A couple recent inquiries from readers of this blog (as well as some recent client questions) reminded me of the critical role of the attorney in the asset protection planning process.
You will frequently benefit by getting input from multiple advisors — such as your investment advisor, accountant, tax preparer, maybe even certain friends and family members. Only an attorney, however, should ultimately render asset protection advice. This is because once you have retained an attorney, your discussions with the attorney will be privileged. The attorney-client privilege is a very strong one and is designed to facilitate open and honest discussions between you and your lawyer. Correspondence and discussions with your investment advisor and most other professionals will generally not be privileged. A reputable asset protection attorney will obviously not tolerate discussion about improper or unlawful activities. It is nevertheless extremely important that you be able to speak freely and openly with your attorney about your particular situation and goals. Again, input from other advisors is desirable. But engaging in asset protection planning without the benefit of a trusted attorney is a big mistake.
Another reason that an attorney is so critical to the asset protection process is that only an attorney can lawfully draft certain documents. For instance, while a financial advisor may have good advice with respect to certain provisions of a will or trust agreement, your financial advisor is not supposed to be drafting those documents. In fact, that kind of drafting may constitute unauthorized practice of law. Even putting aside the possible illegality of such action, it just does not make any sense. I have had a couple instances recently in which I was presented with trust agreement provisions that had been prepared without the help of an attorney. The poor drafting lead to all kinds of problems.
The failure of many individuals and organizations to engage in asset protection planning costs far more in the long run than the planning itself would have cost. A team approach to asset protection planning is frequently advisable as long as a lawyer is a key team member. Asset protection planning without the help of an attorney, however, is likely to be an accident waiting to happen.