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This week is a reverent occasion for the American family. We celebrate unity by putting family differences aside, enjoying sports, movies and of course, good food! Often the legacies of our families are portrayed to future generations only with the pictures at the dinner table while we sit around and enjoy the holiday. This travels to the heart of estate planning and to the reason that drives so many of us to strive for excellence in all of our endeavors.


Do I need an estate plan?

Certainly it is not a crime to die without an estate plan, but if you do not employ a method of transferring your assets, you will die intestate, which means the state probate court will determine your Last Will & Testament according to decree of law (probate). In essence, you have a choice. You can let the state decide the outcome of your assets, or you can decide the outcome of your assets.

What is an estate plan?

An estate plan is the documentation by which an owner of an asset chooses one or more legal methods of transferring all of his or her assets to chosen recipients upon death. A proper estate plan takes into account personal, administrative, and transfer tax matters in order to create the most efficient, cost-effective means of transferring a particular estate upon the owner’s death.

You have five choices: 1) Do nothing and go to probate, 2) Use Jointly Owned Property protection 3) Create a Will or 4) Create a Trust, 5) Use another method of transfer, such as a Family Limited Partnership, or a combination of all the above.

What is wrong with probate?

First of all, the court has to decide the legal decedent. Secondly, probate takes months and costs the estate money. Probate is a record of public file and all family matters pertaining to inheritance become the records of the courts. The other aspect of probate is the fact that estate taxes would likely have been mitigated if the legal options available had been enacted. Since a deceased person is unable to transfer their assets, in the interest of the public, a court will transfer the assets from its’ neutral perspective according to the law.

There are also many laborious and costly steps in probate even with a Last Will & Testament when a person dies with a will (testate) that can be avoided by employing legal methods afforded to all persons with assets.

How can I avoid probate?

There are many options. One very common way is to hold property as join-tenants-with-rights-of-survivorship (JTWROS). Another method is by deeding realty property to someone with a life estate retention clause in the deed.  A third well-known strategy of avoiding probate of bank accounts, life insurance, IRAs and other assets normally held in accounts is to make those accounts payable-on-death (POD) directly to a named beneficiary.  All of these methods, however, can create potentially undesirable outcomes ranging from loss of control and unnecessary lawsuit exposure during lifetime to the forfeiture of a thoughtfully structured disposition of one’s estate at death.


The real reason for this newsletter!

The best alternative and the core foundation of estate planning is the Revocable Living Trust (RLT). When the creator of a living trust transfers assets to the trust, actually to himself as the trustee, he has already conveyed legal title to his assets to a “party” that does not cease to exist when he dies.  That party is the office of the trustee, which he may occupy during his lifetime.  Specific assets of the estate determine the particulars and the other methods that may be available to use in conjunction with an RLT. Irrevocable trusts, family limited partnership and charitable trusts are also options.

When the living trust transfers the assets to the trust, the conveyance has already occurred; it occurs while a person is living rather then upon their death.

It is worth mentioning that there are many offshore methods that provide superiority to domestic Asset Protection.

Discussing this within families is a difficult task. There is no great time to discuss the subject and the holidays certainly fall into this category. What our holiday traditions remind us of is that our family legacies are worth protecting. Conventional wisdom tells us that at some point we must discuss this.

As Asset Protection practitioners, we encourage you to think about an estate plan in the future if you do not already have one. Though the holidays are not great times for these discussions, they are the times to observe our gratitude and reflect on what role family legacy can play in future generations.

Until next time,