Special Estate Planning Considerations for Professionals

Columns and blogs abound offering tips and questions individuals should ask to help you choose the right professional to assist you with your investments, retirement, taxes and legal planning. Check any consumer organization’s website or scroll posts on LinkedIn and you will discover options to evaluate your potential new trusted advisor. Here are a few questions that are not generally found on those lists, but probably should be part of your interview:

  • Have you taken care of your own estate planning?
  • If you have done your plan, how long has it been since you reviewed it for fit and accuracy?
  • Do you have an exit strategy (if the advisor is also an owner versus employee)?
  • What will happen to your clients if you should become disabled or die while still working in your practice?
  • What is your “backup” plan? (Ask for the names of the individuals involved.)

Astute clients and potential clients occasionally asked me when I had a solo law firm what guidelines were in place in the event something happened to me. I had an answer and I had a plan because I faced the potential disability question back in 2008. Just a couple months after opening the doors to clients I started having severe joint pain, headaches and odd tingles with random fever and flu-like symptoms. My physician tested me for rheumatoid arthritis and when it came back negative suggested I was suffering anxiety from opening my own practice and trying to cope with family life (my son was barely a year old and our daughter was due to start kindergarten). A few weeks later after I suffered Bell’s palsy in my face my husband rushed me to the hospital where they performed a spinal tap. Suddenly diagnosed with Lyme disease I scrambled to make formal what previously had only been some light banter over drinks with a good friend. As with the business owners and families who come to Boylan Code for planning assistance, unexpected events push long-standing “to do” list items to the forefront. Sadly, I had started a disability insurance application with my advisor when I first opened the firm and had set it aside. Once diagnosed that option to replace lost income during disability was lost to me.

All professionals, not just attorneys, have a professional obligation to their clients to notify them when major changes occur and having an exit strategy in place benefits everyone involved, including the professional, her clients, the business team and employees, vendors and colleagues. Having individuals identified who can step in and assume work flow and business operations will keep matters flowing, can avoid malpractice claims and can provide needed security and liquidity should unforeseen catastrophes or illness strike.

Each profession is governed by its own rules and ethical standards and each profession’s own licensing bureau as well as professional organizations provide assistance to varying degrees with these needs. For example, the New York State Bar Association offers a comprehensive guide, NYSBA Planning Ahead Guide: How to Establish an Advance Exit Plan to Protect Your Clients’ Interests in the Event of Your Disability, Retirement or Death. Attorneys need to pay particular heed when client funds are involved; if the signatory to the client trust account becomes disabled or dies without anyone else having access to those funds a special supreme court proceeding must be instituted for another attorney to gain access to those funds, determine to whom they belong and arrange for their payment or return. Strict rules prohibit the attorney charged with this endeavor from taking any payment for the work involved. Having sadly assisted in one such instance where a trust account was not handled prior to a fellow lawyer’s death I can personally attest to the significant time involved, time that took me away from other clients’ work and required personal trips to the financial institutions involved. Certainly the decedent never intended for this to happen, but by failing to plan it did.

For licensed professions often a different person needs to be named to handle the business versus other personal matters due to client or patient confidentiality and the strict governance of the particular profession. For example, an accountant’s practice cannot be taken over by the surviving spouse who can otherwise be named as Executor to manage personal assets following death. Discussions regarding the proper person to name and what sorts of authority they will need following a death or disaster need to occur and be reviewed regularly. Likewise, any entity agreements need to be reviewed to ensure that transfer restrictions are followed and included as needed in the principal’s estate planning documents.

Professionals owe their clients, colleagues and families the respect and care to provide for a smooth transition in the event of death or disability. Some basic steps to help:

  • Institute a system for transitioning clients, open work, closed files and physical records.
  • Provide a road map for employees and agents who will need to help with the transition.
  • Ensure that estate planning documents provide the needed business powers to avoid your agent or fiduciary having to resort to unnecessary court involvement and expense.
  • Recruit other outside professionals to play their necessary parts.

While preparing this column our summer associate, Austin P. Judkins, researched various financial industry publications and could not find surveys that addressed the specific question of whether financial professionals had actually engaged in preparing their own estate plans. So while we could not find specific industry information for the numbers of bankers, lawyers, accountants, financial advisors and related professionals involved in estate planning who may have neglected to prepare their personal plans, by reviewing general planning statistics we can deduce that approximately one half (1/2) of planning professionals have no plan in place, and for those that do, what does exist may be insufficient. This by no means suggests that those professionals lack professional skill. It is much more probable that they are highly skilled and like the fabled cobbler are so successful at helping others that their own needs fall by the wayside in favor of devoting themselves to their clients.

Our firm regularly works with a cadre of other accounting and investment professionals to help our clients secure their business and personal planning. We now recognize the need to take a closer look at helping those trusted partners with their own transition planning. If you find yourself wondering if your disability strategy or exit strategy could use some attention we would be honored to help you complete the needed steps to ensure peace of mind and care for your team, your clients and your loved ones.

Lisa M. Powers, Esq. is a Partner in the Wealth Protection and Transfer practice group at Boylan Code, LLP.

Austin P. Judkins, a summer clerk at Boylan Code LLP and a student at Syracuse University College of Law, also contributed to this article.

To view the published article, click here.

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