Successful estate planning requires that you take a “big picture” view of the client’s situation.
“If you are not having a conversation that’s holistic,” says Jason Round, senior manager, financial planning support with RBC Financial Planning in Toronto, “and if you’re not looking at all of a person’s financial affairs, then there’s a risk that you won’t provide the right advice.”
That big picture includes an awareness of all the people — both experts and beneficiaries — who will have a stake in the plan. The following steps can help ensure your client’s estate plan is complete and will result in a smooth wealth transfer:
1. Create a power of attorney
Make sure your client has granted power of attorney as part of the estate plan.
Clients tend to focus on what will happen after their death, says Round. There could be serious consequences for the estate plan however, if the client has not granted power of attorney should they become incapacitated.
Be sure that both personal care and financial needs are covered by POAs.
2. Bring in experts
Invite other professionals to meet with your client to fill in any gaps in the plan.
Financial advisors are not expected to be experts in every topic involved in an estate plan, says Reg Swamy, a vice president with the Trust Business, a division of TD Waterhouse Inc.’s Private Client Service Group in Toronto. Therefore, it’s important that other experts, such as tax and insurance specialists, meet with the client to ensure the estate plan is complete and correct.
Bringing in other professionals presents an opportunity to continue to deliver value to the client, Swamy says, and enhance your credibility.
3. Meet the beneficiaries
Build relationships with the client’s beneficiaries to maintain the account.
Taking the time, before the client’s death, to get to know those who will be inheriting the assets, Swamy says, will help the entire wealth transfer process run smoothly. It also puts you in a position to continue to work with the family and the account.
4. Talk about taxes
Consider various strategies to minimize the taxes on the estate. For example, weigh consequences of paying probate fees as opposed to income taxes.
Depending on whom the client plans to pass the estate to, Swamy says, it may be best to work on a tax plan today.
5. Ask about any changes
Keep the estate plan up to date and in line with the client’s situation.
Ask the client about any changes his or her life during the annual review, Round says.
Most of the time very little will affect the estate plan, he says. But more dramatic changes, such as remarriage, could have a significant impact on the estate and may warrant a full review of the plan.
This is the second installment in a two-part series on estate planning.