Estate Planning Is A Vital Part Of Your Overall Financial Plan.
What To Avoid In Estate Planning?
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Crucial Mistakes to avoid with Estate Planning.
In my personal opinion, the number one “do not” in estate planning is doing it yourself. The reality is that if you do your own bankruptcy or your own divorce, somebody will tell you if you made a mistake. In estate planning, you are not going to know if you made this mistake or not because you are going to be incapacitated or deceased. So if there is one circumstance in which you want to have competent representation, estate planning is it.
I always tell people that I can do a great job driving to the grocery store, but I do not play around with my car’s engine because I am not a mechanic. It is the same thing with estate planning; you might think you can do it yourself, but you will probably make a mistake. That is why I always say do not do it yourself, have somebody competent represent you.
Are There Any Age Restrictions In Estate Planning?
Absolutely! Age restrictions are prevalent, and I do with my clients who have young children. The vast majority of my trusts say that the interest and dividends that the trust spins off go to the children’s guardian to take care of them until they’re 21. Once the children reach the age of 21, the trustee will distribute the interest and dividends directly to the child to learn how to use the money.
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Concerning the actual principal of the trust, that is the real money that you started with that has grown over time in the investments that the trust owns; the trustee has the discretion to give money to the kids for whatever they need, be it support, going to college, down payment on a house, starting a business, or anything reasonable and necessary under the circumstances.
In terms of when you give the children the money, I am a big advocate of not giving children big piles of cash until they are at least about 25 years old. My reasoning on that is that most kids run wild after they get out of college until they are 25, or if they did not go to college, they are having a perfect time, and they do not settle down and be a little bit more financially responsible until they are age 25.
For the most part, you really cannot tell how responsible a 10year old is going to be until they are 10 or 15 years older, so we do what I call a tiered distribution scheme. For example, your trust would say that when the child hits 25, they get 25% of whatever their trust is worth, then when they attain age 30, they get another 25% of what the trust is then worth, and when they reach age 35, then they get the balance of the trust.
There are many reasons to tier it. Number one, you give the child multiple shots at the money. If you give it all to them in one go and they blow it in one shot, there is no second chance. I have seen many kids get a big pile of money, and they blow it relatively quickly, so at least this way, you give them two or three shots to get it right. It also protects against the child getting married young and divorced young with the divorcing spouse walking away with a lot of the money because the child did not know to keep the funds separate from his spouse until a period of time had elapsed in the marriage when they know that everything is going to be okay for the long haul.
The other reason you do not give it all to them when they’re young is if they develop financial problems; they get sued because the creditors can go after the money if the child has it. But if It is still in the trust, then the creditors cannot get to the capital. There are many reasons to restrict the money from the children until they reach certain ages. There are other kinds of restrictions you can put in, such as requiring the child to have a college degree before they get the money when they turn 25. Many of my parents are very adamant that they are working hard to provide the funds to go to college. If they die, they want to make sure their kids go to college, so they say, “Look, you’ll still get your money at age 30 and 35, but if you want the money at 25, I want some kind of degree,” whether it’s a 2-year degree, 4-year degree or whatever the parents decide they want to put in.
What Are the Difficult Aspects of Estate Planning for An Attorney to Deal With?
Almost all the decisions that my clients have to make, I help with! I help them evaluate a given individual if they will make them a trustee of the money or a guardian of the child. I help them determine what assets they want to give to the children, whether it is how they are splitting up the personal property like the cars and the jewelry and the gun collections. I talk to them about how they want the kids to receive the particular financial assets. We talk about who will make the medical decisions and whether that person is appropriate.
I give them advice and counseling on what their options are concerning life support and do not resuscitate options; we talk about their options as far as how do they want to approach organ donations, what purposes do they want to donate organs for; we talk about what their real options are concerning burial and cremation and help them make a choice that is best for themselves, and so on.
The real job of a credible attorney is to walk the people through the entire estate planning process and help communicate to the client and help the client figure out what exactly it is that they want because when most people come into my office, they are not sure what they want; they don’t even know the right questions to ask.
My job is to facilitate or walk them through the process and help them pick the right people in the proper order, help them get the estate set up the way they want, and help them make sure that their wishes are taken care of in the event of their incapacity or death. Everybody wants to know the job of an estate planning lawyer; a compassionate attorney is a good counselor, administrator, and facilitator.
What is the Hardest Thing for People to Understand When it Comes to Estate Planning?
The hardest thing for people to understand is that it is not just some impossible thing they cannot get done. Most people feel like it is so complicated and it does not make any sense, and they do not know what to do. The reality is that if they commit to working through the process with me, they are going to get exactly what they want, precisely the way they want it and when they want it; and have it all structured and have all the loose ends tied up so that once they are done, they can put the binder with the documents in a safe place in their home and then go on and enjoy their lives.
Most people think it is a very lengthy process that takes forever and is costly, and the reality is that those are just not tangible reasons. The thing to realize is to commit yourself to the process, do the things that I ask you to do, and answer the questions I invite you to respond to. You can put together an excellent estate plan for yourself. The estate planning process is straightforward. Moreover, it will be done, and you will continue and live your life. That is what my clients come to me for, and that is what I passionately try to provide.
For more information on Things to Avoid In Estate Planning, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by contacting Steve Bliss today.