Everyone could benefit from a legal mentor: a trusted generalist with some knowledge of the law.
This is a true story. The names have been changed to protect the incompetent. Mr. Everyman despised lawyers. Like many people, he had little use for them—until he desperately needed one. That’s when they’re really expensive, you know. He was in his late fifties, skeptical of all but his own advice, highly successful in business, and had accumulated an enviable estate. Mr. Everyman’s son-in-law was a lawyer who had worked for a couple of years in a bank trust department, long enough to understand the big picture concerning estates and taxes.
Mr. Everyman was too young to think about dying and had done virtually no estate planning outside the purchase of insurance. One day, Mr. Everyman’s son-in-law, to whom his only and much-cherished child was married, tried to explain the potential financial calamity his estate was exposed to in the event of his untimely death. Mr. Everyman didn’t particularly trust his son-in-law, was not keen on taking advice and certainly not fond of paying for it. Therefore, although his trustworthy son-in-law was offering free mentoring, Mr. Everyman basically ignored him.
One day, in his late seventies, Mr. Everyman suddenly became quite ill and had a close call, perhaps even a brush with death. Only then did he get serious about sheltering his substantial estate from government redistribution. He took decisive action: He called a long-time friend and sought to cash in on favors. However, his friend, a practicing attorney, had little or no knowledge of estate planning, wills and trusts, or drafting like-kind documents. The attorney/friend nevertheless drafted a trust for him. The trust named Mr. Everyman and his daughter as Grantors.
By making Mr. Everyman’s daughter a Grantor of the trust, the esteemed counselor potentially affected an immediate gift of Mr. Everyman’s estate to his daughter. She, of course, was not a Grantor of the trust. She was supposed to have been the beneficiary only, but Mr. Everyman (and his attorney/friend, too, apparently) didn’t know the difference and they felt good about their efforts. The gift tax rate at the time was 55%, exposing Mr. Everyman to substantial gift taxes. The son-in-law immediately pointed out the problem but years passed before Mr. Everyman, to his credit, engaged a competent attorney and tried to patch things up; but issues remain to this day.
What you should take away from this story is:
1. Relatives and friends don’t make good advisers because, despite their good intentions, their advice is tainted by self-interest, their work is often inferior, especially when they’re being paid little or nothing; and no one is going to hold them accountable.
2. Having a legal mentor on your payroll—just like corporations employ in-house counsel—is a great idea because that individual has the true incentive of protecting your interests by recognizing your needs and weaknesses, being a sounding board for your concerns, and, most of all, looking over the shoulder of other professionals who may or may not be competent to serve you.
Jeff S. Barganier is an attorney, writer and entrepreneur.
This is the second post in a 20 part series. If you missed the last post in this series, please click here to retrieve it.
The opinions expressed in this blog post are the author's own, and do not necessarily reflect the opinion of Red Oak Legal, PC.