concerns around tax planning. While only 42% of respondents have proactively addressed estate taxes with a professional, 90% worry about the impact of taxes, including on IRA distributions and capital gains. Clark Randall, Director of Financial Planning at Creekmur Wealth Advisors, pointed out that while most Americans won’t face federal estate taxes due to the current exemption limits, estate planning remains essential due to state taxes and tax-deferred assets like IRAs and 401ks.

The report also found a lack of client knowledge about trusts, with nearly 80% of clients unaware of key differences. Farrell explained the importance of both revocable and irrevocable trusts. Revocable trusts can simplify the probate process, while irrevocable trusts can help reduce estate tax liability by moving assets out of the estate, though they are less flexible. Farrell recommended revocable trusts for most clients due to their simpler, more cost-effective nature.

Finally, Farrell noted that advisors who integrate estate planning into their practices experience faster growth. Engaging clients in estate planning often leads to new business, including next-generation referrals, and contributes to increased assets under management (AUM). “If you’re not engaging in the estate planning conversation, and the client is talking to someone who is, those assets are at risk,” Farrell warned.