How should my Estate Planning Attorney & Financial Planner work together?

/ January 6, 2014

Calculator - iStockThere are many parts to your financial life which may require you work with multiple professionals from different disciplines. Two of the most important professionals you should have on your team are a Financial Planner and an Estate Planning Attorney. Each of these professionals should have an understanding of what the other is doing. Some overlap is expected but is necessary for both disciplines to understand your needs. Discussed next are the roles of each of these important professionals and how they should work together.

The Financial Planner’s Role

Your financial planner helps organize your financial life. They create a financial plan designed to help you accomplish your goals. The financial plan includes a statement of your net worth, retirement projections and a risk profile. The plan lays out your financial goals in an organized way and guides you on how to best achieve those goals. Once the plan is complete your portfolio can be invested. Your financial planner should perform an analysis of your current investments and make recommendations on how they could be changed to better align with your financial plan. They should be able to explain why they are recommending those changes in a simple, easy to understand way. A good financial planner is a teacher, not a salesman. It should feel like you are being educated, not sold something. Once the portfolio is invested, your planner should continuously monitor the portfolio and make necessary changes to reflect changes in your financial plan or in the financial markets.

The Estate Attorney’s Role

Your estate attorney’s role is to plan for the efficient disposal of your estate at the end of your life. First, they will work with you to determine your needs and goals as it relates to your assets. A good attorney will make suggestions related to your estate you may not have thought about before. Then, with your needs and goals in mind they help create a strategy to best achieve these goals by efficiently transferring your assets, reducing tax and administrative costs, and potentially avoiding probate.

In addition, your estate attorney should help plan and prepare for incapacity. This is when you are no longer able to make financial or medical decisions because of an illness or disability. This type of planning involves choosing legal guardians for your children or others under your care, as well as choosing a health care agent(s) and attorneys-in-fact for you.

How they work together and complement each other

Speaking from the financial planner’s perspective, much of the upfront work is done by the planner through the creation of a comprehensive financial plan, as a lot of this information is used by the attorney. As mentioned earlier, your financial plan should include a statement of net worth but also a listing of your current beneficiaries, your financial goals, income and expenses, and current investments, all of which is useful for your estate planning attorney. As well, by going through this process your financial planner will already have gathered and organized your financial information such as tax returns, current estate documents, financial account statements, etc. Having this already organized will save your attorney time and you money. If you know you have immediate estate planning needs it may be wise to seek out an estate attorney first. But in my experience, the process of creating a financial plan will help identify a lot of estate issues. Issues you may not have known prior to creating a financial plan.

Your financial planner will help invest your money in order to achieve certain goals, such as a child’s college education or plan for the care of a loved one, but your estate attorney is the one who drafts the actual legal documents, such as wills and trusts. Once these legal documents are in place your attorney and financial planner will have to make sure your assets are titled properly to match what is in the estate plan.

We know that life changes. These changes may affect many areas of your life including your financial and estate plan. Your team of professionals needs to be communicating to ensure both your financial and legal plans reflect these changes. Both financial planning and estate planning are not just one time events, but once the groundwork is laid and your team is effectively communicating between each other changes can be implemented quickly and efficiently.

I hope after reading this article you recognize the value of a strong partnership between your financial planner and estate attorney. Whomever you choose to be on your financial team, make sure all of your team members are aware of what the others are doing. This will save you time and money, which will otherwise be wasted on duplicate and uncoordinated efforts. If you are already working with one professional but not the other, ask for a referral as most financial planners and estate attorneys will already have other professionals who they trust and have worked with in the past. They may already know the best person for your situation.