How to Tell Good Advice from Bad

By Kim Kimbrough, J.D., L.L.M

Today, I want to talk about asset protection advice. It’s everywhere these days. Google. Magazines. TV shows. Your accountant. Your financial advisor. Your lawyer. Your rich uncle. Your deadbeat brother.

There’s no shortage of people who think they know how to protect your assets. Where should you go? Whom should you trust?

Some people go to lawyers. Some go to their financial advisors. Others go to their CPAs.

Will these people get good advice?

Maybe. Maybe not.

Asset protection is tricky. It’s not just a financial issue, though many CPAs and financial advisors will claim otherwise. Asset protection isn’t just a legal issue, though just about any lawyer can create a trust or set up an LLC. But is it the right trust? Is it the right LLC? Will it protect you in the ways you need to be protected?

Asset protection sits at an interesting junction of professional expertise. It’s where estate planning, financial planning, tax planning, and long-term care planning collide. Finding someone who understands all those things is easier said than done.

Here’s how to tell the good advice from the bad.

First, start with a specialist: an estate planning lawyer. Resist the temptation to work with the lawyer who helped you close on your last real estate deal or helped you get your divorce. Avoid the general practice attorney. You will get better advice from an expert, someone who has dedicated his or her career to estate planning law and everything that goes with it, including wills, trusts, powers of attorney, LLCs, and medical directives. However, it can’t be just any estate planning lawyer. It needs to be someone with experience.

Second, find someone whose skills are current. Laws that govern things like estate planning, elder law, Medicaid, and VA benefits change all the time. How can you tell if the lawyer you’re considering is up on the latest? Check out the firm's website. Is the lawyer putting on seminars for the public or providing continuing education for other attorneys? If the lawyer is out there educating others, it’s a good sign that his or her knowledge hasn’t gone to seed.

Next, most asset protection strategies have tax consequences, so your estate planning lawyer needs to have a background in tax law. If you can find an estate planning attorney who is also a CPA, that’s a great combination. However, you’ll have a better chance of finding a unicorn. It will be easier to locate an estate planning attorney who has a LL.M., (a lawyer’s master’s degree) in tax. There just happens to be one here at Kimbrough Law.

At this point, you may be wondering what role a financial professional like a CPA or CFP might play in the development of your asset protection plan. There’s a place for their expertise, but you have to know what you’re risking if you rely exclusively on them. Your CPA may be a tax expert, but unless she is a lawyer, she won’t be able to do the legal work, and she may not be willing to help you plan. Your CFP might be a great long-range planner, but he will be no help with the legal work. And unless he understands tax law, your heirs might end up with an unwelcome bill from Uncle Sam after you’re gone.

My advice to you is this: find an experienced estate planning lawyer with advanced training in tax who works in conjunction with your CPA and your financial advisor. If you know what to look for, you’ll have a better chance of creating an asset protection plan that does what you want when you’re alive—and after you’re gone.

If you’re interested in asset protection, Kimbrough Law can help. Just give us a call.