Plan for the unexpected

Finn Kelly, CEO, Wealth EnhancersA recent personal tragedy has reiterated the importance of being properly protected.

Finn Kelly, CEO, Wealth EnhancersA recent personal tragedy has reiterated the importance of being properly protected.

I am a big believer in learning from your mistakes. I am also someone who finds extreme clarity when times are at their worst. I'd like to share with you some very personal experiences I have had with death, as I hope some people can learn from some of the things I have observed.

My 64 year-old father-in-law-to-be (Paul Riegelhuth) recently died unexpectedly following an accident at home. This was the second time in my life that I understood the word "tragic". I can't describe how hard the last month has been. Paul was more than just a father to my fiancé Sarah Riegelhuth; he was a mentor, business partner and friend.

It is the first time that I have not had an answer or a solution to help Sarah. It gives me so much grief that I won't be seeing Paul walk Sarah down the aisle in six weeks' time and see a smile on her face that only her dad could bring.

During this experience I have learnt so many things about the importance of having a very thorough estate plan and also the role an adviser plays during this horrible time.

In chronological order of what I experienced:

Power of Attorney (Medical)

When someone is in an ICU you can expect that you may need to make some important medical decisions. In any family there are definitely going to be some more competent and suitable people for this huge responsibility. What I learnt: Having a medical power of attorney alone is not enough - you need to tell the person responsible what you would like to occur in different situations. You also need to tell everyone close to you that you have appointed that particular person in order to prevent conflict if the situation ever arises.

Power of Attorney (Financial)

Unfortunately, when you are in a hospital bed the rest of your life doesn't just stop. You will still have a number of financial commitments that need to be addressed. The last thing your family needs at a time of sadness is the extra burden of dealing with financial commitments without having the appropriate power to address them. What I have learnt: The person you appoint needs to have an idea of your personal financial situation. Many people are disorganised (or at least operate within their own organised chaos!) when it comes to their finances and it is extremely hard for any outsider to understand your situation. Have a place where you keep all your financial records and accounts, and let the financial power of attorney know so they will know where to look.

Business planning

If you are a key person in your business you need to train someone else in the particular things that you do so the business can keep on running when you don't. What I learnt: The importance of having a good relationship with your banker, as well as having cash reserves in your business, will help you get you through tough times.

Trauma insurance

This insurance provides a lump sum payout on diagnosis of a list of defined critical illnesses or injuries. What I have learnt: In our situation, it was very comforting to know that there was such a policy in place. If Paul had woken up and needed a particular expensive treatment or rehabilitation program, we would have had the financial resources to pay for it. This was an experience that highlighted to me the importance of having a strong adviser relationship, as they will be able to educate you on your options. In many cases your family does not know what insurances you may have.

Wills

Up until a couple of years ago, Paul had only a very, very old and basic Will in place and the outcome in that case would be extremely different from what his actual wishes were. So if you haven't already, the first thing you need to do is prepare a Will immediately. It is not okay to say, 'You will get to it'; arrange for your Will to be prepared now.

What I learnt: It is all well and good having a Will, but you need to explain why you have structured things in a particular way as unfortunately, people will often have certain expectations and if they are surprised, this can cause a lot of conflict with the other beneficiaries. It is a lot easier to explain all of this when you are alive as you can provide your reasoning. You also need to think about how you have structured the Will and the ongoing implications this will cause for people. If you have family members that do not like each other, do not force them to have to own a property or business together, etc.

Executor

Appointing an Executor of your Will is very important as they have the responsibility and discretion to execute your wishes. What I have learnt: You may think it is a good idea to appoint your most responsible family member but you are burdening them with a huge and emotional responsibility which could cause extra stress when they are already grieving. I have since changed mine to a trusted adviser and friend who understands my situation extremely well.

Statement of Wishes

This is not compulsory in a Will but I believe it is the most important document. It outlines why you have structured your Will in a particular way, the intentions behind certain things and also how you would like your funeral to be structured. Think of it as your last chance to speak. The great thing about this document is that you can update this document regularly without necessarily having to update your Will. This is particularly useful if you are not inclined to speak with your desired beneficiaries at the present time, but at least enables you to explain yourself if the Will is executed. What I have learnt: This simple document can alleviate so many concerns, unknowns and stop feuding between beneficiaries. As an aside, organising a funeral is a horrible responsibility to have and I have seen people constantly second guess themselves as they don't know what they should do. If you can provide them with some simple guidelines (like whether you'd prefer to be buried or cremated) you will ease the burden on them at the time.

Life insurance

When you die you want to ensure that you don't negatively affect your loved ones financially, as well as emotionally. Life insurance is one way you can fix this. What I have learnt: When a loved one passes away, you feel incredible loss and you feel entitled that you should receive something in return. It is not because you are greedy or money focused, but it is extremely hard to have to give something up that you love so much and not get anything in return. Leaving a sum of money is a small consolation but still a very powerful way to alleviate your loved ones' feeling of loss. Of course, if you do have debt or ongoing financial responsibilities, it is critical that you have life insurance to cover this.

Business succession planning

Anyone who owns a business needs to have a plan outlining what they want to occur in the business if they are no longer around. Ensuring a buy/sell agreement is in place and insurance policies held will ensure the estates can be paid out for their share of the business in a timely manner.

What I have learnt: It is all well and good having a plan, but you need to educate your family on what the plan involves and who they should be getting advice from should the event occur. Luckily for our family, we were in the same industry as the business in question so we knew what to do, but the other family members had no idea and it made me realise how hard it would have been for them if we did not have the knowledge to run a financial advisory business.

Having an adviser

Upon reflection, I'd say the biggest thing I have learnt from all of this is the important role an adviser can play in a horrible situation. As Paul was a financial adviser himself, he unfortunately did not have an adviser. Luckily, I was able to fill this role for the family. However, it was not that enjoyable for me as I was affected emotionally as well and I did not have all the details of his situation that I would have liked. I can remember thinking how nice it would have been to be able to turn to another trusted adviser who could tell me that "everything is going to be OK financially; remember we have planned for this situation and we know exactly what to do and we will do it for you. Please just focus on grieving with your family."

Please learn from my experiences and make a plan for the unexpected. It is selfish toward your loved ones if you don't.


About Finn Kelly
Finn Kelly, CEO, Wealth Enhancers

Finn Kelly is the CEO and co-founder of Melbourne-based wealth management boutique Wealth Enhancers. He heads the portfolio management arm of the business, and has developed unique client education and staff training programs.

In his former career, Finn spent seven years as an Army Officer in the Australian Defence Force - an experience he attributes much of his leadership ability and business acumen to.

Along with his life and business partner Sarah Riegelhuth, Finn will be representing Australia at the G20 Young Entrepreneurs Alliance Summit in Russia in June. 

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