5-minute Finance: Client Planning Beyond The Grave

By MICHAELA SCOTT 
For AdvisorNews 

When someone’s life ends unexpectedly or before plans are solidified, the job of sorting through finances, documents and online accounts falls onto the grieving family and friends. Though it is an uncomfortable topic, advisors should help clients plan for the unexpected to make their own passing logistically easier for loved ones and ensure their wishes and legacies are respected.

Build The Team

The first step to end-of-life planning is bringing in the right people to help with each element. Clients should have two groups of partners for this process: a personal inner circle and a team of professionals. Encourage clients to create a regularly updated list of these individuals and their contact information.

The personal inner circle consists of selected family members, friends, business partners, clergy and community leaders. These people should have close relationships with your client and will act to protect your client’s financial and non-financial interests after death. They can also be trusted to understand your client’s intentions and plans once they are no longer here.

The team of professionals consists of people paid to help plan and execute final wishes. This team includes us, along with lawyers, accountants, insurance agents and sometimes other financial advisors. Clients may ask for referrals to these other professionals, so have a few vetted partners in mind if needed. Other clients will have their own lawyers, accountants and others, but will need to professionally introduce them to each other. Once this team is assembled, our job is to work together to jointly protect and promote our client’s interests.

Document Everything

Once your client has passed, their inner circle and professional team will need to act quickly and efficiently. The inheritance process is much easier if the client’s team already has all the information it needs easily accessible, such as the most up-to-date lists of their financial assets, obligations and liabilities, and information about where and how to access them. This list may be longer than your clients expect, especially if they’re younger. Standard items include bank and investment accounts, credit cards, property deeds, retirement funds and insurance policies and should also include things like student and car loans, rental leases and online subscription fees.

Cell phones, computers and online accounts have a lot of information that your client’s team may need to access. Ask your client how they want these items to be handled, and encourage them to speak with an attorney to create a strategy for their digital assets. They may create an online account inventory so somebody can manage them in case of incapacitation or death. If so, your clients should also discuss a security plan for that inventory with their attorney.

In addition to the above items, clients should take time to set their funeral preferences and create a living will. They should also decide whether to give someone power of attorney to cover cases of their own incapacitation. These documents should be settled and shared with appropriate people well before they might need to be used. With these documents in place, a client’s team will be well-equipped to uphold the client’s wishes as they are dying and immediately after.

Standardize Accounts

With your client’s assets listed and key people in place, you can help client’s decide how to distribute their assets after death. Depending on their exact situation, clients may best benefit from having a trust, a will or both. Insurance and investment accounts will also need attention to ensure alignment across the board.

Trusts have the obvious benefit of avoiding probate court and come with a great degree of flexibility to cover contingency scenarios. This can potentially save surviving relatives years of emotionally exhausting court hearings. However, certain situations require your client to have a will. If your client’s inheritors are minors who will need a legal guardian, for example, that legal guardian should be named in a will.

Even if they have a trust or will, your clients may want to ensure the beneficiaries named in those documents are the same ones named on their investment accounts and insurance policies. If these names conflict, instructions in wills or trusts may be ignored. Set annual client meetings for updating these documents and policies to ensure their assets will go to the correct people. Major life events, such as marriage, divorce, new children or grandchildren and changes in health for your client or their beneficiaries should also prompt meetings.

A client dying without an established plan for their assets can leave loved ones picking up the pieces during the grieving process, and an intended legacy in the hands of a court. But with our help getting their affairs in order, clients can give their loved ones comfort and continuity, even in the midst of grief.

Michaela Scott, CFP®, MSFS, leads Borislow’s Employer Retirement Consulting Practice, and has been an MDRT member for five years. She is a Retirement Income Certified Professional and as an Investment Advisor Representative was awarded the Five Star Wealth Manager. She also received the Millennial Advisor Award from the American College of Financial Services in 2017. Michaela co-authored If I Had Only Known – Checklist and Guidance for Before and After Death with Jennifer Borislow and Melissa Marrama. She also serves as President of the Alumni Association for Saint Anselm College. Michaela lives in Hampton, New Hampshire.