Winstead Law


An ongoing discussion of current issues in the law

Don't just buy the box, put something in it! The interplay of estate and financial planning

Estate planning attorneys will freely admit that while having a well thought out estate plan is essential if you hope for your heirs to avoid unnecessary expense, a financial planner is equally important in making sure that your financial future remains secure for a long retirement.  After all, you’ll need to rely on the work product of your financial planner long before the estate plan your attorney creates for you kicks in.

Attorneys and financial planners often work in conjunction with one another to meet these very different goals.  But it is important to remember that one is not a substitute for the other: your lawyer will not be giving you financial advice, and likewise your financial planner will not be giving you legal advice about estate planning.  Neither is licensed or insured to do the other’s job.

As an estate planner, I can assist you with the tools that will allow you to leave a financial legacy to your family, and minimize exposure to probate proceedings, challenges, taxes, nursing home costs, etc.  But only your financial planner can ensure that your finances are properly woven into that estate planning fabric so that your retirement is secured and things work as planned after you are gone.  I explain here just a few of the ways in which we work together to streamline things for you and your loved ones.

Avoiding Unnecessary Tax

If your estate will be taxable, your attorney may create a plan based on credit sheltering that will allow a couple to take full advantage of both spouse’s tax thresholds and potentially avoid hundreds of thousands of dollars or more in estate tax.  But utilizing the estate plan is not automatic: it requires your financial planner to move and title assets in such a way as to make sure the estate plan is fully utilized while ensuring that you have the finances you need to enjoy retirement and avoid present tax liabilities or other penalties.

Avoiding Unnecessary Probate Costs

The court-directed probate process can create unnecessary delay and expenses. Your attorney might have created an estate plan that can completely eliminate the need to probate your estate.  But that is not the end of the story.  Unless you have ensured that financial assets have been properly titled, it is all too easy to find that probate is necessary.  Your financial planner is a useful agent in ensuring this is done in such a way as to make sure that you are financially secure while protecting the asset down the road.

By way of example, recent studies point out that less than 40 percent of retirement accounts use secondary beneficiaries. In this type of a situation, if the primary beneficiary pre-deceased the retirement plan owner and the beneficiaries weren’t updated, those assets would be subject to probate before they would go to the heirs.

Avoiding Problems with Assets in Other States

Your attorney needs to take account of any assets you may own in other states.  Most commonly, a client may own real estate in another state.  The problem is that real estate must be probated in the state where it lies.  Therefore, a Massachusetts resident whose estate is administered in Massachusetts, but who had property in Florida, would have to have a probate case taken out in Florida just to deal with the real estate.  Not surprisingly, this is time consuming and expensive.  A competent attorney will assist in ensuring that real estate is retitled in such a way (for instance into a trust) as to avoid this situation.  But other assets, financial accounts for instance, may be dealt with by a financial planner.

We all want to leave a legacy for our loved ones, and your Estate Planning Attorney is an essential component of that planning.  But utilizing a financial planner to ensure your secure retirement while you are still here must also be a key goal.  Make sure you keep both in your corner and working together!

Martin Winstead