By Alan G. Orlowsky, J.D., C.P.A.
Investing in today’s confusing and volatile financial markets, with a myriad of financial products to choose from and numerous arcane rules and regulations to cope with, often involves the help of an experienced financial planner. For many individuals, this no longer is an option, but rather a requirement. A financial planner is not only an expert on investment strategies and products which fit your personal needs and risk tolerance but also a close personal advisor whose job it is to help you grow, protect and preserve your wealth for future needs.
Once you and your financial planner have designed an overall strategy for saving for life’s future needs, you still require a comprehensive estate plan to protect you and your family against the inevitable. In planning for this inevitability, whether timely or untimely, there are many questions that must be answered. For example, to whom will your estate pass? To your wife? To your husband? To your children? To your parents? Charity? Will there be taxes to pay? Debts and business obligations to deal with? Who will manage the estate for surviving children whether infants, toddlers, or teens? How will your estate be protected from poor or no management, misappropriation, poor judgment, spend-thrift children, and naiveté? Who will act as a guardian or trustee? Certainly, you do not want to name a crazy old uncle, spendthrift sibling, or an aging parent. Besides, most individuals have enough on their plates with their own personal and financial obligations. Your financial planner most likely will have discussed some of these questions and issues with you, but he or she is unable to draft legal documents. As such the services of an attorney are required.
Astute financial planners routinely advise their clients to engage the services of an attorney to draft a comprehensive estate plan, but all too often this advice is ignored. Many of my referrals are from financial planners who understand that to protect and preserve a well-designed financial plan a well-designed estate plan is a necessity. Unfortunately, due to irrational fear, procrastination, or lack of understanding, the planning is often shelved. In my capacity as an attorney, representing poorly or completely unplanned decedents’ estates, I have seen and dealt with the problems caused by doing it yourself, with little or no planning. Unnecessary expenses and taxes have been paid, acrimonious and complicated business arrangements unwound, lengthy probate proceedings incurred and family members feuding among one another because of the lack of direction provided by the deceased. Don´t let this happen to your family!
A basic estate plan should include a Will, Revocable Trust, Durable Power of Attorney, and Health Care Power of Attorney. Once these documents have been completed and signed, your attorney with the assistance of your financial planner will coordinate the revision of beneficiary designations of IRA accounts, life insurance policies, annuities, etc., and the transfer of financial assets to trust.
It is important to remember that your financial planner was hired by you to prepare a financial plan, not an estate plan. So, in conclusion, take seriously his or her advice to undertake the smart estate planning you require to protect and preserve the financial plan you have worked so hard at to create.
Alan G. Orlowsky, President of Orlowsky & Wilson, Ltd. in Lincolnshire, Illinois, has been counseling people on estate planning for 28 years. He previously worked for the IRS in its Estate and Gift Tax Division. He also worked for the Deloitte & Touche accounting firm, and he has taught taxation and accounting at Loyola University of Chicago, School of Business.
Al is a contributing author of the book 21st Century Wealth (Esperti Peterson Institute, Denver, 2000), and has written numerous articles on the subject of estate planning. Contact Alan Orlowsky by email or call 847-325-5559.