There are two new tax proposals being floated. One is an income tax proposal and the other is a wealth tax proposal. Read on to learn more about these proposals and whether they might impact you or your clients.
Saw a great Facebook post, and I just had to share it! During the 18 years I was involved in civil litigation, I was confounded by how many incredibly smart people would enter into a business contract without involving any lawyers (a DIY business contract) in order to save money. Then, when there was an inevitable dispute on the contract and the parties resorted to litigation, they would retain an A1 trial attorney but were upset and appalled at having to pay the fees charged by this highly skilled, top of the line professional.
My thought then and now is that you can’t go cheap on both sides of the deal! Either you pay a lawyer’s fee on the front end to ensure that you are entering into a wise and sound business contract, that all the provisions are in place to protect your interests, OR you pay a ton of money to a first-rate trial attorney to represent you in the litigation when your DIY contract falls apart and there are contractual deficiencies, or provisions that you presumed were there that aren’t (such as a provision that allows the prevailing party to recover their attorney’s fees), or provisions that you thought would protect you that in reality don’t.
One of my all-time favorite authors, James Clavell, wrote “a bad decision at the right time can destroy you far more surely than any bullet!” That is never more true than when smart people create a DIY Living Trust that turns out NOT to be what they thought it was. Why? Because a defective Living Trust is usually not revealed until it’s too late to do anything about it: a loved one has died and the Trust doesn’t protect the estate from taxes or from being adjudicated in Probate Court, or doesn’t properly protect the surviving spouse, or the beneficiaries, or the expressed wishes of the decedent.
I get it! I really do. I’m always looking for a bargain. My wife and I never pay full price at the movies. We almost always go to a restaurant already having a discount or reward of some sort in hand before we even order. I never pay full price for protein or workout supplements. Never! But, in the legal realm, the adage “you get what you pay for” is simply an irrevocable truth. If you go cheap, you get cheap. It’s just how such things work. Avoid being “pennywise and pound foolish.”
So, when it comes to putting together your Family Living Trust – or reviewing an existing Family Trust, you need a highly skilled professional! You need a top of the line estate planning attorney, one who will design your Trust so that it:
- Protects you and your spouse, while alive, from the wealth-busting costs of long-term medical care and nursing home expenses;
- Provides for and protects the surviving spouse;
- Acts like a Sentry to safeguard and preserve the short- and long-term interests of your beneficiaries,
- Minimizes or even eliminates any tax implications,
- Avoids any Court involvement, and
- Ensures that your Family and Financial Legacy are passed on to future generations.
I’ll be giving a free workshop at 6 p.m. in La Canada-Flintridge on Wednesday, March 13th at the La Canada Public Library called: Why Most Estate Plans Fail and What to Do About It. Seating is limited, so you’ll want to reserve your seat now. Click this Link to reserve your seat.
I remember being horrified a number of years ago by an online article advocating a DIY vasectomy. The article seems to have disappeared from the world wide web, but I still cringe as I recollect the step-by-step instructions which included puncturing the skin with a knitting needle then “hooking” the vas deferens with a crochet hook and “yanking” it in order to sever the duct! Truly disturbing!
My thought then and now is: who in the world would even consider doing something so ridiculously dangerous? And yet, there are myriad real DIY projects that seem just as foolhardy if not insane. Here are just a few:
DIY Estate Planning
A DIY Living Trust is not the best idea either. Here are just a few of the reasons why:
- DIY and online legal documents are designed for a mass market, and not to the specificity of your situation or circumstance. They are “one size fits all.” These boilerplate documents simply cannot address the incredible diversity in people’s lives and families.
- The devil is in the details. The little things are often the big things. Said another way, small errors can result in large consequences. Many critical technical and legal details and protections may not be accounted for in your DIY Estate Plan, which could result in:
- Inadequate legal and tax protections for you and your loved ones;
- Exposure while you’re alive to the wealth-busting perils of long term medical costs and nursing home expenses;
- Potentially tens of thousands of dollars or more in taxes and costs which diminishes your estate and the value ultimately passed to your beneficiaries.
- Statutes change every year. Case law morphs constantly. As a consequence, DIY legal document templates can be out of date, inaccurate or flat-out wrong. Most of the prominent purveyors of legal documents explicitly state that they make no warranty that their information or materials will meet your requirements; that you should not rely upon their information for personal, medical, legal or financial decisions. They are telling you caveat emptor. Buyer beware!
- Your DIY Estate Plan may create a false sense of security. You may believe that you’ve protected yourself and the wealth for which you’ve worked your entire lifetime, when the reality is that your DIY efforts may not provide the type and breadth of protections that you thought they would. The worst part is that you’ll not realize it until it’s too late.
A knock-off iPhone may look like an iPhone. You may save a bucket of money when you buy the knock-off. But the reality is, it’s not an iPhone, never will be an iPhone, and will not give you the iPhone experience that the genuine article would have given you. You get what you pay for!
Likewise, when it comes to setting up your Living Trust, doing it yourself is seldom a wise decision. What may have seemed like a bargain at the time could, on the back-end, swiftly turn into a long, slow, expensive and public nightmare of unnecessary taxes, probate court costs and fees, high attorney’s and accountant’s fees, or – even worse, result in your assets being distributed to the wrong people at the wrong time.
An effective estate plan, on the other hand, will provide enduring financial stability to you, your spouse, your children and your other beneficiaries. It will protect your privacy and the privacy of your loved ones, and will ensure that your wishes are carried out after you are gone. A well-qualified attorney who specializes in estate planning can help you structure an estate plan that maximizes protections for you and your spouse or partner while you are alive, limit the impact of taxes, and ensure that your wealth and family legacy is lovingly passed on to future generations.
For more information about the hazards and pitfalls of a DIY estate plan, I invite you to review: Dangers of Do-It-Yourself Wills and Living Trusts, one of the 34 free reports available on my Firm website.
“You can’t predict. You can prepare.”
So said Howard Marks, billionaire co-founder of Oaktree Capital Management in one of his famous Oaktree Memos.
Most of us have purchased life insurance. We have a 401K or IRA. We have medical and dental insurance. Many of us keep a tool kit, a first aid kit and jumper cables in our cars. Some of us even keep 72-hour “Go-bag” kits ready-to-hand. Many have emergency food storage in our homes. Some even have a year’s supply of food storage! Many Californians – particularly those of us who have lived through many earthquakes, still keep a flashlight and shoes near our bedside in case of an earthquake.
Why do we do such things? It’s because we can’t predict, but we can prepare.
The absolute truth is that we never know what’s going to happen. But we can consider the likely scenarios and prepare for some of them. We can make sensible and practical preparations for the vagaries of an unpredictable or even unforeseeable future.
An estate plan should be one of those preparations.
I know from my own personal history – from my paternal grandparents, how devastating a failure to prepare an estate plan can be. It’s a story that is much too long for this Blog post. Suffice to say that when my grandfather passed, virtually everything that he and my grandmother had built over their entire lifetime was gone, lost to nursing home expenses and long-term medical costs for my grandmother. When my grandfather passed, he had gone through every last penny of his savings, pension and social security caring for himself and my grandmother. It was all gone. All of it. Nothing to leave to their only child, my Dad.
That tragedy has echoed down the years through my parents and then to my siblings and I. The saddest fact is that it all could have been avoided IF my grandparents only knew that a simple estate plan could have sheltered their assets, protected the wealth that they had spent their entire lives working for, and allowed for their financial legacy to be passed promptly and effortlessly to their son.
You don’t have to be a millionaire to benefit from an estate plan, or to have an estate plan prepared by a competent attorney. It only requires a decision and then action. I encourage you to make YOUR decision and ACT NOW!
For more information about how a wisely crafted estate plan can help avoid what happened to my grandparents, I invite you to review a free report: Set the Stage for Medicaid Eligibility, one of the 34 free reports available on my Firm website.
Choosing the right Agent under a Power of Attorney is one of the most important choices. This article discusses the qualities of an ideal Agent and qualities to avoid in selecting an Agent. Read on to learn more.