Category Archives: Asset Protection

Easy Asset Protection

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Some things you can do to protect your assets for your family are easy to do and some are very difficult.  Why not do the easy ones?

First of all you have to remember there are no simple magic trusts.  If there was a magic trust that insulated a person from creditors and liabilities most people would get it.  With asset protection you want to take steps to make you less of a target. You want to make it harder for creditors to get at your assets. It’s not going to a wall but rather you are placing hurdles. If you place enough hurdles you will be able to preserve your assets!

Here are a few easy things you can do:

1) FILE A HOMESTEAD EXEMPTION ON YOUR HOUSE –  Though it’s not a huge number a homestead exemption protects equity in your home. Just get the form and file with the county recorder’s office.

2) CHANGE THE NAME OF YOUR TRUST – Don’t name your trust in your name. Put it in some other generic name. Call it the “Main Street Trust” or the “Blue Jeans Trust” or the “ABC Trust.”  Call it anything but don’t put your name on the trust. Remember a lot of real estate databases that people use to look up targets for lawsuits are driven by names. If your name isn’t on your house it will be much harder to find!

3) SET UP A SPEND THRIFT TRUST FOR YOUR FAMILY – Though you can’t set up a magic trust for yourself you can set up a magic trust for your family.  Most people do this for their kids to receive their assets after death. However, you can do it during life also. There is certainly more trust involved when you do it during life as you have to “give away” the assets but you can build in some protections.

4) SET UP A CORPORATION OR LLC – A business provides good asset protection and is very easy to set up. If you have a legitimate business, rental properties, or other such assets set up a legal entity and run it like a true business entity!

5) SET UP AN IRREVOCABLE HOUSE TRUST – It’s one of the simplest irrevocable trusts there are. A Qualified Personal Residence Trust (“QPRT”) is a great way to protect a valuable home for your loved ones!

I have other tricks and tools. Let’s talk about how I can help protect YOUR assets!

-John

Asset Protection Trusts After Mortensen

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The federal bankruptcy Court recently came out with a big ruling in the asset protection world. It’s called the “Mortensen case” or more officially known as:

Battley v. Mortensen, Adv. D.Alaska, No. A09-90036-DMD, May 26, 2011 (Original Memorandum) and July 18, 2011 (Memorandum Denying Motion For Reconsideration).

In this case Mr. Mortensen set up an Alaskan asset protection trust in 2005.  He filed bankruptcy in 2009.  The trust was designed to protect his assets from creditors including bankruptcy. However, one has to remember there is a connection between the Federal bankruptcy laws and the state trust laws.  That is, you need to keep the Federal laws in mind when implimenting a state asset protection trust. In particular, Mr. Mortensen filed his bankruptcy without the aid of an attorney. This was likely his fatal flaw. This is because there is a well known federal bankruptcy law which is called a “clawback” and allows the bankruptcy trustee to claw back assets that were given away (including to a creditor protection trust) within 10 years. If Mr. Mortensen had hired an attorney they probably would have told him to wait a few years before filing for bankruptcy. If he had done that his asset protection trust would have protected him as he desired.

The key point is that YES domestic asset protections trusts are still a great tool for some clients to use.  However, this is for experienced estate planning lawyers to set up.  There are several states that have domestic asset protection trusts though California is not one of them. However, California residents can get protection from other state’s laws if they set their affairs up properly.

If you want to talk about domestic asset protection contact an experienced California estate planning lawyer like John Palley!  -John

P.S. The federal bankruptcy law referred to above, 11 U.S.C. section 548(e) provides in part:

(1) In addition to any transfer that the trustee may otherwise avoid, the trustee may avoid any transfer of an interest of the debtor in property that was made on or within 10 years before the date of the filing of the petition, if–

(A) such transfer was made to a self-settled trust or similar device;

(B) such transfer was by the debtor;

(C) the debtor is a beneficiary of such trust or similar device; and

(D) the debtor made such transfer with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made, indebted.

California Asset Protection

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Let me start by saying there is no magic trust. As I often tell clients if there was a magic creditor protection trust we could all get one, stop paying for car insurance, and leave reckless lives. Not saying we all would but a lot of people would. Though there is no magic trust there are steps you can take to make your assets protected, at least to some degree, from creditors and liabilities.

The first step is PLAN AHEAD. You can not do asset protection when you have a lawsuit coming. That is when you know, or should know, you are about to get sued you can’t set up asset protection. Well, you can but it can easily be defeated as it would likely be construed as a fraudulent conveyance or fraudulent transfer.  When I speak of estate planning this would include giving assets away when you know you are in trouble. That’s generally not the best move to make. There are exceptions to this rule like OJ Simpson for example. It is my belief that OJ mortgaged his house in Brentwood to the greatest extent he could and then moved the money to a lawless island nation somewhere.  He also moved any other assets (stocks, bonds, cash) to the lawless island nation.  His NFL pension was already creditor protected so he didn’t have to worry about it.

The second step is to consider what’s practical for your assets and your situation. OJ was an extreme situation as he knew was in deep trouble and he probably had extensive assets. He probably spent many tens (if not hundreds) of thousands of dollars to set up the most complex asset protection he could.  As stated above he probably created an off-shore trust in some lawless island nation… or more likely multiple off-shore trusts at multiple lawless island nations. I point out them being lawless as you have to move control of your assets to a place that won’t honor the US laws… and thus how do you know they won’t just steal your assets from you!?  Obviously most people aren’t in as much trouble as OJ and probably don’t have as much in the way of assets. Thus, what’s practical for YOU?

I have discussed the topics before so today will just mention them briefly. In coming days I will give more details. Starting with the simplest to the most complex here are some things you can do with your estate planning to create creditor protection.

First, a revocable trust provides no actual creditor protection. However, what if that trust has a name other than your own name?  I have seen people name there trusts after a street, a family member, their maiden name, their dog, or just a generally pleasant name (i.e. The Oak Hills Trust). Again, this provides no actual protection but can make it harder for potential creditors to know what you have.

Second, an irrevocable life insurance trust. Don’t own your life insurance yourself. Instead put it into an “ILIT” which can create creditor protection and tax savings. Plus, it can create a totally protected trust for your spouse or loved one who receives the money after you die.

Third, a Qualified Personal Residence Trust. A “QPRT” is a dynamite way of protecting your house from creditors. It’s simple, not too expensive, and we believe provides solid protection for your personal residence or a non-rental vacation home.

Fourth, a Family Limited Liability Company or Family Limited Partnership.  A “FLiP” is a common vehicle to hold rental properties, other real estate and even stocks, bonds and investments. It’s a great way of muddying the waters!

There are more options but the above are the basic ones that can be done without too great of cost. They can be implamented by middle class families who are concerned about losing their hard earned assets. They are not impervious but they are better than doing nothing!

Contact me to discuss these and other options or visit our home page at www.californiaprobate.info

California Living Trusts

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I meet with clients almost daily where we discuss the benefits of employing a revocable (or “living”) trust to help plan their estate.  The living trust becomes the centerpiece of basic estate planning for most people both due to the benefits it provides but also due to the horror stories it can help avoid.  With the changes in the federal estate and gift tax rules in recent years each United States citizen can currently give away far greater amounts of money when they die without incurring the federal estate tax. 

The mistake that many people make is thinking that they do not need a living trust, or even wanting to revoke the one they have, because they “only” have $400,000 in assets.  This is a big mistake because the federal estate tax exemption has absolutely nothing to do with the California probate laws.   Probate laws still kick in at $100,000 in assets and can be necessary for even smaller estates in some instances.  Thus the value of living trusts needs to be considered for anybody who has assets! 

This article is written with California laws in mind by a California attorney. The principles are the same or similar in most states but you should review the law in your state with a licensed estate planning attorney.

IMPORTANCE OF A WRITTEN PLAN

Without a written plan in place your heirs will likely encounter many problems and inconveniences upon your incapacity or death.  They range the gamut from court room battles among family members over custody of minor children to relationship ending feuds between family members over the distribution of assets.  Additionally, there are many problems that arise if a person becomes incapacitated.  For example, if you were ever to end up in the hospital in a coma, you need someone to be in a position to make decisions for you.  In these situations, it is important to have written instructions to address your personal and medical affairs.  The key is planning ahead.  By establishing a written plan, your wishes and needs will be carried out exactly as you desire; without the written plan in place, anything is possible!  The main options to distribute your assets, after death, are a will or a living trust.  A will is the more basic option which is great for causing your wishes to be followed after death but does generally require a lengthy and costly visit to the probate Court.

REVOCABLE “LIVING” TRUST

The centerpiece for most estate plans is the revocable “living” trust.  There are many reasons people form living trusts.  The biggest benefit of a living trust is avoiding probate.  Do you know what the financial cost of going through probate is?  A $400,000 estate would generate an $11,000 attorneys fee, about $2,000 in Court costs and an $11,000 Executor’s fee.  Yes, almost $25,000 to collect, divide and distribute your estate after you die!  The fees and costs are based on a percentage of the total assets so these numbers go up as the size of your estate goes up!  Interestingly, the total estate size is based on the gross value of your assets and not the net value thus a house with a huge mortgage is valued at the fair market value and not the smaller net equity value. 

A living trust is actually a pretty straightforward device.  It is simply a separate entity (analogous to a corporation) that holds your assets.  You retain complete control over your assets while you are alive and mentally competent.  Upon your incapacity or death another person you choose (called the “successor trustee”) steps into your shoes and manages your assets for you.  This successor trustee can be a relative, a friend, or a professional fiduciary (like a bank).  In recent years I have seen a lot more cases where we discuss using a professional fiduciary and, in fact, discuss this option in most cases.  Avoiding the probate process is critical, as your successor trustee can distribute your assets in an expedient manner to your heirs. 

In addition to the shorter delay in distribution, a trust also can make it more difficult for creditors to collect money from you or your heirs; as they are forced to sue the trustee or the beneficiaries, which can be a time consuming process.  Relatives wanting to “contest” the trust have a more difficult time as a trust is more difficult to get overturned than a traditional will.  Of course, both the will and trust will have “no contest” clauses in most cases which dissuade contests by disgruntled family members. 

A fallacy has developed that living trusts are complicated and burdensome to maintain; this is just not true.  A living trust is completely revocable and amendable.  This essentially means that it can provide for whatever you want; and if it doesn’t say it already, it can be added.  Except for the initial setting up of a trust, where I help assure that all of your assets are “placed” into the trust (the “funding process”), you never have to do anything different with your assets than if you owned them outside of  a trust.

ASSET PROTECTION

Unfortunately our society looks to the Court to settle all problems. When in doubt… SUE, SUE, SUE!  With our society heading in this direction people are naturally worried about protecting their hard earned assets.  Though a trust does not provide impervious walls to creditors there are some steps that can be taken, within a trust, which can increase your level of asset protection. Also, and most importantly, a properly set up trust can provide very complete asset protection to the loved ones who you leave your trust to. We will go over these options, at great length, when discussing how your trust should be set up.

PROBATE

Do you know how long a probate takes?  Assuming we are able to meet every deadline, to the day, a probate can be completed in 7 months in most counties  in California.  However, any little hiccup, like an Executor who is a procrastinator, and your probate will take 8, 9, 10 months… and in rare cases a year or two! 

Unfortunately, the fees and time delay of a standard probate may be significant.  Do you know what happens if you own real estate in another state?  Most people claim they do not own real estate in another state, but many people own a timeshare in Hawaii, a cabin in Tahoe, oil rights in Oklahoma or other such assets.   Having to hire attorneys in multiple states is possible for clients with these type of assets and is one more very good reason to get a living trust. With a properly funded living trust these assets will pass to your heirs with ease and without having to hire out of state attorneys.

What about the first death between a husband and a wife, do you know what can happen there?  Could your estate end up in probate?  There is a common misconception that all assets owned by husbands and wives belong to the other, automatically, at death.  Last year I was retained by a woman whose husband of five years had died.  He had children from a first marriage, real estate in his name, a business in his name, lots of debt and unfortunately no living trust!  In addition to the costs and delays of probate this new widow had to fight with her husband’s sister about the widow’s interest in the family business and file a lawsuit to divide real estate her husband owned.  The mental drain was far worse than the financial drain though the financial cost was substantial!

CONSERVATORSHIP

Another great feature of the living trust is that it enables you to avoid the need for a conservatorship should you become incapacitated.   A conservatorship is a court administered process, similar to the probate process, which costs you money and can be very frustrating and time consuming for your heirs.  Avoiding a conservatorship may be even more important than avoiding the probate as it happens while YOU are still alive!

TAXES

In addition to all the problems with a probate there are also clients who face the possibility of estate tax after death.  A properly drafted living trust can reduce and/or eliminate estate tax.  The estate tax savings can be several hundred thousand dollars to those that have taxable estates. Also, though estate taxes are not applicable to as many people any more a poorly created estate plan can create unnecessary income taxes, in the form of capital gains tax, which can be avoided with good trust planning.

CONCLUSION

Just because your estate might be below the current federal estate tax exemption level does not mean that you do not need a trust.  The costs and delays of probate are very real and have no connection to the estate tax exemption levels.  All of the above can be avoided with a properly drafted and funded living trust.  You can avoid the huge costs and delays of a standard probate, you can avoid any disputes at the death of either spouse and you can avoid the need for multiple attorneys if you happen to own assets in other states or countries.  A living trust can save your family many thousands of dollars, avoid any delays and make sure your assets are distributed exactly as you desire!  Do not let your family become subject to the expense and delay of probate… call a qualified estate planning attorney and get your living trust put together today!

For more information contact me directly or visit our main estate planning and probate page at www.californiaprobate.info

-John

How simple is a simple trust?

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I am preparing some notes for a presentation I am making next week to some CFP students at UC Davis Extension. I have taught the whole 10 week class, in estate planning,  before.  This time I will be a guest lecturer in the tax class for CFP students. I will talking about the taxation of trusts and estates. One chapter I will be lecturing on is entitled “Simple v. Complex Trusts.”  Now most of my clients do not consider these issues at least not by these terms. However, your attorney may discuss it with you or, at least, they will think about it when they set up your trust… or at least they should. Let’s discuss….

When you write a trust there are two main ways to handle the distribution of income from the trust. This is typically an issue for after you die and how money should be distributed to your children or other loved ones. The distribution can say that “all income shall be distributed” at least annually or that “all income may be distributed” at least annually.  Wait a minute you say… what’s the difference!?  “May” v. “shall” is the difference.

Yes, it’s really that simple.  The issue of simple v. complex has nothing to do with how many pages your trust is, or how much legalese is used, but rather these simple little words.  In a simple trust all income SHALL be distributed at least annually. By distributing all income the trustee files a 1041 fiduciary income tax return and sends out a K-1. The K-1 will show all income being attributed to the underlying beneficiary and will be reported on their 1040. In a complex trust the trustee has the option to distribute the income and thus the income is taxed within the trust at the trust tax rates.  These rates are higher than the individual income tax rates.

If the income tax rates are higher why would anybody do a complex trust? There are many reasons but most notably it provides better asset protection. If the trustee is required to distribute the income there is no asset protection for those distributions and thus the trustee could be required to distribute them to your creditors.  On the other hand, if the trustee has the option of distributing the income that means she has the option to NOT distribute the money and thus opt to NOT pay a creditor that is hounding you. There may be other reasons but to me this is the most significant.

Yes, it’s that simple!

Send me an email or call me with any questions, be it simple or complex!

-John

Protect your ASSets

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Ok, I apologize but I couldn’t resist the title for this post.  Our society is crazy with litigation. Yes, you can blame the lawyers but individuals have to hire the lawyers and sign the lawsuits that are filed! However, it’s no doubt litigation is out of control, people sue for everything big and small, and juries sometimes give crazy judgments (i.e. McDonald’s hot coffee at the drive-thru case).

If you are like me you live an honest life. You work hard, you stay out of trouble and you are not a huge risk taker. However, life has risk no matter what you do! Let’s talk about protecting against that risk….

Start with insurance. Of course you should purchase insurance for large risks from a top rated insurance company.  House, car, liability, health, business, and of course an umbrella policy. In my opinion if you don’t have a million or two, at least, of umbrella insurance, you are missing a major piece of asset protection. Finish reading my blog post and then call your insurance company!

Ok, so you have insurance, you have an umbrella policy and you live a relatively careful life. That’s a good start. Let’s talk about what else you can do.  Your standard revocable “living trust” does NOT provide asset protection for you. Yes, really! A revocable trust is a dynamic device but it provides you no protection.

What about you setting up a trust for a third party (your kids) or your parents setting up a trust with you as a beneficiary?  The current gift tax laws allow for five million to be transferred tax free NOW. This is a huge change in the gift tax laws. The exemption had been stuck at one million for almost 10 years. In theory the gift tax exemption goes back to one million on January 1, 2013 so this is planning to do NOW.  You can put five million into a trust to benefit “your spouse” and “your children.”  You don’t need names; it can even be future people. Your best friend can be trustee.

By doing the above trust you have given away your assets so protected from your creditors. It’s in a third party trust so your kids are protected.  Your best friend is trustee and, in theory, he can only give assets to your spouse and kids. Presumably your spouse and kids will share with you right!?

Yes there is some “risk” involved but I would rather bank on my kids and best friend rather than some stranger who might sue me!

That type of trust arrangement is tough for a lot of people to swallow but there are a lot of other things we can implement to give you protection without giving up much control: a qualified personal residence trust, an irrevocable life insurance trust, and a family limited partnership to name a few.  Let’s chat about these options and others!

-John

ILIT's Do not Have to be About Estate Taxes

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An ILIT is the standard acronym in the industry for Irrevocable Life Insurance Trust.  An ILIT is one of the most dynamic estate planning tools available and that’s why I mention them from time to time. The key on this blog post is the idea that an ILIT need not have anything to do with estate taxes.

Historically ILITs were used to create a tax free fund of money. With the current five million dollar ($5,000,000) exemption from federal estate taxes a lot less people are worried about estate taxes.  Of course the law is set to sunset December 31, 2012 and go back to ONE million dollars ($1,000,000) on January 1, 2013 but let’s put that concern aside for the moment. Let’s assume you do not have any estate tax concerns. Read on because this article will have a great idea to provide tremendous value to your family!

Let’s say you are a professional making a nice salary. Let’s say you have a husband and two young kids.  Like most people you want to provide for your husband and also your kids.  What if you could give them money tax free and with CREDITOR PROTECTION built in!?  Well, that’s what an ILIT can do for you and your family. The way it works is this….

Let’s say you want to provide a two million dollar death benefit to your family should you die prematurely.  Term life insurance, especially at young ages, can be purchased for pennies on the dollar.  I am not a life insurance salesperson but let’s assume you get two million dollars of term death benefit for $200/month. That’s a wild guess but let’s go with it.  Obviously the odds are in your favor that you will not die during the term of the term life insurance. Maybe it’s 10 or 20 years.  However, IF you die during that time your family will thank you forever for having the thoughtfulness of having two million dollars of death benefit. Even in today’s days of .002 percent interest most people can live decently with two mil in the bank!

Life insurance is often can distribute tax free after death but not always. There are many situations where it can create a taxable event. Thus proper planning is important. However, it can be made to be tax free with an ILIT if set up properly.

Ok, but why an ILIT?  An ILIT creates creditor protection for your spouse and kids. The two million would sit in an investment account, in the name of the trust, and in most cases the spouse can even be the trustee in charge of distributing assets! However, a properly drafted ILIT has built in asset protection so that their creditors can not get that money! It’s an incredible tool.  TAX FREE MONEY WITH CREDITOR PROTECTION BUILT IN!

The simple mechanics are you hire an attorney, like me, to set up an ILIT for you. The ILIT then purchases a life insurance policy (term or whole life) on your life. Each year you gift money to the ILIT trustee (usually a trusted friend) who pays the premiums of the life insurance. When you die the trustee claims the death benefit, invests it in the name of the ILIT, and then distributes the funds to the beneficiaries you have selected in the trust. It’s really simple!

The costs are not great to set up an ILIT and the combination of tax savings and creditor protection are truly PRICELESS!

Contact me to discuss your situation to see if an ILIT will help you!  -John

A little mis-direction

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I have written before about asset protection. It’s the hot item right now as people are getting sued, finding out they co-signed something they should not have, and finding out that personal guarantees mean you can actually be personally LIABLE!  Today I am going to write about a simple thing you can do with your current (or about to be set up) revocable “living” trust to give you a small amount of asset protection.

A standard revocable trust provides NO asset protection for you. However, what is a very common method of determining a potential defendant in a lawsuit?  Lawyers look in the real property records.  Amazingly the public records show what real estate is titled in your name, what you paid, what your down payment was, what your first mortgage was for, what your second (or re-fi’s) were for, what banks those loans are with, and a whole host of other information.  Yes, it’s PUBLIC.  Also, a lot of older records include your phone number even if you have an un-listed number.  Call the county assessor and find out what public information there is out there about your house.  

What if you could put a little hurdle to make it more difficult for potential litigants, or just random crazy people, to find what property you own? It’s just a little mis-direction play but it can be a touchdown in your asset protection.  Though you may be unlisted in the white pages you likely ARE listed in the real estate records which are likely search-able on many websites!  Let’s say you live on Main Street and your name is John Smith.  Most people would call their trust the “Smith Family Trust.”  Now that’s good but it’s still in your name and thus shows up in name searches.  What if you changed your trust name to the “Main Street Trust?”  A person wanting to sue you would do a search for “Smith” and they would not find your house or other real estate as they are titled in the name of the Main Street Trust! 

NO this is not an impervious wall but this will reduce your chances of a lawsuit and will put up one additional wall to make it harder for lunatics (or criminals) to find out where you live. Check back in a few days for another simple tip like this….

Qualified Personal Residence Trust

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Estate planning attorneys love acronyms: Q-TIP, Q-DOT and Q-PRT are three relatively well known types of trusts.  Others include ILIT, CRT, GRAT, GRIT and A/B.  Though all of these initials are good estate planning tools to consider the QPRT, or QUALIFIED PERSONAL RESIDENCE TRUST is a vastly underutilized tool in this author’s opinion.

A QPRT is an irrevocable trust whereby the grantor gives away their house to their chosen beneficiaries.  This is quite often a parent (or parents) giving their home to their children. A QPRT is a great estate planning tool for many reasons but two jump out as being the biggest:

1) Reduced taxation;

2) Asset protection.

Well, in my 15+ years doing estate planning work I don’t think any client has refused the idea of lowering their taxes.  Likewise in that 15 years the concept of asset protection has become more and more important as our litigious society develops. Yes, you can insert rude comment about ambulance chasing lawyers here.

With a QPRT you deed your house to a trust but you retain the right to live in your home for life. At the end of a pre-determined term of years your house transfers, at the least ownership, to your chosen beneficiary.  The appreciation of that house during those years goes to your kids along with the house.

The moving of appreciation out of your estate along with a special way to calculate the gift make a QPRT a dynamite way to transfer a house. In simple terms the special calculation of the gift “value” factors in the home’s actual value but is reduced to the present value of a future interest. Was that 10thgrade economics when they talked about the idea that one dollar today is worth much more than one dollar in 15 or 20 years?  The same simple concept applies to a QPRT.

You say you don’t really have much of an estate tax issue so are not worried about the above tax savings. Ok, do you like the idea of protecting your house from potential creditors?  Most people, whether they like it or not, realize they will likely get sued one day.  Wouldn’t you sleep better, during that time, if your house were in a creditor protected trust?  You don’t need to answer because I KNOW the answer!

While nothing is impervious to creditors a QPRT provides a nice barrier to potential creditors.  All the general concepts of asset protection apply and you have to be careful not to commit a “fraudulent” transfer but your attorney can help you with that.  A QPRT is a perfect asset protection device because it is “just estate planning” that happens to have some inherent asset protection built in.

Oh ya, I forgot to mention the cost is very reasonable and there is no on-going issues as some other estate planning tools cause. You pay the attorney fee plus an appraisal for your home.

Call me so we can see if a QPRT is right for you!

-John

Software v. Attorney

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How many people would be so excited if you foundsome brand new lawyer willing to prepare their trust for $500?  What a deal, right?  An experienced attorney like myself might charge $2,000, or more, for a living trust package for a husband and wife.  Some charge $5,000 and up… but of course they have fancy offices and are usually in the major cities of our fine state. However, let’s get back to the $500 special… or the Nolo Press do-it-yourself kit.  Is trust software for $49.95 really the same as what an experienced attorney can do for you?

Ok, you know the answer I am going to give because I am an experienced attorney and not a software salesman.  Seriously though, do people really think the fifty bucks spent on a software package or $500 spent on a paralegal or brand new attorney will be truly THE SAME as what an experienced estate planning attorney will do? In my opinion it is just silly to think you are getting the same thing.

Let me start by saying that I am not telling you that a fifty dollar software package or pre-printed form will might not work for some people.  It might. However, an estate plan is supposed to give you PEACE OF MIND.  Peace is defined as “the absence of mental stress or anxiety.”  This means when you put together your estate plan you want to KNOW it’s done right so you can find something else to worry about.  You are trying to save tens of thousands (if not hundreds of thousands) of dollars and thus want to KNOW your estate plan is prepared correctly. You do not want to leave your kids, or other loved ones, with a mess after you die.

I could write a book on why one should use an experienced estate planning attorney for their estate plan. However, this is supposed to be just a short blog entry so I will spare you the entire book.  Let’s talk about a few of the main reasons why an experienced attorney is going to be better for you.

First and foremost an experienced attorney makes it easy to FUND YOUR TRUST. An improperly funded trust is just a pile of paper.  You need to properly deed your house and other real estate holdings to the trust. Where do you get a copy of your former deed so that your new deed can be accurately prepared? Where do you get a preliminary change of ownership form that is required to be filed with each deed you record? How much does it cost to record a deed?  Where do you mail the deed fore recording? Do you need to mail copies or just the original?  How long does it take to record a deed (or, when should I get worried?)?  The list goes on and that’s just with the deed!  The transfer of banks and other investment accounts is even more full of questions!

Second, and semi-related to the above, how should I title my IRA, 401k, and other retirement account in relation to the trust?  Does your software package explain the ramifications of naming your spouse as beneficiary, your kids as beneficiary or even your trust as beneficiary?  Does your software package fill out the forms for you?  As an attorney with 15 years of experience funding trusts I know the answers to all these questions!

Third, can a software package adequately explain all of the trust distribution options to you so that you fully understand them?  Do you and your husband want an “A/B Trust?”  How much discretion should you give your trustee in making distributions to minor children?  Would it be advantageous to leave assets in trust for your children’s life and give them CREDITOR PROTECTION?  I don’t think your software program, or paralegal, or new attorney can explain all of those details. I was a new attorney once and I can assure you I have learned of a great number of options in 15 years… and, more importantly, multiple ways to explain it all so it makes sense to you.

Fourth, and the final point for today to keep this from becoming a book, experienced estate planning attorneys make it EASY for you. We walk you through an estate planning questionnaire, we prepare a rough draft and explain it to you, we ANSWER all your questions, we prepare final documents for signing, we notarize your documents without extra charge, we help you fund your trust, we store a copy of your documents in our files, and we serve you a hot cup of Starbuck’s coffee, with a smile on our face, when you come to our office!

In conclusion, hire a professional to do a specialized and important task like setting up your estate plan.  You probably don’t work on your car yourself, you certainly don’t act as your own doctor, so why would you act as your own attorney!?  Preparing an estate plan is far more than just filling out a few forms.  I encourage you to find an experienced estate planning attorney to work with. If you don’t know one, in your area, contact me and I will gladly give you some referrals as I know qualified attorneys throughout the state!