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Advanced Estate Planning

It is my opinion that some attorneys OVER plan for their clients.  Most people with assets need a revocable living trust. That is clear.  Along with the California revocable trust they should have all the basic documents like pour-over will, durable power of attorney, advanced health care directive (or “living will”), Hippa release, quitclaim deed (or grant deed), certified extract of trust, and other similar funding documents. The question though is what other documents should be included into higher net-worth clients. It is my opinion that some attorneys over plan and over complicate their client’s lives.

The biggest culprit here is the “family limited partnership.”  I love the concept on paper but unless the client is worth at least $5,000,000 I would say there are many less costly estate planning tools to use.  FLPs come with annual entity fees to the state, annual accounting requirements and are very expensive to set up due to all the appraisal costs.  I thus try to hold FLPs for the right clients.

Next biggest is charitable trusts. Before my friends in the non-profit world get on me let me stress I love clients giving to charity. However, it is my opinion that a CRT is an overly complex way of doing this.  Plus, in some cases the charity never gets anything!  Instead if you want to give to charity just give to charity. You avoid all the attorney fees and appraisal costs to set up the CRT.  Plus, more importantly, you avoid the annual tax filings which can be quite complicated and expensive for the CPA to prepare.

Let’s stop there for the day.  I think the above two are the two most over-used planning devices. I should say, over-used in the wrong situations!

In the coming days I will blog about some more efficient advanced estate planning options!

-Johnv

Ratings and Reviews

10.0John Bernard Palley
Wealth Counsel Member
2015 Best of the Best Badge