The Four-Way Test applied to Law
The Four-Way Test was invented by Herbert J. Taylor as a simple ethical test to help make the right decisions in every situation not only for himself but for his staff. Making the right decision for your team or for a new client is altered and deviates from a purely profit-focused business model when the Rotary Four-Way Test is applied. We apply the Four-Way Test in our firm because it creates the best outcomes for the team and for our clients.
Asking the question, “Is it fair to ALL concerned?” changes how we make decisions about our team in many ways. For example, when a team member requests time off, we ask whether someone else is available to back them up while they are on vacation. Looking for the fair outcome for ALL concerned means we don’t want to leave just a few people in the office to care for the needs of all the clients. Looking for the fair outcome to ALL concerned means we consider the impact on ALL the team when making hiring and firing decisions or when considering changes in pay or other benefits.
Is it RIGHT?
Sometimes we change this question to ask, “What is RIGHT?” instead of “What is FAIR?” We change it to “What is right for all concerned?” because I believe the sense of what is right is what was intended by the use of the word “fair” in this question. We ask this in our estate planning meetings. What is the right distribution choice for your loved ones? We do not focus on the fair choice because most clients think of the word fair from the sense of being equal. A fair distribution from parents means equal shares to all the kids. But I don’t believe the decision to give equal shares is necessarily the right decision in many situations. People cope with living life in different ways. Some are more successful financially. Others are less successful. Many factors influence their success. If family members are less successful it might be because of choices they have made, or medical conditions which affected their lives or ability to work, or the medical conditions of a spouse or children with which they’ve had to cope.
My old pastor said that there are three “fairs” in this world – the national fair, the state fair, and the county fair. And if you think life is going to treat you fair, you’re in for a rude awakening. That stuck with me. Asking what is right and thinking of the word “fair” in the Rotary Four-Way Test from the perspective of what is right is the more useful view.
Taking the Wholistic View: What It Means for ALL Concerned
What is fair and right for ALL concerned? This means looking at what we call in the legal world “the totality of the circumstances.” We look at the client’s age and desires, financial situation, family situation, and tolerance for failure or fear level. We want to offer solutions that get them to their destination in the current family and financial situation, with a reasonable expectation of success. I like to provide clients with more than one option.
For example, on estates worth less than $1.3 Million, you can give your home to your children using a transfer on death deed, but that may not be safe from the Medicaid Estate Recovery claim at the end of your life and it may exclude your grandchildren if a child predeceases you because I can only put one level of beneficiaries on a deed like that. There are pros and cons of planning for only one level of protection. Alternatively, you can transfer a home to a revocable trust and your grandchildren will not be accidentally excluded. You may not be protected from Medicaid Estate Recovery claims because Medicaid’s policy says they can come after a revocable trust. (They aren’t right now but we know what the government does when it needs money.) The best protection would be to place the home in an Asset Protection Trust. This is going to avoid probate, protect the grandchildren, and protect the home from the Medicaid Estate Recovery claims. The family decides the risk they want to take based upon the circumstances and their level of fear.
If they choose to do the transfer on death deed, doing what is right for the client means that, after an explanation and understanding of the options, I support their choice.
Considering “Fair” and “Right”: Do We Work Together at All?
Doing what is fair and right for the client often means that I do not allow them to hire us at all. Yes, you heard that right. If they do not need what we offer or do not need what we offer first, then we connect them with the professionals they do need. This firm does not operate only to be profitable. This firm operates to make the lives of our clients better. For example, if a client and their spouse comes in and they are planning to move to South Carolina in a few months, I’m going to recommend that they meet with an attorney in South Carolina instead of doing a plan in Georgia and then doing the plan again in South Carolina when they get there. If there is a concern about health or, if the client does not have a financial power of attorney or healthcare advance directive, then we may recommend that we do those documents at a minimum so that they can act on each others’ behalf if needed. This recommendation comes from the knowledge that the rules are different from state to state and many law firms will not amend the work of other attorneys for liability reasons. If there is a critical illness, then we may recommend something different to cover them until they get to South Carolina.
Clients who have a special needs child can use a special needs trust included inside their trust or will instead of using a standalone special needs trust where we are not expecting a gift of funds or assets to the child from other relatives before the parents pass away. The special needs trust we include — baked into — the parents’ plan. This structure is recognized by the Georgia Department of Human Resources and saves the family several thousand dollars.
When someone comes in to get help with a probate matter, we look to see if there is any property without a co-owner or beneficiary for which title must be changed. If no such property exists, we still give that client suggestions on how to handle next steps and provide them with professional referrals and a gift to help them with the grieving process. We don’t file with the probate court unless there is a clear benefit for doing so.
Doing Right by ALL
In short, we focus on what is best for the client not just what’s best for the firm. What I have found in this journey we call life is that doing right by ALL people makes a better culture for the team and a better outcome for all potential clients. And potential clients we don’t allow to hire us often come back for help with other needs such as the widow who needs an updated estate plan or the trustee of a special needs trust who needs direction or a relative who needs help with the probate process for someone else who passed away.
We are all in this life together. Is what we are going to do fair (or right) for ALL concerned? What can we do that may not be profitable in the financial sense but is the right thing for ALL concerned?
