Money, Mortality and the Modern Family: Rethinking estate planning

Conventional estate planning is failing to meet the increasingly complex and varied demands of today’s modern families.

Why is estate planning falling short? How can you as financial advisers and private client professionals help to bring estate planning into the modern age and seize the opportunities this opens up?

Stellar Asset Management’s Virtual Summit on Money, Mortality and the Modern Family set out to find the answers.

Just because this is how it has always been, does not mean that this is the way it has to be.

Mandy Hickson was one of the headline speakers at our Estate Planning Virtual Summit on Money, Mortality and the Modern Family (click here to access Mandy’s inspirational talk and other sessions from the Summit).

From Mandy’s earliest years, she had dreamed of being a fighter pilot. She had all the necessary ability and motivation, earning an RAF flying scholarship before she had even learned to drive. Yet the next step up into the fighter cockpit kept being thwarted by computerised aptitude tests that had been programmed by and for men. However good her flying skills, the computer kept saying no.

Undeterred, Mandy’s dogged determination eventually secured her a place in an elite Tornado squadron. She went on to serve with distinction on numerous missions over hostile territory including the no-fly zone in northern Iraq.

Businesses can learn a lot from Mandy’s frontline experiences, including the kind of preparation, teamwork and decision making needed to perform under extreme pressure. But what most stands out in relation to estate planning are her insights on how to overcome institutional barriers and inertia.

Like an institution that bars women for no better reason than it always has, estate planning is struggling to keep up with the modern world. Some of the issues are longstanding. In particular, many clients would prefer not to contemplate, let alone discuss their mortality, especially if they are feeling fit and well. As a result, many of their accountants, lawyers and financial advisers are reluctant to start what could be a sensitive and often unwelcome discussion. A clear consequence is that barely one in two people has even made a will.

This can leave their families facing needlessly lengthy and expensive legal rigmarole. The failure to put a viable estate plan in place can also land beneficiaries with a hefty inheritance tax bill. Should you as a financial adviser or private client professional therefore be more proactive in raising the subject?

The Summit discussions highlighted the importance – perhaps even the responsibility – to tell clients what they may not know. This includes the consequences of dying without a will or effective estate plan.

One size fits nobody

Even where estate planning is in place, it tends to be a one-size-fits-all package that does not reflect individual circumstances nor the complexities of the modern family.

For a start, people are living longer. That means that there could be five or more generations within a family and multiple different expectations and aspirations within this extended chain of beneficiaries. This heightens the need for engagement with clients, taking the time to understand their circumstances and aspirations, and then developing customised solutions to address these.

Effective estate planning requires more than the bare financial facts. Just as important are the life stories and dreams that shape people’s hopes for the future.

The complexities of the modern family are compounded by divorce, children with different partners and the potential for conflict this may entail.

It would certainly make sense to involve all the different generations in the estate planning conversation. This will help everyone affected to understand the consequences and ensure that the solution reflects their needs.

While this does mean going the extra mile, it offers the opportunity to develop professional relationships with beneficiaries and their children.

Never too young

Further Summit discussions challenged the assumption that estate planning is only for people approaching the end of their life. Far from it. Many people now become wealthy quite young.

Deploying estate planning tools such as Business Relief can provide a tax ‘shelter’ for people coming up to the ceiling on their lifetime pension allowance, while freeing them from inheritance tax later on. It would therefore make sense to engage with clients at a younger age and build estate planning into a lifetime approach to tax and wealth management.

The way forward

How then can you deliver the outcomes your clients and their families expect? What came through from the experts taking part in the Summit were three closely-related priorities:

Client-centric focus

Engage, understand and customise. This is the key to delivering the right outcomes. It can also strengthen trust. The more transparent you are and the more you can show clients that you are working in their best interests, the more they will open up and share with you.

Virtual roundtable of expertise

Lawyers, accountants and financial advisers are seeing many benefits in working together to tackle multi-faceted client needs in areas such as business exit and tax-efficient structuring as part of a virtual roundtable of expertise.

Build for the future

Bringing estate planning into the conversation early and involving beneficiaries in helping to develop solutions that evolve and adapt over time is very beneficial.

In a previous article, we look at how to deliver these priorities in practice in areas ranging from breaking down the barriers to engagement, to harnessing innovative techniques to structure and manage funds.

You can check out all the sessions and expert tips by logging on the Stellar Estate Planning Virtual Summit on Money, Mortality and the Modern Family.

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 20 Chapel Street, Liverpool, L3 9AG is authorised and regulated by the Financial Conduct Authority.