Problem #1: Probate. Probate is the court-supervised process of passing title and ownership of a deceased person’s property to his or her heirs. The process consists of assembling assets, giving notice to creditors, paying bills and taxes, and passing title to property when the judge signs the order. Probate can cost your loved ones 3% to 5% of your estate and take years to complete. Protect your assets from the high cost of probate by setting up and properly funding a revocable living trust. Since the trust you have created actually owns your assets, no probate will be required.
Problem #2: Lawsuits. Protect your assets from lawsuits by doing any or all of the following, as appropriate: (1) purchasing an umbrella liability insurance policy, (2) setting up a family limited partnership, (3) setting up a program for lifetime gifting, (4) setting up a limited liability company, and (5) incorporating.
Problem #3: Estate taxes. Protect your assets from state and federal estate taxes by setting up and funding a tax-saving Family Asset Protection Trust. Because of recent changes in the Estate and Gift Tax laws most of us don’t need to worry about estate tax. However, if you have a substantial estate a proper estate plan will save a tremendous amount of expense for your family.
Problem #4: Income taxes. You can lower your income taxes by setting up a family limited partnership to own income-producing property. Then you can make gifts of limited partnership interests to the other limited partners, often your children or grandchildren. They then pay income tax at lower tax rates. A family limited partnership is an excellent tool to shift income to partners who pay taxes at lower rates. It’s also an effective way to make gifts and still keep total control of all the property owned by the partnership.
Problem #5: Capital gains taxes. Protect your assets from capital gains taxes by owning your assets as community property, if you are a married couple. This can be done with a Community Property Trust. On the death of either community property spouse, your entire estate gets a “double” step-up in basis for income tax purposes to the full value of the appreciated property, thus avoiding ALL capital gains taxes. You get only a one-half step-up in basis if the property is owned in joint tenancy. Your attorney can set up this valuable tax-saving device at the time he creates your Family Trust.
Problem #6: Spouse’s Creditors. Protect your assets from the claims of your family’s creditors, ex-spouses, and the IRS. Your lawyer can include creditor protection provisions in your Family Trust and help you appoint a properly trained trustee.
Problem #7: Inexperienced Beneficiaries. Protect your assets from being wasted by young or inexperienced family members. Most beneficiaries spend their entire inheritances in less than two years, regardless of the size of the estate or the heir’s socio-economic background. Your lawyer can set up your Family Trust with protective provisions that provide guidance and safeguard your life savings.
Problem #8: Guardianships. Protect your assets from the high costs of incapacity by (1) setting up a living trust so you avoid the need for a guardianship, and (2) drawing up a durable medical power of attorney.
Problem #9: Conservatorships. Protect your assets from the high costs of incapacity by (1) setting up a living trust so you avoid the need for a conservatorship, (2) drawing up a durable power of attorney for property management.
Problem #10: Nursing home care. Protect your property from the high costs of nursing home care. If appropriate, set up a Medicaid Asset Protection Trust while leaving enough outside of the trust to cover your expenses until you qualify for governmental aid. Or, buy insurance that covers nursing home care and provides a death benefit that returns the not money spent on nursing home care to your heirs.
Problem #11: Unwanted medical care. Protect your assets from unwanted and costly medical care by having a medical power of attorney that spells out which medical care, treatment and procedures you want — and which you don’t want. If you wish, a living will can be incorporated into your medical power of attorney to list exactly what you want.
Problem #12: Unwanted emergency care. Protect your assets from unwanted emergency care. If you have a terminal illness, you can draw up and sign a pre-hospital medical directive that will tell emergency personnel not to resuscitate you in the event of a medical emergency.
Problem #13: Ineffective estate plans. Protect your assets from an ineffective estate plan. Don’t depend on pre-printed “cookie cutter” form kits or document preparation services for your estate plan. Contrary to what you may have heard or read, one size does not fit all! You may think you have precisely what you need. But you will never know. Because your family members will have to clean up the mess. You see after you die, your family members will try to use your documents to settle your estate.
Problem #14: Commissioned salespeople. Don’t depend on financial planners or insurance professionals to plan your estate. They simply don’t have the knowledge, skill, judgment, and experience to handle the many legal consequences of your estate plan. You didn’t hire a used car salesman or street sweeper to write your will. Then why would you hire a financial planner or insurance salesman to plan your estate? Your estate plan is too important to entrust to anyone other than a skilled, qualified estate planning and asset protection attorney who is licensed to practice law. Of all the estate plans I’ve created, no two of them have been the same. When you die and your family members try to settle your estate, that isn’t the time to discover that you hired the wrong person. Do your family a real favor. Give them the greatest gift of love. Make sure your estate plan has been correctly and skillfully set up and properly funded.
Problem #15: Unqualified lawyers. Many attorneys get into estate planning because this area of the law is becoming very popular with seniors. Unfortunately, many of these newcomers don’t have the experience needed to be an effective estate planner. I recommend that you choose an independent attorney who focuses his law practice on asset protection and estate planning. This will help ensure that the lawyer you choose has the knowledge, skill, experience, and judgment necessary to fully protect your family, your money and your property, and to give you advice and counsel that is in your best interest.
I invite you to call for a free appointment to learn how you can protect your family and your assets. Also, if you have any questions or comments, you’re welcome to call me at 303-974-4400. I’ll be pleased to speak with you over the telephone without charge.