As a broker, what will you do when working with an estate planning attorney? Perhaps your most important interaction is in sharing information. Furnish full and detailed data about your client's assets (but only with your client's written permission) to his or her attorney. This data includes the current fair market value of each asset and how each is owned, namely, individually and by whom, in joint tenancy and with whom, or in tenancy-in-common and with whom. Without this information from you, no attorney can make planning suggestions or accurate tax calculations for the client.
For your protection, it is important to indicate that you are providing the data with your client's permission and that it represents only the data you have. The client may well have other valuable assets besides securities, such as real estate, a business, life insurance, retirement benefit plans and so forth. Even though you do not manage these additional assets, they may need to be included in your client's estate and will need estate planning analysis if taxes are to be minimized or avoided.
Even though the new tax bill enacted and signed by the president provides some estate tax relief, making sure the attorney has a complete picture of the client's estate is important. The estate tax rate is lowered from 55% to 50% in 2002, and the current “exemption” of $675,000 is raised to $1 million in 2002. However, the tax itself and high rates (no lower than 45%) stay with us until 2010, and even then may not go away permanently.
Making a Recommendation
Your client might ask for your advice on selecting an attorney. This is not a simple question unless you already know reputable attorneys with the high level of expertise necessary to do estate planning work. Even estates of modest size ($600,000 to $2 million) can present a challenge to an attorney who does not specialize in estate planning.
Under the ethical rules that govern attorney conduct, a lawyer should not undertake any assignment he or she is not capable of performing competently. Not every lawyer can draft a will, any more than every doctor can perform a triple-bypass operation. Be sure the person you recommend is up to the task, fair in his or her pricing, and prompt and caring in his or her responses. Otherwise, your client will blame his or her dissatisfaction with the attorney's performance or inattention on you.
Your brokerage trust company or any other trust company will know the names of good practitioners in this field. American College of Trusts and Estates Council (ACTEC) members all specialize in estate planning, so the ACTEC is almost always a reliable group from which to select counsel for your client. There are ACTEC members throughout the United States.
One final point: Do not give estate planning advice yourself directly to your client. However, you can freely discuss general concepts, such as gift giving, living trusts or whatever. Never say, “This is what you should do.” By doing so, if the advice you give is incorrect and the lawyer even concurs, both you and the lawyer are liable.
Roy M. Adams is worldwide head of the Trusts and Estates Practice Group at the law firm of Kirkland & Ellis in New York. In addition to his law practice, he lectures extensively on estate planning and has authored several professional texts including “Contemporary Estate Planning: A Definitive Guide to Planning and Practice.”