If you are a person who has achieved a stage of financial independence, it is vital that you have an effective Estate Plan to protect you and your family. An Estate Plan is not limited to having a Will. It generally involves more complex decisions around the control of your personal, family and business affairs in the event of death or incapacitation.
If a plan is poorly constructed and communicated, it can lead to damaging disputes. We’ve all heard the horror stories:
- You may have heard about the Rinehart family feud?
- Or the family who never reconciled when the granddaughter took her grandmother’s antique engagement ring?
- How about the estate that got whittled away to nothing by legal fees?
- Or the neighbour who passed away without a Will and suddenly a mistress emerged in the aftermath?
Poor planning, lack of open communication, high emotions and high stakes when handling an estate are a combustible mix and can lead to family relationships breaking down. None of us want this in theory – but it happens tragically often.
This article focuses on ways to help ensure you avoid such problems by putting in place an effective Estate Plan – by which we mean one that is complete, valid, and well-communicated.
Having the tough conversations around your estate
Having a conversation about your own, or a family member’s, mortality isn’t easy. It touches on everyone’s values as well as the health, wellbeing and relationship dynamics of all the related parties – often difficult issues! And the logistics can be tough too. It’s rare for all family members to be in the same place at the same time, and when there is a gathering it’s usually for personal or seasonal celebrations – which doesn’t naturally lead to discussion of a family member’s aging.
But doing this is absolutely essential. Ensuring your wishes are clearly communicated, and giving key people a chance to have their say about roles and responsibilities, can save a world of trouble down the track. And with the increasing incidence of Alzheimer’s, once a person is diagnosed it becomes extremely difficult to obtain legal verification of their wishes. It is often at a crisis point when people become physically and/or mentally incapacitated, that critical financial and care related decisions are made. Having the conversation early and clarifying wishes can help the loved ones left behind to understand decisions, rather than being angry and resentful when it’s too late to make any changes.
Preparing for the conversation about health, wealth and the future
It’s important to make a specific time and place for the conversation, and ensure it suits all involved. Trying to rush the conversation without adequate preparation, or in the wrong setting, can cause unnecessary upset and not achieve the desired outcome.
A good starting point is to frame the conversation in the context of the person’s health. As a natural part of aging, emotional, mental and physical functioning capacity can wear away. And for many people, a difficult health diagnosis is the trigger for this conversation.
Conversation starter tips:
“I’ve been thinking for a while, that we should probably chat about what we all want to happen in the next few years as Grandma is getting on.”
“It’s always better to do this early while there isn’t any big health problems that we have to react to quickly, so I was wanting to ask after your grandmother after her bad turn last month.”
The process of formulating and implementing an effective estate plan can be confronting and time consuming, and many people put it off until it is sometimes too late. However, engaging in open dialogue and legally formalising what it is that you really want does make everything so much easier for you and your loved ones in the long run. A complete, effective and well communicated estate plan is vital to promote family harmony and to leave the right legacy of your life.
If the steps outlined above seem daunting, a capable Financial Planner can help! A large and important part of our role for our clients, is helping them through this process. Involving your planner as an impartial outsider can really help defuse tensions and ensure your wishes are carried out.
Kristine Pham, Associate Financial Planner, Profile Financial Services
Phillip Win, Managing Director, Profile Financial Services
Profile is a boutique firm of financial and investment strategists, with a 30 year history of helping clients develop and act on plans to achieve their financial goals. Profile is self-licensed and privately owned, and has adopted a goals-based approach to investment for clients since 2011.