A friend of mine from out of state asked me to review estate planning documents she is getting ready to sign before going out of town for the first time with her husband and without her kids.

These documents were prepared by a traditional estate planning lawyer who sent her the draft documents for review before she signs them.

Right away, I had the feeling this was not going to be pretty. Why?

Well, to begin with the lawyer was her husband’s lawyer from before she was married to her husband and the lawyer didn’t spend very much time with her explaining the planning options or the way things were being set up.

Then, he sent her draft documents to review. Frankly, that’s just nutty. Unless I am working with a lawyer who specifically requests drafts be sent to him or her before signing, I never send drafts. How can this lawyer possibly expect my friend to review over 150 pages of documents and understand whether they do what they are supposed to do? Impossible.

The lawyer should have sat down with my friend and her husband and reviewed the documents with them before they sign them - not sent them to his client to review on her own.

My friend said she was told the documents will make things easy for her at the time of her husband’s death. And, she was ready to sign them because she had no reason to believe anything else. It just so happens she mentioned to me she’d had documents drafted and she was reviewing them and I offered to take a quick look.

Uh-oh. These documents have a lot of problems.

Here’s just a couple of things I saw:

1. When her husband dies, his half of the assets go into a trust that she does not have full control over at all, though she was told she would. In fact, she has to go to a Special Trustee for distributions from the Trust.

2. There is a mandatory division of the assets after her husband dies, which will require her to set up multiple trusts, even if tax law doesn’t warrant it based on the size of their assets at the time of his death making the administration after his death more complicated and expensive.

3. The plan does not adequately provide for her child from a prior marriage. If she were to die, he could potentially be taken out of their home and into the arms of strangers until the authorities could figure out where her family is and what to do.

4. After her death, the trust leaves all of the assets outright to their beneficiaries when they turn 25, 30 and 35 without making sure those assets would stay in protected trusts that the beneficiaries could access, control and use but couldn’t be lost to divorce or lawsuits.

Of course, my friend couldn’t know any of this just by reading the documents. She’s not a lawyer. And, I’m going to give her husband the benefit of the doubt and assume he didn’t realize what these documents said either and didn’t know his options for doing things differently. Maybe he thought he was making things as easy as possible for her. But, he wasn’t.

Estate planning isn’t about signing form documents you don’t understand. It’s about having a relationship with a trusted Personal Family Lawyer you will be able to turn to for guidance when something happens.

My advice to my friend is the same as my advice to you … make sure the lawyer who prepares your estate planning documents is someone you absolutely, totally 100% trust is going to be there to guide you and hold your hand when something happens to someone in your family. Don’t sign documents prepared by someone you barely know who may not be looking out for your best interest. This is about so much more than the documents.

If you don’t take this advice, you could be the one left holding the bag when your spouse dies.

If you’d like a review of your estate planning documents and a consultation with me to discuss what they say and what will happen when your spouse dies, I have a few limited consultation times available nationwide. The review and consultation are $950. Contact support@familywealthmatters.com if you’d like to get on my calendar.

Family Wealth Planning is the Web 2.0 version of estate planning.

Whereas “estate planning” is about preparing and passing on your financial assets at the end of your life, Family Wealth Planning is about making the right financial and legal decisions for your whole family wealth throughout your lifetime and leaving the world a better place after you are gone.

It’s about capturing the assets that are most often lost when someone dies … the intellectual, spiritual and human assets that make up a great majority of our family’s wealth and passing them on as well.

When my dad died, he left behind a bit of money, but the rest of his wealth was lost, uncaptured.

I have no letters from him or recordings talking about his hopes and dreams for my future.  My children will never hear his voice or know what was important to him.

I suspect it is the same for your family.

And while there are gobs of websites and businesses springing up to help people capture these assets and pass them on, in my experience we are just too busy and it rarely gets done.

I’ve found the best way to make sure this happens is to make it part of your legal planning.  When you are working with a lawyer on your family’s “estate” planning, if your lawyer is only preparing a plan to pass on your financial assets, he or she is only doing 1/4 of the job.

What you want is a lawyer who will help you capture the wealth that is most often lost and most difficult to plan for … your intellectual, spiritual and human assets or who you are and what’s important to you.

Through a simple Family Wealth Legacy Interview process at the end of your planning together, your Personal Family Lawyer will help you capture the most valuable family wealth you have and pass that on for successive generations by building a legacy library that will be far more valuable than any dollars you could ever leave behind.

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In last week’s article “How to Choose the Right Trustee,” I mentioned that there are no trust police out there making sure that your Trustee is following the instructions set out in your Trust. That can be scary when you are entrusting your whole life savings and your kids’ financial well-being to this person.

But, there are some checks and balances you can put in place to ease your mind.

1. Name Different People to Be in Charge of Your Money and Your Kids

Many times, people I’m meeting with want to name the same person or people to serve as guardians to take care of their children and Trustees to take care of the money left behind.

They think if they would trust someone to raise their kids, they should trust that person to take care of the money too.

This is not necessarily the case.

The qualities you are looking for in a guardian are not necessarily the same as what you are looking for in a Trustee AND if you name separate people, then they can watch out for each other.

Your children’s guardian would be entitled to regular accountings of Trust assets by the Trustee and could monitor to make sure everything seemed right. And, on the flip side, the Trustee would be in regular communication with the guardian to ensure your kids were getting proper care.

2. Name a Bank or Trust Company to Serve as Co-Trustee

If you don’t have two separate people to serve as guardian and Trustee, you may want to consider naming a Bank or Trust Company to serve as an administrative trustee, responsible for all of the tax-filings, investments, and other compliance issues.

You could give distribution power to the guardian or other family member plus give that person to the right to remove and replace the Bank or Trust Company serving as administrative trustee so long as they were replaced with another independent entity.

3. Begin a Relationship With a Personal Family Lawyer When You are Young and Healthy

When you work with a Personal Family Lawyer to establish your planning while you are young, that is a relationship with will last you a lifetime. And, ideally, your Personal Family Lawyer will continue to guide your Trustee after you are gone so that you can have the peace of mind of knowing your Personal Family Lawyer know will ensure your wishes are carried out.

If you use one or more of these checks and balances, you’ll have very little to worry about when it comes to the care and feeding of your financial wealth after you are gone.

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Before we talk about how to choose the right Trustee, let’s talk about what a Trustee does and whether you need to choose a Trustee.

A Trustee is the legal owner of assets held in Trust. When you establish a Revocable Living Trust, you will be the Trustee of your own Trust as long as you are alive and able to take care of your own finances.

At the time of your death or in the event of your incapacity, your “successor” Trustee would step in to take over control of the assets held in your Trust.

This does not mean that the Trustee can use the Trust assets for him or herself. The Trustee is required to use the assets only for the benefit of the Trust beneficiaries, who are determined by you. If you are living and incapacitated, typically you would be the beneficiary of the Trust. If you are no longer living, the beneficiaries will be the people you name to receive your assets.

The Trustee will have control over how the assets are invested, ensuring that tax returns and other filings are handled and will be responsible for making distributions to the beneficiaries.

The number one most important quality when choosing a Trustee is, as the name suggests, Trust. While the Trustee is not supposed to use assets for his or her own benefit, there are no trust police checking on what the Trustee does. Therefore, it’s critically important that you Trust your Trustee to do the right thing. And, it’s not a bad idea to include a system of checks and balances within your planning to ensure that your Trustee is doing the right thing. I’ll share some ideas for checks and balances in next week’s article.

Once you’ve chosen someone you can trust, the next most important factor is that they have common sense, good organizational skills, and a willingness to seek professional guidance. The job of Trustee entails quite a bit of paperwork and compliance requirements in order for the Trustee to maintain his or her responsibilities (legally known as fiduciary obligations).

The Trustee should seek guidance from a team that includes a tax advisor, a legal advisor and a financial advisor. A Trustee that intends to handle taxes and investments without guidance and does not seek the counsel of a lawyer is destined to fail.

Last, but not least, your Trustee should be the person that will make financial decisions for your heirs as close to the way you would. As I like to tell my clients, choose the person or people who would give your kids the same answer you would if your kids came to them at the age of 19 and said, “I don’t want to go to college. I want $50,000 from my Trust so I can {travel Europe, start a band, start a business, etc.}” Notice, I didn’t say that the Trustee would give the “right answer” – just the same answer you would.

To recap, you are looking for someone you trust implicitly, has common sense, good organizational skills, is willing to seek guidance from a legal advisor, tax advisor and a financial advisor and will make the same choices for your heirs that you would financially.