Financial advisors play an important role in helping families build, manage, and preserve wealth. A good financial advisor can be an invaluable member of your professional team. But managing your investments and designing your estate plan are two very different jobs.
Recently, more financial advisory firms have begun offering estate planning services to their clients, sometimes through online document platforms, affiliated services, or standardized estate planning programs. The convenience can be appealing. After all, your financial advisor already understands your investments and financial goals. Why not handle your estate planning there too?
For individuals and families with relatively simple circumstances, these services may appear to offer an easy solution. But if you have accumulated a mid-sized or larger estate, own real estate, have a business, have significant retirement or investment accounts, or want to protect an inheritance for your children, estate planning can be far too important and complex to treat as an add-on to investment management.
The better approach is to have an experienced estate planning attorney serve as the architect and guide for the estate plan, while working collaboratively with your financial advisor, CPA, insurance professionals, and other advisors.
Estate Planning Is About Much More Than Producing Documents
One of the biggest misconceptions about estate planning is that the primary goal is to obtain a trust, will, power of attorney, and health care directive. The documents are important, but they are the end product of the planning process, not the planning process itself.
A skilled estate attorney should first understand your family, assets, goals, concerns, and potential risks. The attorney can then help you identify issues you may not have realized needed to be addressed.
For example:
- What happens to your children's inheritance if one of them later divorces?
- Could an inheritance be exposed to a child's creditors or lawsuit?
- Should your children receive their inheritance outright or in a continuing trust?
- What happens if your surviving spouse remarries?
- How should a blended family be protected?
- Is your estate approaching a level where federal estate taxes should become part of the conversation?
- Are your retirement accounts coordinated properly with your trust? Can they be left to children in a way that protects them from creditors, predators and divorce?
- Who should serve as trustee, and should a beneficiary eventually be permitted to serve as his or her own trustee?
- Should a Trust Protector or independent trustee be incorporated into the plan?
- How should business interests and real estate be handled?
- Are there California-specific tax, property, probate, or trust administration issues that need to be considered?
These decisions require judgment and experience. They cannot be reduced to filling out a questionnaire and generating documents.
The Bigger the Estate, the More the Details Matter
As families accumulate wealth, estate planning generally becomes more, not less, important. Consider a married couple with a home worth $2.5 million, several million dollars in investment and retirement accounts, perhaps a rental property, and other assets. Their estate could easily be worth $5 million to $10 million or more. At that level, seemingly small planning decisions can have significant long-term consequences.
The trust may eventually control millions of dollars. It may need to protect a surviving spouse for decades. It may determine whether a child's inheritance remains protected from a future divorce, creditor, or lawsuit. It may affect how assets pass to grandchildren and future generations.
And as an estate grows further, sophisticated tax planning may become appropriate. Families with larger estates may need to consider strategies involving irrevocable gifting trusts, life insurance trusts, charitable planning, business succession planning, or other advanced estate techniques.
This is where experienced legal guidance becomes particularly valuable.
Standardized Estate Plans Can Miss Important Opportunities
Estate planning programs offered through financial advisory firms may rely heavily on standardized questionnaires, templates, or technology-driven document preparation. Technology itself is not the problem. Experienced estate planning law firms also use sophisticated technology. The difference is who is directing the process and exercising legal judgment.
Two families with the same net worth may need completely different estate plans. One family may have financially responsible adult children in stable marriages. Another may have a child going through a divorce, a beneficiary with creditor problems, a family business, a special needs beneficiary, or children from a previous marriage.
A questionnaire can collect information. It cannot replace an experienced attorney who recognizes a problem, explains the consequences, asks the next question, and recommends a solution tailored to that particular family.
Your Estate Planning Attorney Should Be Your Guide
For families with meaningful wealth, we believe estate planning works best when an experienced estate planning attorney acts as the client's legal guide. That does not mean excluding the financial advisor. Quite the opposite. The strongest plans are often created when the estate planning attorney, financial advisor, CPA, and other professionals work together, each bringing expertise from his or her respective discipline.
Your financial advisor can provide critical information about your investments, retirement accounts, insurance, cash flow, and financial objectives. Your CPA can provide valuable tax information. Your estate planning attorney can then integrate those pieces into a comprehensive legal strategy designed around your family and your goals. No single professional needs to do everything.
Independent Advice Matters Too
There is another reason to consider keeping estate planning and investment management as distinct professional roles: independent advice.
Your estate plan may involve decisions that affect how investments are owned, which assets are transferred, how beneficiary designations are structured, whether assets should remain under management, and who will control them after your death. Having an independent estate planning attorney provides another professional perspective focused specifically on the legal consequences of those decisions.
That does not mean your financial advisor's recommendations are inappropriate. It simply means that when millions of dollars and your family's future are involved, having qualified professionals independently evaluate different aspects of the plan can provide valuable checks and balances.
Creating the Trust Is Only Half the Job
Even an exceptionally drafted trust may fail to accomplish its goals if it is not properly implemented. After signing, assets may need to be transferred into the trust. Real estate deeds may need to be prepared and recorded. Business interests may need to be assigned legally to your trust. Financial accounts may need to be retitled. Beneficiary designations should be reviewed and coordinated with the estate plan.
This process, often called trust funding, is one of the most important parts of estate planning.
An experienced estate planning attorney should help clients understand not only what their documents say, but also what must happen after signing to make the plan work as intended.
Ask Who Is Actually Designing Your Estate Plan
If your financial advisory firm offers estate planning services, you should ask questions before moving forward.
Who is actually providing the legal advice? Is an experienced estate planning attorney personally reviewing your circumstances? Does that attorney practice estate planning every day? Do they have experience with mid-to-large sized estates? Will you have an attorney-client relationship with that lawyer? Is the plan customized to address your family's particular risks? Who will help ensure the trust is properly funded? And who will be available years from now when your circumstances or the law changes? Most importantly, ask whether you are receiving a truly individualized estate planning strategy or primarily a set of documents.
At Geiger Law Office, estate planning is not an add-on service. It is what we do. We help families understand their options, identify risks they may not have considered, coordinate with their other trusted advisors, and design estate plans intended to protect the people and assets that matter most.
If you, a friend, or a loved one would like to discuss estate planning, contact our Intake Department at 760-448-2220 or visit us online at www.geigerlawoffice.com/contact.cfm. We proudly serve families throughout California from our offices in Carlsbad and Laguna Niguel.
