TEN THINGS YOUR ESTATE PLANNING ATTORNEY WON’T TELL YOU: Or, how you just named some lawyers beneficiaries of your estate
- Your Kids Hate Your Second Spouse.
- Your Kids Will Sue Your Second Spouse When You Die.
- Attorneys Will Be Beneficiaries of Your Estate from all the legal fees from estate administration and estate and trust litigation. Your heirs will have questions, hire lawyers, and fight.
- That Marital Trust You Created Isn’t Worth the Tax Savings. Why put your third spouse and kids from your first marriage in a financial stew? Why make your kids remainder beneficiaries of a trust which benefits only your third spouse during his or her life? Why not just make outright distributions to your kids and your latest spouse, and let them part ways each with a bag of pre-determined cash?
- Your Co-Trustees Won’t Get Along. Naming kids with no experience managing money or investing assets won’t go over well. Your individual co-trustees will think the trust company you appointed is over paid and non-responsive. Individual trustees will bicker among themselves and find it difficult to manage the trust, in essence, by committee. Everyone feels under-appreciated and under paid.
- When You Become Incapacitated, They Will Fight Over Your Person and Purse. People used to wait until you died before fighting over your wealth. Not anymore. Now they hire guardianship litigators to file petitions for guardianship and to have you determined incapacitated. They want to restrict your civil liberties and basic human rights. Oh yes, they want to control your money, too……and pay their attorneys from your bank account. Crazy kids.
- How You Think Your Kids Will Spend Their Inheritance Is Nothing Like Reality. They will use it, spend it, blow it sooner than you think. Give them money outright and chances are they are planning to spend it rather than invest it. They are picking out leather interiors and booking business class airfare rather than evaluating whether now is a good time to invest in emerging markets.
- Your Kids Will Try to Bust Up That Family Trust. Your kids won’t deal well with having to ask a trustee if they can have some of your money, which they view as THEIR money now that you are gone. They will try to bust up the trust and have everyone’s shares distributed to them, now. New and progressive laws permit probate judges to intervene in trust affairs for any reason, and reformation and modification of trusts are now part of some states trust laws, which can permit major changes to your trust.
- The Dirty Secret of Estate Planning: It Got Really Simple, and Cheap. The newest tax law permits a married couple to give away $10.5 Million free of estate tax. This shelters 99% of US estates from the estate tax. No more need for complex estate plans. No need to be “sold” a charitable remainder trust by your broker. No need to give away your house to a “QPRT” (imagine: and rent it back and pay rent to your trust?!) A simple, pour-over will, a revocable trust, a power of attorney and health care documents are all you need to have a great, reasonably priced estate plan.
- Taxes Aren’t That Important. Saving estate taxes aren’t the problem any more for wealthy, ultra high net worth Americans. With some time, and a little bit of tax planning, and lifetime gifts, you and your spouse can give away lots more than the $10.5 Million if your estate is a substantial one. There are plenty of ways to shift wealth, while reducing potential estate taxes. The focus, the challenge, for wealthy families now is how your wealth will be administered when you are gone. The shift in focus for services for the high net worth set should be away from tax minimization, which is “easy,” to wealth administration. How will your millions be spent, or mis-spent, by your heirs?
But who cares, right? After all, you’re dead.