To have a fully functioning estate plan, you need to have coordination. The estate planner prepares the necessary legal documents, the bankers (and financial advisors) title your accounts properly and invest your money, and the accountants file the appropriate taxes. When it works, it’s a well-oiled machine that reduces costs and delays, properly distributes your assets, and complies with state and federal tax laws. But, when it goes wrong, well, that’s not good.
The main reason there is a lack of coordination between these three cogs is they are almost always separate entities. There may only be a few law firms that can offer taxation services for their clients – usually because they lack the expertise. Banks do not draft legal documents for their clients as it is a conflict of interest (although many have legal departments that will review a client’s documents for compliance, etc.). Attorneys and accountants are never banks.
Ego gets in the way, too. Advisors of this type have their own way of doing things. Furthermore, there can be legitimate disputes as to the interpretation of tax laws and how assets should be held. So who do you listen to? Well, the attorney obviously! Kidding. Listen to all of them.
You see, each of these professionals has access to different parts of your financial information. It is rare that an attorney looks at your W-2 or knows your credit history. Likewise, a bank’s only job is to keep your money with them (sorry, bankers). Accountants, well, they only work from January to April 15 and just care about making Uncle Sam and the state of California happy.
To have true financial health, all three need to work together. I’d argue that adding your insurance broker, doctor, and even your realtor in the mix would truly result in an especially coordinated and superior estate plan.
So how do we accomplish this? Truth is, it can be difficult. It is possible that one or maybe even two of your advisers will want to work together but getting the third, fourth, and so on is almost impossible. So seek professionals who are collaborative. You’ll be able to spot them because right from the start they will start asking about your other advisors, asking what they think and what they are doing.
If your advisors aren’t doing this on their own – ask them! Why not? After all, this is your financial future not theirs! I may start getting death threats from other professionals, but honestly, if your advisors are not willing to have their work looked at and even critiqued by other professionals, perhaps they are not as confident in their work as they should be. I’m happy to have other professionals question what I’m doing. If I’m not acting in the best interest of my client, I’d like to know about it. If I disagree with another professional’s comments, I should have the resources to support my opinion and then have a healthy dialogue about it.
Don’t be shy about asking your attorney, banker, financial advisor, CPA, Realtor, insurance agent, or doctor to connect with your other professionals. It could save you and your loved ones money and headache, and could alleviate any number of unknown problems in the future.