Using a will to cement long-term client relationships

Drafting and advising someone on a will not only have the potential to protect precious family relationships and save money, but can vest a critical advice relationship between an intermediary and a client. David Thompson, Legal Adviser at Sanlam Trust, says there are few client interactions as profound in gaining personal information about a client as the drafting of a will, and herein lies the opportunity.

“The contents of a will have split families, turned siblings against each other and have led to the wasting of inheritance money on unnecessary court battles. And, whereas people often draft a will because they want to avoid inheritance battles, a well thought- through will plays a major part in anyone’s financial planning. If poorly drafted it can cause disputes and unimaginable trauma.”

Thomson says clients, in an attempt to express what they would like to happen to their possessions after their death,   have to disclose a lot of personal information to their intermediary. In taking the instructions to draft a will, intermediaries have an opportunity to establish the foundation for a long-term relationship with their client and build lasting trust. The opportunity will also lend itself for further discussion about the client’s investment and insurance portfolio too – The discussion.”

Thomson says that intermediaries can use this discussion to prepare the ground for proper estate planning. The most likely solution from an estate planning exercise is pure life cover to ensure liquidity within the estate to pay executor’s fees; estate duty; debt; CGT & other taxes. In addition, he says, intermediaries should be encouraged to discuss with their clients the possible need for an inter vivos trust and to clearly explain the difference between an IV trust and a testamentary trust. “Furthermore, you will do well to advise your clients on the safe custody of the original Will to offer peace-of-mind.”

Thomson encourages a discussion on potential executor’s fees and who to appoint as executor and/or trustee. Clients don’t always understand the responsibilities of

an executor and the time consuming effort it takes to finalise an estate. Appointing a family member or friend without the necessary expertise, might not always be the best decision. In addition, clients with loved ones living overseas will have questions about foreign inheritances and exchange control. The exemption from estate duty on retirement funds is also an important aspect of estate planning.

“Clients will, generally, welcome a simple calculation showing their potential exposure to estate duty and capital gains tax and whether they have the means to pay for these expenses and taxes. Most intermediaries have access to a liquidity calculator or software to help them calculate this. The importance of  having sufficient cash available to the estate and the trust set up to, for example, look after minor children cannot be underestimated. Funds may have to be provided for a lot longer than the client initially believes- experience has shown that to be the case quite often. Proper estate planning will give you a much better idea of how to address these concerns,” says Thomson. Intermediaries may offer holistic estate planning services or have access to legal consultants to help them do this.

Apart from the abovementioned, other questions may arise from the financial statements (personal or business) of the client. “Any debts & liabilities of the client should be settled when he or she passes away, and there are a variety of insurance solutions for this”.

However, Thomson cautions against overwhelming clients, as the priority is to prepare the will and get it duly signed & witnessed. “Thereafter you can prioritise some of the other important issues in a follow-up meeting. Once an estate analysis and plan has been complied most of the work has been done as it can conveniently be used as basis to update every now and again with the client’s fresh information.”

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