Your CPA acts as the tax expert who prepares your tax returns and calculates your estimated tax payments. They can also provide recommendations surrounding how to manage and reduce taxes. In addition, in partnership with your financial advisor and estate planning attorney, your CPA can provide valuable insight as you consider legacy gifting strategies.
An estate-planning attorney helps you manifest your goals for your assets by structuring a plan to accomplish those goals. An effective estate-planning attorney will ensure you have functional estate plans, including a will and/or revocable trust, powers of attorney for financial and health care decisions, and a health-care directive. In addition, they can provide the beneficiary language for your non-probate assets such as life insurance, annuities, and retirement plans. Your attorney is also an invaluable partner to assess and determine the best vehicles to successfully accomplish preserving, managing, and distributing your assets after your passing.
Risk-management specialists, often acting as an insurance broker, are also an important leg of the stool. Risk management specialists may work in the area of property/casualty, long term care, disability or life insurance. In each area, their expertise identifies ways to reduce your risk of loss, whether that’s insuring your life so your family has financial stability if you pass away or become disabled, or insuring property so it can be replaced in case of a loss or lawsuit.
On this team of four, the financial advisor acts as the “deep generalist.” This means that the advisor has attained knowledge of each of the three areas of tax planning, estate planning, and risk management to help advise you on potential next steps to accomplish your goals. The advisor can bring ideas for solving problems to you and then consult one or more of the three experts if needed to undertake the objective. The advisor essentially acts as the “quarterback” for the four-person team. They call the play and then pass the ball onto who can best accomplish the task while still supporting the development of that play. On top of being the quarterback, a financial advisor can also provide investment management services.
While you may be extremely familiar with each of the four legs of the stool, it is important to consider a few questions:
- Is my stool “out of balance” because one of these professionals is missing?
- Are the legs of my stool working together efficiently to give me the support I need?
- Do I need to change my thought-process surrounding what one of these resources can do for me?
To have the foundation you need to build and maintain your legacy, it is imperative that all four legs of the stool are in place and working together properly to support you on your path to success.
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