Questions
1 From the information given, you have to establish the issues of concern regarding the clients' situation, and to outline how you propose to address them in order to better achieve the clients' wishes.
2 You will need to comment on how the initial information, and that which comes to light the day after the first meeting, might have been gained during that first meeting. In other words, what should you have done during the first meeting to become aware of all the relevant personal information?
3 Mrs Chin telephones you the day after the meeting. What liability might have arisen for you and your licensee if she had not phoned you with the information? Where might the legal liability have arisen from?
Case Study
Mr and Mrs Chin met you yesterday for their first appointment to seek financial advice for their situation. Some of the key issues arising from the data collection process you conducted during the meeting are shown below.
Mr Chin is age 70 and has 3 adult children from a previous marriage, whilst his wife is 62 and has 3 adult children from her first marriage. They own their home as joint tenants. They each made a will about eight years ago which benefits each other; however they are unsure as to what their wills state should happen if the other predeceases them. Neither has established a Power of Attorney for another party (including each other). Their assets include the family home and around $600,000 of investment capital. They are reasonably comfortable in terms of living expenses and insurance for the foreseeable future..
Mr Chin has been increasingly unwell and has been hospitalised several times in recent years. Mrs Chin said she is otherwise well, although she mentioned she has a heart pacemaker.
At the first meeting you asked them why the house had been bought as joint tenants. They didn't understand the significance of the question so you explained it to them.
The meeting ended well with the Chins accepting your fee and signing an engagement letter. You made a commitment to prepare a Statement of Advice, and to meet them again to present a draft of your recommendations one month from now.
The next day, unbeknownst to Mr Chin, Mrs Chin called you. She explained that she wanted to be sure that her three children receive her share of the assets that she and her husband own. She went on to say that when their relationship commenced about 15 years earlier, Mr Chin brought just $50,000 or so of investment capital to the relationship. Mrs Chin also mentioned that the money for their current home had come from the sale of the house which she and her first husband (deceased) owned. In short, your explanation of the house ownership had kept her awake with worry last night.