When we do estate planning for business owners, our plans generally include some discussion of business continuity plans. This article sets out how we think about this.
Giving Unique Assets
We often have clients who would like a child or other beneficiary to receive a specific asset.
To understand this situation, consider our friends Jack and Jill Smith. Jack and Jill have four children, Adam, Betsy, Carl, and David. Their total assets are $1M, and include a family cabin property worth $400K. Adam and his family use the cabin the most, and Jack and Jill would like to see him end up with it as part of their plan. What are their options?
Creating a Personal Financial
Our firm handles estate planning, not financial planning. However, to effectively help our clients, we often need them to create a good personal financial. Sometimes this is for an estate planning client working on a distribution scheme that requires good numbers or who needs a good list of assets to fund a revocable trust. Sometimes it is for an adult child who is trying to get their parent’s finances in order or trying to decide how to pay for long term care. Sometimes clients who are business owners need a financial to give to the bank, perhaps along with supporting documents. This article explains how we recommend our clients go about this, and includes an Excel template that can be useful in doing this.
Preparing for Your Estate Planning Consultation
Every estate plan we do starts with a free consultation. We get a lot done during those meetings, but they (honestly) don’t require much preparation. Here’s what to know about the agenda and how to prepare.
Background Information
The first agenda item is always to cover the basics of what an estate plan does, talk about how the process works, and answer general questions.
Next is a chance to get to know a little bit about you.
Why We Don’t Use Irrevocable Trusts
We get a lot of client questions about protecting assets from the nursing home. It would be easy for us to sell an irrevocable trust to every prospective client who raises the issue (which, honestly, is a lot of them).
But we don’t. We spend time talking people out of them. Here’s why.
UNDERSTANDING MA
To understand why we don’t do irrevocable trusts, you first have to understand a little bit about how long term care is paid for in this country.
Everyone who reaches a certain age will receive Social Security and Medicare. The government calls these programs “entitlements,” meaning that all of us are entitled to them because we paid into the system with payroll taxes while we were working.
Differences Between a Will and a Trust
When people come to our office for estate planning, they often start by asking us whether they need a will or a trust.
The very short answer is, of course, that it depends. Wills and trusts are tools. The right tool for each client will depend on the client’s family situation, asset situation, and goals for their plan. Historically, about half of our plans have been will-based plans, and half trusts.
That being said, there are some common reasons to choose one tool over another. This post explains how each option works and the common reasons we might recommend one over another.
Planning for Blended Families
Estate planning used to be pretty easy when every family was a husband, wife, and two and a half kids surrounded by a picket fence. That’s often not how it works anymore, and we now do many estate plans for blended families.
Like a lot of issues involving blended families, there are good solutions available in this type of planning, but it can take a little more time and thought to get there. This post explains how we work through plans for blended families.
How to Choose Agents
Choosing the right people to carry out a plan is often just as important as designing the plan correctly. We spend a great deal of time in our estate planning meetings discussing who to choose for a variety of key roles. These roles include financial roles, like estate administrator, and personal roles, like guardians for minor children and powers of attorney for health care.
This post discusses the various roles and the skill set necessary in each.
WisPACT Trusts - a great planning option for children with disabilities
For a long time, I’ve been using WisPACT trusts to hold money for special needs beneficiaries. For people who are unfamiliar with special needs trusts or WisPACT, what WisPACT does is manage a pooled special needs trust (SNT). Like any other SNT, the funds are managed to supplement—not replace—government programs like SSI and MA. The pooled part means that disabled individuals have their own accounts with WisPACT. WisPACT hires a corporate money manager (currently, Chemical Bank) to manage the funds as a single pool, and gets a favorable fee structure, since it has millions to invest. WisPACT makes decisions about distributions in consultation with a trust advisor (a family member or guardian of the beneficiary).
What to Expect During an Estate Planning Consultation
Every estate plan we do starts with a free consultation. We get a lot done during those meetings, but they really (honestly) don’t require much preparation. Here’s what happens.
First, we cover the basics of what an estate plan does, and how the process works. Next is a chance to get to know a little bit about you. We want to understand your family structure—how many kids and what are their ages, and same for any grandkids. For people without kids, we want to understand who your nearest relatives are. We also want to understand asset structure. We don’t need to know too many details—just a general idea of net worth and how it is structured.