Estate planning often fails to achieve its original goals due to a lack of proper administration. Estate-planning vehicles should not only be structured with regard for a family’s objectives, but should also be continuously monitored to ensure they are achieving the family’s intended goals. This integrated approach requires a multidisciplinary team, preferably within a single firm.

Traditionally, the client works with an estate-planning attorney to develop a plan whose administration is picked up by another advisor, perhaps a tax accountant or money manager. Implementation and maintenance may be neglected. If one of the non-integrated group of advisors suggests something new—a life insurance trust, family limited partnership or qualified personal residence trust—the estate planning attorney is again engaged and more professionals assembled. Vying for “top dog” status, they may fail to: maintain proper books and records, such as those for family limited partnership entities; make timely payments or distributions from estate-planning vehicles such as GRATs or CRTs; and prepare and file necessary gift and income tax returns.

In contrast, a multifamily office (MFO) client team carries out the client’s estate planning and wealth management objectives in an integrated fashion, utilizing a team of professionals covering tax, accounting, investment advisory assistance, estate planning, philanthropy and risk management. As an important initial step, the MFO performs an estate planning review. Some examples of this process:

Family Limited Partnerships. Family limited partnerships (FLPs) transfer wealth in the form of non-marketable limited partnership (LP) interests to junior family members (or trusts). FLPs are attractive because of valuation discounts achieved through gifts of LP interests, coupled with control over the FLP assets that the senior generation retains through general partner interests. The MFO team’s:

• Investment advisory professionals select assets in the portfolio best suited for funding of the FLP, set up custody accounts and implement transfers of assets.

• Tax/accounting professionals obtain tax identification numbers for the FLP and calendar estimated tax payment dates and amounts, then coordinate cash flow needs for tax payments.

• Income tax professionals prepare and file annual income tax returns for the FLP, issue Form K-1 to the partners and, if engaged to do so, prepare tax returns for the individual partners.

GRATs. The grantor retained annuity trust (GRAT) is an irrevocable trust designed to transfer future appreciation of an asset free of gift or estate taxes, after the grantor has received all payments of a reserved annuity payable from the GRAT assets for a period of years. The MFO team administers GRATs, attending to initial asset allocation, valuation of GRAT assets and ongoing review of asset performance to uncover opportunities to lock in GRAT success. Team members:

• Look for opportunities to recommend GRATs for appropriate clients, often with “rolling GRATs,” whose structure takes the annuity payment received by the grantor from one GRAT and rolls it into a new GRAT—to enhance the ability to pass on excess appreciation to beneficiaries.

• Set up custodial accounts for each GRAT and oversee the funding of each GRAT, complying with the IRS requirement that each GRAT have only a single source of funding.

• Compute the GRAT’s gift element and prepare and file gift tax returns to report each GRAT’s source of funding.

Intra-Family Loans. Wealthy families often make loans among themselves for various purposes. The senior generation might loan funds to children, grandchildren and trusts for the benefit of family members to purchase homes, enter into businesses or simply to make investments. The MFO team assists with loan transactions by documenting loans with promissory notes, disbursing loan funds from the client accounts and maintaining tickler files of interest rates, payment due dates and note maturities to assure IRS compliance, avoid potential problems and enhance the wealth-shifting effectiveness of such loans.

In conclusion, an integrated approach to estate planning and wealth management, employing a multidisciplinary team, can help clients realize their wealth transfer goals early enough in their lifetimes to enjoy their wealth, pursue philanthropic goals and leave a larger charitable legacy at death.

Harris myCFO^® is a brand delivering services through Harris myCFO, LLC, an investment advisor registered with the Securities and Exchange Commission, and certain divisions of BMO Harris Bank, N. A., a national bank with trust powers. Not all products and services are available in every state and/or location.