Should my financial advisor and attorney discuss my Will?

15 08 2011

by Michelle Ash, CFP®, CDFA™

Imagine this:  a husband and wife learn that the wife is probably going to pass away in the next few months due to a terminal illness.  While dealing with their grief and trying to enjoy their remaining time together, they also try to prioritize putting financial affairs in order so that the husband has less to deal with after her death.  He will be busy learning to be a single dad to their young children, and helping them cope with the loss of their mother.  Avoiding the hassles of probate and any other avoidable financial issue is a high priority to them.  They meet with their financial advisor, discuss their situation, and ask him to help them make sure everything is in order.  He takes a brief look at things and assures them that all of the accounts he handles will be transferred with no problems.   Unfortunately, the advisor overlooked the fact that the two taxable accounts he manages were not in joint name of husband and wife, but rather were only in the wife’s name.  The couple took the advisor at his word, only to find out later that he was incorrect and assets that should have just simply transferred to the husband would now be tied up in the legal process of probate.  Months later, the husband still awaits the process to be complete.  Adding insult to injury, probate assets are not available to any heirs until probate is finished, so the husband has to go without this money that would otherwise be very helpful to him until probate is done.

A recent blog reader posed the topic of this particular post:  “Should my financial advisor meet with my will lawyer to make sure everything is okay when I die?”

After reading the story I just shared, which is unfortunately true and was told to me by a recent new client to our firm, I have to say that my general answer to this question is – YES, there should be coordination between your financial professionals and your estate planning attorney.

Does this mean that every financial planner should be going with every client to every discussion about a will, trust, power of attorney or any other estate planning document?  Not necessarily.  But it is important to realize that when you spend the time and money making your estate plan, you might as well take the next step and make sure that the estate plan is going to actually be effective once it needs to be.

Components of a basic estate plan

Let’s stop for a moment and define what I mean by an estate plan.  Generally, every adult’s estate plan should consist of a Last Will & Testament which documents what happens to your possessions when you die.  Your estate plan should also probably include ancillary documents such as a health care power of attorney, living will, and durable power of attorney.  These ancillary documents are things that come into effect in the event of your incapacity, not your death.  You might think that incapacity would be pretty rare, but what if you were in a bad car accident and unable to make health care decisions for yourself for a few days?  Who has the authority to do that for you?  A health care proxy (also called health care powers of attorney) can direct who has that authority.  A durable power of attorney indicates who you authorize to make financial decisions for you.  A living will indicates the conditions under which you want to be kept alive if you are either in a persistent vegetative state or end stage of a terminal illness.

Many people hear the term “estate planning” and may think “I’m not wealthy enough to need estate planning.”  True estate planning, however, is about a broad range of issues, including health care (and spending of assets for it), children fighting over money, second marriages, caring for elderly parents, and multigenerational relationships, among other things.  Consequently, these are issues that can affect all of us, not just those one might deem as “wealthy”.

Having the documents isn’t enough

Clearly in my example the couple did make the effort to ensure their estate plan would be carried out as they wished.  Perhaps involving the estate planning attorney, however, could have helped the couple know for certain what items needed to be addressed prior to the wife’s passing.  Perhaps the financial planner and the attorney could have worked together to make sure the planner was clear on what changes needed to be made.

Estate planning work is often extremely complex.  Many individuals develop one or more trust documents to go along with their will.  Some people own businesses and have buy/sell agreements and other contractual arrangements that will take effect in the event of their death.  Every professional has a specialty and while many financial planners have some degree of experience or expertise in the area of estate planning, the ultimate authority on how to carry out the client’s legal wishes after death is the attorney.

Recommended action plan 

My suggestion and full answer, then, would be as follows:

1) Hire an attorney who specializes in the area of estate planning in your state.  Just like a general practitioner doctor is not a brain surgeon, a general attorney is not necessarily a specialist in knowing all of the in’s and out’s of estate laws in your state.

2) Work with that attorney to develop an estate plan that addresses your needs.  It may be very simple; it may be complex.  Ultimately the design is up to the both of you.

3) Tell the attorney up front that you will want their help ensuring that all of the pieces of your estate plan are coordinated after they draft it for you.  It may cost you extra for this assistance, but what’s the point of paying for estate plan documents if they aren’t going to work?

4) Tell your financial professionals that you are updating your estate plan and want their help coordinating the pieces with your attorney.  Be sure to tell ALL of your financial professionals:  investment advisors, accountants, insurance professionals, even your bank, because each of them may play a role in proper coordination.

5) Many attorneys will draft instructions for you that you can take to the financial professionals, telling them what needs to happen.  If your attorney gives you these instructions, provide them to your financial professionals.  If the financial professionals don’t understand the instructions, disagree with them, or have something else that needs to be discussed, give all of the professionals and attorney permission to talk to one another.  You will likely have to sign disclosure forms allowing them to do so, but at least then you won’t have to be the go-between, trying to interpret what each is saying when there may be terminology you are unfamiliar with.

6) When you believe that all of the coordinations are done, let the attorney know what actions have been taken and ask them to check that everything is in good order.  You will likely need to provide the attorney with updated financial statements so they can verify the actions that were taken.  They may charge you extra, but here again, an ounce of prevention is worth a pound of cure.

In person meetings required?

Should these meetings and coordinations happen in person between the professionals?  Maybe; much of that depends on the complexity of your estate situation.  A large majority of what needs to happen can probably be coordinated by email or phone.  But if you have a large estate which will have a lot of complexity, it may be best to put all of the professionals in the same room.  This will allow them to brainstorm the possible solutions, pros and cons of each, and share them with you so that you can determine the solution that fits you best.

This blog article does not constitute legal, tax, or personal financial advice.  Please consult your attorney and/or financial professional for personal, specific information.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP(R), CERTIFIED FINANCIAL PLANNER(tm) and federally registered CFP (with flame logo) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Investment advisory services provided by Paragon Wealth Strategies, LLC., a registered investment advisor.




2 responses

13 10 2011
Randy Coleman


Your post is right on target and timely. Coordination between and among professionals is critical to serving the client’s best interests. The client’s professional team should include the financial planner/advisor, the estate planning attorney, the life insurance professional and typically the CPA or other tax advisor.

Your suggestions regarding the documents other than the will are also timely. The need for the designation of health care surrogate and HIPAA authorizations have never been more important as physcians and hospitals increase their controls over the dissimination of protected health care information.

Finally, and very importantly, the new Florida power of attorney statute that took effect October 1 of this year, requires significantly more consideration by the client and consultation with financial advisors and insurance professionals is more important than ever to help the client determine which powers need to be specifically authorized for the power of attorney.

Your clients should take comfort in knowing that your insights are working for their benefit.

Randy Coleman

23 08 2011

This is a nice blog, people do not discuss coordination of financial professional and estate planners in an average estate planning college course either

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