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Advanced Estate Plans for High New Worth Families
Simple Estate Plans
Power of Attorney
Every person in the United States over the age of 18 should have Basic Legal and Emergency Documents (BLED’s). Every person has a need for estate planning and asset protection. The more assets you have the more planning you should do. Basic Legal and Emergency Documents consist of the:
- Last Will and Testament. A Last Will and Testament (LWT) will allow you to designate a personal representative who will handle your affairs at death, who will be the guardian and conservator for you and your children, and who will receive your property on death. Without the LWT, the wrong persons may be appointed by the court to handle your affairs and property after you die, or the court may appoint inappropriate persons to care for you in a nursing home, or raise your minor children. Also without a LWT, the legal fees, surety bonds and other fees will be greater.
- Durable General Power of Attorney. A Durable General Power of Attorney (DGPA) will permit your chosen agents to sign legal documents and disburse checks for you while you are incapacitated, missing or away. During a period of incapacitation your legal and financial matters might fall into disarray without the DGPA. Deadlines will be missed, and important matters may not be handled without going to the courthouse to petition for the appointment of a Legal Conservator and expending large amounts of money on attorneys’ fees, doctors and surety bonds.
- Durable Medical Power of Attorney. A Durable Medical Power of Attorney (DMPA) will allow your chosen agents to make medical decisions for you in the event you cannot direct the doctors yourself. Without a DPMA, someone will have to go to the local courthouse to seek appointment as your legal guardian which will cost money in the form of legal fees, filing fees, and ultimately could delay your treatment.
- Durable Living Will. A Durable Living Will (DLW) directs your chosen agent what care you want at the end of your life, and when to “pull the plug” and allow you to pass away. Without a DLW, a medical professional may keep you alive and in pain indefinitely, enduring something worse than death and eating up your wealth in useless and unneeded medical care. The DLW also prevents your family from needing to initiate very expensive and complicated court proceedings just to carry out your wishes.
- Durable Mental Heath Care Power of Attorney. A Durable Mental Health Care Power of Attorney (DMHPA) will allow your chosen agent to confine you for mental health care, without the costs and embarrassment of a mental health hearing in court. With a DMHPA, you will not be able to sign yourself out of a protective institution while still mentally impaired, which would require your family to use force to capture you and submit you to an expensive courthouse mental health hearing with multiple lawyers, multiple doctors and extremely emotionally charged proceedings.
- HIPAA Authorization. New federal laws have been enacted to protect the privacy of health care information. These laws have civil and criminal penalties for non-compliance. Your physicians and other medical staff must have the HIPAA Authorization documents in order to release your health information to your loved ones if you enter their facility and are unable to respond. Imagine the complications of your loved ones not having access to your medical records in an emergency.
- Durable Funeral and Burial Instructions. Durable Funeral and Burial Instructions (DFBI) will prevent disagreements and arguments among family members who are making your funeral arrangements. Without the DFBI, family members who are next of kin may quarrel over details of the funeral and burial, each one absolutely sure of what you wanted. Family members may also have psychological remorse over whether they selected the correct pallbearers, the right coffin, the best person to offer the eulogy – and worry about their sensitive errors for the rest of their lives.
- Personal Property Inventory List. A Personal Property Inventory List (PPIL) allows you to designate who will receive your personal effects, household goods, and other moveable property. Many bitter arguments over who gets Mother’s wedding ring or Dad’s gold watch can tear a family apart forever. Your Last Will and Testament will authorize the making of a PPIL in your own handwriting, detailing who gets each one of your treasured articles and eliminating the chance of fighting over them.
These documents ensure your wishes are carried out by your family members. Please make an appointment with us to discuss any questions you might have and to learn more about how these basic legal and emergency documents can help your family.
The Revocable Living Trust
The quality of an estate plan is directly related to the foundation upon which it is built, and the revocable living trust is that foundation.
By creating, funding and maintaining a revocable living trust, the foundation of your estate plan will be set. You, as the Grantor, Trustee and Beneficiary of the revocable living trust during your lifetime, will keep control over all of your assets and you can use them as you see fit.
Upon your death, or the death of both spouses in the case of a married couple, the revocable trust will become irrevocable and the people you choose to inherit your assets will be protected.
Here’s what we mean by “protected,”
- A fully funded trust will avoid probate. As too many families in Arizona can tell you, the probate of a loved one’s estate can be stressful, expensive and long. To begin a probate, a person in charge of the estate called the personal representative must be appointed by the court. As happens frequently, two or more family members believe that they should be in charge. This leads to the hiring of lawyers and a long drawn out battle over the assets of the estate, and ultimately the court may decide who gets what.
- If your revocable living trust is created, funded and maintained correctly, there is no need for a probate when you pass. You decide who will be the trustee of the trust after you pass (the successor trustee), who will get what assets (the beneficiaries), and when they will get them (the distribution of trust estate).
- You control when the trust estate is distributed. We’ve all heard stories about what can happen when a minor turns 18 and receives a sizable inheritance. Unfortunately, many of the stories end badly. The child spends frivolously on fancy cars, lavish trips, or even worse on drugs, alcohol and gambling, to a point where all the assets are gone within a few years.
- Most of our clients who have children or grandchildren under the age of 18 choose to add provisions in their trusts which direct what age their family members can receive assets from the trust. A common provision only allows 1/4th of the trust assets to be distributed to the family members once they have reached age 25, another 1/4th at 30, another 1/4th at age 35, and the remainder at age 40. The percentages and ages are all decided by you.
- Also, the trustee of your trust has the discretionary power to withhold a distribution if a beneficiary is addicted to gambling, alcohol or drugs, or engaged in any other self-destructive behavior that is facilitated by payments of money.
- Creditors have a hard time collecting on your beneficiaries’ debts. If your assets pass directly to your family members outside of a trust, your assets could be immediately taken by the creditors to pay off your family members’ existing debts.
- If your assets are in your trust when you pass the trustee is not required to distribute those assets to your family members if the money will just be used to pay off a bunch of old debts. Also, even though the beneficiary is entitled to the money, the creditor cannot force the Trustee to make the required distribution directly to the creditor; therefore both your assets and your beneficiaries are protected.
These are just a few of the most important features of a revocable living trust. Please make an appointment with us to discuss any questions you might have and to learn more about how a revocable living trust is the foundation of a quality estate plan.
Estate Planning and Asset Protection for High Net Worth Families
Estate planning and asset protection for high net worth families is maximized through the implementation of a complex plan of revocable and irrevocable trusts, limited liability companies and limited partnerships, and management agreements and loans between these entities.
We have developed a system for educating our clients, their families, and their professional advisors so that eventually these plans, while complex in form, are easy for our clients to understand.
Please make an appointment with us to discuss any questions you might have and to learn more about how estate planning and asset protection for your family can be achieved.