Estate planning can sound like a daunting task. However, within the dynamic of the client and the team of financial professionals, I have found if you keep it as straightforward as possible, you are capable of achieving great success.
A process I learned through membership in the Millions Dollar Round Table (MDRT) is the KIS principle — keeping it simple. Taking what can be a complex procedure and simplifying it benefits the client and the entire team. I find that focusing on a few key areas can help:
The core team. The first step in the estate planning process is defining the team and setting a clear understanding of the role of each member. The team consists of the people involved in the planning process, which can include accountants and/or attorneys. Once you have a team in place, it’s time to begin.
Make sure everyone knows what is to be communicated and to whom. I generally find that I bring the expertise on financial products that support an estate plan, such as life insurance. An attorney on your team has knowledge of specific states’ laws and how to properly write legal documents, such as wills and trusts. An accountant is also a key member of the team and offers expertise on state taxes. The client may already work with some of these professionals, but it’s a good idea to have your own team at the ready. When working with an attorney and an accountant you’ve referred, make sure to provide your clients with bios and any additional information about the other professionals that’s helpful
Fact finding. Another initial step in creating an estate plan is making sure all parties are involved from the beginning. Whoever the decision makers are, make sure they are present when you meet. In most cases, having both partners and key family members there can prove beneficial because they can consider the value of this type of planning as a group.
See also: Find Your Fact Finder
Start by reviewing your clients’ insurance needs and potential tax liability by conducting a whole needs analysis. This is the time when you calculate how much insurance might be needed based on several factors: the clients’ annual gross income, the total annual income needed by each partner in the event of one of their deaths, as well as the number of years they’d like to provide this income to the survivor.
Communications and expectations. Not only is it critical for a client to know what it takes to put an estate plan in place, but it’s also just as essential for you, as the financial professional. Anticipate where the bottlenecks are in the process and disclose them early. Manage expectations by providing the appropriate amount of information. Give your client a sense of how long the process will take. Keep the whole team informed on what they should expect every step of the way to reassure everything is in place.
Explain the underwriting process so that challenges like obtaining an attending physician statement are clear and you build an understanding of where assistance may be needed. Getting information up front can make a big difference and overcome some hurdles that can surface.
It is critical to have a very clear understanding of the health of those being insured. For example, if a client had an illness six years ago, but didn’t share this with you, the whole planning process will be slowed down once the information is revealed. In the initial meeting, get complete disclosures on even the most insignificant of health issues. Ask probing questions when you are pre-qualifying them.
Make sure the clients understand that payments for life insurance that supports an estate plan must come from a separate or trust account. Once the account is established, the trustee can make premiums payments to the insurance company.