A lawyer, an accountant and a financial planner walk into a room. They’re joined by an executive coach. This isn’t the set up for a joke, but I’d rather that be your first thought than “wow, this is going to be expensive.”
If you are doing tax planning, planned giving, business succession planning, or estate planning, it’s likely going to be far less expensive in the long run if you involve a playbill of actors.
Think of it as an ensemble production.
The ensemble
Often clients will feel they only need one of these professionals, and then they try to have that professional cover the other roles as well, perhaps thinking this is more cost-effective.
But Alexander Hamilton didn’t write the Federalist Papers alone. And there were others in the room where the Compromise of 1790 happened (which was, after all, a financial plan).
And while we may not break out into song after a meeting, each of your professional advisers has their own strengths, which should be utilized accordingly. Sure, occasionally there’s a Daveed Diggs who played Marquis de Lafeyette in the first act and Thomas Jefferson in the second act of Hamilton, but he didn’t do both roles at the same time. You may have a CPA who is also a Certified Financial Planner, or a lawyer who is also a CPA–just be sure you know what role they’re playing for you in which act.
I’m an estate planning attorney (sure, think of me as James Madison—he did most of the writing of the Constitution). I help my clients plan for death, disability, and leaving a legacy. Often that involves trusts that last for several years to several generations.
Sometimes the first act calls for a revocable trust, some lifetime gifts, maybe forming a business entity or two. Then the second act involves transferring interests in the new business entities and bringing in younger generations on the ground floor, and/or charitable gift planning. None of this can be done without a script and all of the actors on stage together.
The script
This type of planning requires a thorough understanding of the client’s hopes, concerns, goals, and values.
I spend some time discussing just that with my clients. But I also need to understand a client’s current and future financial situation (yes, future — do you have an inheritance coming? Is there a lawsuit pending? When are you retiring?
Have you earmarked certain funds for a lifetime goal?). The person who may be most familiar with that is the client’s financial planner (let’s call her George Washington) — and he or she should be involved in the planning, so the script is well thought out. This will save time, money, and frustration in the long run if everyone is working toward your same script.
Discussing gifting of assets (whether to family or charity) or business succession planning can rarely be properly done without the input of an accountant (enter Alexander Hamilton, stage right). For example, if I suggest a certain gift to descendants, the accountant will be in the best position to know the specific tax consequences of such gift and perhaps suggest the assets that are best given to charities versus a family member.
Furthermore, it’s the accountant who will need to prepare future gift tax returns and income tax returns for you and any new entity. If the accountant is in the room where it happens, they won’t be surprised with that information on April 14th.
Likewise, if you’re talking to your CPA or financial planner about forming a new business entity, he or she may suggest, for example, an S corporation for tax reasons. It’s likely your estate planning attorney who’s going to advise that the irrevocable children’s trust you were forming and wish to have as a shareholder will not qualify as an S corporation shareholder, so perhaps we should look at a Limited Liability Company, or restructure the trust.
Rehearsals
Odds are good you meet with your accountant and financial planner at least annually.
This is probably not so with your attorney. Thus, your CPA or financial planner is more likely to know when something has occurred in your life or business that should be brought to the attention of your attorney or another member of your ensemble who can take it from there.
If those actors already know each other and work together, it’s more likely they’ll be sharing relevant information (with your permission, of course) regularly. Script revisions make for a stronger show.
The finale
Don’t throw away your shot. Cast your play. Invite them all to rehearsals. Get them in the room where it happens and your financial script written. It’s going to be a fabulous production.
Teresa J. Rhyne is an attorney practicing in estate planning and trust administration in Riverside and Paso Robles, CA. She is also the #1 New York Times bestselling author of “The Dog Lived (and So Will I)” and “Poppy in The Wild.” You can reach her at Teresa@trlawgroup.net