When you think of financial planning, the most obvious guide in the process is a financial professional, someone who is trained and who has met rigorous registration or certification requirements to provide specific types of advice and services.[i] Most people don’t think of their attorneys when it comes to creating and implementing financial plans. However, a lawyer can play a key role on your planning team, specifically when it comes to planning for your financial legacy, charitable giving, and tax strategies.
It is natural to separate estate planning and financial planning in your mind. Your estate planning attorney helps you create trusts, wills, and other estate planning documents designed to manage and distribute your assets when you die and to provide for seamless management of your finances during periods of lifetime incapacity.[ii] On the other hand, your financial professional manages your wealth and helps you create and implement strategies for retirement planning and saving for long-term goals such as education funding.[iii] To be sure, these services are different and distinct. However, there should be some interplay between both of these professionals’ roles.
In addition to drafting trust instruments, an attorney can also provide assistance with “funding” trust instruments and can weigh in on the potential legal ramifications of various asset titling strategies. Conversely, your financial professional can provide more informed advice about your overall investment picture when he or she is aware of your estate plan and legacy planning goals.
A lawyer can also provide valuable advice when it comes to implementing your goals for lifetime or legacy charitable giving.
There are a variety of insurance and annuity trust planning strategies your lawyer can help you create, and your financial professional can help implement.[iv] Whether you want to make charitable contributions during your lifetime and leave the remainder to your spouse or future generations, or create a lifetime annuity income for yourself and leave remaining assets to a favorite charitable cause, an attorney can put the legal framework in place to help you work toward reaching those goals in a structured, tax-efficient manner.
Your estate attorney needs to know what your financial picture looks like in order to provide legal advice about various strategies and to draft trust provisions related to income, estate, and gift taxation.
Different types of investment vehicles are taxed differently. Approaching trust or other investment account distributions haphazardly, without considering the potential tax ramifications, could result in unnecessary overpayments to the IRS or other tax authorities.[v] Working with both an attorney and a financial professional can help you take a more deliberate, tax-efficient approach.
Help Your Financial Planning Team Help You
Ultimately, you can help your financial professional by facilitating or enabling communication between the various members of your planning team. Keep your financial professional informed about changes in your estate plan. Similarly, notify your estate and trust attorney about changes to your financial situation as such changes often drive updates to trusts and other estate planning vehicles.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.
LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
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