This is the second half of a two-part article looking at the process of hiring an estate attorney and why it is so important to get this right.
The following article – kindly republished here with the authors’ permission – is by Stuart Lucas and Josh Kanter. (Details on the writers below.) They examine the steps that family offices and those in wealthy households must take in choosing estate attorneys. Choosing advisors can be a complex process but needs to be gotten right. The first half of the article was published here.
Another topic to consider is how an experienced attorney weighs the benefits of doing something now versus doing something later. How would this attorney help us weigh taking a specific action today versus some years into the future when we will know more about the scale of our wealth, the motives of our children, or the state of the tax code – which could become more or less advantageous? Sometimes the reason for acting now is obvious, often it’s not.
In our view, one of the least helpful answers an attorney can give is simply to offer to do whatever the prospective grantor(s) wants. A well intentioned attorney should have the capacity to take a family through the philosophic complexity of this question, directly or in concert with the family’s other advisors, and to help identify potential flash points of future tension.
4. Operations and accountability
• How do they measure the tradeoffs between
complexity and efficient execution over the life of the
structures they recommend, individually and
• How can they help their clients to integrate estate planning advice with corporate and personal tax elements of their enterprise?
• How do they help clients maintain strong controls to assure compliance with the structures and transactions designed in the documents?
• How will the lawyer help clients to choose initial and successor trustees and other governors and governance structures?
• How would they design multi-generational family control over leadership selection and governance representation? How is accountability approached in documents and operating processes?
Every estate plan, once designed, needs to be implemented effectively and periodically reviewed to have any value. Too many families and lawyers view this as an administrative matter and do not give it due consideration.
Client direction and business circumstances often cause estate
attorneys to focus on the formation and design of individual
planning elements one at a time, often driven by immediacies like
potential tax law changes or specific liquidity events. As wealth
grows, entities tend to proliferate, tax returns multiply, and
operational complexity compounds. Each time assets are passed
from one person or entity to another, qualifying valuations and
clear records are essential tax records.
Figuring out how to manage a growing administrative burden while remaining strategic is essential.
This is especially true when families are large and complex. Estate plan design must balance asset and entity fragmentation – which may have specific tax and technical advantages – team building with operational and governance complexity of the overall family enterprise. It is essential to orchestrate and project forward how the pieces will fit together.
Administering large and long-lived estates can become enormously costly and complex, particularly as they age. At some point, the complexity becomes counterproductive and the original intent backfires. We don’t espouse specific right or wrong answers here, but as you listen to each lawyer’s response to these questions, ask yourself how sensitive they are to the long-term administrative and strategic implications of complexity. How intentional will they be to help you avoid a costly planning mess that runs the risk of overburdening your heirs rather than empowering them.
Choosing knowledgeable trustees and holding them accountable is essential, whether they are individuals or institutions. Having a workable mechanism to remove and replace them is essential. Equally important is how you will educate and train your beneficiaries to know what to expect from their trustees, how to be good beneficiaries, and how to be good stewards of the wealth they will inherit or steward for future generations.
5. Risk management
• How does this lawyer advise clients to manage
the intersection of estate planning risk with the business risk
and asset value volatility of the underlying assets in their
• What are the best ways to protect against challenges to clients’ estate plans from government, family members or others?
• How does the lawyer factor in prospective changes to the law into their advice?
The effectiveness of estate plans is heavily impacted by the characteristics of the assets being incorporated into the plan. How are the assets valued? How volatile are they, and is that volatility across assets correlated? How liquid are they? Do they have stable income streams? Estate planning techniques are also affected by externalities like interest rates, the current tax code and prospective changes to it. Estate planning often introduces an element of rigidity into family enterprises, so you need to project current planning priorities into an uncertain future. Can and will your lawyer help you ‘stress test’ the plans to look for unintended results and consequences, including those that might impact family harmony?
Estate planning or implementation decisions driven by emotional or business reasons which contradict trust terms and/or best practices often result in ugly intra-family lawsuits. Is the lawyer sensitive to these possibilities and will they point out when the quality of decisions, the communication about them to interested parties, and/or when checks and balances are dangerously inadequate? Part of a good tax and estate attorney’s job is to point out where to take measured risk, where not to, and how to avoid our own worst instincts.
6. Experience and wisdom
• Give examples of some of the most successful generational transitions that have occurred under the planning the lawyer helped put in place, and some of the worst. What led to success or failure?
Technical tax saving is one thing (though not assured to work), but the success of the other purposes of the structure is an entirely different matter, one that involves your loved ones’ lives, their productivity, prosperity, and happiness. These are impactful decisions, the consequences of which can lead to disruptive family litigation or to family harmony for generations. You want someone beside you that fully appreciates – and has experienced – the magnitude, seriousness, and potential implications of these decisions. We strongly believe that such wisdom leads to more and better insight into trustee/beneficiary relationships and what it means to educate grantors, trustees, and beneficiaries successfully.
If you’ve made it through a process of the type and depth we’ve tried to describe here, you’ll have a pretty good sense of the people you have interviewed and whether you can work well together. In addition, the interview process will give you a deeper understanding of the issues and options before you. The right decision for you will be predicated on much more than the essential technical skill of your finalist. You will understand how well that choice fits your needs, ambitions, values and approach to risk. Your choice should also have the interpersonal skills to be a good listener and to work well with other family members, senior staff if you have a family office, and advisors.
In essence, do you feel compatibility and comfort with your selection? Hopefully, the answers to these questions will help you compare and contrast your finalists in a useful way. To this day, both our lives have been meaningfully impacted by technical and qualitative estate planning advice that was put into practice one to three generations earlier. We know first-hand that this is a critical decision with substantial financial and interpersonal implications for you and your family for a long, long time.
About the authors:
Stuart E. Lucas is Co-Managing Partner of Wealth Strategist Partners (www.wealthstrategistpartners.com), advisors to exceptional families across their business, financial and cultural dimensions. He is the principal designer of the Private Wealth Management program at Chicago Booth School of Business and author of two books on wealth management.
Joshua S. Kanter is Principal of Josh Kanter Wealth Advisory Services (www.joshkanter.com) providing personalized multi-generational family, business and legal wealth advisory services to his clients. He is also founder of leafplanner (www.leafplanner.com), a comprehensive owner’s manual solution to bring the deliberateness of a family office to your family.