After we pass away, it becomes the duty of our loved ones, legal advisors and business partners to make decisions about arrangements and carry out our final wishes.
For high net worth individuals (HNWIs) and business executives, these activities can be particularly extensive. From managing estates to notifying associations, family members and other parties have a lot to deal with - during what is an already difficult period.
When HNWI and business leaders fail to have their affairs in order, they make these processes even more complicated and risk not having their wishes carried out.
Based on her experience serving as an executor and helping clients prepare their end-of-life affairs, BDO Family Business Lead Partner Susan Rix and her team have developed a Family Business Personal Information Register, which helps people compile all the essential information required by the key parties. Below Susan has offered some insights into how individuals can better manage their information.
Why is it important for HNWI and executives to ensure their affairs are in order? What information should they consider?
When someone passes away, their family, successors and executors need to know which arrangements to make, how to manage the estate, what additional actions they need to take to close the necessary accounts and so on.
Many people think mostly about wills and codicils, but there's so much more. For example, where is the deed to your house? If it's in a safety deposit box, where is the key? Who are the trustees to your property, and where are they located?
This also includes wishes for funeral arrangements - details that aren't always covered in wills. Do you want a Christian rite of burial? Which hymns? Do you want to be cremated?
Today's digital activities add another layer of complexity: When you pass away, what happens to your online social profiles? Will anyone have the access information so they can shut down these accounts?
These modern platforms are easy to forget because they're not what usually comes to mind when we consider end-of-life arrangements. Individuals need to consider all of these little things - in addition to the larger arrangements like managing assets and business successions.
What happens if they don't have their information and intentions clearly in place?
For some things, there are processes in law to figure out ownership. But there are also elements that could have a negative impact on businesses, for instance, if they're not laid out ahead of time. What happens to day-to-day operations if someone suddenly dies?
Furthermore, there can be financial costs, for example, if people don't know you have funeral insurance, your estate might unnecessarily have to pay those fees.
It's not just an inconvenience or a financial matter - there's also an emotional impact that can have a long-term impact on family dynamics.
Some people know there's going to be a problem. They think, "I don't want to deal with it before I die, so I'll let them sort it out after". That's when you find things become very bitter and you have siblings that never speak to each other ever again and all those unpleasant consequences. Lawyers get involved – at a significant cost.
Who needs to be informed about the whereabouts of critical information?
Ideally your accountant, lawyer, perhaps executor of your will would have access to this information. Think about the people who need to make the decisions and arrangements right after you pass away - they're the ones who should have everything on hand.
When should people start preparing their information?
Sadly, it doesn't matter how old you are - anyone can meet with an untimely death. The older you are, the more complicated your life tends to be, but even young people have Face Book accounts and all those sorts of things. How would anyone know how to get access to those?
Our suggestion is to gather this information at the same time you set out a will. Everyone over 18 should have a will. We know that doesn't happen, but once you start to buy a house, get married, or have a long-term relationship, that's the time you should make a will and start to get all of these things in order.
These days, we're seeing a lot of people still on their own, with no spouse or partner to take responsibility for these issues. In these cases, it's particularly important to have your affairs in order.
Another thing to consider is dementia, particularly as the population ages. What if you're still alive, but can no longer communicate your wishes or provide this information? That's why it's so critical to collect all of these components early on.
What strategies do these individuals typically use to put their affairs in order? Have you found that most are sufficiently prepared?
Most people are not well-prepared. A large percentage of the population doesn't even have a will - and certainly not this type of comprehensive register. They're just leaving things to chance or for other people to figure out the arrangements.
Also, if you get married, get divorced, have children and so on, you need to update your will. People often forget to update their information when big life changes occur.
How can they make sure they have everything properly arranged?
At BDO, we offer a Family Business Personal Information Register, which helps people compile all of this data. There's so much to think about that it can be overwhelming - this document guides people through the process so they can make sure everything's covered.
It's kind of like doing a tax return. You know you have to do it and you just don't want to go through the process, but you breathe a big sigh of relief when it is complete.
This tool is designed to help you do that and for us to be able to assist you in that process. That way, you can have the peace of mind that your affairs are in order, even if the unexpected happens.