Providing asset details to your estate attorney is essential

Published Oct 29, 2017 at 9:00am

“Why do you need copies of my bank statements?”

“I keep my beneficiary information up to date, why do you need to see that?”

These are legitimate questions I’ll hear from clients, some more guarded and protective than others. It is understandable. The news is full of phishing schemes, breaches of personal information and outright fraud.

At the same time, the state comptroller advertises widely it is holding over $15 billion in unclaimed funds.

This staggering figure speaks volumes about how many people neglect both estate planning and telling their loved ones about their assets and where to locate them.

Unlike information provided over the Internet or to clerks taking credit card numbers, attorneys are bound by attorney-client privilege to keep any matters discussed confidential and private.

If there is discomfort in sharing such information, clients should be aware the penalties for breaching this confidence are severe, ranging from suspension and disbarment to criminal charges.

Also, the client should specifically inform his/her attorney if they are authorizing the sharing of such information with family members or other individuals, like financial advisors.

I always encourage a single client to bring at least one child with them to meetings, as such open communication often prevents questions or disputes after a person dies. However, I first inquire whether the parent is comfortable sharing this information with that person present.

I’ve found the following to be the most common reasons to share financial details:

• To Avoid Probate! In the world of estate planning, the attorney’s job should be to determine what type of assets you have and to whom they will pass upon your death. This is much easier said than done.

Many people are confused about what assets are distributed through a Will or Trust upon death, as opposed to what assets pass directly to a named beneficiary after death. The estate attorney should be able to explain, outline and streamline this process for you.

If a client does not tell his/her attorney about bank accounts, life insurances, IRAs and similar funds, and show proof the beneficiaries and account holders are up to date, it can create a world of confusion and potential litigation after death. At the very least, it will create a situation where an estate needs to be probated via the court system which equals time, delay and legal and filing fees expended which could have been easily avoided.

• To Prevent Underestimating or “Losing” Your Assets. I often encounter children of deceased parents spending countless hours/days trying to figure out exactly what accounts and property their parents owned. Life insurance is usually among the first assets sought, yet funds can be lost forever if not properly claimed.

See the reference to unclaimed funds above. Recovering life insurance benefits becomes more problematic if the policies are very old, are misplaced and/or if the policy was taken over by another company and up to date records cannot be found.

Common client questions I ask (in addition to standard account information): Do your life insurance benefits change if employment ends or upon reaching a certain age? Do you own property in other states? Do you own any vacant lots or co-own property with relatives or friends? Are you an owner or part-owner of a business? Do you own multiple vehicles or guns (i.e., assets that are heavily regulated)? 

• To Make Clear Who Gets the Bulk of Your Assets When You Die.  Example: Joe Private, a widower, refuses to divulge his assets to his attorney. Claiming he has sufficient assets, he demands a Will be drawn up which leaves $25,000 each to his two children and, “whatever is left, if anything …” to his brother, John Private, also a widower.

Joe Private dies and it is discovered he has over $500,000 in assets. John Private has predeceased Joe but has one son, Freeloader Private, who now stands to inherit $450,000 from his estranged Uncle Joe’s Will. Joe’s two sons, who despise Freeloader, are livid at this result and claim the Will intended to leave them the bulk of the estate. Poor estate planning and lack of detail has now created a hostile family situation, litigation and a potential malpractice action against the attorney.

Conversely, there are situations where people want to leave a specific dollar amount to a person or charity and “everything else” to their children. If there are few assets left in the estate, this can create a situation where children end up with nothing after the other named beneficiaries are given their specific sum.

A better solution is to ascertain and list all known assets and then leave percentages, rather than dollar amounts, to beneficiaries. This avoids a winfall by a so called collateral beneficiary, entity or someone you intended to leave a much smaller sum.

• To Prevent Fraud and Misappropriation of Your Assets. If you entrust your asset details with your attorney, you are helping to combat fraud or the “worst case scenario” element of someone trying to abscond with your assets after death.If there is a hostile family situation brewing, if a family member is addicted to gambling, drugs, alcohol or has severe money problems, the more danger there is for illegal behavior.

Providing copies of current statements and beneficiary information to your attorney, and keeping those documents updated when vital changes are made, is a safety net against fraud and abuse and can assist in tracking down a culprit.

Keeping the foregoing in mind when sharing vital information with your estate attorney will hopefully dispel any discomfort and instead bring peace of mind that you are ultimately benefitting your family for generations by completing a proper and thorough estate plan.

James S. Rizzo is an attorney with the law firm of Hilton Estate & Elder Law, LLC, with offices in Rome, Utica, Boonville and Lowville.

He has over 21 years of legal experience and concentrates in Estate Planning matters, including Wills, Revocable and Irrevocable Trusts, Powers of Attorney, Health Care Proxies, Asset Protection, Nursing Home/Medicaid planning and related Litigation issues.

He can be reached at 315-624-9600 or jsr@hiltonlawny.com for a free, confidential, initial consultation. Visit us on the web at: www.hiltonlawny.com.