Use estate planning to enhance your financial advice business

The implications of longer life expectancy mean advice businesses need to adapt as the need for more complicated strategies, as well as tax and estate implications, requires a different approach to the traditional retirement planning proposition. It also requires advisers to look across the generations to ensure there are no unintended outcomes or issues that arise from not considering other generations in a client’s individual financial plan.

Estate Planning

When devising, recommending and implementing strategies for clients, advisers often overlook the implications for up to three generations of family members and the potential business opportunities which may arise.

What are the benefits of offering estate planning?

Estate planning forms an integral part of the financial planning service model and provides a number of opportunities and benefits for advisers. Offering estate planning shows clients that advisers care about what happens in their clients’ future so it’s an effective client engagement tool. Clients obtain a benefit from ‘peace of mind’ knowing that their affairs will be legally and professionally managed when they die, or should they have an accident or suffer from an illness.

Estate planning also enables advisers to gain a better understanding of what’s important to their clients. This helps an adviser ensure their client is receiving the most appropriate advice on issues, such as insurance, super and binding death benefit nominations.

Estate planning offers the possibility of increased revenue because it is another service which can be charged for. Estate planning provides advisers with the opportunity to access the next generation, recruit them as clients in their own right and also retain funds under management. Similarly, in some situations, an adviser may manage charitable or testamentary trusts left by a client, benefiting from the associated revenue for managing these trusts. Another advantage is that it broadens the demographic of the adviser’s client base.

What approach to take? A professional trustee or partnering?

In many cases the best approach will be to develop partnerships with role specialists, such as lawyers, for Wills. In more complex situations it may be necessary to use the services of a professional trustee company. This can be particularly valuable in the event of any family disputes.

Bring up the topic of estate planning with your clients

It may not occur to many clients just how many decisions they will have to make. Estate planning is essential to any financial plan. Not only are there social security implications but increasingly, unintended disinheritance has become a real issue for blended families or just for those individuals who do not update their Wills. Furthermore, there may also be some deliberate strategies to skip generations in estate planning.

An accidental disinheritance can occur when clients either have no Will or the Will doesn’t function as intended. It can also occur when benefits bypass the estate, such as with super death benefits. If there is no valid death benefit nomination, the super fund trustee will decide who to make the payment to and unintended beneficiaries may reap the rewards.

Increasingly today, the rise of blended families has meant that accidental disinheritances are on the rise as many people do not stop and think about the implications of children from previous relationships if they themselves die without making adequate provisions beforehand.

The law is complex. Sadly, it’s not uncommon for children (whether biological, adopted, step or ex-nuptial) to be denied their intended inheritance, or they receive a reduced amount. It’s worth noting that even if the surviving spouse tries to do the right thing, marriage (except in rare circumstances) generally revokes an existing Will. So if a spouse remarries, and fails to make a new Will, then state intestacy laws mean that some children may miss out altogether.

Another issue that clients may want to consider is generation skipping. There may be reasons including social security planning for why clients should consider this scenario or perhaps they just want to consider this because their grandchildren would benefit more from an immediate inheritance than their adult children.

Questions you could ask to demonstrate to clients the benefits of estate planning

Following are some questions you could use to begin the discussion about estate planning with your clients:

  • Do you understand the laws of intestacy?
  • Who do you want your beneficiaries to be?
  • Are there family members with special needs?
  • Is changing an ownership structure required before you pass on your estate?
  • Are life interests likely to be used?
  • Are there blended family issues that need to be addressed?
  • Is there a need for minimising family disputes?
Ideas to maximise intergenerational advice opportunities

A customised advice pack

Consider creating an advice pack for your clients to give directly to their children. This can assist in starting the advice journey and the first step is for clients to understand the benefits of a good financial plan. You may consider the introduction of a ‘family advice fee’ which may enable your older clients to subsidise the advice fees of their children.

Annual seminars

Hold an annual seminar and invite the extended family of your clients. You may take the opportunity to invite clients in to strengthen relationships and provide an overview on investments. This might be a good opportunity to invite extended family along so they can see that financial planning is really the only way to make sure their future financial plans are achievable and help keep them on track.

Systematically diarise important dates

As part of good practice management, note down important dates for your client’s children and other family members. These should include wedding anniversaries and milestone birthdays. Use this to enquire about them as naturally as you would enquire about birthdays of your client.

Tax advantages

Explain the tax benefits of establishing a testamentary discretionary trust (TDT) in the Will. TDT Wills are generally more expensive but a $1,000 investment by an adult child in a TDT Will for their parents may in future save the adult child thousands of dollars in tax each year.

Are you ready to help your clients with estate planning?

Family structures and family dynamics are more complex than ever before and providing family financial advice can be correspondingly complex, however, if done successfully, it could provide an enduring and mutually beneficial relationship. If you would like more information in relation to estate planning services, please contact Australian Executor Trustees (AET). AET is part of the IOOF Group and offers estate and trustee services. AET can provide valuable assistance with estate planning across all the states and territories in Australia. For more information on how AET can help, please call one of their estate planning lawyers on 1800 882 218 or you can make an online enquiry by visiting