Ten steps to successful estate planning

Whatever way you look at it, estate planning is ripe for transformation.

£5.5 trillion pounds will be passed from one generation to another over the next thirty years. Yet only one in two adults has even made a will. If estate planning is in place, it tends to be a one-size-fits-all package that does not reflect individual circumstances or the complexities of the modern family.

How can we create a customised and effective, client-centric approach to estate planning? In October 2021, 27 expert speakers and over 500 financial advisers and private client professionals came together at the Stellar Estate Planning Virtual Summit to explore the way forward through the themes of money, mortality and the modern family.

Rounding up the key takeaways from the summit, here are ten steps that you as an adviser or private client professional can follow to deliver better outcomes for clients and realise the growth opportunities for your business.

Step one: Don’t be afraid to talk about mortality

Be proactive in engaging clients about estate planning, whatever their situation. Yes, some might be reluctant to discuss their mortality. But it is important to ensure that they are aware of what they may not know. This includes the potential for a hefty inheritance tax bill if they ignore the need for estate planning. Moreover, the earlier you start the conversation, the better your chance of creating solutions that properly address complex financial and family matters.

Step two: Open up the conversation to younger generations

Estate planning is not just a matter for clients, but also their children, grandchildren and other beneficiaries. That is why it is so important to involve all the different generations in the conversation. This will help everyone affected to understand the consequences and ensure that the solution reflects their needs. Clients may be reluctant to discuss inheritance with children for fear that it might reduce their drive or cause disputes. So it is important to help clients open the dialogue with their family in a way that addresses these concerns.

Step three: Create the space for dialogue and understanding

Given all the different facets of estate planning, it is important to give clients and their families space to discuss the issues. Again, you can start with the primary client requirements. As you build up trust, you can then begin to explore more complex and sensitive family and financial considerations. Allow clients time to explain what they want to achieve and the motivations behind this. Explore ways to break down barriers and build trust. Could coming out from behind the desk help you to engage, for example? You can help to build up a rapport by starting the conversation with positive experiences and cherished aspirations.

Step four: Break down the issues into manageable chunks

Estate planning is as complex as the modern family. As people live longer, you may need to consider the varied demands of what could be five or more generations. There may also be complicating factors, such as sibling disputes or children from different partners. You cannot tackle everything at once. So address the primary issues such as provision for young children first, before moving on to more complex demands. By starting the planning early, you can help to avert potential conflicts.

Step five: Establish your virtual roundtable of expertise

There is unlikely to be a one-stop solution. Lawyers, accountants and other professionals may therefore be needed to address such issues as business exit or agreements between families experiencing conflicts. Ideally, the lead ‘curator’ within this virtual roundtable of expertise will be the professional with the closest client relationship, who can then bring in other partners as and when needed. Circumstances and demands will also change, so the curator can help to ensure solutions keep pace.

Step six: Rethink the investment lifecycle

The phases of accumulation and decumulation we saw in the past are giving way to a new dynamic in which people can be wealthier younger and often have more assets later in their life than they can use. You can help clients to determine the assets and wealth they need to draw on in the remainder of their life on the one side and what is surplus and likely to be passed on to beneficiaries on the other. While the former should be protected in low-risk portfolios as part of standard wealth protection and decumulation, the risk/reward threshold for the latter can be higher.

Step seven: Explore all the options at your disposal

Many one-size solutions neglect the range of options that are available to help clients and their families retain financial control, reduce their tax liabilities and pass on more of their wealth to loved ones. Depending on the circumstances and client motivations, the solutions range from Business Relief and R&D relief to structuring assets within easily bequeathable family-owned companies.

Step eight: Be proactive in discussing ESG

The growing focus on sustainability, social responsibility and other environmental, social and governance (ESG) issues is changing investment expectations. This could be important for your clients and even more critical for the younger generations to which they are passing on their wealth. Just because they have not brought up ESG in the conversation, it could still be a priority. An analogy would be risk. Clients may not mention it without being asked. But you still need to profile their appetite and respond accordingly.

Step nine: Build an enduring relationship

Estate planning is about life as well as death. You can build estate planning into lifetime solutions that begin when clients are still young and adapt as they move through the later stages of life. This is also an opportunity to establish enduring relationships with beneficiaries.

Step ten: Check out our Estate Planning Summit

In this round-up we have only been able to offer some of the headline takeaways from the Summit. The good news is that all of the sessions are available to view online. So, for more insights in areas ranging from communication, collaboration and customisation, to forging trusted relationships with multiple generations, visit the Stellar Virtual Summit site.

If you would like to discuss any of the issues outlined here or know more about how Stellar Asset Management can help you to deliver great estate planning for your clients, please contact a member of the team on 020 3195 3500 or contact enquiries@stellar-am.com.

 

Important Information

Stellar Asset Management Limited does not offer investment or tax advice or make recommendations regarding investments. Prospective investors should ensure that they read the brochure and fully understand the risk factors before making any investment decision. The value of investments and the income from them may fall as well as rise and is not guaranteed. No assurance or guarantee is given that any targeted returns will be achieved. Forecasts of potential future results are not a reliable indicator of actual future results.

Stellar Asset Management Limited of Kendal House, 1 Conduit Street, London W1S 2XA is authorised and regulated by the Financial Conduct Authority.