Why Accountants should Lead the Estate Planning Converstion for SMEs

Of the 50 % of SME’s I meet with wills, most are inadequate. Usually because the lawyers or the clients haven’t properly understood the structures in place.

Recently, a client with a very successful business said everything was in place – his usual lawyer had done his wills. Based on past experience, I asked to see a copy – and when it arrived it was a basic 2 page will. Problem was he didn’t own any assets, they were in trusts and a company. This combined with a second marriage and children from a combination of 3 parental pairings ( at different times ) meant his will would have been destined for court .

Having given him the “good news” that they were ineffective we set about understanding his intentions regarding his current spouse and how the estate would be divided up one she passed away. The complexity was creating a succession plan for the entities that would pass beneficial control to the spouse and then the kids ultimately and ensuring the spouse couldn’t alter the succession plan after the husband died.

It took us a lot of creative thinking working with the accountant to create a structure which involved:

• Adding testamentary trusts for each child as default beneficiaries to the trust
• Having the wife and accountant become trustees of each of the kids TTs to ensure the husband’s intentions were followed
• The shares in the company to be left to the kids TT’s .
• Added multiple back up appointors to the trust to mirror the controls required via different succession stages

This strategy ensured:

• The kids were protected
• The wife was protected as a beneficiary via the kids TTs
• There was succession
• The accountant played a vital role as an independent trustee

We could then brief the lawyer about the overall strategy knowing it worked at a corporate level. We also took advice in formulating the plan re changes to the entities control provisions.

Unfortunately, all too often, accountants aren’t involved in the process and as a result lawyers do not receive a proper brief (through no fault of their own).

The accountants I work with are now getting used to playing an integral role in designing the estate plans for their clients and remaining a central figure in the ongoing management of the estate process. The clients love the outcome.