Consider this: imagine a classical orchestra with each musician given different sheet music. No matter how good the musicians are, you’ll end up with a cacophony. The same holds true for your team of financial and estate planning professionals. If there is no communication between the professionals you work with, you could wind up with a financial mess. This is highlighted in a recent article written by the staff of WealthCounsel, an estate planning networking, education and legal software company that helps estate planning attorneys practice excellence.
Many of us don’t consider ourselves to have a team of professionals. But think about those you’ve worked with in the past: insurance agents, CPAs, financial advisors and estate planning (or other) attorneys. For those owning a business, you might also have business managers or other professionals you work with regularly. Without communication between all these advisors, you could end up with a financial mess now and a disaster later for any heirs.
Think about what could happen if your estate planning attorney isn’t aware of a life insurance policy. If so, you may have designated your spouse as primary beneficiary of the policy with any children as contingent beneficiaries. While that’s pretty standard, what happens if you and your spouse pass away at a young age and before your children are grown?
Legally speaking, the insurance company is required to distribute the proceeds of the policy according to your beneficiary designation form, giving your young children the death benefit. While you would want your children to have access to any money they might need, you might also want a more experienced adult to assist them. Trust planning would allow for a trustee to come alongside them and manage the money for them until they come of age, or even thereafter.
What about financial planning? There may be assets with complex rules when it comes to inheritance, such as IRAs and other retirement accounts. With collaboration between your estate planning attorney and your financial advisor, you can ensure those assets take advantage of tax planning techniques and pass to your heirs in an efficient manner. If both these professionals are in communication with your insurance agent or accountant as well, they may notice other, more advanced planning opportunities, such as creating an Irrevocable Life Insurance Trust (ILIT) or charitable remainder trust. No communication could mean missed opportunities.
This is one of the reasons why we at Family Estate Planning Law Group strongly encourage our clients to hold a Family Care Meeting. This meeting gets the whole team together: your financial professionals, as well as those you’ve asked to become trustees or take on other fiduciary roles in your estate plan. It also introduces your financial and estate planning team to one another—giving them the opportunity to collaborate on your behalf and find new planning opportunities—but without any need to discuss assets or inheritances with heirs.
When we hold a Family Care Meeting, we highlight the basics of the plan, the advantages of the planning you’ve done and outline the roles and responsibilities of the fiduciaries. It’s far easier for your loved ones to hear about the plan now, before there’s a medical emergency or a death. Studies have also shown that heirs often tear assets out of trusts or away from financial professionals if they’ve never met the professional before. Often, that can lead to detrimental financial transactions or even exposing assets to creditors or divorce proceedings, if assets are torn out of a trust.
Giving heirs the opportunity to hear about how you’ve created a plan to take care of them after you’re gone can be one of the most important ways you care for them. And allowing for collaboration between your financial and estate planning professionals can mean an even more effective estate plan for you! For more information about the Family Care Meeting and the importance of collaboration between your financial professionals, explore our website and contact us to schedule your consultation today!
Reference: WealthManagement.com (March 24, 2017) “Planning is a Team Sport”