After more than two decades in financial advice, I want to share with you what I have observed when it comes to estate planning.
Many people, despite a lifetime of carefully building their wealth, end up neglecting or leaving until too late a major contributor to peace of mind. And that is devoting sufficient care and attention to how their estates will be managed and distributed.
My experience is that many people can be reluctant to tackle (or even to think about) what will happen to the wealth they fought so hard to build over their lives. And in many ways that reluctance is understandable. People can find the subject of estate planning overwhelming, mind-bogglingly complex and all just too hard.
Consider this: Our lives, relationships, commitments and financial affairs tend to grow more complex as we age. Yes, wealth is amassed but so do obligations and potential complications. And these only tend to multiply with each generation and as relationships evolve.
It’s like a grandchild’s infuriatingly complex Lego set. There are just so many little pieces involved, none seem to fit, and it is hard to imagine how all the myriad elements can be put together to make a satisfying whole. Just where do you start?
Break it Down
Here’s a thought: Talk to us! The key to making all those myriad pieces of your material life fit together in the way you hoped is having an adviser on-side who knows you, your circumstances, your aspirations and hopes, and the family dynamics you face.
If you want to solve a Lego puzzle, start small. Likewise, the key to successful estate planning is breaking down into bitesize, manageable decisions all those initially intimidating elements that make up your financial life and relationships.
So before you even face a lawyer, my suggestion is to sit down with us and reflect on your testamentary wishes, including how you balance the needs of security, clarity and control that arise from managing your financial and personal legacy.
This is a complex area with a host of legal, financial and tax-related considerations coming into play. Therefore, it makes sense to have an adviser who is across all the technicalities and who can help you safely navigate the decisions.
The People Piece
But as important as the technical considerations are, estate planning is ultimately about people. So you also need someone who understands the challenging family relationships and dynamics that made you exasperated in the first place.
Financial legacy problems and people problems often go hand in hand. While sorting the financial issues won’t solve relationship issues on their own, it can deliver clear air, clarity and confidence for other conversations.
As advisers, we find this sensitivity radar comes naturally from having ongoing relationships with clients via their financial plans. For example, a client might mention in passing some changes in their children’s lives – one may be moving overseas; another may be having marital problems, some might suffer from health issues. Whatever the case, these nuggets can spark a discussion on their estate plans and whether existing arrangements are still fit for purpose.
Ultimately, estate planning is complex because people and their families are complex. With blended families, for instance, it is important to explore all options to ensure the needs of your spouse and adult children from different relationships are met.
Giving You Options
Sometimes, it can help to break down the possible strategies into options A, B or C, for instance, and show the potential consequences under each scenario. We have found that crunching the numbers like this (something a lawyer is unlikely to do, by the way) can bring the options to life for clients.
And all of this can be done before you meet with a lawyer – the benefit being that you are fully armed and have worked through the options first. We may even write up a brief for the lawyer. The benefit for you is a sense of confidence and clarity.
Some clients want us to meet with their family, so with our support they can explain their estate intentions to everyone. This gives the clients comfort that they have communicated their decisions to their adult children. Likewise, it gives the offspring the opportunity to ask questions and allows an open dialogue so there are no surprises, unanswered questions or guessing of intentions, when the will maker dies.
Little Details, Big Implications
We also need to ensure alignment between clients’ financial plans and their testamentary wishes. For instance, it is not uncommon to discover a client’s super death benefit nomination differs from what is in their Will. Alternatively, a client may have intended bequests but have their assets sitting in a non-estate asset. Details, yes, but important in the overall design.
If clients expect a claim against their estate, they should not bury their heads in the sand in the hope it goes away. Claims are time-consuming, emotionally exhausting and can be expensive for the estate. The good news is there are strategies to help mitigate the risk of an estate claim, but that again is why attention to all the little things is key.
Ultimately, a well-executed estate plan makes the role of an executor easier. In contrast, poorly executed Wills – where executors and trustees are not given the powers they need – can be hard to navigate and costly to manage.
Keys to Success
So, yes, there is a lot of think about when planning the management and distribution of your estate. But it is a lot easier if you start early and have a strong and ongoing relationship with adviser who knows and understands you and your family.
If this is something you’re thinking about, my suggestion is to work with an adviser who asks lots of questions about your estate plans. By gently probing, they can uncover details you may not have considered. And they can ensure that the estate plan, just like your financial plan, is regularly reviewed to ensure it remains relevant.
Take it from me: An adviser who dismisses or does not ask about your estate intentions should be a red flag, particularly where you have complex or blended family relationships. That is a headache you and your loved ones don’t want.
On the other hand, if you find the right adviser – one who can help you navigate all the technicalities, who helps you clarify your wishes, who provides you with a range of options to achieve them, and who aids you in communicating those wishes to the people your love – the benefits to you are clarity, confidence and peace of mind.
Now that is a puzzle worth solving!
