July 25, 2017

Train Your Heirs

If you want your wealth to last and be available for future generations of your family, then you need to make sure that your heirs are ready to handle the responsibility of maintaining your wealth.

The ability to manage and preserve a large amount of wealth is not something most people are born with. If it were, then there would be few stories about big lottery winners ending up with less money after a few years, than they had before they won millions.

There are many stories like that.

There are also numerous stories about families that once had a lot of wealth that was lost over the generations.

These stories are actually so common that the few families who successfully preserve wealth for generations, are considered the exceptions to the rule.

Recently, the Wills, Trusts & Estates Prof Blog discussed ways to make sure your family might be one of the exceptions in "Preparing Heirs for Successful Wealth Stewardship."

The key to such success actually seems relatively simple. In practice, however, it can be difficult.

Heirs need to be trained to handle the wealth.

They need to know how to make good investments and how to avoid bad ones. They also need to learn what good uses for the money are and what type of spending would be wasteful.

Perhaps, most importantly, heirs need to know who to turn to for advice.

A good estate plan is also vital to preserving family wealth.

The wealth cannot be maintained without the proper legal instruments, but estate planning is not enough by itself.

Reference: Wills, Trusts & Estates Prof Blog (June 29, 2017) "Preparing Heirs for Successful Wealth Stewardship."

June 27, 2017February 23, 2026

Protect Your Assets with Estate Planning

There is possibly no greater blow to a person, than losing all of their assets to creditors. It can happen to anyone, but you can protect against it by utilizing estate planning tools that provide asset protection planning for business owners and professionals.

You have probably noticed at some point or another, that the U.S. is a very lawsuit happy country, much more so than most European countries.

The reasons for this have a lot to do with the way that our court system is set up. Anyone can file a lawsuit for almost anything. There is very little to deter someone from doing so, in most cases.

Even if the plaintiff loses, he does not have to pay the defendant’s legal bills, which can be quite high. Consequently, no matter how wealthy a person is, they can be sued and potentially lose everything if the court system rules against them, rightly or wrongly.

Therefore, it is extremely important for the wealthy to protect their assets from potential creditors, as the Wills, Trusts & Estates Prof Blog discussed in “Asset Protection Measures.”

The good news is that protecting assets from potential creditors is not an inherently difficult task.

Estate planning attorneys have many ways to assist clients in doing that.

A trust is typically the best option for doing this. However, there are other ways to protect assets, including utilizing retirement accounts and college savings plans.

As a last resort, insurance can be purchased to protect against creditors.

You should protect your assets, and you should visit with an estate planning attorney to determine the best way to do so.

Reference: Wills, Trusts & Estates Prof Blog (May 31, 2017) “Asset Protection Measures.”

June 26, 2017

How to Blow a Big Inheritance

It is often noted that great family wealth has a tendency to disappear after a generation or two. That is because the same mistakes in handling that wealth are made over and over again.

There is little doubt that an ever increasing amount of America's total wealth is being concentrated in fewer and fewer hands. Many wealthy people are amassing large fortunes that could potentially pass down through their families for generations.

This "generational wealth" has the potential to make some families wealthy for hundreds of years.

However, we know from history that rarely actually happens, when great wealth is passed down by families.

Most of the time, the wealth dissipates after a generation or two, even if we do remember the exceptions where that did not happen.

If you are someone who is going to receive an inheritance of generational wealth, then you need to know how to make sure that you are one of the exceptions that preserves the wealth.

Financial Advisor recently discussed in this challenge "These 5 Mistakes Destroy Generational Wealth."

Things to avoid doing include:

Do not spend recklessly as soon as you get an inheritance. Buying all of your dream items, is not a good idea immediately after receiving an inheritance.
Do not think you can handle the assets without receiving proper financial advice.
Take your time to make a plan about what to do with the money. There is no need to act right away.
Make sure that you are not paralyzed by all of your investment options. You should not act right away in a rush, but you do need to act eventually.
Avoid giving to every friend or family member with a hand out at your expense.

On the other hand, contact an experienced estate planning attorney who can help you form a team of advisors to help guide you to prudent decision-making.

Reference: Financial Advisor (May 23, 2017) "These 5 Mistakes Destroy Generational Wealth."

June 16, 2017

Leaving A Large Inheritance? Pros & Cons

Many wealthy people are torn between wanting to leave a large inheritance for their children and fears that their children will not be able to handle the wealth.

Wealthy parents whose children do not get independently wealthy on their own, often fear that leaving those children a large inheritance would be a mistake. The children might not be able to handle the money and it might cause them to give up their own careers.

In some cases, the children might also waste all of the money and leave nothing for their own children. Despite this common fear, the wealthy parents do want to leave their children large inheritances.

This tension creates problems for many people as they plan their estates, as the Wills, Trusts & Estates Prof Blog points out in "New Focus for Estate Planning."

The key to resolving this tension is to understand that estate planning can be about more than just transferring a lot of assets to heirs. With a traditional Will, heirs get all of the assets at once, which leaves open the possibility that assets will be misused.

There are many kinds of available estate planning tools that can be used to make sure that heirs do not waste everything.

Many types of trusts will help preserve the assets.

Of course, this can only be done, if an estate planning attorney knows that the client fears his children will waste an inheritance. The attorney needs the client to express these fears, so the attorney can devise the best plans.

Reference: Wills, Trusts & Estates Prof Blog (May 17, 2017) "New Focus for Estate Planning."

June 15, 2017

Alan Thicke Estate Battle

Alan Thicke's sons are fighting with their stepmother over their father's estate.

Two of deceased actor Alan Thicke's sons have entered the probate case to settle their father's estate with a unique claim. The have filed a claim suggesting that Thicke's third wife, Tanya Callau, is attempting to get more of the estate than she is entitled to receive and that she has threatened to go to the tabloids, if she does not get her way.

Thicke and Callau had a prenuptial agreement and she is already set to get a sizeable portion of his estate. Her take includes 25% of his personal assets, 40% of the remainder of the estate, a $500,000 life insurance payment and she can stay in the residence for the remainder of her life.

The sons have not stated what else Callau wants and it is not known what she would tell the tabloids, if she went to them.

TMZ reported this story in "Alan Thicke Sons Go To War With His Wife To Protect the Estate."

Other than the celebrity nature of this estate and the alleged threat to get the tabloids involved, this is, of course, not a particularly unusual estate battle.

Adult children are often at odds with a surviving step-parent and that battle often makes its way into probate court to fight over the estate. This is especially true when there are large sums of money involved.

Wealthy people who have remarried and who have children from previous relationships, need to understand how common these types of fight are. They then need to make estate plans with that in mind, if they hope to minimize the problems.

Reference: TMZ (May 16, 2017) "Alan Thicke Sons Go To War With His Wife To Protect the Estate." Estate Administration, Estate Litigation

June 8, 2017September 16, 2024

Protect Your Digital Assets

Technology is changing so rapidly that people and the law are not keeping up. This creates problems in estate planning.

It was not that long ago when the Internet was new and primarily seen as nothing more than a source of entertainment for most people. That has changed dramatically.

More and more people are now conducting business online and our digital accounts have become a large part of our personal lives. This has become a problem in estate planning because most people manage their finances online and after death their heirs cannot access these digital files, which are password protected. A generation ago, heirs could discover financial information relatively easily through paper statements.

Laws have also not kept pace, as Investment News discusses in “Most estate plans aren’t dealing with digital assets properly.”

By default, what happens to digital accounts and assets after we pass away is a patchwork of the individual terms of services of the different websites that we use.

Every website has different rules about the accounts and whether they can be passed to heirs and under what circumstances they can be passed down. And whether passwords and accounts can be accessed.

Some states have attempted to address this problem by adopting proposed uniform laws, but there is a long way to go for the law to catch up with technology. Maryland and DC have passed new laws.

If you would like to make sure your heirs can access your digital financial information or have a say in what happens to your digital accounts after you pass away, it is important that you speak with an estate planning attorney about it, so you can make appropriate plans.

Reference: Investment News (May 11, 2017) “Most estate plans aren’t dealing with digital assets properly.”

June 7, 2017October 25, 2023

Why Trusts Are Better Than Wills

Most estate planning attorneys believe that trusts are generally a better way to distribute an estate than wills. It is important to know the reasons why that is.

If you spend any time at all talking to estate planning attorneys or researching estate planning online, it will not be long before you hear that trusts are usually better than wills for estates. This has become such a truism, that even many non-attorneys instinctively suggest a trust when a friend asks them about estate plans.

While it should be noted that trusts are not always better, it is true that they almost always are. Particularly, in Maryland and the District of Columbia, which have Maryland estate taxes and DC estate taxes, which are lower than federal estate taxes, trusts are especially helpful.

Recently, Wicked Local Norwood listed some reasons why that is the case in “Five Ways in which a trust is better than a will,” including:

With a trust you can avoid probate, which can be expensive and time-consuming. Most wills have to go through probate court.
A trust can be drafted that protects your beneficiaries from creditors. If you give heirs money outright in a will, then any creditors they have can go after that money. Trusts avoid this problem.
Special needs trusts can be used to give assets to people with disabilities without making them ineligible for government benefits.
Trusts can be used to reduce estate taxes in ways that are impossible to do with wills.
With a trust, you can leave assets for minor children that are managed by a third-party without the unnecessary intervention of probate courts.

All that noted, wills have the benefit of a neutral judge overseeing the process and “testamentary trusts” can be created under wills that accomplish the same ends as those available through a revocable living trust that avoids probate.

Regardless, consult with a qualified estate planning attorney to evaluate the best approach for your unique circumstances.

Reference: Wicked Local Norwood (May 14, 2017) “Five Ways in which a trust is better than a will.”

May 26, 2017October 18, 2022

No Estate Tax Does not Mean no Estate Planning

With the release of President Trump’s tax plan and Republican majorities in Congress, it seems inevitable that the estate tax will go away. That does not eliminate the need to do estate planning.

A big part of modern estate planning is planning around the federal estate tax. Many estate planning instruments were designed to help lower the estate tax burden on wealthy estates. Profit Law Firm helps clients reduce federal estate taxes.

Without an estate tax, it might seem that there is not much of a reason to do complex estate planning at all. Some people anticipate that will be the case soon, since President Trump has released a tax proposal that would eliminate the estate tax and Republicans who hold majorities in both houses of Congress agree with the idea.

However, it is not that simple as Financial Advisor recently discussed in “Estate Planning: It’s Not Over.” Some states such as Maryland and DC, have state estate taxes, at $3 million and $2 million, respectively see more information about these estate taxes. So residents in these states will have to do some extra planning regardless of the federal tax rates and a Maryland estate planning attorney can help.

It still is not clear when, if and how the federal estate tax might be repealed.

Congress could choose to phase it out over a few years or scrap the idea entirely, if they cannot agree on offsetting spending cuts or where to raise revenues from elsewhere. Senate Democrats could also mount a filibuster over any tax plan that Republicans propose, which they are expected to do.

No elimination of the estate tax is permanent, of course. Even if it passed now, it could always be reinstated when Democrats control government again.

While you might be excited about the elimination of the estate tax, do not make the mistake of thinking that means you can make your estate plans with the assumption in mind that it will go away for good, if it does at all.

Reference: Financial Advisor (April 3, 2017) “Estate Planning: It’s Not Over.”

May 18, 2017June 14, 2025

Making Sure Your Family Has the Cash They Need

Even a great estate plan cannot help your family, if they do not have the cash they need to meet expenses before the estate plan can be executed.

People often go to great lengths to get an estate plan carefully crafted that covers every possible need their family could have. That is a good thing, but it might not be enough.

If you are your family’s sole breadwinner and most everything is in your name, then you also need to think about how your family is going to make ends meet while your estate is being administered. Bank accounts in your name are supposed to be closed as soon as you pass away, so your family cannot legally access them.

Unfortunately, that is not going to stop any bill collectors from making calls, and grocery stores are not going to sell their food on credit to your family.

As a result, you also need to plan for your family to have access to cash.

Some advice on how to do that comes from South Africa by way of Personal Finance in “Will your family avoid a cash-flow crisis on your death?” The advice is also applicable to the U.S.

Getting an estate through probate can take a lot of time, depending on the size of the estate and the probate laws in the state.

Your family will not receive the cash from your will for a while, in most circumstances.

If you do anticipate that your family will need cash after you pass away, the most effective way to provide it is normally to take out a life insurance policy. These policies pay out almost immediately upon learning of death.

Another idea is to open a joint bank account with a trusted family member and to put some money in the account that will only be used in the event of your passing.

Reference: Personal Finance (April 22, 2017) “Will your family avoid a cash-flow crisis on your death?”

May 17, 2017

Getting Upset Over Another’s Estate Plan

Sometimes when we hear about another person's estate plan, we may tend to get upset, if we think we are slighted in some way. It is a good idea to think about the plan from the other person's point of view.

There is a very human tendency to get upset whenever we initially feel slighted by someone else. A recent advice column in philly.com, "Wife upset by in-laws' plans for their estate," illustrates why it is sometimes better to hold off on the anger and look at things from other people's points of view.

A woman wrote in to say that her husband had a teenage son from a previous marriage. The woman was cleaning out papers from their office and discovered a printed out email from her father-in-law to his attorney. The father-in-law was asking how to set up his estate, so it would be certain to go to the teenage son, and not the woman, after her husband passed away.

This upset the woman, since she felt that she was being viewed as not being trustworthy enough to make sure the teenage son received an inheritance after her.

The problem here is that if the woman had seen this from the father-in-law's point of view, she might not have been so upset.

He wanted to make sure that his assets were kept in the family and that his grandchild would eventually receive them. The woman could have possibly gotten remarried or had a falling out with the son after her husband passed away.

From the father-in-law's perspective, he merely wanted to make sure his grandchild was taken care of, which was not necessarily making a judgment on the woman's character. "At our firm, we may hold two family meetings, to help a family understand and accept the plan," says Michelle Profit, an estate planning attorney.

Reference: philly.com (April 23, 2017) "Wife upset by in-laws' plans for their estate."

Building Legacies that Last Estate Planning and Elder Law

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