Not All Attorneys Are Created Equallegacy
About six years ago, I limited the scope of my legal practice solely to estate and financial planning. After I obtained my securities and insurance licenses, I got up to speed on the latest issues involving estate and tax planning. Now I deal with everything from very small estates that only require a simple will to very complex estate plans that involve irrevocable trusts, family limited partnerships, and other strategies for tax-efficient wealth transfer. This is in addition to my work in retirement, income, and business planning.
Most laymen associate estate planning with the execution of a last will and testament. However, the process, if done correctly, involves so much more. The essentials of the most basic estate plan should include the following: 1) a mechanism for distribution of estate assets via a will, trust, or beneficiary deed; 2) a living will/health care directive; 3) a durable power of attorney; and 4) if a trust is prepared, it must be funded.
Attorneys who do not devote most of their practice to estate planning often make two common mistakes that can have devastating impact on their client. The first mistake is they fail to prepare a durable power of attorney (DPOA). A DPOA is a document that sets forth who has the authority to make decisions and sign documents for a person in the event they are alive, but no longer mentally competent. Typically spouses will name each other as their attorney-in-fact, with one or more of their children as the successors. Without this document, the only way a family can take action on behalf of a person that lacks mental capacity is to obtain a guardianship. That process can be burdensome, expensive, and time consuming.
The second common mistake is they fail to fund a trust. The purpose of a trust is to distribute assets to beneficiaries without the time and expense of probate. Time and again, I have clients that want me to review their estate plan and the first thing I notice is that the trust was never funded by the attorney. Funding a trust means that you have placed all your assets in the name of the trust. This would include deeding property in the name of the trust, changing the designation on your investment and banking accounts to the trust, and making the trust the beneficiary of your life insurance policy. If a trust is not funded, probate becomes necessary and that means an attorney was paid thousands of dollars for nothing.
That is why I contend not all attorneys are created equal. Someone may be licensed to practice law, but fail to have the requisite knowledge to adequately prepare an estate plan that is tailored to a client’s needs. So if you need the services of an estate planning attorney make sure you ask them how much of their practice is devoted to estate planning, or check out their website to see what points of their practice they emphasize. That simple inquiry could save your family time, expense, and unnecessary heartache down the road.