How to Successfully Prevent Clients’ Biggest Mistakes around Estate Planning

Estate planning can cause rising tensions within a family. It’s not necessarily that people don’t know what needs to be done (though that can be an issue, too); it’s that the decisions are emotional and often difficult to think about.

So how can you make the process as painless as possible for your clients and help them start the conversations that will make things easier for them and their families down the road? This is what today’s guest, Bill Green, tackles in today’s episode.

Bill is a Certified Financial Planner, Financial Management Advisor, and Chartered Financial Divorce Specialist. With over 29 years of experience in the industry, he holds his Chartered Investment Manager designation and is a member of the Nazrudin project, an international advisory think-tank. Bill is the author of two books and now works as a fee-only financial planner on an hourly basis, largely offering second opinions and financial plans for other advisors’ clients.

What You’ll Learn in This Episode:

  • The biggest mistake people make in tax and estate planning (6:55)
  • Bill’s response to the idea that working with a financial planner is too expensive (10:50)
  • How Bill helps his clients involve their families in the estate planning process (12:35)
  • Strategically using charitable donations (18:15)
  • How Bill successfully combats misinformation about personal finance (22:10)
  • Why Bill believes mentorship is critical to both new and experienced advisors (31:10)

Links and Resources:

Bill Green

The Success Tax Shuffle

I Am… Three Little Words from A to Z

“Just because something worked for somebody doesn’t mean it will work for you.”

“We are stewards for our economy and stewards for the people out there who aren’t as fortunate as some other people, and I think that the people that have the money should share with the charities that are out there.”

“We all go to school and get an education, but they teach us how to get a job. They don’t teach us how to manage money.”

With nearly 30 years of experience in the financial services industry, Bill has the experience — and plenty of great anecdotes — to help dig into estate planning and the joys of pure financial planning.

Below, we’re sharing three key ideas from this episode:

  • The biggest mistake people make in tax and estate planning
  • How Bill successfully combats misinformation
  • Using charitable donations strategically

For the rest of the episode, find the podcast on iTunes or Stitcher, or hit the link above.

The biggest mistake people make in tax and estate planning

The biggest mistake Bill sees clients making in their estate and tax planning is approaching issues with a one-size-fits-all mindset.

Often, people get most of their financial advice from two sources:

  • Family and friends: Clients’ loved ones are full of ideas and suggestions about what they should do with their money. But as Bill puts it, “just because something worked for somebody doesn’t mean it will work for you.”
  • The media: It’s easy to forget that the business model of most media companies is to make a profit by selling advertising, not necessarily helping their readers. And one great way to get more people to view their content is by eliciting strong emotions like excitement and fear — emotions that are terrible for consumer behaviour when it comes to finances.

The problem with these kinds of advice is that they’re generic. And in financial planning, advice specific to the client is key.

Even relying on the advice of just one professional isn’t a good idea. A lawyer will give a legal opinion while an accountant will give an accounting opinion; ideally, people should speak with both to get a well-rounded perspective.

Or better yet, they should work with a financial planner — who might not know all the answers, but who can certainly see the bigger picture and connect them with the right professionals who can help.

How Bill successfully combats misinformation

While you can’t control the types of misinformation your clients will come across as they move through the world, you can help them avoid making costly mistakes based on that misinformation.

As Bill puts it, “the job is to educate them and hold their hand.” And that takes some work.

Listen to their concern

The first part of educating is really listening. In order to hear and accept that you have a better approach, your clients need to know that you actually hear them, especially if they’re really interested in or scared about something that they heard from a friend or radio show host.

For example, Bill has seen a lot of people worried about probate; and while it certainly can be a concern, he’s found that it’s not actually what they should be focusing on the most when planning their estates. But since the prospect of someone’s will being questioned or challenged can be frightening, he’ll always start by hearing out the client’s concern first.

Give real-life examples

Next, Bill loves giving real-life examples of scenarios he’s seen with past clients — the pitfalls of joint ownership, tax bills being triggered that shouldn’t have been, and OES clawbacks because people did something at the wrong time.

He can explain to his clients how he’s personally seen the issues that the capital gains tax and deferred tax liability have caused when people have not adequately taken taxes into account. These personal stories hit home much easier than statistics or facts and help him explain important concepts in a way that clients can understand.

Using charitable donations strategically

Bill’s favourite way of avoiding huge taxes on clients’ estates is through charitable donations. Where do you think your clients would prefer their money go — to the CRA or to their favourite charitable cause?

And from Bill’s perspective, there’s no upper limit — “the bigger the donation, the better.”

It’s a piece of estate planning that is often forgotten; lots of people make annual donations or give when someone knocks on their door, but they don’t think about the ways they can leave something behind to the causes they love. And as a bonus, donations can significantly help reduce tax liability.

Hint: Encourage clients to get their families involved in setting up a charitable donor fund and get them to decide together where the money goes. It teaches strong values and helps their family better understand their wishes and goals for the money.

Bill is particularly fond of in-kind donations, especially when the amount is over $1,000. Help clients identify a share in their portfolio that’s had a big capital gain and suggest they donate that in kind to offset tax liability.

Consider using an asset that has appreciated a lot — particularly a T-SWP or T-Class (depending on the provider), which allows an investor to withdraw up to a certain percentage of their capital as a return of capital resulting in little to no tax paid on distributions. Then they can donate that investment in-kind which eliminates all capital gains so the charity avoids paying any tax on the donation received.

It’s also important to remember that donations made in a client’s estate can be carried back to the year prior to death to get back taxes that have already been paid — Bill has even seen cases of clients able to eliminate all of their tax liability through donations (and have money to leave to their families).

Hint: To hear more on this topic, listen to our episode on estate planning according to clients’ values with Sterling Rempel.

For more helpful advice from Bill, catch the full episode and hear about the large family meetings he facilitates for his clients, how he combats the misperception that hiring a financial planner is too expensive, and more. You can find the show right here on this page or subscribe on iTunes or Stitcher so you don’t miss any episodes.

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