Although you may already work with a financial planner and an estate planning attorney, you may not be making the most of their expertise if you haven’t asked them to work together on your behalf.
It may not even seem like they need to speak to each other: Your financial planner helps you organize and manage your finances, and your estate planner provides the guidance and legal documents to handle your property after you’re gone. Each planner does his or her job, dotting all i’s and crossing all t’s, and you’re able to check those items off your to-do list.
In a perfect world, that’s the end of it. But in the real world, your concerns and issues don’t come pre-labeled “financial” or “estate” — where these areas overlap, financial planners and estate planning attorneys can work together to create efficient solutions through coordinated planning.
Architect and Builder
Think of a building project where the architect and builder aren’t communicating. Is the building beautiful, but the roof leaks? Is the building efficient, but over budget? Professionals work much more effectively when they collaborate to put the client’s needs first.
As the “architect” of your estate plan, your attorney meets with you to determine the best way to accomplish your estate planning goals while navigating complex laws on property, estates and taxes. Your attorney takes a look at your situation and crafts a design for how to get your assets where you’d like them to go.
Here, your financial planner assumes the role of “builder,” advising and implementing your plans in the most efficient and effective manner. Your financial planner helps you develop a strategy and monitor your progress in areas of investing, saving, tax and retirement planning.
Unlike architects and builders, whose client relationships may come to an end upon the completion of a project, financial planners and estate planning attorneys often work with clients over their lifetimes.
Photo vs. Video
Your estate planning attorney is in a position to spot big-picture issues. If it’s been a while since your will and other estate planning documents have been updated, there may be significant discord between the plan your old documents are implementing and your current objectives.
You’ve changed; what was once an accurate picture is now dated and inconsistent with your goals. You rely on your estate planning attorney to point out that discord and help you update your documents to meet your current goals.
An attorney’s greatest limitation is that s/he only receives a snapshot of your life — changes in financial status, marriages, divorces, births and deaths may significantly change the effectiveness of your estate plan, but your attorney may not always be the first person that you think to call. Often years can pass before you get around to updating your estate planning documents.
In contrast, a financial planner sees you multiple times a year, and this ongoing relationship can allow that person to view the changes in your needs as they occur. Even when updating your estate plan may be the last thing on your mind, your financial planner is able to point out when it’s time for you to see your attorney to make changes to your plan.
Your financial planner should help explain your long-term goals to the attorney, and vice versa. This kind of collaboration can result in a more individualized, effective plan.
Many times, the plan that best fits your needs is not what is most efficient from a purely financial or estate planning perspective. And while estate planning attorneys and certified financial planner practitioners both must look out for your best interests, finding the appropriate balance between differing priorities and objectives is often the hardest task.
In these areas that require balance, good communication between your estate planning attorney and your financial planner is invaluable. When estate and financial issues overlap, the roles of the professionals blur. The best attorneys and financial planners take ownership of these areas to provide a measure of balance, so that neither loses sight of the bigger picture (or the important details).
If an attorney or financial planner approaches these areas with a “not my job” attitude, it can have severe repercussions on your estate or financial plan. While they provide great potential for improved service and efficiency, areas of overlapping responsibilities also provide room for error when communication is lacking.
While crafting your estate plan, your attorney will provide guidance on the steps you’ll need to take outside of the attorney’s office to ensure that the administration of your assets dovetails with your estate planning documents. Your attorney may have suggestions for retitling accounts, or input on how to use beneficiary designations effectively (in order to make sure that your retirement accounts or other assets are distributed according to your wishes).
The involvement of your financial planner at this stage of the process helps ensure that the necessary paperwork will be completed so no assets fall through the cracks.
This kind of follow-up is particularly critical if you have decided to implement any type of living trust, where forgetting to retitle accounts and update beneficiaries can completely undermine your reasons for using the trust.
The benefit of having a team of professionals on your side can be enormous — and so can the consequences of neglecting to make the most of their help. Your legacy and long-term goals may suffer by your failing to use your planning professionals to your greatest advantage.
Jordana Guzman is an attorney with Davis, Agnor, Rapaport & Skalny LLC. She can be reached at 410-995-5800 and firstname.lastname@example.org. Matthew D. Porter, CFP, J.D., is the managing member of Patuxent Financial Partners LLC. He can be reached at 410-730-1744 and email@example.com.