Understanding the psychological undertones of estate planning

'Wrapping up a life' and 'winding up an estate'. - Such phrases have a kind of heaviness to it and people will respond accordingly in different ways. The emotional side of estate planning is personal and complex in its own ways.

For many individuals, there is almost as much at stake emotionally as there may be from a financial standpoint. For others, the emotional side may even hold more weight than what they have in terms of their assets.

For families involved, estate planning revolves around a life altering event: the death of someone. Loss of life naturally prompts a host of emotional and psychological responses. The entire process of planning and plan execution needs to make room for the anticipation of a life ending and the real effects that come with the actual event.

Planners almost have to assume more than one role to create the most effective plan - one that ensures that the finalised plan is airtight, well written and structured for the law to take its course, and on the other side of things, handle a highly sensitive human matter with care and respect.

Estate planning: it's a collaborative effort

Holding the estate planning sessions together requires trust. For that trust to be meaningful, mutual respect is key and that involves planning at a pace that is aligned well between planner and client.

With so many complex layers of interest involved, both a planner or planning team and the client are naturally going to approach initial discussions at different levels of understanding. On both ends, a strong interest in achieving a cohesive plan will exist. Both will want an effective outcome. It's in the differences between each side that the ultimate goal can sometimes be lost.

If a client is inclined towards emotion during the process and the planner is not able to effectively manage this, the plan may very well end up lacking something important for a client or ultimately for their families

Achieving the goal involves understanding the full complexity of the client. To hold it all together, there needs to be trust. For that trust to be meaningful, mutual respect is key and that involves planning at a pace that is aligned well between the planner and the client.

Planners need to recognise that a client's knowledge of estate planning may not be at the same level as their own. Planners and planning teams should ideally walk a client through the process, building that knowledge base alongside them. Too much too quickly can be somewhat staggering for someone.

Clients can be overwhelmed easily by the legal jargon and formalised tone of drafting a plan. This can be perplexing and even off-putting. When people feel overwhelmed or uneasy; helplessness and dependence typically come to the fore. A person may even place too much confidence in a planner.

While a planner is in a unique position of confidence, it isn't ideal for a client to cede the power of the process entirely to the planner. Swinging on either side of the ideal, clients can develop too little or too much trust in their planner or planning team.

It's perfectly human for an individual facing a big decision to feel anxious and somewhat uncertain. From this position, people naturally gravitate towards finding surety from individuals they deem to be in a position that's more knowledgeable. This can result in a client asking a planner, 'What do you think is best to do here?'.

This is a tricky position to be placed in and a planner should be cautious. In this instance, all the legal knowledge a planner possesses isn't necessarily the most appropriate kind of power to exercise. A planner can easily slip into an area of dependency and the process becomes more about the plan they will put together on the client's behalf, and less about the client's true goals and wishes.

Thus, both planning and client sides must work together like a team, step by step. Allowing an imbalance will create a disproportionate plan in the end. Balance throughout the process will also amplify trust between the two sides, which is crucial to achieving the desired result.

What defines a good estate planning result?

For many planners and planning teams, an effective estate plan needs to achieve two crucial things. Firstly, to ensure a smooth transition of assets as desired by a client and, secondly, to ensure that the integrity, respect and relationships among family members remains intact during the administration process.

To achieve this, the planning stage must be both respectfully personal and professional.

Factoring in the human complexities of estate planning

The entire estate planning process is destined to be dynamic and cater for complexities. Planners have to be consistently aware of the moving parts and be able to spot the potential flaws that hinder successful progress.

If too many things go wrong during the process, planners may even find themselves taking several steps backwards to correct them. Recognising these in the moment and taking appropriate steps can really help to bolster the relationship in the right direction.

What factors should planners be mindful of?

• How many people may be involved in the estate planning process
  Many clients may opt to take on the expertise of more than one estate planning professional - all with diverse professional backgrounds and areas of expertise. If this is the case, everyone will need to render their services collaboratively if a good result is to be achieved. Conflicts of expertise should be avoided. There is a level of strength in the sharing of different areas of expertise which, when applied well, can best benefit the client as well as the group as a whole.
  
  Likewise, many couples may choose to handle their estates jointly with a singular planner. In such a case, planners will need to manage both with care, as it is likely that the pair won't always see eye to eye during the process.
• Prior inheritance experience
  Some clients may have already had some experience as an inheritor, beneficiary or fiduciary. As a result, there may be existing views on the process of wills, trusts or tax implications. Some may even have stereotypical perceptions of estate planners. As professionals, advisers and planners have prior experience viewpoints on the other side of the table too. Experience affects how people think and. Informed views based on these experiences can work either for or against a planning process. In some instances, where appropriate, intergenerational communication between family members before a client has passed away can be beneficial. This creates open dialogue and can result in a level of transparency that settles any misconceptions that can occur later when a person is in no position to explain or defend themselves. It also helps cancel out the idea that all estate-planning processes are the same.
• Listening and communication difficulties
  Planners can learn a lot from their client's body language. For many of us, we communicate directly this way. It's not just about the words we use. What a person thinks or feels can often be picked up in their body language.
  
  A client may be incredibly anxious during the planning stages with an intense fear of coming to the end of their own life. They could experience great difficulty expressing themselves as a result. It helps to be very aware of the factors that create tension in a person during planning or administrative stages.
• The difficult topic of death
  Clients and planners alike may struggle with this. Both will be face to face with the topic of mortality - the client's own inevitable demise, and in the background, for a planner, this may surface feelings of their own for the planner. Both planner and client may feel discomfort, but this shared viewpoint is not altogether a bad thing.
  
  It's absolutely fine to admit that neither of you are comfortable talking about mortality and that you share some anxiety or levels of fear about it. It's also okay to show a little vulnerability on the subject. By being open and honest, this can actually be helpful. In a psychological sense, this practice helps to significantly reduce one's fears. So, in an estate planning set up, this may be helpful for the process too.

Other obstacles may also include:

• Personal challenges of the past, such as a troublesome employment history, situations of bankruptcy, divorces, tax issues, potential lawsuits or run-ins with the law, and so on.
• Potentially precarious family relationships.
• Mental health issues of a client or related family member.
• Presence of substance abuse or addiction in the client or from someone they are related to
• Presence of attitudes (possibly that of a beneficiary) that lean towards an entitlement to wealth
• Distrust, anxiety and fear around dealing with a planner or adviser, the estate planning process itself, costs and tax.

Sensitivities and vulnerabilities come out in all sorts of ways and if inappropriately managed can, no doubt, lead to negative outcomes.

The added layers of taxes, laws, assets and processes both on local soil and, where applicable, on international soil contribute to a challenging process for both advisers and estate planning teams, as well as the clients themselves. In addition to this, the coping capacity of inheriting parties and beneficiaries feature in the mix at various stages too.

From the word go, the process is both a sensitive and complex one that can easily go awry without the right doses of respect, trust, empathy and dignity from all concerned. If scenarios, circumstances, the various human aspects and potential obstacles are correctly read at the right times, winding up an estate will stand the best chance of achieving all of the desired goals. This brings ultimate peace of mind for any client and their families.

The human aspect is part of the entire estate planning process - from the very first meeting with a client and straight through to the administration stages. Practicing greater finesse in going beyond the stringent rules and regulations means that planners can enhance a process that leaves little room for the very real personal elements that aren't avoidable. Tactfully handling the human side of estate planning creates an enhanced estate planning result. And this, everyone involved can better benefit from.

Sources:

1. https://www.wealthmanagement.com/estate-planning/human-side-estate-planning-part-1
2. https://www.wealthmanagement.com/estate-planning/human-side-estate-planning-part-iii

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