Estate Planning is much more than just creating a Will, Power of Attorney and nominating superannuation beneficiaries.
It’s about understanding your needs and those of your business, family and their beneficiaries and project managing the moving parts so that your objectives are met when the time comes to rely on the documentation.
What is Estate Planning?
Estate Planning or ‘family wealth management’ is best described as a professional occupation focused on wealth preservation and the transfer of wealth to designated successors.
Modern Estate Planning sees the rise of a new breed of multi-disciplinary advice, that includes your Financial Planner, Lawyer and Accountant.
At JVA, we believe that a project plan is essential, with your Planner’s role being pivotal in guiding each of the specialists involved in the Estate Planning process to achieve your overall goals.
Unfortunately, there are still many Financial Planners who deal with Estate Planning by simply referring you to a lawyer, which can result in a costly and ineffective Estate Plan.
A team effort
The necessary specialists needed for an effective Estate Plan is a Lawyer, Accountant and your Financial Planner. No single party can put an Estate Plan into place – it is very much a collaborative discipline.
The role of each professional can be broken down quite neatly:
- The Financial Planner: Defines your overall needs, coordinates the specialists needed to achieve those needs and identifies if the Estate Plan is funded properly;
- The Accountant: Makes sure that your affairs are structured appropriately from a tax point of view;
- The Solicitor: Draws up the associated legal documentation.
The great thing about working in collaboration with people who you can trust, and that have ideally worked together before, is that they have a full overview of your complete financial and personal situation. This enables efficient and effective collaboration across all aspects.
Take the role of the Lawyer, for example. One common gripe about lawyers is that they don’t have the time or inclination to properly investigate your circumstances and specific needs. The problem stems from the fact that there is little margin in preparing wills as far as lawyers are concerned. Your Financial Planner can minimise this impact by packaging the relevant information in the most efficient method for the Lawyer to utilise, thereby reducing unnecessary cost.
Strong project planning is critical
JVA have adopted disciplines from the project management world to ensure timely and secure engagement for these important and often complex plans to succeed.
The easy overview is to picture if you were to draw a line down the middle of a page, on the left-hand side is the gathering of information, the education and awareness of what an Estate Plan entails … and on the other side is drafting the documents.
By ensuring the right information is shared efficiently and issues are resolved collaboratively, your Estate Plan becomes far more effective in achieving your objectives.
Estate Planning Considerations:
The finer details
Talking to your Financial Planner before engaging the expense of a lawyer can uncover personal issues that could threaten your estate or result in documents needing to be revised down the track: children from other marriages, drug-dependent children and family members who are spendthrifts, to name but a few examples.
Discussing the complete background of your family and airing any potential issues can be a difficult conversation to have, which is why a trusted Financial Planner is best equipped for these initial conversations. They can advise what aspects may need to be mitigated, highlight any elements you are yet to take into consideration and advise what should be incorporated into your plan.
It is only after your Financial Planner has done a detailed fact find and outlined multiple scenarios to you regarding your Estate Plan, that other specialists are engaged.
Getting it funded
The only way you can create an asset at an unspecified time in the future upon the occurrence of an event – death – is life insurance. We find this is a neglected part of many Estate Plans.
Your Financial Planner can not only structure your insurances to fund your plan but can also review your insurances regularly to ensure they meet your current requirements and future needs, with your Estate Plan taken into full consideration.
Taking care of business
A big part of preparing your estate involves putting a business succession plan in place. Who will take over the family if the unthinkable happens?
Business succession planning should be the starting point for a solid Estate Plan.
It should include the appropriate buy/sell arrangements, as well as ensuring that if something happens to the principal that the business can continue.
Your Estate Plan is not a ‘one-off’ piece of documentation. People marry; people divorce; people have children; businesses start and businesses fail.
This is yet another reason why your Financial Planner should be central to your Estate Plan – rather than a set and forget approach, your Planner can advise what changes in your circumstances could have an effect on your Estate Plan and recommend when it should be updated so that when the time comes, your objectives are realised, your legacy maintained and your loved ones looked after.