“I often get asked what makes me so passionate about wealth planning for future generations?” Claire Mackay shares her views
This is a summary of the thoughts on estate planning I shared on stage with Emma Alberici and our wonderful clients at Quantum Financial’s Investor Seminar.
Evangelical about estate planning
My clients trust me to look after them and the people they love. And there have been too many instances where I’ve been brought in where I’ve seen the best of intentions or the head in the sand approach which has resulted in absolute misery for families.
Problems arise not because there’s not enough money there to support your family and those you care about, but because when money is involved people sometimes change.
Best version of themselves
My mantra when it comes to investing for your family, when you have plans for how you are going to support them when you are no longer around is “Help your loved ones to be the best version of themselves”.
So when you’re not around your intentions are not going to be known unless they have been documented.
Even when all the right documents with the best intentions are in place, I’ve been pulled in after the fact and it can still go wrong.
For example, one 21 year old only child suffered losing both their parents in quick succession. They didn’t understand the protections that had been put in place for them and, as we all know, some 21 year olds have certain views of the world.
They thought they knew better and so unwound all of the legal structures that were designed to give tax efficiencies and asset protection just because they didn’t understand. And they felt that everyone was telling them what to do and no one took the time to explain to them what the options were and what was in their best interests.
Does your plan do what you think it should?
I’ve seen situations where clients have said to me “Don’t worry about it, we’ve got it under control. You don’t need to see our documents, we’re fine. That’s not what we’re hiring you to do.”
And then when the unfortunate happens the documents were written on the back of an envelope, witnessed by a couple of friends at a bbq, and yes, we got there in the end but the documentation meant the lawyers had to do more, which meant the client paid more. This caused unnecessary grief when the client should be dealing with really important stuff like grieving and putting their loved one to rest.
Looking after your family
So yes I get evangelical about effective estate planning because I’ve seen the worst things that can happen. Now I don’t expect my clients will go through the worst things, but I think that if we plan for the worst then it can only ever turn out for the better.
But I have also seen the best.
I’ve sat down with clients and we’ve said “Look, we’re not going to be equal with our family because they have different needs. We’ve worked through, with expert lawyers, to look after a child who is going to need assistance for the rest of their life” Or we’ve taken into account the different personalities, strengths and weaknesses of children and grand-children.
For others estate planning is about their kids and grand-kids.
One of my clients, when we had the estate planning conversation, told me her granddaughter is into Disney princess and the Disney fairy tales. This meant she knew all the names for the wicked step moms, the wicked step sisters, the horrible uncles, etc. It’s those people who may come into your loved ones’ lives who we just don’t know.
Now I truly hope that all my clients have no family issues whatsoever. But I recognise reality can be different. My clients’ children might have fabulous partners and they’ll be married for 60 years and there’s going to be no dramas, but we just don’t know.
They might end up in a work environment where they’re at risk as well and might have an acrimonious split with their business partner and assets are at risk.
These are the sorts of things that keep me awake at night for my clients. Now this may sound really sad and pessimistic thinking about all those horrible scenarios. But if we plan for unfortunate events as best we can and they occur, then we can have mechanisms in place.
I’ve met most of my clients’ children and grandchildren and I don’t believe that they’re going to be in that scenario, but I just don’t know who’s going to be in their ear. We don’t know if they get injured and if their carer becomes a close confidant who then starts suggesting ideas to change the structures. We don’t know who is going to be in their ear encouraging behaviour that is not the best version of themselves.
Because I work with my brother, I understand sibling rivalry and how it can go back over many decades. Likewise, you understand how the dynamics between all your family members work. Understanding this, with my clients we’ve put in place structures that meant when they were needed they provide your loved ones with protections. The sibling rivalry that could have been a big risk didn’t become an issue because there was understanding in the family of what we were planning to do. The structures and plan were in place which meant people were able to be the best version of themselves.
When the estate plan kicks in
Until you’re in the thick of it you don’t know. Maybe conceptually you might think you know but until you have to do it, you don’t realise how painful it can be. Sure, the lawyers will say it’s all going to be fine, we’ll do it all, but we’ve had situations where the lawyers have submitted documents to the courts without telling us. This has meant that bank accounts have been frozen everywhere which in turn meant that there was no immediate money available. Our clients have had to go into the bank to get a new debit card because the old one didn’t work anymore. So there’s the logistics of it but there’s also the process you need to follow. We’ve also had clients where they’ve sold assets without thinking about the tax and if we’d taken our time, worked with the accountant, then the overall estate would have been better off.
You have to have a plan
So what we say to our clients and indeed to everyone, is make sure you have a plan if anything horrible happens. We’ve had clients where we’ve been in the first ten calls they’ve made. The police are involved, the medical people, the family and then often we are next on the list.
Of course, we know this is a reminder of the incredible trust or clients place in us because we can start working behind the scenes focusing on all the different moving parts.
For some of our clients, we sit in on meetings or teleconferences with the accountants and the lawyers to make sure we had a plan of attack that we all understood and followed for minimising the family’s tax and protecting the family’s assets.
Our clients spent the next few weeks, quite rightly, putting a loved one to rest and grieving with their family. When it was time, they come in and we have all the paperwork ready, we have a plan of attack. Regular payments into accounts that you rely on to pay the basics of life shouldn’t stop.
There is a lot of stuff that happens that we can guide you through. We can’t do your signatures, we can’t do it for you. But we can certainly do everything we can to make this process a little less scary.
It’s never for you
One important thing to always remember is that an estate plan is not for you.
I care for all my clients very deeply but the estate plan is actually for the people who my clients love and care for who are going to be left behind grieving. For some of my clients they are looking after their parents’ affairs and we have helped them through horrible time of their life to get everything all sorted.
So I am evangelical about estate planning because I often get asked at bbqs what is the biggest financial planning mistake? My answer is always “Not having a plan and all your paperwork in place”.