Beyond the Basics: Critical Questions Financial Advisors Should Ask But Do NOT

How to Uncover Deeper Insights & Deliver More Optimal Solutions from the Perspective of an Estate Planning & Probate Attorney

Questions can build stronger relationships between financial professionals and their clients. 

Most of the time, however, these questions don’t go far enough. They usually just scratch the surface without unpacking all of the information necessary to uncover the nuances of clients’ needs, hidden risks they could face, and untapped opportunities for better results.

Beyond the numbers, asking about certain relationships, expectations, and investments can unleash all-new insights about: 

• Current oversights 
• How to bridge any gaps between existing plans and established financial goals
• What may really best serve their clients, both in the short- and long-term 

Often, this information doesn’t come to light with typical intake and check-in questions. Instead, it typically takes more pointed questions that most financial advisors are simply NOT asking. 

13 Questions for Advisors’ Clients & Why They Matter

The following questions that most financial professionals aren’t asking can be pivotal to zeroing in on the tools, devices, and strategies that could be more optimal solutions for their clients.

Keep in mind that asking these questions may not be a one-time event. With new marriages, divorce, and evolving life circumstances, the answers to these questions can change over time. So, it’s prudent to revisit them periodically, discussing the answers with clients, particularly during or after major life events (including moving). 

1. Are all the children “of the marriage”?

In Texas, stepchildren do not automatically inherit assets from stepparents. These parents must specifically designate stepchildren as beneficiaries in an estate plan if they want to leave them an inheritance. 

So, parents in blended families may want to reassess their wills, trusts, and other estate planning documents to include stepchildren after a new marriage.

Along with the issue of disinheritance, stepchildren and blended families can significantly raise the risk of will contests and probate litigation, especially if zero steps are taken to engage in blended family estate planning.

What to Listen for: Key details in these answers can include specifics about step relationships, stepchildren’s ages, and any special needs or considerations associated with these children. Family dynamics can also come into play here, highlighting possible points of contention that could be headed off by putting specific instruments in place now.   

Pro Tip: Revocable living trusts can put clear inheritance plans in place for blended families, including options for asset distribution outside of probate. Additionally, bypass Trusts, also known as A-B Trusts, and Qualified Terminable Interest Property (QTIP) Trusts can provide mechanisms for preserving inheritances for children from previous marriages, preventing unintended disinheritance.  

2. How should your children receive their inheritance?

Many people assume that inheritances are directly handed over, in full, to their designated beneficiaries. While that can happen, it’s not always the case — and it may not be the best option for beneficiaries who are children due to factors like (and not limited to): 

• Age: Putting some guardrails in place for minors and/or young adults can ensure that an inheritance meant to last years doesn’t disappear in months. 
• Health needs: If beneficiaries have chronic or serious medical conditions that require long-term care, setting up devices like trusts can establish a way to cover health care bills well into the future. 
• Potential creditors: If children are adult beneficiaries with debts or expected creditors, giving these heirs direct ownership of their full inheritance could put those assets in creditors’ crosshairs. 

Without considering how to distribute an inheritance, there can be much greater risks that it ends up getting siphoned off by creditors, poor choices, or other financial drains.

What to Listen for: Fears and concerns can bubble up here, starting to reveal where safety nets may need to be put in place to control how and when heirs receive the bequest. Also, listen for mentions of grandchildren, as different devices may be better suited for inheritances to grandchildren.

Pro Tip: Testamentary trusts, special needs trusts, and grantor retained annuity trusts (GRATs) are just some options for directing how inheritances can be distributed to and safeguarded for children. When grandchildren are among the beneficiaries, generation-skipping trusts (GSTs) can be another practical option. 

3. Did you limit any specific gifts with a percentage cap?

Many clients specify an amount — like $50,000 — that beneficiaries will inherit without considering how evolving asset values can impact future distributions. With that, fixed-dollar bequests can lead to unintentional inequalities among beneficiaries. 

That could happen if the value of the estate: 

• Decreases: A set cash gift could leave little for other heirs while depreciating assets could mean beneficiaries end up with far less than intended.   
• Increases: With appreciating assets, one or a few beneficiaries could end up with the lion’s share of an inheritance, receiving far more than the grantor had originally intended.

Ignoring these issues can be like gambling with beneficiaries’ inheritances, making it more likely that they’ll receive drastically different amounts than anticipated. This could become another source of disputes and probate litigation in some cases. 

What to Listen for: Cash bequests, asset types, and more complex assets, like real estate and business interests, may each require special handling to account for the volatility of asset values, ensure fair distributions, and head off potential disputes in the future.

Pro Tip: Percentage-based bequests can offer a greater degree of proportional fairness if an estate grows or shrinks. Leveraging lifetime gifting strategies, portability, intentionally defective grantor trusts (IDGTs), real estate privacy trusts (REPTs), and other tools can be useful here too. 

4. Have you loaned money to a loved one that is still owed? Is there a written agreement?

Loans among loved ones rarely come with written agreements. Instead, these tend to be based on assumptions of repayment. However, in Texas: 

• Without proper documentation, it may be possible to argue the loan was a gift. 
• The probate courts generally recognize promissory notes as legally binding, but informal arrangements can be subject to legal challenges. 
• Verbal loan agreements can be difficult to enforce after death and are common sources of infighting among heirs. 

With that, a lack of documentation for family loans can become another source of unintended financial advantages for some heirs. It may serve as grounds for contested probate, which can delay distributions and put extra stress on loved ones. Additionally, forgiven loans may be considered taxable gifts, creating unexpected liabilities. 

What to Listen for: How have loans to loved ones been structured, repaid, and documented? Do clients want debts repaid or forgiven upon death? These follow-up questions can start to unravel how to address loans in clients’ financial lives and legacy planning.   

Pro Tip: Promissory notes, gift equalization clauses in wills, and revocable trusts are a few dynamic, risk-lowering tools that clients can use to oversee loan repayment terms during their lifetime, as well as the repayment or forgiveness of loans after death.

5. Do you anticipate inheriting anything substantive from your parents?

Many clients focus on their own estate plans, overlooking how an incoming inheritance could impact their financial circumstances. 

To address this proactively, helpful follow-up questions here can include (but are not limited to):

• What’s the anticipated value of the bequest? 
• How is the bequest structured?
• Is it liquid?
• Will the child be given a power of appointment to decide who receives the principal upon their death?

Failing to plan for an inheritance can result in unintended tax liabilities, assets unaccounted for in an estate plan, and greater chances of future family disputes in a Texas probate court. 

What to Listen for: Uncertainty versus how prepared a client is to receive wealth can come into focus here. Keep an ear out for specifics, including the type of assets involved, amounts, and when and how clients learned about their inheritance.  

Pro Tip: Updating estate plans, establishing new trusts, and re-evaluating the overall value of the estate (for estate tax reasons) can all be crucial when clients are anticipating an inheritance. The more details they can get about these inheritances, the better equipped they’ll be to dial in their plans for receiving those assets with minimal risk, delay, or complication. 

6. Do any of your children have substance abuse or money issues?

Addiction, outstanding debts, legal judgments, and bankruptcy issues can all become instant drains on generational wealth. When these issues are in play,  a child’s inheritance can quickly evaporate if no protective measures have been put in place. 

What to Listen for: Concentrate on concerns clients have about children’s ability to manage money or histories of addiction, gambling, or unbridled spending. Potential external threats, like impending lawsuits or divorce, can also be integral to note.  

Pro Tip: Spendthrift trusts, discretionary trusts, and irrevocable trusts can serve as highly effective ways to structure distributions, protect assets, and incorporate specific terms for receiving funds.

7. Do you have real property or assets in another state or country?

Owning real estate or assets outside of Texas or the U.S. can open up complex probate and tax issues, as well as the need for:

• Ancillary probate, requiring a separate legal process in another U.S. jurisdiction
• Compliance with foreign inheritance laws, tax treaties, and/or forced heirship rules that could override Texas estate plans. 

Ignoring out-of-state or foreign-based assets could trigger unforeseen legal roadblocks, excessive taxation, higher probate fees, or even the forced liquidation of valuable assets. 

What to Listen for: Mentions of vacation homes, rental properties, overseas bank accounts, or investments in foreign businesses are all key details here. If clients don’t currently have these types of assets, ask about any potential acquisition plans, so this matter stays on your radar. 

Pro Tip: Revocable living trusts may head off probate in multiple jurisdictions, allowing for the direct transfer of assets to beneficiaries, outside the court system. Depending on the asset and where its located, a number of other trusts may also be suitable for assets outside Texas and the U.S. 

8. Is some money in financial institutions with policy documents that trump wills and/or intestacy laws?

Payable-on-death (POD) and transfer-on-death (TOD) designations are at the heart of this question. That’s because many people do not realize that:

• POD and TOD designations trump the terms of wills. 
• Some financial institutions have documents that designate who receives the assets even if no POD designation has been made.
• Financial accounts with beneficiary designations operate outside of probate. 
• Texas law recognizes POD accounts, TOD designations, life insurance policies, and retirement plans as separate from the will. This means that even if a will specifies a certain distribution, the assets in these accounts will go directly to the beneficiary named on that account or policy.

Misunderstanding how POD and TOD designations work — or failing to use them — could leave significant sums to an estranged loved one or a former business partner, instead of the intended beneficiary. This oversight could also increase the value of an estate and, in turn, the associated estate tax liabilities. 

What to Listen for: Who are the beneficiaries listed on POD accounts, TOD designations, life insurance policies, and retirement accounts? Along with the answer to this follow-up question, it’s also imperative to understand when the beneficiaries of these accounts were last reviewed, as it may be time for a fresh look at them. 

Pro Tip: Schedule regular reviews of beneficiary designations for POD accounts, TOD designations, life insurance policies, and retirement accounts. Irrevocable life insurance trusts (ILITs) can also be advantageous here, keeping life insurance policies and proceeds outside of estates and probate proceedings. 

9. Does your business operating agreement lack succession language or a succession plan?

Probate can entangle business interests without succession language or plans in place. That can interfere with operations and cash flow. It may also mean: 

• Heirs lack clear directives for taking the reins, rendering them unprepared to step into leadership roles.
• Businesses suffer much greater financial losses through leadership transitions, elevating the risks of liquidations and closures.

Depending on the business, its structure, and what clients want in the future, succession plans can transition leadership over years, months, or less time while establishing contingencies in case plans go awry. 

What to Listen for: Current leadership structures, possible successors, and liquidity needs should come up at this point. So should details about the business structure, terms of the operating agreement, and what “ideal” ownership/leadership transfers would look like for clients.

Pro Tip: Buy-sell agreements, family limited partnerships (FLPs), and even spousal lifetime access trusts (SLATs) are often helpful in business succession planning. For family offices, family office GRATs can be useful too. 

10. Do you collect anything?

Valuable collections—such as art, antiques, jewelry, firearms, rare coins, or classic cars— are assets that clients can overlook when they’re evaluating estates, asset distribution plans, and estate tax liabilities. 

As personal property, these assets can be subject to probate, disputes among heirs, and unanticipated tax bills, like capital gains tax, if they’re excluded from financial plans, including estate plans. 

With that, collections may be mishandled, undervalued, or subject to costly disputes. They could also become serious financial burdens for beneficiaries.  

What to Listen for: Take note of any mentions of sentimental attachments, family heirlooms, hobbies, and/or prized assets. Cryptocurrency can be another “collectible” asset that may warrant distinct strategies and devices for preserving value and transferring assets to beneficiaries.  

Pro Tip: Revocable trusts, IDGTs, GRATs, and several other trusts can be useful for high-value collections. If the goal is to eventually donate collectibles like art or historical artifacts to museums or non-profits, charitable remainder trusts (CRT) can be an optimal vehicle to meet those objectives. 

11. Are any of your beneficiaries non-family members?

Like stepchildren, non-family members will not automatically inherit anything unless they have been explicitly named as beneficiaries in an estate plan. 

Clients who wish to leave assets to close friends, caregivers, charities, or business partners will need to take special measures to provide for these beneficiaries in their wills, trust documents, or other estate planning documents.

Failing to do so can exclude non-family beneficiaries while possibly sparking legal battles between heirs. 

What to Listen for: Relationships between the client and their beneficiaries are key to understand, as are family dynamics, estrangements, and the nature of the assets a client wants to give non-family beneficiaries. 

Pro Tip: POD and TOD designations can come in handy here. So can “no contest” clauses, which can strip beneficiaries of their inheritance if they challenge the will and lose.

12. Does any beneficiary receive government benefits?

Supplemental Security Income (SSI), Medicaid, and other government benefits have strict income and asset limits. For vulnerable beneficiaries who depend on these benefits, an inheritance could:

• Look like income 
• Render them ineligible for benefits
• Result in a termination of benefits, even with a one-time, moderate bequest
• Mean beneficiaries have to spend down their inheritance in order to re-qualify for benefits

Ironically, the inheritance that’s supposed to help these beneficiaries could end up causing far more financial distress, complications, and instability if not handled properly.  

What to Listen for: Pay attention to any mentions of disabled, elderly, or low-income beneficiaries, as well as special needs or references to public assistance. 

Pro Tip: Special needs trusts (SNTs) are a popular tool for distributing assets without jeopardizing eligibility for and access to government benefits. Depending on the benefits, the inheritance, and the beneficiaries in question, other trusts can come into play here too, like customized irrevocable trusts.

13. Are you or your beneficiaries non-U.S. citizens? Do you or your beneficiaries live outside the U.S.?

International estate planning requires unique, complicated considerations, particularly regarding: 

• U.S. estate tax laws and Texas probate procedures
• Assets abroad, over which Texas courts may have limited jurisdiction
• Foreign tax laws and inheritance restrictions

Without considering cross-border estate administration issues, international heirs may struggle to claim their inheritance. They could also be forced to give it up, liquidate it, or use it to pay off significant tax penalties. 

What to Listen for: Dual citizenships, foreign-held assets, and overseas loved ones are essential details to note. So are any plans clients may have to move outside of the U.S. 

Pro Tip: A combination of estate planning tools is often vital to addressing the complex issues that arise with international beneficiaries, clients, assets, and estate planning needs. Like cogs in well-oiled machines, all of these devices must be devised to work in tandem for optimal results. 

Next-Level Solutions for Brighter Financial Futures

Better financial futures can come into focus when professionals ask meaningful questions and engage in thoughtful planning geared toward individual needs, circumstances, and objectives. 

That’s as true for financial advisors as it is for estate planning attorneys. When these professionals partner to serve clients in pursuit of the same goals, the sum of their knowledge, resources, and services can be invaluable to clients.

At TAW Law Texas, we routinely work with financial professionals, CPAs, Realtors, and other experts, advising on and devising wills, trusts, estate plans, guardianships, powers of attorney, and other essential devices.

To consult with experienced estate planning attorneys in Austin, Texas, contact TAW Law Texas.

Email us or call 512-827-9212 to talk to a trusted
estate planning attorney in Austin now.

Dedicated to providing client-first service, TAW Law Texas is known for strategic representation and value-focused solutions. We counsel individuals, professionals, businesses, and other parties throughout Travis County, Williamson County, Bastrop County, Blanco County, Hays County, Caldwell County, and beyond. 

We are also committed to giving our clients more flexibility in resolving their legal matters. That’s why we offer two tiers of probate representation, including premium probate services. 

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Todd A. Wilson

Todd A. Wilson has been practicing law since 2007, with the aim of educating all strata of society and sharing crucial insights about the importance of estate planning, probate, and more.

The Law Office of Todd A. Wilson (also known as TAW Law TX) offers affordable estate planning and probate services.