In-House Estate Planning: What an Advisor Can and Cannot Do

Where the legal line sits

In California, preparing wills, trusts, deeds, and powers of attorney, and providing individualized advice regarding their legal terms, generally involves the practice of law and should be handled by a licensed California attorney. Avinci does not practice law. A financial advisor who is not a licensed attorney does not draft those documents, regardless of how familiar they are with estate planning in practice.

That boundary is sometimes presented as a limitation of advisory firms. It is more useful to read it as a division of labor. The attorney's work produces documents that carry legal effect. The advisor's work concerns the assets those documents are meant to govern: how they are held, how they are titled, who is named on them, and how their tax treatment interacts with the rest of the plan.

Both halves matter, and they are easy to separate. A properly drafted trust may not govern assets that were not transferred or otherwise directed to it, depending on the asset and the applicable transfer arrangements, and beneficiary designations generally operate outside a will or trust. Trust funding in California covers that gap in more detail.

Two meanings of in-house

The term in-house estate planning may describe different service models. Two examples are common, and both are legitimate.

• Legal services attached. The firm has a licensed attorney on staff, or operates alongside an affiliated law practice, so that drafting and financial planning happen under one arrangement. Where this model exists, the attorney's role and any related business interests should be disclosed.
• Coordinated with outside counsel. The advisory firm handles financial planning and administrative coordination, and works with the client's own attorney, or one the client selects, for legal drafting.

Neither model is inherently better. The first can reduce handoffs; the second preserves the client's choice of attorney and keeps the legal relationship independent of the investment relationship. What matters is that the firm tells you plainly which model it uses and who is responsible for each piece.

Who does what

The table below is a general description of how estate-related tasks commonly divide among professionals. Scope varies by practitioner and by engagement.

A general illustration, not a statement of any individual professional's scope. Legal determinations are made by the client's attorney.

California documents and rules

Several features of California law shape what an estate plan here needs to contain, and each is a subject for your attorney.

• Separate health and financial authority. California generally uses an advance health care directive for medical decisions and a separate durable power of attorney for financial matters. An estate plan typically addresses both.
• Community property. California is a community property state, which affects how assets acquired during marriage are characterized and how basis may be treated at the first spouse's death.
• Probate costs. California law provides a statutory compensation schedule for personal representatives and their attorneys in probate, generally calculated on the value of the probate estate without deducting certain debts, which is one reason trust funding receives attention here.
• Proposition 19. Changed the rules for certain parent-child transfers of real property and property tax reassessment. Eligibility depends on specific requirements.

Inherited retirement accounts

The SECURE Act changed how most beneficiaries receive inherited IRAs and employer plan accounts. Most non-spouse beneficiaries who are not in an eligible category must now empty an inherited account within ten years of the original owner's death, rather than stretching distributions over their own life expectancy. In some cases, annual distributions are also required during that ten-year period.

The practical effect is that beneficiary decisions involving retirement accounts can have significant tax consequences in addition to estate-planning consequences. A large tax-deferred account left to an adult child in their peak earning years may result in significant taxable income to the beneficiary, depending on the applicable distribution rules and the beneficiary's circumstances. Naming a trust as beneficiary adds further complexity, because how the trust is drafted affects which distribution rules apply.

That is precisely the kind of question that falls between disciplines. The attorney drafts the trust, the CPA advises on the tax outcome, and the financial plan determines how large the account is likely to be. Retirement-account decisions of this kind, including evaluating whether a Roth conversion or other strategy may affect the future tax treatment of inherited assets, belong in a coordinated conversation among the client's financial adviser, CPA, and attorney.

Questions to ask a firm

These questions clarify how any firm divides estate-related work, and each has a factual answer.

• Does the firm have a licensed attorney on staff or an affiliated law practice, or does it coordinate with outside counsel?
• If an attorney is affiliated, how is that relationship structured and disclosed, and can I use my own attorney instead?
• What does the firm do internally for trust funding and account titling, and what is left to me?
• How and how often are beneficiary designations collected and reviewed, and with whom?
• At what point in the year does the firm coordinate with my attorney and my CPA?
• In what capacity is the firm acting for each service, and how is it compensated for each?

A firm's willingness to answer these clearly and in writing can help you make a more informed comparison.

How Avinci divides the work

Avinci Wealth Management is a Registered Investment Adviser registered in California, Arizona, Illinois, Texas, and Nevada, firm CRD #327780, headquartered at 23929 Valencia Blvd, Suite 404 in Santa Clarita, with additional offices in Beverly Hills and Woodland Hills. When providing investment advisory services, Avinci Wealth Management is subject to its fiduciary obligations under applicable investment adviser law.

Avinci does not practice law and does not draft wills, trusts, deeds, assignments, powers of attorney, or other legal instruments. Your attorney does that, and we work alongside them. At the client's direction, Avinci may provide administrative assistance with account forms provided by financial institutions and help collect and track account titling and beneficiary-designation information as part of the financial-planning process. Legal determinations regarding ownership, trust funding, deeds, and whether documents and designations implement the estate plan are referred to the client's attorney.

Under the Retirement Blueprint, estate coordination is examined alongside investments, tax, income, and insurance, so a beneficiary decision and a conversion decision can be looked at in the same conversation. Founder Lindahl Lucas personally oversees the development of each Retirement Blueprint.

Avinci receives advisory fees for investment advisory services. Separately, insurance and annuity products may be offered through our affiliated insurance agency, Lucas Insurance Services, which may receive commissions from issuing insurance companies. This compensation arrangement creates a conflict of interest and is disclosed in our Form ADV. Related reading: trust funding in California and planning for long-term care costs.