Your wealth advisor, CPA and attorney may each do excellent work, but important details can be missed when they are not talking to one another. Regular coordination can prevent expensive surprises.
A family with significant wealth typically relies on at least three professionals: a wealth advisor, a CPA and an estate attorney. Each is skilled in a particular field, and each usually works from the information that field requires. The attorney sees the documents. The CPA sees last year's return. The advisor sees the accounts. Unless someone connects them, no one sees the whole picture.
What happens when they work separately
- A trust is drafted but never funded. The attorney prepares a revocable trust. No one retitles the accounts. The assets go through probate anyway.
- A beneficiary form overrides the estate plan. A trust is created to protect a child's inheritance, but the IRA still names the child directly.
- A large gain is realized without warning. Securities are sold in December, and the CPA learns of it in March, when nothing can be done to offset it.
- A Roth conversion has unintended effects. A conversion that looked sensible in isolation raises income enough to increase Medicare premiums and reduce other deductions.
- A gift is made without a return. A transfer to a family trust is completed, but the gift tax return that reports it is never filed.
- A business sale is planned too late. The owner's personal advisors are told after the letter of intent is signed, when most pre-sale strategies are no longer possible.
None of these is the result of poor advice. Each is the result of good advice given without full information.
What coordination looks like
- Shared information. With your permission, each professional has current copies of what the others produce: estate documents, tax returns, account statements and the financial plan.
- An annual joint review. Once a year the team looks at the same agenda together, including income and gains for the year, planned gifts, changes in the family and upcoming transactions.
- Advance notice of major decisions. Before a sale, a large gift, a conversion or a change of residence, everyone is consulted while options are still open.
- Clear follow-through. Every decision has an owner and a date, so that documents are signed, accounts are retitled and returns are filed.
Who leads?
Someone has to convene the group and keep track of what was decided. In many families that role falls naturally to the wealth advisor, who is usually in the most frequent contact with the client and has the broadest view of the family's finances. Leading the coordination does not mean replacing the others. Legal advice comes from the attorney and tax advice from the CPA. The advisor's part is to make sure the right questions reach the right professional at the right time.
Questions to ask yourself
- Do my advisor, CPA and attorney know one another by name?
- When did they last speak to each other about my family?
- Does each one have the current version of my estate plan and my most recent tax return?
- If I were considering a major decision, who would I call first, and would that person bring in the others?
How we work
At NewEra Wealth Advisors, we take a family office approach to coordination. With each client's consent, we work directly with their CPA and attorney, share the information each needs and bring the group together for decisions that cross disciplines. We do not provide tax or legal advice. Our role is to make sure that the advice our clients receive fits together.
Common questions
Why should my advisor, CPA and attorney coordinate?
Each professional usually works from the information their own field requires. Unless someone connects them, no one sees the whole picture and important details can be missed.
Who should lead the coordination?
In many families the role falls naturally to the wealth advisor, who is usually in the most frequent contact with the client. Legal advice still comes from the attorney and tax advice from the CPA.
What does good coordination look like?
Shared information with your permission, an annual joint review, advance notice of major decisions and clear follow-through on every decision.
References
- Background reading: Kiplinger, 'Your Financial Planner, CPA and Attorney Work Best When They Work Together' (kiplinger.com); Kiplinger, 'This Is What Can Happen When Your Financial Plan and Estate Plan Aren't in Sync' (kiplinger.com); Pashman Stein Walder Hayden, 'The Power of a Team' (pashmanstein.com).
Securities offered through Bolton Global Capital, Inc., 579 Main St., Bolton, MA. Member FINRA, SIPC 978-779-5361. Advisory services offered through Bolton Global Asset Management, a SEC registered investment advisor.
This material is provided by NewEra Wealth Advisors for general informational and educational purposes only. It is not intended as, and should not be relied upon as, investment, tax or legal advice, or as a recommendation for any individual. Tax laws and regulations are complex, subject to change, and apply differently depending on individual circumstances. Figures cited are believed to be accurate as of the date shown and may change. Please consult your tax and legal advisors before taking any action. NewEra Wealth Advisors does not provide tax or legal advice.
