CPD: Estate planning – overcoming client objections

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How do you help clients who don’t believe they need an estate plan?

Financial advisers are ideally positioned to initiate and project manage the process of implementing an estate plan. Unfortunately, there are those clients who don’t believe they need an estate plan or feel that having made a Will is sufficient to protection for their estate. In this article by Zurich, common objections – and possible responses to those objections, are examined.

Estate planning is simply the process of ensuring that a lifetime of effort is preserved with the right amount of money landing in the right hands at the right time.

Often, when your clients think about estate planning, they’ll tend to focus on the consequences following death. As a result they often do not appreciate that there are many documents which need to be properly prepared by a legal specialist as part of their estate planning; Wills, Powers of Attorney, Memorandums of Wishes and Testamentary Trusts.

Advisers understand the important role of estate planning in providing a holistic financial plan for their clients.

Managing the estate planning process

Financial advisers are ideally positioned to start the conversation and project manage the process of implementing an estate plan. Working with an accountant and a specialist lawyer who contribute their knowledge and expertise opens the door for an adviser to be positioned to towards the role of project manager, given their more intimate knowledge of the clients financial and personal circumstances and ambitions. This unique vantage point provides the adviser with a more complete picture of potential pitfalls in achieving the clients desired outcomes.

 

 

As illustrated in figure one, each of the client, legal professional, accountant and adviser has specific and important roles to play.

However, for many advisers, estate planning can be a challenge. Some clients don’t understand its importance, others believe they have their affairs in order. Others may have some basic elements in place but have not revisited their estate plan since a change in circumstances. Like a financial plan, an estate plan should be reviewed regularly.

Overcoming the 10 most common objections to estate planning

While the following may not be the only objections you encounter to the notion of estate planning, the following comprises ten common objections – and a recommended response to your client for each of them.

Objection one: My affairs are too complex and it’s just too hard

The problem isn’t that your affairs are too complex but rather the delivery of a solution seems too difficult. What you need are answers from someone who can deliver an outcome and walk you through the process.

Taking comfort in the knowledge that you are dealing with professionals who can provide you with the answers that you are looking for and show you the simplicity of the process should be adequate encouragement for you to move forward with your estate planning and the preparation of your Will and other estate planning documents.

Objection two: It will bring up emotional issues that I don’t want to deal with

Estate planning inevitably leads to the consideration of personal relationships. A Will can constitute a publication of our feelings towards those that we know. This can evoke negative emotions such as anger, guilt, remorse or regret.

Unresolved issues between family members and spouses can be difficult to broach and although your lawyer and financial planner are not counsellors, they do have personal knowledge of your circumstances and the issues involved and may be able to provide objective views on these issues. Also be mindful that a Will is not etched in stone, and as circumstances change, and relationships and issues change, amendments to your Will can, and should, be undertaken.

Objection three: I can do it myself

Of course you can prepare a Will yourself or use a post office Will Kit to assist you for next to no fee.

What a Will Kit doesn’t provide is advice and guidance on your legal obligations under the Succession Act and whom you have an obligation to provide for from your estate. Nor does it give any direction about the impact certain decisions will have on your family and loved ones.

Objection four: I am too young, and death is years away

Unfortunately death comes to us all and there is no way of knowing when our time has come. Like anything in life, successful outcomes require thoughtful planning and the administration of your estate following your death is no different. An estate plan is about creating a financial plan for your life.

It allows for the distribution of your estate in accordance with your wishes in a timely and cost effective manner.

While everyone has different attitudes towards death, preparation of an estate plan need not focus on your death but rather what benefits you can provide for your family and friends when the inevitable happens.

Objection five: My estate is too small to justify a Will

No estate is too small to not justify the preparation of a Will. If you don’t have a Will, your Executor needs to apply to the Court for a grant of administration before they can deal with any of your assets.

This application alone can run into thousands of dollars. So the cost of getting a grant of administration may be greater than the balance of the bank account leaving any expense that cannot be paid from your assets, to be paid for by your family. Having a Will generally alleviates the need to apply to a Court for a grant of Probate for small estates and so relieves your family of this emotional and financial burden.

Objection six: Wills are too expensive

The cost of preparing a Will is generally far cheaper than paying solicitors fees to determine who can administer and who will benefit from your estate, and then apply to the Court for a grant of administration following your death.

The cost of a Will is a small price to pay to ensure that your personal effects go to those persons who you want to receive them, and to ensure that your estate is administered in an efficient and timely manner without financial burden to your family. The price for a Will generally doesn’t vary due to the size of a person’s estate. Wills become more expensive with the complexity of a person’s affairs.

Objection seven: My spouse gets everything anyway

This line of thought presupposes that you will predecease your spouse. What happens if your spouse dies first or at the same time as you? In that circumstance, what happens to your children? Who will know your wishes regarding the upbringing and welfare of your children?

Another issue with this line of thought is that assets which aren’t jointly owned will not necessarily go to your spouse. The Succession Act determines who gets your assets on your death. If you have children then your spouse is not entitled to all of your assets as they must be divided between your spouse and children.

Objection eight: I have no family so it doesn’t matter if I have no Will

Regardless of whether you have any immediate family, your affairs must be dealt with by someone and your assets will be disposed of to someone.

Under the Succession Act, the end recipient in the event that you have no family or next of kin will be a payment to the Government.

Most people have friends or a particular charity that they would rather see benefit from their estate. Further, a Will makes the process easier for whoever is left to pick up the pieces after you have gone.

Objection nine: I have a Will, I did it when I first got married

All Wills need to be reviewed. Circumstances change, children are born, assets are bought and sold, and relationships change. An old Will may be valid but wholly inadequate. For example, it may not make provision for all of your children as they weren’t all born when you made your Will. Your Will may have named your parents as executors which is no longer appropriate as they are elderly and not in a position to act as executor.

Wills should be reviewed at least every three years to determine their validity and applicability. Having an old Will may be as effective as having no Will at all, or worse, could result in your estate not being dealt with in accordance with your intentions, or result in the Will being contested by disappointed beneficiaries.

Objection ten: I’ve given my relatives instructions about what I want done with my estate

Such instructions are not binding and result in delay, confusion and additional expense in administering your Estate. If you pass away without leaving a valid Will in place, your wishes including the control of your Estate, the beneficiaries of your Estate and who will look after your children cannot be followed.

This leaves your family to sort out these issues and may lead to conflict between them and not see your wishes realised.

No one wants their lack of preparation to result in family conflict or to incur unnecessary expense. They will particularly not want the government to become a beneficiary because of their inaction.

Conversations about estate planning will be highly valued because departure from this world – whether it is planned or unexpected – is inevitable. The right guidance will help your clients resolve costly complexities and ensure their lifetime of effort is preserved, with the right amount of money landing in the right hands at the right time.

 

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