The Following is a no-nonsense overview of some good basic Estate Planning questions and options by my friend Attorney Jay Young, a partner at the law firm of Marquis & Aurbach in Las Vegas. Call Jay and his team for help or with questions and make addressing this issue a top priority and an essential part of any well thought out financial plan for your family.
Yours, Ike
WHAT HAPPENS TO MY STUFF WHEN I DIE?
I tried for 15 years to get my friend to do some basic Estate Planning. He assured me he didn't need my help, and that he had everything "under control" without spending money on an attorney to do a Will and a Trust. My friend died last month and I am now trying to help his widow through the financial mess he left behind.
Now, my friend was an extremely intelligent man and very capable in many ways. But he did not have things "under control". Now, his widow will have to spend thousands of dollars in attorney fees, put his estate through probate, and lose almost 1/3 of the assets they worked so hard to accumulate. His widow is learning through my friend's mistakes that if you do not have an estate plan, the State will determine who gets your assets, not you.
Following is an overview of the ways one may transfer assets upon his or her death, discussing the risks and rewards of each method. We will also discuss the estate planning tools that are available to you to avoid the risks associated with each transfer method.
What Happens to My Stuff if I Die With or Without a Will?
No matter how many times you tell your spouse that you want "Johnny" to get your Ford Motor stock, your survivors will not decide who gets your assets upon your death unless you complete some basic estate planning. Those who die without a Will or who do not title assets such that they pass to a designee by operation of law or under the terms of a contract (discussed below), allow the State to determine who will receive their assets upon death. Assets that are not titled to provide for transfer at death may only be transferred by court order.
Unfortunately, those court proceedings are expensive. It is estimated that the average cost of these types of court proceedings is $10,000. Compared to the cost of simple estate planning devices, this is a great expense and is very avoidable. Having a Will does not even protect you from having to go to court, however. A Will is nothing more than directions to a judge saying. "Dear Judge: I do not want my assets to pass according to statute. Instead, I want them to pass as follows . . .." In other words, a Will virtually GUARANTEES that your loved one will have to go to court and spend attorney fees. There has to be a better and less expensive way, right? Read on.
How Can I Make Sure my Assets Pass by Operation of Law?
Some forms of ownership of an asset declare legally who will receive the asset upon your demise. Owning property in joint tenancy, as community property with right of survivorship, or designating that assets are held for the benefit of, payable on death to, or to be transferred on death to a designee are recognized in the law as valid ways to transfer ownership of an asset upon your death.
While these methods are fairly easy and cost-effective, people usually get into trouble when they THINK they have made these designations, but have not. My friend "forgot" to title cemetery lots and to designate a beneficiary on a bank account and stocks even though he thought he had everything "under control".
How Can Contracts Help me Pass Assets on my Death?
You can designate by contract that upon your death, certain assets pass to your designee. These contracts include life insurance policies, partnership agreements, shareholder agreements for closely help corporations, trusts, retirement benefits, stocks, etc.
How Can an Estate Plan Help?
A proper estate plan can help to make sure your assets pass to those you intend to receive them. It can ensure that your dependents are cared for both financially and physically (especially for minors). An estate plan can also help reduce taxes and attorney fees and keep your loved ones from having to go to court. The cost of a simple estate plan is a fraction of the average cost of going to probate court.
Many people think that a Trust is only for rich people. They would be wrong.
A Living Trust is a tool that should be utilized by anyone over 18 years old who has children and/or real property. When properly formed and funded, a Trust replaces a Will and will provide for the management and distribution of your assets upon your death without having to go to probate court. During your lifetime, you have complete control over your assets, even though you would place all assets (homes, bank accounts, stocks, etc.) into the Trust (meaning the Trust is the owner of the assets). You will need to designate a successor trustee, whose job it will be to transfer the property in your Trust according to your written desires. A Trust can be changed as often as you like after it is formed. When you die, your successor trustee will simply follow your directions and may transfer your assets without having to go to court or incur those attorney fees.
Of course, there are other estate planning tools that we recommend along with a Trust. Those include a Living Will (directive to doctors whether you desire life support, etc.), a Pour-Over Will, Power of Attorney, and others depending on the scope of your needs and amount of your assets.
How Can I Get Started Protecting my Family?
Call 702.821.2419 for a free consultation with one of Marquis & Aurbach's excellent estate planning attorneys. They can meet with you and explain how to best protect your family (every situation is unique and your estate plan should be designed just for you). Whether you make any changes is up to you, but let them help educate you on whether your family is at risk and how you can avoid that risk. www.marquisaurbach.com
Tuesday, May 25, 2010
Wednesday, May 12, 2010
Beyond Prenups - Where Asset Protection meets Domestic Relations Law
We advise all of our clients to address pre-nuptial planning and tell them that combined with what we do, the value and surety that tools like the Asset Protection trust and our other tools provide will give them great additional security and take a great finite "snapshot" of their assets entering the marriage.
It has been our experience that careful planing also reduces or eliminates areas of conflict and dispute and helps control the financial and legal costs of such battles that enrich no one but the lawyers.
The link below is to an article in Private Wealth magazine that exapnds upon this concept.
Beyond Prenups - Where Asset Protection meets Domestic Relations Law
http://www.fa-mag.com/component/content/article/5521.html?issue=144&magazineID=3&Itemid=211#josc601
It has been our experience that careful planing also reduces or eliminates areas of conflict and dispute and helps control the financial and legal costs of such battles that enrich no one but the lawyers.
The link below is to an article in Private Wealth magazine that exapnds upon this concept.
Beyond Prenups - Where Asset Protection meets Domestic Relations Law
http://www.fa-mag.com/component/content/article/5521.html?issue=144&magazineID=3&Itemid=211#josc601
Wednesday, May 5, 2010
Tips To Avoid A Lawsuit - An Expert's View
This article is by my friend and colleague Douglass Lodmell, a nationally recognized Asset Protection expert and founder of one the leading Asset Protection only law firms in the country, Lodmell & Lodmell, which I formerly managed and am now of-counsel with. One of the most basic concepts in the martial arts is "avoid harm" and while we are firm believers in having a great, pro-active defensive plan we also place great value on behavior and thinking that minimizes exposure in the first place - here are some of Doug's tips on that.
Yours, Ike
Perhaps these tips bring to mind the oft-quoted adage, it's not paranoia if they really are out to get you. That's pretty accurate, says Lodmell. There are plenty of greed-blinded, entitlement-minded predators out there who are all too willing to separate you from your hard-earned money. Protect yourself as best you can-but don't let fear and cynicism become your defining characteristics.
Don't flaunt your wealth. Don't practice a lifestyle that advertises you have a lot of disposable income. Even if you don't consider yourself wealthy, if you're driving a top-of-the-line luxury sedan and openly discussing lavish vacations, plenty of other people will assume that you are-and will see you as a juicy target for a lawsuit.
Draw up a pre-nuptial agreement before marrying. It may not be romantic advice, but from a legal standpoint it's definitely wise. Being served for divorce is the most common lawsuit.
Identify and correct any existing personal or business liabilities. Use well-drafted and thought-out planning before the fact, and make sure you have planned for dispute resolution in the most efficient manner for after the fact. A majority of businesses fail in the first three years, and these often turn from high hopes to high drama as partners fight over the remaining assets. Good planning before there are problems can limit future potential trauma.
Know the employment laws backward, forward and inside out. Few areas are as treacherous as those involving the employment of other people. Disgruntled ex-employees can fairly easily exaggerate or even fabricate incidents that "prove" they were victims of harassment or discrimination. Know how to legally interview, hire, and fire employees, and make sure those working for you know as well.
Don't play favorites with employees. You must treat everyone equally. Think twice before you give an employee a special break or extra time off for any reason. This also applies to being too harsh on one employee and not others. If you don't do the same for everyone, then you could be in for trouble.
Be scrupulously careful about doing anything that might be construed as sexual discrimination. Here are some disturbing statistics: according to Jury Verdict Research, 38 percent of all verdicts between 1996 and 2002 involved claims of sexual discrimination. Equally sobering is the report from Jury Verdict Research that 67 percent of sexual discrimination court cases end with the plaintiff winning. And in 2000, the mean award for sexual discrimination was a hefty $529,373.
Understand vicarious liabilities. Employers can be held accountable for the actions of their employees-sometimes even for actions the employers specifically told the employees not to do. Train them effectively. And if you have children, you have a whole other set of worries. Parents are often held accountable for the actions of their children (e.g., auto accidents).
Increase your automobile insurance coverage to the highest dollar amount. Your medical practice isn't the only place where you're at risk for a lawsuit-our nation's roads are fast becoming a highway to wealth. Make sure you are insured to cover a good chunk of medical expenses should you, your spouse or your children be involved in a lawsuit.
Implement binding Arbitration/Alternative Dispute Resolution agreements with all staff and everyone with whom you do business. The American Arbitration Association estimates that 80 to 90 percent of the disputes it mediates and/or arbitrates are quickly and cost-effectively resolved without litigation. It's just good business sense to legally require that any grievances between you, your patients, clients, or even your vendors be settled out of court in arbitration.
Adequately warn customers about potentially dangerous situations. Personal injury lawsuits are big business. New York City paid $53 million in 2002 for "slip and slide" complaints, which led them to shift the burden for such claims to property owners. Putting up signs like "We use microwave ovens" or "Caution: wet floor" may seem simple, but they can go a long way toward preventing lawsuits.
Treat your clients and customers in an exemplary manner. It may sound naïve or simplistic, but it's true: being nice usually pays off. Most of us simply don't like to sue people who we think are doing a great job. On the other hand, we have no problem suing those who "didn't care about us in the first place." If you needed it, that's one more reason to practice the Golden Rule!
"Yes, we do live in troubled times and our legal system is dysfunctional," says Lodmell. "But instead of bemoaning the lack of justice in our society, we must become a force for change. Any time you get the opportunity, speak up in favor of personal responsibility. Denounce greed. Always do what's right and set a good example for your children. Unlike changes in legislative and judicial reform, changes in public attitudes cannot be mandated. They can be changed only through grassroots efforts at the citizen level. Be the change you would like to see . . . the country you save might be your own."
Yours, Ike
Perhaps these tips bring to mind the oft-quoted adage, it's not paranoia if they really are out to get you. That's pretty accurate, says Lodmell. There are plenty of greed-blinded, entitlement-minded predators out there who are all too willing to separate you from your hard-earned money. Protect yourself as best you can-but don't let fear and cynicism become your defining characteristics.
Don't flaunt your wealth. Don't practice a lifestyle that advertises you have a lot of disposable income. Even if you don't consider yourself wealthy, if you're driving a top-of-the-line luxury sedan and openly discussing lavish vacations, plenty of other people will assume that you are-and will see you as a juicy target for a lawsuit.
Draw up a pre-nuptial agreement before marrying. It may not be romantic advice, but from a legal standpoint it's definitely wise. Being served for divorce is the most common lawsuit.
Identify and correct any existing personal or business liabilities. Use well-drafted and thought-out planning before the fact, and make sure you have planned for dispute resolution in the most efficient manner for after the fact. A majority of businesses fail in the first three years, and these often turn from high hopes to high drama as partners fight over the remaining assets. Good planning before there are problems can limit future potential trauma.
Know the employment laws backward, forward and inside out. Few areas are as treacherous as those involving the employment of other people. Disgruntled ex-employees can fairly easily exaggerate or even fabricate incidents that "prove" they were victims of harassment or discrimination. Know how to legally interview, hire, and fire employees, and make sure those working for you know as well.
Don't play favorites with employees. You must treat everyone equally. Think twice before you give an employee a special break or extra time off for any reason. This also applies to being too harsh on one employee and not others. If you don't do the same for everyone, then you could be in for trouble.
Be scrupulously careful about doing anything that might be construed as sexual discrimination. Here are some disturbing statistics: according to Jury Verdict Research, 38 percent of all verdicts between 1996 and 2002 involved claims of sexual discrimination. Equally sobering is the report from Jury Verdict Research that 67 percent of sexual discrimination court cases end with the plaintiff winning. And in 2000, the mean award for sexual discrimination was a hefty $529,373.
Understand vicarious liabilities. Employers can be held accountable for the actions of their employees-sometimes even for actions the employers specifically told the employees not to do. Train them effectively. And if you have children, you have a whole other set of worries. Parents are often held accountable for the actions of their children (e.g., auto accidents).
Increase your automobile insurance coverage to the highest dollar amount. Your medical practice isn't the only place where you're at risk for a lawsuit-our nation's roads are fast becoming a highway to wealth. Make sure you are insured to cover a good chunk of medical expenses should you, your spouse or your children be involved in a lawsuit.
Implement binding Arbitration/Alternative Dispute Resolution agreements with all staff and everyone with whom you do business. The American Arbitration Association estimates that 80 to 90 percent of the disputes it mediates and/or arbitrates are quickly and cost-effectively resolved without litigation. It's just good business sense to legally require that any grievances between you, your patients, clients, or even your vendors be settled out of court in arbitration.
Adequately warn customers about potentially dangerous situations. Personal injury lawsuits are big business. New York City paid $53 million in 2002 for "slip and slide" complaints, which led them to shift the burden for such claims to property owners. Putting up signs like "We use microwave ovens" or "Caution: wet floor" may seem simple, but they can go a long way toward preventing lawsuits.
Treat your clients and customers in an exemplary manner. It may sound naïve or simplistic, but it's true: being nice usually pays off. Most of us simply don't like to sue people who we think are doing a great job. On the other hand, we have no problem suing those who "didn't care about us in the first place." If you needed it, that's one more reason to practice the Golden Rule!
"Yes, we do live in troubled times and our legal system is dysfunctional," says Lodmell. "But instead of bemoaning the lack of justice in our society, we must become a force for change. Any time you get the opportunity, speak up in favor of personal responsibility. Denounce greed. Always do what's right and set a good example for your children. Unlike changes in legislative and judicial reform, changes in public attitudes cannot be mandated. They can be changed only through grassroots efforts at the citizen level. Be the change you would like to see . . . the country you save might be your own."
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