The death of a client does not mark the end of the advice journey. It often signals the start of one of the most complex, emotionally challenging and administratively demanding periods a family will experience. David Downie, Technical Manager at Aberdeen Adviser details how financial advice professionals are uniquely positioned to connect the planning undertaken during a client’s lifetime with the practical realities that follow their death.
Families are often required to navigate unfamiliar processes, interpret legal documentation and make significant financial decisions. When bereavement is handled poorly, it can lead to disputes, confusion and the loss of long-standing client relationships.
However, when managed effectively, it provides a meaningful opportunity to demonstrate the value of holistic advice – guiding families through a difficult period, reducing complexity and building trust that can strengthen relationships across generations.
Dealing with the estate
Becoming a Legal Personal Representative (LPR) is an onerous task.
Many executors are family members or friends who have little experience of estate administration. They are often unaware of their responsibilities, the legal requirements placed upon them, or the potential personal liabilities they may face.
The result is a heightened risk of delays and errors. This can be both financially costly and emotionally draining.
LPRs are responsible for administering a deceased person’s estate in accordance with the law and the terms of the will (if one exists).
Their duties include identifying and valuing assets and liabilities and applying for probate or letters of administration where there is no valid will or executor.
They must also ensure that all debts, taxes (including inheritance tax), and expenses are settled before distributing the estate to beneficiaries.
Even the distribution itself can be fraught with difficulties against increasingly complex family structures, including blended families, multiple marriages and estranged relatives.
Any actions LPRs take must be in the best interests of the estate, exercising reasonable care and diligence, and keeping accurate records of all transactions.
They are also responsible for dealing with HMRC, managing estate assets during the administration period, and resolving any claims against the estate.
From April 2027, LPRs will have the added burden for ensuring that any IHT due on pension death benefits is correctly accounted for and liabilities settled despite having no direct control over the pension.
LPRs will need to gather information from scheme administrators, include the appropriate value when reporting IHT, and coordinate tax payment.
Failure to carry out these duties properly can result in personal liability, making it essential that LPRs act prudently and, where necessary, seek professional advice.
Typical issues that LPRs get wrong include the failure to identify all assets and liabilities, distributing the estate before settling debts and tax, missing HMRC deadlines, and misinterpreting the will or intestacy rules.
Other risks arise from poor communication with beneficiaries, lack of coordination with third parties (such as pension administrators), and not retaining sufficient funds to meet unexpected liabilities.
The role of advice firms
Advice firms are uniquely positioned to support families through these challenges. Unlike many other professionals involved in dealing with the estate, they will typically have:
- A holistic understanding of the client’s financial affairs
- A consolidated view of assets across pensions, investments and protection
- A longstanding relationship with the client, often built on trust and familiarity
This places advice firms in a strong position to provide clarity and reassurance, helping to translate complex financial matters into clear terms.
They can guide executors and beneficiaries through the steps involved in estate administration and set realistic expectations about timescales and outcomes.
The benefit of clear record keeping
Many of the challenges faced during estate administration stem from incomplete or inaccessible information. This is where proactive planning during a client’s lifetime can make a significant difference.
Maintaining a centralised record of key information (such as our legacy ledger) can provide enormous value to the executors, personal representatives and families who are left to administer the estate.
This may include:
- Details of all income and liabilities
- Pension, cash and investment holdings
- Protection and insurance policies
- Subscriptions and memberships
- Records of lifetime gifts and transfers
- Digital assets and online accounts
- Copies of key documents, or where to find them such as wills, powers of attorney, death benefit nomination forms etc.
- Contact details for key individuals and professional advisers
Keeping this information up to date and accessible ensures that executors can quickly identify what needs to be administered and where to find it.
These should be revisited regularly to reflect changes in personal circumstances, family dynamics or legislation.
Engaging the next generation
Bereavement often represents a pivotal moment in the advice relationship with the client’s family. It is typically at this stage that control of wealth passes to the next generation.
Engaging with beneficiaries before and after death can deliver several benefits. Early engagement helps build trust and familiarity, ensuring a relationship is established before the estate is administered and distributed; beneficiaries who understand and appreciate the support they have been given are more likely to seek guidance when it matters.
At the same time, many beneficiaries will have limited experience managing wealth, and may require help and guidance on investments, tax considerations, income planning and protection needs.
Supporting continuity of the financial plan is another key aspect, as helping the next generation understand the rationale behind existing arrangements can improve the likelihood that these plans are either maintained or adapted appropriately following the client’s death.
From a business perspective, this approach also creates future advice opportunities, as retaining assets under management and developing relationships with beneficiaries supports a sustainable pipeline of ongoing client engagement.
From the beneficiary’s perspective, access to professional guidance can provide reassurance, reduce the risk of costly mistakes and help them navigate complex issues such as taxation, investment management, estate administration and long-term financial planning.
Ultimately, this support can enable a smoother transition of wealth, preserve the client’s legacy and improve financial outcomes for future generations.
Summary
While solicitors and accountants play important roles in the estate administration process, it is those providing financial advice who are uniquely positioned to connect the planning undertaken during a client’s lifetime with the practical realities that follow their death.
With a comprehensive understanding of a client’s financial affairs and the ability to provide guidance, reassurance and continuity, advisers can play a central role in helping families navigate what is often an overwhelming and unfamiliar process.
Encouraging effective record-keeping, conducting regular reviews and building relationships with the next generation helps ensure families are better prepared for the challenges that arise when a loved one passes away.
Main image: Will, debby-hudson-DR31squbFoA-unsplash
