Setting Expectations

Like many of you, over the past few weeks we entertained guests from northern locales looking for sun, beaches and good weather. While we enjoy having friends and family in our guest room, it’s also a very busy time of year for me and my practice, so I don’t get to take as much time with them as I would like. Consequently, when we first make plans we often make it a point to set expectations about how much time we’ll be able to spend together and suggest activities that our guests can enjoy on their own.

It’s all about setting expectations. Early communication usually sets the stage for a favorable experience for all.

Expectations are also important when communicating with your loved ones about your estate plan. Discussing one’s private legal and financial affairs is never easy. Consider the burden you could place on whoever is responsible to fill the legal role when you become disabled and are not able to manage your checkbook, investments and other day to day affairs.

I therefore encourage my clients to sit down with the party or parties who will serve as an agent under a durable power of attorney document, as your successor trustee of your trust and as personal representative under your will to brief them on your legal, tax and financial situation. This includes where your accounts are held and how you go about managing your assets. It’s a good idea to introduce your lawyer, accountant and financial advisor to your loved ones who you named to fill these important roles.

If you named a bank or trust company to serve as your successor trustee, it’s always a good idea to form some sort of relationship with them prior to requiring their services. If you are an investment do-it-yourselfer then you might consider working with your named bank or trust company on some portion of your portfolio to determine if you’re a good fit for one another.

To do otherwise with any of my above suggestions risks having a “transition in a time of crisis.” In other words, if the parties and professionals that need to be involved in the event of your disability are only called upon at the moment of your disability, everybody must get up to speed very quickly so that things don’t fall through the cracks. When you name a financial firm as a trustee, for example, and they have no prior history with you then they have no idea as to your investment goals, your risk tolerance, and your general philosophy. Once you become disabled, then you may have no way of communicating these facts to them.

If you’ve named a son, daughter or other loved one to fill this role, it can become equally difficult for them, especially if they have no idea as to your net worth, your estate plan, or any tax or other investment issues that you deal with on a day to day basis.

Many clients fear sharing this confidential information, even with their closest relatives. A major concern is that in revealing your wealth, certain gift or other financial expectations arise. If this is an issue, then perhaps you haven’t named the right parties as your durable power of attorney or as your successor trustee.

More delicate issues arise in blended family situations. When your will or trust continues to benefit your spouse with the remainder interest left to family members not of your current marriage, then you are financial marrying these individuals to each other, often for the remainder of the surviving spouse’s lifetime. Setting expectations in this situation is crucial. If your spouse is your primary concern, it always helps to voice your intent to those affected while you are alive, healthy and competent. Don’t just leave it to the cold words of a legal document. If you aren’t comfortable revealing the extent of your finances, then at least express your intentions in broad terms to squelch future problems.

Communicating and getting ahead of any difficulties is always a good idea. And what’s good for the goose is good for the gander. The conversation should be just that – a dialogue rather than a lecture. Take the time to listen to any concerns that your loved ones might have. After learning of those concerns it might mean a needed adjustment to the course.

Now that summer-like weather is almost upon us, our guests have fled. But that means we may spend a little time up north to enjoy their nice weather. I wonder who might have an available guest room.

The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

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Craig R. Hersch

  • Senior Partner,
    • Sheppard Law Firm
  • Florida Bar Board Certified Estate Planning Attorney / CPA
  • Editorial Advisory Board Member,
    • Trusts & Estates Magazine
  • Founder & Board Member,
    • State Chartered Trust Company