I am an entrepreneur in my 50s and have done minimal estate
planning. However, I just learned that I have a potentially fatal illness, and
my long-term prognosis is not good. So now I have to get moving on
trust-and-estate planning for my family. My sister-in-law is a T-and-E attorney
and has offered to help me, and so has my cousin, who is a financial planner.
They have also offered to serve as trustees after I die. But I’m wondering if it
is smart to bring family into these very emotional issues. Could this cause my
heirs any legal problems? Would I be better served by using independent,
objective advisors? In a majority of cases, the
prudent choice would be to work with qualified, independent and objective
advisors and fiduciaries (executors and trustees). Entrusting this important
work to relatives introduces the possibility for conflicts of interest,
dissension among family members and a casual attitude in relation to crossing
the t’s and dotting the i’s on a punctual basis. Any request or expectation of
receiving a bargain will only increase the possibility of issues. Minimizing estate taxes in a short time frame is complex,
aggressive and uncertain in nature. You need to look for qualified advisors with
experience, independence and expertise. You and your heirs should expect a high
level of professional responsibility and accountability. The relationship should
allow for the option to make changes, if desired. It may even be necessary to
fire advisors—or sue them in appropriate circumstances. In terms of
relationships among family members, this can lead to disaster at a time when
full and united support and caring within the family is needed.
Joe M. Goodman, Adams and Reese, Nashville While
the drafting of estate planning documents is not
rocket science, it does require an in-depth knowledge of current law—both
probate and tax. Drafting these documents can also be costly. If you believe
that your sister-in-law is a competent attorney who is up to date on all the
estate planning documents, then you can certainly begin the process with her. As
you move forward, you will need to ensure that she is willing to follow your
directives, even if she disagrees with your decisions. If you believe that you
would be uncomfortable changing attorneys in the event that she is not
fulfilling your wishes, then you should go with an independent attorney from the
start. Here are some other factors to consider: Nature of assets: If your
assets are primarily comprised of interests in a family-held business or family
property, suddenly involving an outsider in the decision-making process might
cause strain. However, if the bulk of the estate consists of marketable
securities, then a trust company is often well situated to manage the assets.
Heirs: I often suggest
appointing disparate parties as trustee and guardian so there are adequate
checks and balances to ensure your wishes are met. Make sure the guardian and
trustee share a good line of communication, so they can work together to meet
your children’s needs. Conflicts of interest: Trust
companies often charge a fee based on a percentage of assets under management;
this can deter trust company personnel from making significant principal
distributions. Alternatively, family members can hold their own agendas that can
cloud judgment. Be sure to provide trustees with the right to retain experts, so
they can hire professionals when appropriate. The personal touch and trust a
family member can provide is a treasured asset that you should utilize—if you
believe they will prudently and ethically adhere to your guidelines.
Jeffrey S. Fishman, JSF Financial, Los Angeles
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