In this article, we discuss the different ways in which financial technology is transforming the world of estate planning. When a loved one dies, there is, unfortunately, some wrangling regarding that person’s estate. In some cases, this can result in an individual contesting a will, something which can cause an irreparable rift within a family.
In order to avoid this, it’s advisable to be as clear as possible as to who gets what in the event of your death. This is where fintech can come in handy; many softwares and technologies are coming into play in 2022 which are helping people prepare for this. In this article, we explore the fintech out there that is helping people plan for their death in the most effective way possible. Take a look.
What Is Estate Planning?
Estate planning is the process of making arrangements for the disposal of a person’s estate during that person’s life. This should factor in possible changes, including the possibility that the person may, at some point, become unable to make decisions for themselves.
It also involves allocating property and items, as well as calculating ways in which you can minimize the amount of inheritance tax that your beneficiaries will need to pay by using gifts, allowances, and life insurance. Estate planning traditionally requires the services of a lawyer in order to execute and legalize the plan and its contents.
The Problems With Traditional Estate Planning
The estate planning world can be a complex one, particularly when a person holds a considerable number of assets, including property and investments. With the traditional model, the individual would need to work with financial advisors and legal teams in order to keep on top of their estate planning.
This can be something which would run to significant costs in both money and time. This also posed issues in terms of storage and recognition of signatures and legal documentation such as wills, leading to discrepancies which, subsequently, could lead to somebody contesting a will.
An example of this is if a person claimed more than was bequeathed to them within the documentation. These kinds of legal wrangles can be expensive and can, in some cases, take up to 24 months to even be heard in court.
Has Fintech Transformed The World Of Estate Planning?
As technology advances in leaps and bounds, there are few parts of our lives that remain unaffected by digital transformation. From the way we shop to the way we work, we live in an increasingly digital world and, the latest area under the spotlight is estate planning.
Whilst t estate planning has remained the same for many years, in 2022 there’s a new kid on the block in the form of fintech. Short for financial technology, fintech has, in recent years, been transforming a number of industries by streamlining financial processes through technology.
It’s thought that the term ‘fintech’ was first coined by global financial expert, Chris Skinner, in 2005 and, since that time, the word has become an everyday part of our vocabulary. But how is fintech helping?
Fintech Is Cutting Costs
Fintech experts are now turning their hands to estate planning in order to untangle the complexities that many people experience. New generation digital estate planning models allow people to better manage their own estate themselves without having to involve teams of expensive experts.
Fintech companies are prioritizing Direct To Customer (D2C) channels for estate planning. This cut costs by providing a DIY platform and the services of a ‘virtual advisor’ rather than a pricey real-life one.
Added Extras To The Estate Planning Process
As well as making the estate planning process cheaper and more streamlined, Fintech platforms also offer added extras such as spouse profiling, guided customer journeys, and remote notarization.
This ensures the entire process is massively more convenient and improves the customer experience. In return, these fintech companies are able to maximize their own profits through cross-selling and collaboration.
Digital Currencies and Estate Planning
As estate planning is dragged kicking and screaming into the digital world, fintech companies are also exploring ways in which they can introduce estate planning clients to cryptocurrency as an alternative form of investment and bequest.
While any form of estate planning will generally involve real-life assets such as property and valuables, more and more people are beginning to see the benefit of holding digital currencies to pass on to their beneficiaries.
The Limitations Of Fintech
Although digital is no doubt the future for the estate planning industry, this certainly won’t be something that happens overnight. In order to get fully on board with digital, many firms will need a complete overhaul of their in-house resources.
This includes the purchase of equipment and, in a lot of cases, collaboration or partnership with a third party such as a strategic IT service provider. Fintech companies may also find that they face a level of resistance from older clients, who neither understand nor trust advanced technology.
Has Fintech Really Transformed Estate Planning?
Whilst a customer may be reasonably comfortable using digital technology such as a mobile phone app for counting their steps, when it comes to their property and hard earned cash, some may be less keen.
In order to bring technology to mainstream estate planning, there is a considerable hurdle that estate planners will need to overcome. Although many older people embraced technology during the pandemic, taking the plunge into digital finances may be a step too far.
For others, however, the digital model of estate planning offers a simplified way of keeping their assets and documentation accurate and up to date. This can be incredibly important in order to factor in changes to family dynamics, for example, the arrival of a new grandchild.
It also helps to make your intentions clear and appoint somebody to act on your behalf in the event that you are no longer able to make decisions for yourself. So, what do you think of fintech in the future of estate planning? Does it look bright?
If you are interested in even more technology-related articles and information from us here at Bit Rebels, then we have a lot to choose from.