THE IMPORTANCE OF CANDOR IN AN ESTATE PLANNING CONSULTATION
DO I REALLY NEED TO TELL MY LAWYER?
As an estate planning attorney, I sometimes find that my clients are hesitant to disclose details about their life or their assets. However, candor and honesty are crucial to forming an estate plan. Read on to find out more about what your attorney needs to know, what she does with that information, and why she needs to know.
(Yes, I am an attorney; however, I am not your attorney. Nothing in this post creates an attorney-client relationship or should be construed as legal advice. This post is solely for informational and educational purposes. Be sure to discuss your particular facts and circumstances with your own attorney.)
WHAT YOUR ESTATE PLANNING ATTORNEY NEEDS TO KNOW
In any estate planning consultation with my clients, I always want to know at least three things:
- What you own
- What it’s worth
- Who you want to give it to.
However, from time to time, I find that some clients are reticent to share any details with me. Some clients don’t want to or won’t disclose information about their accounts, their titles, or even their wishes for their estate plan.
Obviously, keeping information from your attorney makes his or her job a whole lot more difficult. I assure you that I am not asking you about your accounts or estate planning decisions to amuse myself or others. Further, I am not asking you about your accounts or estate planning decisions to somehow steal your assets.
I have 3 small children, a law practice, and a house to run. I do not have the time or the energy to siphon client accounts or live a life on the lam!
Thus, I assure you that any questions that I, or any other trustworthy estate planning attorney ask you are relevant to the discussion.
Why are people afraid to share; what do attorneys do with the information, and why does he or she need to know? Those are some of the questions that we are going to address here.
WHY ARE SOME CLIENTS HESITANT TO SHARE THEIR INFORMATION
Discomfort with the attorney: First and foremost, if you are hesitant to share details about your estate, your accounts, your family, or your wishes with your attorney, then perhaps consider whether this attorney is a good fit for you.
I assure you that your attorney doesn’t want you as a client if you do not respect him or her. Further, you do not want an attorney that you do not connect with.
To be honest, I have had plenty of clients that have taken the time to find a different attorney. No hard feelings. Sometimes my personality, style, demeanor, or tactics are not what the client is looking for. If you are not comfortable with your attorney, find another attorney –there are lots to choose from!
Fear of disclosure: Some clients do not want to tell me about their assets, accounts, and information simply because they fear that someone else will find out.
Let me stop this fear immediately.
Attorneys are bound by attorney-client confidentiality. That means that attorneys, and the staff that work for them, are unable to disclose even your name to anyone else. The only way that an attorney can tell anyone what you tell them is if you have disclosed information about a crime that you are about to commit such as murder. At that point, the attorney can only alert the authorities to a potential homicide.
To really make this clear, attorneys can and do lose their licenses to practice law if they disclose your information.
They are not going to talk about your assets and your strange family at their next family reunion.
Don’t let fear or embarrassment keep you from being open and honest with your estate planning attorney.
Embarrassment. Some clients are afraid to tell me about their assets, their accounts, or their families out of shear embarrassment.
Attorneys hear it all. Massive amounts of debt, estranged family members, money sewn into the curtains, cult affiliations, and more. We’ve heard it.
If you are embarrassed about it, you should still tell your attorney. I guarantee that a good attorney will handle that information with delicate discretion if you are truly embarrassed about it.
Or, better yet, he or she might tell you that you have nothing to be embarrassed about.
Privacy. Some clients are just private by nature. They never wanted to discuss their estate plan with their families let alone a complete stranger. Death, money, taxes, and families are subjects that are best left out of dinner conversation. However, I can assure you that your attorney needs to know about all of these details even if they are difficult to share.
TELLING YOUR ESTATE PLANNING ATTORNEY YOUR WISHES WILL NOT CAUSE YOUR DEATH
Fear of death. Other clients put off meeting with an estate planning attorney and even having a discussion with their attorney because they fear death.
To be frank, statistically speaking, you have no chance of beating the odds of death.
It happens to everyone. Talking about it with an estate planning attorney will not make it happen sooner! Rather, you might find that you have far more peace of mind about your estate and your demise if you do discuss it!
Guilt. Some clients do not want to disclose details about their estate, their accounts, or their families because of guilt. This guilt is usually in two forms. 1. Guilt that the client carries because he or she knows that he or she has done something wrong. Or, 2. Guilt that the client carries because he or she fears that he or she has done something wrong.
In the case of #1, refer back to that attorney-client confidentiality. Your attorney can’t disclose your wrongdoing to ANYONE else. Further, your attorney might even be able to help you fix it.
In the case of #2, you should make sure that you are comfortable with your attorney who can help you avoid potential roadblocks, pitfalls, failures, or mistakes.
In either case, you should tell your attorney.
Your attorney isn’t going to tell and doesn’t care!
WHY DOES YOUR ESTATE PLANNING ATTORNEY NEED TO KNOW?
I don’t know a single law student or estate planning attorney who ever went to law school, studied for and passed the bar, and formed a harried and stressful legal career just so he or she could learn the lurid details of other people’s lives. There are reality shows for that.
Instead, most attorneys I know want to help their clients. Your attorney doesn’t care about your strange practices, your estranged family, or your massive debts. What your attorney cares about is how to help you pass and preserve your legacy.
Your attorney isn’t asking you questions about your personal life for entertainment or conversation. These details are relevant to your estate plan!
What your estate planning attorney needs to know
So what does your estate planning lawyer really need to know?
In order to form a comprehensive, personalized, and well-rounded estate plan, your attorney needs to know at least these the following:
1. What you own.
This includes your assets, your investments, stocks, bonds, mutual funds, business interests, accounts and more. Further, you need to disclose how you own those assets –the titles.
Are they owned in a partnership or corporation? Do you have a joint owner on the accounts. Have you named a beneficiary on the life insurance policies?
If so, tell your attorney. As part of every estate plan that I complete, I go over each and every one of my clients’ beneficiary designations to ensure that they comply with state law and the wishes of the client.
More often than not, my client is able to identify a piece of property that he forgot about or didn’t realize was relevant to his estate plan. Sometimes it’s a simple brokerage account that merits a call to an investor. But other times, it is a classic car sitting in the garage that needs an amended title and a new insurance policy to make sure that it stays out of probate.
(Related post: Why Do I Want to Avoid Probate?).
2. What it’s worth.
Your attorney probably doesn’t need an appraisal of each and every one of your assets in order to form your estate plan. However, he or she will need to know your net worth.
Why?, you ask.
Well, for a number of reasons.
Your net worth is one of the considerations in determining whether you might be a candidate for a trust or a similar non-probate transfer. Further, your net worth indicates to your attorney whether or not you are over or under your state’s probate asset limit.
More importantly, your net worth is an indicator of your potential tax treatment. Currently, a husband and wife can pass more than $22 Million dollars in assets without having to pay any estate taxes. If you own or will own more than that amount of money, then your attorney will need to create an estate plan that mitigates your beneficiaries’ tax burden.
(We expect this number to change drastically in the coming months and years, so your attorney will also need to know your net worth so that he or she can respond to the change in legislation.)
Likewise, the types of your assets might raise other tax red flags for your attorney. Certain retirement accounts, pension plans, and income deferral accounts all create a tax burden for the beneficiary or the decedent’s estate. Thus, your attorney will likely have a way to help mitigate that tax burden.
In order to determine how the best estate plan for your situation, your attorney will need to evaluate whether you have tax concerns, probate concerns, or even IRS concerns.
3. Who receives it.
Finally, your attorney needs to know your estate planning goals and objectives. Who do you want to receive your assets if you pass away? Do you want any restrictions on them?
Not every estate planning technique can be specifically tailored. For example, my favorite estate planning tool, the transfer on death deed, is far less customizable than the Irrevocable Trust.
Simply telling your family your wishes and desires is not enough to make your wishes enforceable. Further, distributions that seem obvious to you are certainly not obvious to others.
Many different clients have many different definitions for the word “fair” or “obvious.” To some, fair is leaving everything to the child who never left home. To others, “fair” is leaving an equal portion to every child. While to others, “fair” is leaving all of their assets to grandchildren.
The options and decisions run the gamut. You do need to disclose who your family is, what you want them to receive (or not receive), and how much.
YOUR ESTATE PLANNING ATTORNEY NEEDS TO KNOW IN ORDER TO MAKE A CUSTOM ESTATE PLAN THAT FITS YOUR NEEDS AND WISHES
Failure to disclose all of the details, all of the family dynamics, all of the family members, or even all of the accounts could leave your beneficiaries in a mess. You don’t want your children to end up in a prolonged probate battle simply because you didn’t want to talk to your attorney.
Candor is extremely important in your estate planning meeting. If you don’t trust or respect your attorney, find another one.
In order to have a good, well-rounded estate plan, you must disclose information about your life and family. Although it might be unnatural, uncomfortable, or strange to you, I can assure you that your attorney is not asking for his personal amusement.
He or she is not going to share your details or be shocked at your decisions. Instead, a good attorney will take the time to discuss your options, your wishes, and your plan –specifically tailored to you and your circumstances.