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Strong collaboration comes down to open communication

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The estate lawyer and the financial adviser are a critical team, working together to ensure a client’s well-being, not unlike doctors in an operating room.

As in other relationships, the key to successfully serving their mutual clients lies in open communication between the parties.

It is imperative that a financial adviser fully understand her clients’ estate plans. Ideally, the financial adviser should speak directly to the estate attorney so that she knows how the attorney envisions the plan to work.

Open dialogue between financial and legal advisers enables the entire team to be on the same page.

If, for example, the estate attorney is unfamiliar with some of the more intricate rules for beneficiary designations on an annuity contract and the client requests the funds pass directly to a trust but still wants to receive special tax treatment, the financial adviser can be a knowledgeable resource for the estate attorney and client.

When communication between advisers and clients is lacking, documentation might be mishandled – resulting in significant costs to the client. If a beneficiary designation on a retirement plan document is completed incorrectly or not at all, the result may be dramatically different from what was intended, and the tax consequences can be devastating.

If a client has a revocable living trust, for example, the financial adviser should reach out to estate lawyers for instructions on how to properly title the clients’ assets, such as checking accounts, real estate holdings, simple securities and investment accounts with the exact trust name.


Without proper titling, clients may end up with assets not being distributed as the client had envisioned, owing probate fees and may not benefit from the tax savings offered by using a trust.

It is one thing to create a trust, but if accounts are not properly titled in the trust’s name, thereby “funding” the trust, the trust may not include all of the assets intended for it.

Additionally, in the event that a spouse (or primary beneficiary) dies before the other, it is critical that financial advisers seek input from estate attorneys to ensure that contingent beneficiaries are designated and properly titled on all asset accounts.


In another scenario, if a financial adviser anticipates that a married client’s assets will exceed the death tax exclusion amount, she can notify the estate attorney – who can then protect those assets by creating a marital and residuary (also known as a “family”) trust.

These trusts can benefit the surviving spouse and then possibly their children (and sometimes nieces and nephews), and then grandchildren and future generations.

For death tax purposes, the residuary trust’s assets are valued at the time of the first spouse’s death, and the appreciation of those assets will not be “death-taxed” upon the second spouse’s death.


In the meantime, the second spouse should use his or her assets first and save the residuary trust as the nest egg fund of last resort. In so doing, when the second spouse dies, there are fewer assets to be taxed and more will have built up inside the residuary trust.

Again, to ensure that clients’ assets pass to whomever they want in the way that they want, estate attorneys and financial advisers must coordinate carefully.

Keeping open those lines of communication is the key.

Marilee Falco is a principal and financial strategist at JoycePayne Partners of Bethlehem and Richmond, Va., responsible for client financial strategy and counsel, comprehensive financial planning and investment management. A Certified Financial Planner and chartered financial consultant, she can be reached at mfalco@joycepaynepartners.com.

Dolores Laputka is an attorney and member at Norris McLaughlin & Marcus PA with offices in Allentown, Bridgewater, N.J., and New York. A former Certified Public Accountant, she is co-chair of the firm’s business law group and specializes in wealth management/estate and tax planning. She can be reached at dlaputka@nmmlaw.com.

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