As advisers, most, if not all of us, would spend a proportion of our time encouraging our clients to seek legal advice in respect of the implementation of partnership or proprietorship agreements when in business with others, as well as the drawing up of documents such as wills, powers of attorney and enduring guardianships. However, when discussing the same topics with our clients – accountants, financial planners and lawyers, we are periodically surprised at the lack of documentation executed and in place in respect of their affairs.
A couple of years ago (back when we could travel overseas), whilst attending a conference in the US, one of the speakers stopped the audience in their tracks with the statement that he revisited his will on his birthday annually. The room looked aghast, probably firstly thinking how morbid it would be to perform such a task on your birthday each year. However, the presenter’s philosophy or rationale behind this action was simple. The details of the will were shared with everyone that was a beneficiary, thus if there were any complaints or hard discussions to be had, these could take place whilst the presenter was still around and alive to respond. It was his opinion that this would limit or avoid disputes post his passing. Furthermore, the commitment to review the will annually ensured that it remained current and up-to-date, another factor that is so important. We hear of some individuals who don’t have a will in place at all, despite holding assets, and in many instances, having kids. We also hear of parties who draft a will during the early years of their lives, only to lock it away, never to be seen again. So this speaker’s approach really did strike a chord.
Another experience highlighting the importance of both proprietorship and estate planning was in respect of a practice that we were selling. We had spoken with the senior partner regarding the ongoing negotiation around the sale with a contract expected any day. Only a couple of days later, we were contacted by another partner in the practice being sold to advise that his colleague had taken ill and was now in a very serious condition in hospital. We were getting to the pointy end of the transaction, with the contract for sale now ready for exchange, however the senior partner was not in a position to perform this task. Upon enquiring, the partnership did not have any written agreement. Furthermore, the practitioner had not appointed a power of attorney or enduring guardian. Thus, we had a willing purchaser, part of a willing seller, a contract for sale, but no way of effecting the exchange. A couple of weeks went by and it was touch and go for the senior partner, however eventually they returned to health sufficiently to get the transaction across the line. This whole scenario was so so so lucky to eventuate, and we weren’t talking about any small sum either. The price eventually paid for the practice was important to funding the next phase of these practitioners’ lives, so it remains a stark reminder of the importance of such agreements.
If these are recommendations that we would make to our clients, it really isn’t any less important for us to ensure we have similar protections in place, both from a professional and personal perspective. Do you have all of these affairs in order? Perhaps also importantly, when were they last reviewed and do they remain current?