Baby steps to encourage your clients to start estate planning, P. 1

By Ryan Parker

Bankers Annuity Brokerage

If you can help your clients break the process down into simple “homework” assignments, each of which represents a baby step toward fulfilling the ultimate goal, then they're more likely to follow your advice. It's just that simple.

The notion of estate planning can be overwhelming for your clients, especially when they consider the scope of what makes for a good estate plan. And even though it may sound much tougher than retirement planning, it's every bit as important. And it's your job to not only help your clients grasp this importance, but also to guide them along the estate planning path.

As with most serious financial endeavors, planning their estates is not likely to be high on your clients' list of priorities, especially those who think that estate planning doesn't apply to them since they're not millionaires. Arguably the biggest impediment to forward motion, however, is the perception that the process is long, arduous and tedious.

But if you can help your clients break the process down into simple “homework” assignments, each of which represents a baby step toward fulfilling the ultimate goal, they're more likely to follow your advice. It's just that simple.

Consider beginning the process by assigning these four simple projects to your clients. With each assignment, explain why accomplishing it is so important, and how it will help shape their financial lifestyle now and into the future. In some situations, you may even be able to assist your clients by providing evaluations, documents, etc.
  • An inventory of physical possessions — Ask your clients to create a master list of everything they own — both inside and outside the home — that is worth $100 or more. Set a realistic deadline for them to complete this task, as your clients will likely be surprised at just how much they have. The process could take a while, but it shouldn't take longer than a couple of months to find the time to create such a list.

    Recommend they start a spreadsheet and whenever they have a few minutes of downtime, such as when they're watching TV or sipping wine on the patio, add a few items to the list. They should also devote a weekend to a physical walk through to ensure they've recorded all such item, including electronics, antiques and collectibles, jewelry, power tools, furniture, vehicles and even the home itself.

  • An inventory of intangible assets and possessions — The next task your clients should focus on is creating an exhaustive inventory of non-physical products, investments or assets. Ask them to locate any documentation demonstrating proof of ownership of an item, or anything that makes a payment upon their death. Their list should include everything from 401(k) plans, checking and savings accounts, life insurance policies, annuities and brokerage accounts to health insurance, auto insurance, long-term care and homeowners insurance. They should also include the value or payout of each asset on this list.
  • Perform an annuity and life insurance double-check — As both life insurance and annuities are assets that pass to your clients' beneficiaries when they pass away,review your clients' current beneficiaries in case there's been a life change you were never told about, such as a wedding, divorce, birth of a child, or the death of a loved one. Update beneficiaries as needed. Even if your clients aren't making changes in this area, it couldn't hurt for them to contact the carriers on their policies and verify they have all the correct information regarding how they'd like their assets divided among their beneficiaries.

  • Tally up the debt — Ask your clients to create a comprehensive list of all their debts and payments, much as they did when tallying their assets. This list would include items such as mortgages, vehicle loans, student loans, home equity lines of credit, and every credit card in their name, regardless of whether they carry a balance.

    Investopedia makes a great recommendation for simplifying this process: Remind your clients that they're due one free credit report from all three of the major reporting agencies once a year. This can be a handy tool when determining what they owe to whom. It can also reveal possible identity or credit card theft, or simply identify open accounts that should most likely be closed due to a lack of activity.
In part two of this article series, we'll discuss four more baby steps your clients can take to fulfill the ultimate goal of a solid estate plan.