“Get your affairs in order.”
Ever see one of those old movies where two guys challenge each other to a duel? Pistols at dawn? They are given those extra few hours to get their final bills settled, since one of them is likely not walking away.
No one is fighting duels anymore, but your clients should consider organizing their finances to make sorting them out easier for their heirs when the time comes. It’s good for your client. Their heirs. It can lead to more business.
This article doesn’t address estate tax minimization. The focus is the organization and paperwork connected to awareness of all clients’ assets. If assets are never found, the “cost of dying” can be considerable for your client and their heirs.
There might be assets that are lost or never found. If their executor is an attorney, the time they spend organizing the estate is probably billed by the hour.
Centralizing at one firm.
It makes lots of sense. All the savings, insurance and investments are in one place. They get a consolidated statement. They have a financial plan listing their assets. They get you. This is the most obvious business connection. It makes logical sense, too.
List of where the accounts are held.
Let’s assume your client won’t consolidate. Maybe they can’t. Some securities can’t be held at your firm for some reason. They need a list of what assets are held at which institutions. Your performance reviews can often include “assets held away.” At least this lets you know where they have other accounts. This can be very helpful for their executor.
They might have fully paid policies. Maybe term ones, too. The life insurance companies need to be notified when the insured person has passed away. Ideally your client has a folder containing the policies or at least a list of companies, policies and account numbers. If you aren’t holding these policies, the name of their insurance agent will be needed.
Securities held away.
Dividend reinvestment is a “set it and forget it” situation. I was called by a former client about a year ago. “Do you remember you sold me (x) stock 35 years ago? I think I should have more shares than I’ve got.” Of course I helped her.
The solution is often twofold: The executor contacts the shareholder relations area of that firm. Another solution is to look for the 1099 because dividends would be taxable. Based on the amount of the dividend, you can back into how many shares they own and where they are held. You want to avoid this problem. Bring those holdings in house.
Safety deposit boxes.
As people get older, some get forgetful. Years ago, I had a client who passed away. His heirs thought he had more money, because he often spoke about selling securities and buying gold bullion. If he did, he never told them where to look. Clients need to leave safety deposit box information someplace it can be found.
Your client might no longer be married, yet they didn’t think to take their ex off the retirement plan as the primary beneficiary. Their surviving spouse won’t be laughing about this oversight. Meet with your client periodically to review beneficiary designations.
Who gets what?
The Kevin Kwan book “Rich People Problems” talks about a death in a family where the heirs went around the house putting stickers under furniture and vases, so they could make the case “He said I would get this after he died.” Your client should leave a list of how jewelry and other high value items should be distributed upon their death.
Don’t be Afraid to Step In After the Fact
Years ago, I heard from a friend whose surviving mother had very complicated finances. This involved securities in certificate form and unpaid tax bills. On her deathbed, her last words to her son were: “I’m sorry about the (financial paperwork) problems I’m leaving behind for you.” Sorting through everything literally took years.
You might feel: “My friend is grieving. I don’t want to intrude. It will look like I’m sniffing around for business.” It’s a noble sentiment, but it’s wrong.
I was told by a manager the story of an advisor in the same position. They stayed away. The friend became distant. After time passed, the advisor asked the friend why their relationship had cooled. They explained: “After my spouse died, I was in a difficult situation trying to sort through the finances. That’s not my area. You know about this suff. You could have helped me, but you never offered.”
You can offer help without appearing predatory.
— Check out 7 Things Your Client’s Estate Plan Might Be Missing: Morningstar on ThinkAdvisor.