Beneficiaries — Issues in Choosing Professional Advisers

A beneficiary should ask himself whether he wants to (or can) tend to the estate himself or whether he would rather delegate the responsibility to someone else. The larger the inheritance, the more likely a beneficiary will need professional advice. A six-figure inheritance or greater will probably change many things in a beneficiary’s life and he will need good advice for these changes. Even with a modest inheritance, a beneficiary is well advised to consult the most competent attorney and accountant that he can find. Even if a beneficiary only meets once or twice with professional advisers when he first receives his inheritance, their advice is critical to avoid future costs that may far outweigh what he pays now.

Choosing advisers is largely a matter of common sense. First, a beneficiary should look for honesty and integrity. Also important are intelligence and professional competence. A beneficiary may want to look into an adviser’s background and experience. A beneficiary should also question whether he feels comfortable with the adviser — is it someone who listens when he talks and who responds sensitively. An adviser should be willing to put a beneficiary’s interests first.

In order to find an adviser that possesses these traits, a beneficiary should ask other professionals for suggestions. At least two professionals in each category needed should be interviewed in order to provide a basis for comparison. Upon request, an adviser should provide references both from clients and from other professionals in his field. A beneficiary should also ask to see an adviser’s resume and should inquire about the information provided as to education, years of practice, memberships in professional organizations, and specialties.

Although not conclusive of poor professional behavior, a beneficiary may want to ask an adviser if she has ever been cited by a professional or regulatory governing body for disciplinary reasons. A beneficiary should straightforwardly ask an adviser if his inheritance is too large or small for the adviser to deal with. Compensation should also be discussed. In most situations, a straight fee arrangement (by the hour or project) assures a beneficiary of the independent judgment of the adviser. Exceptions to such arrangements include money managers and plaintiffs’ lawyers.

As the client who is paying the bills, a beneficiary should not be intimidated when interviewing potential advisers. Relatives and friends should be avoided as advisers because personal relationships may effect their ability to give detached professional advice. A beneficiary should also be careful about having relatives recommend their advisers because relatives may not want to relinquish information to each other. Cost should not be the sole focus of choosing an advisor. Instead, a beneficiary should focus on the quality and value of the advice he needs. It is important to note that a beneficiary should avoid working with an advisor that declines to hold full and open discussions on any professional matters that the beneficiary wants to discuss.

If an inheritance comes with advisers attached, a beneficiary should remember that the adviser’s loyalties may lie elsewhere. Each adviser should be met separately and asked about matters that concern the beneficiary. Other things being equal, a beneficiary may prefer advisors that are roughly his age. Proximity of advisors is also a concern that should be addressed when making a selection.