Broker Check

Linking Financial Planning with Estate Planning

March 10, 2015

What are the potential benefits of coordinating your financial plan in concert with your estate plan plan.

Question: I’m meeting soon with an estate attorney, but I’m a bit apprehensive because I think estate planning should be done in tandem with financial planning. Is that correct? If so, I’ll need to deal with two different firms; how do I connect them?

Eric: Yes, I agree the work of your financial advisor and your estate attorney overlap and should be done in tandem.

The financial advisor helps you develop a comprehensive financial plan that covers everything — including college funding, life insurance, retirement savings, estate planning and more. We can tell you what estate-planning tools you might need — a will, durable power of attorney, living will, living trust — and we will refer you to an attorney to get those documents.

Here’s a classic example of the flaws of dealing solely with the attorney on the estate issues. Say the attorney recommends a revocable living trust. This is a common estate-planning tool that helps your heirs avoid probate if you die, ensures that your assets are properly managed if you become incapacitated and has other useful provisions. Attorneys charge a few thousand dollars to prepare a revocable living trust.

At this point, the attorney may say, “Here’s the document, sign here; congratulations, you have a living trust.” He or she pats you on the back, sends you out the door and you’re done.

But if you never title your assets into the trust, the document has zero value. Too often, attorneys don’t follow up to see that their clients retitle their assets (brokerage accounts, homes, cars and such) into the trust. If we’re your financial advisor, we’ll make sure you do that.

Whom do you visit first — the advisor or the attorney? In our experience, people usually visit us first and learn what documents are needed, then go see the attorney — but the reverse is OK too.

Thus, if you don’t have a financial advisor, you might want to ask your attorney for a referral. Our clients often don’t have attorneys, so we often provide referrals to them.