Financial advisors are not estate planners. They gather documents but cannot do the same tasks with them in the way an estate planning attorney can. For instance, financial advisors can’t review them and offer legal estate planning advice. Financial advisors often tell you that they don’t need to see your legal documents or have them on file to review them when something happens because they simply aren’t attorneys. If you have questions about needing a trust, contact an experienced estate planning lawyer.
From a lawyer’s perspective, we respect the financial advisor’s role in giving investment advice. Conversely, your attorney cannot explain to clients whether they should pursue a specific investment. Should I take this inheritance and pay off my house, or should I keep it going and get the mortgage interest deductions? These are questions for financial advisors despite the concern being rooted in an inheritance. If we receive these types of questions—which we do—we will defer to another professional in a position to field it.
Lawyers & Finances
At what point do attorneys venture into the financial arena? Number one, we aren’t concerned with how your assets are invested (land, stocks, bonds, annuities). We will hone in on how that asset is titled (you will know that a title means everything if you read that previous blog). We get calls from people regularly about how their loved one has passed away, and we quickly realize that we are one of their last calls. Even more surprising is that these same people will say they spoke to their financial advisor before us and are under the impression that they do not have to go through the probate process. Their concern is that their bank tells them they must go through probate. Here’s their question: What do we need to do?
They will schedule a consultation with us because they want us to help them probate the will. It may take us as little as fifteen minutes to determine (and inform them) that they can bypass probate altogether. How can we arrive at that conclusion so quickly? Because we ask them how the assets are titled. Beneficiary on the IRA? No probate. We titled the home in the name of a trust. No probate. During this conversation, they frequently ask why other people tell them they must unnecessarily go through the probate process. The main reason is that other professionals, whether they are financial advisors or work at a financial institution, are reaching into areas of the law.
Where Mistakes Happen
In many instances, a bank may say that someone needs to go to probate because this is what they were told to say after receiving some training on the matter. Their first action may be to freeze the account and inform the relatives to go through the probate process. It also extends beyond this – Insurance companies may tell people that a specific policy left to someone is tax-free. It could be income-tax-free, but that doesn’t mean it is exempt from estate taxes.
Regarding inheritance tax, it is $11 million per individual ($22 million for a married couple) before your kids have to pay estate taxes. This total includes everything you own. Assets such as life insurance term policies are included in this. (When attorney J. Kevin Tharpe was newly married, the limit was $600,000—and he owned a $1 million life insurance policy. If he had passed away, then his spouse would have owed estate taxes despite having few assets—which is very typical for young couples.) In other words, never underestimate what you are worth. In 2026, the estate tax limit may drop closer to $5 million.
Kevin Tharpe, P.C.
With years of experience in elder law, estate planning, and special needs planning, we understand the importance of accurate, personalized legal guidance. Don’t let misconceptions or incomplete advice lead you astray. Schedule a consultation with us today, where we’ll provide you with the clarity and direction you need to make informed decisions about your assets and future. Our approach is not just about documents; it’s about offering peace of mind and protecting your legacy.
Kevin Tharpe
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- Risks of Failing to Title Your Home in Your Trust - September 18, 2024
