A well drafted will is not worth the (stack of) paper it is written on if it fails to achieve the client’s objectives. Those objectives are often defeated where an estate plan is not properly designed, implemented, or maintained.
Under the traditional approach to estate planning, the lawyer typically designs the estate plan and drafts the relevant documents. The lawyer also makes various recommendations to the client–for example, the lawyer may recommend the client obtain tax advice with respect to a potential tax liability on death and may also recommend the client obtain life insurance to fund that potential tax liability. Sometimes the lawyer follows up with the client with regard to the various recommendations, but not always. Too often the client is left to oversee various implementation and maintenance aspects of the estate plan, and often the client has difficulty dealing with those aspects.
Even where that is not the case, lines of communication are not always open between advisors. Other advisors may only be involved where the primary advisor considers it appropriate. However, the primary advisor is not always the best judge of when there is a need to obtain other expertise.
A tax advisor, for example, may be asked by her client if there are any tax implications of making a loan or gift to an adult child to assist with the purchasing of a home. In providing the relevant advice, the tax advisor may be unaware of the relevant property and family law considerations. Without an open line of communication, the approach chosen may be tax efficient, but may produce an undesirable outcome from a property and/or family law perspective.
Clients tend to be better served by a team approach under which various advisors, whether lawyers, tax professionals, accountants, financial advisors, and insurance advisors, each contribute their own expertise to the matter. Under this approach, one advisor generally oversees or “quarterbacks” the process to ensure it moves smoothly and efficiently. The advisors work collaboratively–not as silos–for the benefit of the client. Together, they help to ensure the estate plan is properly designed, implemented, and maintained.
Where professional advisors fail to work together, they sometimes end up working against each other. For example, where a client owns his home solely, an advisor may recommend that the client transfer the home into joint ownership with his spouse in order to minimize probate tax. The client, however, may have forgotten that his lawyer recommended that the house be held solely in his name for creditor protection reasons and that a transfer into joint ownership may expose the home to the creditors of the client’s spouse. Alternatively, the lawyer may have recommended that the house be held solely so as to ensure that the house, or the proceeds from its sale, passes to the client’s children from his first marriage which might not occur if the client were to predecease his spouse.
Lawyers and other advisors each have their own spheres of expertise and it is rarely in the client’s best interests for the professional advisor to step beyond his or her sphere. Instead, each professional should work together and not against each other.
This multi-disciplinary approach recognizes the increasingly complex nature of estate planning and also recognizes that estate planning involves more than just putting a will or other documents in place. In the broader sense, estate planning is about wealth preservation and, eventually, the transfer of wealth. A collaborative team approach is usually the optimal way to ensure wealth is preserved and transferred in accordance with the client’s objectives.
The comments offered in this article are meant to be general in nature, are limited to the law of Ontario, Canada, and are not intended to provide legal or tax advice on any individual situation. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your personal circumstances.