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How to hamstring your Financial Planner

And rob yourself in the process!

Financial Planner, Lynette Wilkinson, shares how she regrets accepting a commission from a client to create an estate plan – without being able to do a comprehensive review of their assets … and why she has resolved not to take on such an assignment again. She gives tips on how to make the most of your relationship with your planner.

Good intentions pave the way

One of the most satisfying things about my role as a financial planner is to guide clients in achieving their intentions with their money.  One aspect is creating an estate plan that will give effect to their wishes, as their legacy to their family.   This goal is difficult – no, impossible – to achieve when your client is reluctant to share details of his assets.

My clients were well-intentioned.  They shared a vision of wanting to teach their children sensible money management and to leave a legacy for at least the next five generations.  Some of their assets are businesses that could well provide both an income and employment for their children and grandchildren in the future.

Their aim in meeting with me was to devise an estate plan that included reviewing their existing trust.  In the event of their simultaneous deaths, they wished their assets to be transferred into that trust. They brought to our first meeting their wills, their existing trust deed and their marriage certificate, to show whether they had wed in community of property or out of community of property, and whether the latter was with or without the accrual system – of course, this has a huge impact on the estate plan.

Disclosure makes the deal real

Unfortunately, while their goals were certainly noble ones, I was in no position to guarantee that those goals would be achieved. Why not?  My clients simply did not want to disclose detailed and relevant information about their assets and liabilities. I did not know the values of the assets, or whether they were owned or ceded. In the absence of these facts, I was unable to give comprehensive feedback, as I was not able to understand the values of assets, and the cash flow and tax implications of any actions we might recommend.

Why does this matter?

Let’s take the strategy of transferring the couple’s companies into trust on death.  Without knowing the values of the assets, I am unsure how much Capital Gains Tax would be triggered, and if so, how much liquidity (available cash) there is in the estate to pay that tax.  In addition, Estate Duty is likely to be levied against the estate as a result of the transfer of these assets into trust.  Were there to be insufficient funds to pay these taxes, the businesses might have to be sold in order to generate liquidity to satisfy SARS.

Were the business, however, to be sold rather than transferred, the monies could then more easily be placed in the trust, without attracting the same amount of tax.  Alternatively, I could advise that, in the case of one spouse predeceasing the other, the best route would be to bequeath the companies to the surviving spouse, thereby taking advantage of the Section 4(q) deduction, which exempts spouses of any Estate Duty on that asset and defers the Capital Gains Tax to the second dying spouse.

Partner with your planner

Of course, you can go online or to your local bank branch, and obtain an off-the-shelf Will – there you will be asked no questions, and any complications that may later emerge will only then be able to be resolved … often to the detriment of the estate and its beneficiaries.

I am also aware of a local legal company that charged R40,000 to redo a trust deed, and who followed much the same superficial process of not even looking at the wills, but simply creating a trust according to the clients’ stated wishes but without flagging any of the potential pitfalls.

The result of this kind of approach is, ironically, that the intentions of the clients’ are not fulfilled.

Clients approach financial planners because we hold the expertise that they most often do not.  It is therefore my moral responsibility to advise my clients in the best way possible … and that cannot be done with just a slice of the picture.

So, here are some tips on how to make the best of your relationship with your planner, especially regarding creating an estate plan:

  1. Understand that an estate plan cannot be created without your planner understanding your financial plan – the two work in tandem.
  2. Build a relationship of trust with your planner that will allow you to feel free to disclose the necessary information for her to devise your own unique financial and estate plan – she wants your intentions to be fulfilled, so help her to facilitate that.
  3. Share your dreams for your family and the generations that follow with your planner:
  • Is the intention for your businesses to generate income or employment or both for your children?
  • How much of the family’s wealth will the children use?
  • What is the purpose for creating generational wealth? To teach your children money management? To enable your children to be educated? To provide capital for their own businesses?

Knowledge of these intentions will allow your planner to set up your affairs practically to meet your goals; for example, a drafting a ‘family constitution’ will communicate to future generations what grandmother or grandfather’s intentions were in creating the trust.

  1. If you already have a trust, don’t allow anyone to review it unless they also want to understand your finances and to see your will.
  2. Partners must be in agreement regarding both their intentions and understanding the role and value of a financial planner.

A review of either a will or a trust deed is of no value to the client (or the planner, for that matter) when done in isolation.  You will understand then, my reluctance to take on any future requests to do so without an understanding of my clients’ assets and liabilities, and a broader view of their finances.


lynette-wilkinson-chartered-wealth-solutions-retirementLynette holds a CERTIFIED FINANCIAL PLANNER ® status and obtained a Post Graduate Diploma in Financial Planning from the University of the Free State in 2007. She completed an Advanced Post Graduate Diploma in financial planning, specialising in Estate Planning and Risk Management in 2012.

Lynette keeps abreast of the latest industry changes through her membership of the Financial Planning Institute of Southern Africa (FPI), the Society of Trust and Estate Practitioners (STEP) and the Kinder Institute of Life Planning.

Lynette believes in real relationships.

Her professionalism and empathy assist her in the discovery process to define her clients financial and lifestyle goals, allowing her to create a global and strategic financial plan for their unique needs.

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