Month: October 2009

Just read a great article here (http://bit.ly/3sPZ5r) about 12 common estate planning mistakes.  I would add the following to the list:

13. Having a living trust and failing to change your beneficiary designation on life insurance and contingent beneficiary on your retirement accounts to the trust (when advisable)
14. Only appointing guardians of your minor children for the long-term (the short-term implications can be frightening if not planned for properly)
15. Not naming enough “backups” for fiduciary, guardianship, and conservatorship positions
16. Not planning properly for uncommon children after a second marriage

Do you find any of these surprising?  What additional items would you add?

While reading today’s USA Today, I came across a good article  in the Money section entitled “5 Myths about wills – and what you should really do” (http://bit.ly/49gIDj).  The article gives some great advice from attorneys and counselors from around the country, addressing such myths as estate planning only being for the rich, a will keeps you out of probate, and that estate planning only needs to be once and then you’re all set.  The only point of contention I have relates to the discussion of do-it-yourself wills.  Ms. Hanks states that such programs (like Quicken’s WillMaker Plus and LegalZoom) are fine for a basic will because courts are typically “client-friendly with respect to wills,” and “judges want to honor people’s last requests.”  In general, that may be true.  The bigger issue I see is that using a do-it-yourself program may not accurately convey your last requests.  If it doesn’t ask an important question or you don’t understand the question it does ask, what do you do?  What good is having a court honor it, if the document is wrong?!  The advice and direction of an attorney is very important in this respect.  No matter what your economic situation, I strongly recommend discussing your estate planning with an attorney.  If you are unable to afford to do so, please know that there are income-qualified legal assistance groups that may be able to help.

Unless you were born into an Über-rich family (and sometimes even then), your parents’ probably never discussed estate planning when you were growing up and didn’t have any kind of relationship with a personal lawyer (at least not one you remember discussed with fondness!)

It’s not a surprise. 70% of people die without even a Will. So, why would you need to take action now, when you are so young?

Because you are financially smarter than your parents and you care more about the people you’d leave behind than the 70% who die leaving their loved ones in the lurch.

You may be young (or young at heart), but you likely have more far more wealth than your folks already; you certainly have bigger dreams, and there’s a good chance you have kids.  It’s not your age that matters when it comes to planning. Your vision and your family circumstances determine whether you need to plan and when to start.

Regardless of how much money you have in the bank, if you have kids at home, you want to be the one who decides who would take care of your kids in the short-term and who would raise them for the long-term, if you were in an accident. You definitely don’t want to leave that up to a court to decide.

Choosing who will take care of your kids and legally documenting your decisions is estate planning … if you have kids, you need it.

If you do have a decent amount of money in the bank  or own any real property, you will want that money to get to your family as easily as possible if anything happens to you. The State has a plan for your money, but it’s one that will make life difficult for your loved ones. If you don’t plan, your family will have to deal with the Court, not have access to your assets for 6-12 months and they’ll pay a load of unnecessary expenses that you could have avoided if you had planned ahead. You definitely don’t want to leave the people you love with a mess because you didn’t take care of things.

Giving your loved ones easy access to your money if you are in an accident is estate planning … if you have money in the bank or own even one piece of real estate, you need it.

And, if you have a big vision for your future, you want to set up your business in such a way that it can never be taken from you if you get divorced or sued and so that when you die, your family won’t lose half of it to the government. Yes, there are ways to totally protect what you are building and they are a lot easier to put in place when your company isn’t worth much, like when you are just starting out in your 30s.

Showing the Universe you mean business about your business and setting it up so that it grows protected for your family is estate planning … if you have a big vision for your future, you need it.

Last, if you want to pass on much more than just your financial wealth and leave the world a better place, you need to set forth the intention to do that and then take action steps throughout your lifetime to capture the intangible assets that are most often lost when someone dies, like your intellectual, spiritual and human assets. It’s about who you are and what’s important to you.

Creating a structure and plan for passing on your values, insights, stories and experience is estate planning …. If you want to leave the world a better place, you need it.

So, what do the old rich guys know that you should know too?

The most important thing to know is that estate planning is really not a do it yourself process. Sure, you can prepare your own will, trust or health care directive, but real deal, make a difference for your loved ones estate planning (what I call Family Wealth Planning) is about far more than documents; it’s about making the very best decisionsfor yourself and the people you love most so you can leave the world a better place.

Think about the old rich guys …. the guys whose family wealth has grown at each generation –Rockefeller, Carnegie, and Ford to name a few – all had personal lawyers advising them and their family after they were gone and long before they amassed their wealth. Because of these relationships, they left long lasting legacies that improve the world. Contrast that with rich guys like Joe Robbie, Powel Crosley, Jr., and Cornelius Vanderbilt who were once the wealthiest men in America and whose fortunes have been almost entirely dissipated to estate taxes, lawsuits, divorces and general affluenza.

So, learn from the old rich guys who did it right. Show the Universe you are serious about your business by getting control of your financial future. Leave your family with a legacy of true family wealth. If you want to leave the world a better place, even on a small scale, now is the time for you to begin planning your estate.

As a parent, the last thing I want if something happens to me is for my children to be put into a situation in which they feel scared, are surrounded by people they don’t know and don’t know just how much love I have for them. With these 3 Secrets you can guarantee your children will always have the security of knowing just how much you love them – even if you can’t tell them.

Secret #1: Put in Place a Clear Plan for the Protection of your Children — 74% of parents have not named guardians and of the 26% who have, most have made 1 of 6 common mistakes that leave their kids at risk. With a plan in place that names short- and long-term guardians for the care of your children and gives clear guidance to your caregiver and everyone you’ve named to care for your children, your children never have to be put in a situation in which they would be taken out of your home and into the hands of strangers if something happens to you.

Secret #2: Legally Document Your Decisions— Parents regularly tell me that they have discussed and agreed upon a guardian for their children and have even made their wishes known to their families; however, not documenting your decisions can result in your wishes not being followed when it is too late. If you don’t communicate your wishes in a legally binding document, you are placing your children in the middle of a situation in which every family member has equal priority of guardianship and the decision about the care of your children will be left in the hands of the court system and a Judge who doesn’t know you or your kids. Legal documentation is particularly important if you intend for a friend to care for your children as courts will almost always choose a family member over a friend.

Secret #3: Provide a Foundation for Your Children’s Financial Future— Whether it’s through life insurance, savings or some other means, providing sufficient financial resources for your children’s care is your responsibility. And, as a responsible parent, you must take steps to protect what your children will receive. To do so, establish a living trust to receive any life insurance benefits your children would receive so that they don’t get access to your assets at the age of 18 and make sure your living trust holds title to any assets that would go through probate in the event of your death. And, if your estate is large enough, you will want to plan to avoid estate taxes as well.

I encourage you to contact Paula, our Client Services Director, if you have not taken care of these three issues.  She will schedule you for a Family Wealth Planning Session with me, West Michigan’s ONLY Personal Family Lawyer™.  We will discuss what would happen now, what you would want to happen, how to fill any gaps between the two, and whether we are a good fit to work with each other.  I continue to appreciate the dedicated readers of my blog and want to support additional readership.  So, I will waive the typical fee for the Family Wealth Planning Session ($750 value) for three people who call to schedule a session and specifically reference this blog post.  My schedule continues to fill up quickly, so I must limit this to first come, first served.

According to this New York Times article (http://bit.ly/41y1kF), the children of Martin Luther King Jr. have settled their differences over his estate.  The lawsuit involved Bernice King and Martin Luther King III against Dexter King, president of King, Inc.  King, Inc. is the company that runs their father’s estate.  Bernice and Martin accused Dexter of not involving them in decisions about the corporation, withholding documents, and refusing to hold shareholder meetings since 2004.  It never ceases to amaze me how family harmony can break down after a patriarch or matriarch’s passing.  This is a lesson to us all to not only plan, but to plan for contingencies and specifically address points of possible contention.

Before hiring a wills & trusts lawyer to guide you, your family or your business, ask these questions to ensure that you don’t end up paying a whole lot of money for services that are not what you need, expect or want. Hiring an attorney does not have to be a fearful experience. Instead, it can be the most empowered decision you ever make for yourself.

1. What will happen during an initial meeting with your office and how much will it cost?

When you begin to consider getting your legal and financial affairs in order, the first thing to do is call the offices of lawyers who you will meet with to handle your planning.

This is a great opportunity for a first level screening to find the right lawyer for you, your family and your business. Pay attention to how the phones are answered by the office team. You want to find a lawyer who has a live person answering the phones who can answer quick questions for you when you are a client.

When you do talk with someone on the phone, be sure to ask what will happen at the initial meeting and whether there will be a charge for the meeting.

Look for an educational initial meeting. Ideally, the purpose of the first meeting with your lawyer is not just to get to know him or her, but to provide you with specific guidance and information that will benefit you, your family and your business.

You want to leave this meeting with a clear action plan for what your next steps are to ensure your financial and legal affairs and business are set up the best possible way for your family.

Now, it may be that you have to pay for this guidance so don’t be afraid to do that because it can be a hugely valuable education. The key is, you want to know what the cost is going to be upfront so there are no surprises.

Don’t expect to get valuable information that will help your family during a free initial consultation. When a lawyer routinely gives away their time for a free initial consultation it’s not to give you an education, it’s so you can meet the lawyer and decide whether you want to work with him or her. Don’t expect free legal guidance.

2. Are all of your fees flat fees? What is included in the flat fee? What is NOT included in the flat fee.

You want to be sure that you avoid a nasty surprise down the road. Some attorneys will indicate that they use flat fees, but then may tack on additional charges such a photocopying, telephone, courier, postage, recording fees and other expenses. While it may be reasonable in some instances to add on such fees, you want to make sure that you set the proper expectations up front so you don’t end up with a surprise bill in the mail.

3. Does my planning fee include a regular review of my legal documents? What if I want to make changes later? What about on-going work after completion of my initial plan?

Far too often today, families put in place legal documents and think “great, that’s done”, now I don’t have to think about that anymore. Then, the end of their life comes or a crisis pops up and their family finds out that the documents are out of date and the assets aren’t owned properly anyway. Then, the plan fails. Or, business owners set up an entity to shield their personal assets from their business, but then fail to operate the business properly and keep their entity in compliance. Then, the business plan fails.

I blame these failures on lawyers who don’t set the right expectations for their clients.

The truth of the matter is, with estate planning, you can’t set it and forget it. Your wills and trusts and your business documents are living documents that need to be reviewed and updated throughout your personal or business life. And you want to find a lawyer who will keep everything up to date for you, review your documents regularly, and offer a program to provide you with continuing guidance on an ongoing basis without hourly fees.

Look for a lawyer who has a membership program or ongoing service program so you can reach out to your lawyer on an ongoing basis for legal, financial and business consultation without worrying about being nickled and dimed. Oh, and be sure your lawyer isn’t going to charge you for photocopies and faxes!

4. Do you make sure my assets are titled in the right way and my business stays in compliance?

You can have the best business structure and the best legal plan set up for your family, but if your assets are not titled and structured properly and if your business does not stay in compliance, it’s all a false sense of security because when push comes to shove and a crisis happens, those legal documents won’t work.

Make absolutely sure that the lawyer you are working with is not only going to put legal documents in place for you, but is also going to finish the job by ensuring your assets are structured properly and your business stays in full compliance.

5. Can you help me make smart choices about things like buying insurance, saving for college, and retirement planning?

Your personal lawyer can and should help you make decisions not only about things like legal documents, but also about things like buying insurance, saving for college, planning for retirement and all the other challenging decisions that will come up along the way of your life and your business. Your business lawyer should be keeping you informed about things like hiring and firing, trademarking and copyrighting, and growing your business.

This doesn’t mean your lawyer needs to be licensed to sell insurance or financial products or practice employment law or intellectual property, just that they have a big enough breadth of experience and knowledge and access to the appropriate resources that they can be a trusted advisor to you on these issues helping you avoid expensive mistakes.

6. Do you have a process for helping me capture and pass on my intangible wealth, such as my intellectual, spiritual and human assets or who I am and what’s important to me or do you primarily focus on financial assets?

There’s a movement happening in the world in which we are finally beginning to realize that our wealth is far greater than the sum total of the dollars in our bank, brokerage and retirement accounts. In fact, many of us are becoming aware that our intangible assets are much more valuable.

When you are working with a personal lawyer, be sure to find a lawyer who will help you to capture, document and pass on not just your financial assets, but ALL of your assets, including the most often overlooked intangible assets, like who you are and what’s important to you.

Your lawyer should have in place an actual process so that when your planning is complete, you have created either written or recorded messages to your loved ones that pass on your values, stories, insights and experience.

7. How are you able to be responsive to my needs on an ongoing basis?

One of the biggest complaints people have about working with a lawyer is that lawyers are notorious for not being responsive. In fact, I’ve heard of situations in which clients have gone weeks without getting a call back from their lawyer.

This generally happens when a lawyer does not have enough administrative support in his or her office. Far too many lawyers believe they can take care of everything in and around their office themselves, from paperwork to client meetings to calendaring to returning phone calls to connecting with their clients other advisors, the list goes on and on. Truth is, a lawyer who is a true solo practitioner without administrative support or in a firm without adequate support will become overwhelmed and non-responsive to your needs.

You can and should ask your lawyer how he or she will respond to your ongoing needs, how quickly calls are returned in the office, if there is someone on hand to answer quick questions and if you should expect to get right through to your lawyer when you call the office.

A great way to test this is to call your prospective lawyer’s office and ask for him or her. If you get put right through or even worse sent to a voicemail, think twice about hiring this lawyer because it means they do not have effective systems in place for managing and responding to calls or answering your quick questions. Instead, what you want is for the person answering the phone or another team member to offer to help you and if he or she cannot then to schedule a call for you to talk with your lawyer at a future date and time when he or she will be ready to focus on your matter.

Your lawyer cannot be effective and efficient if he or she is taking every call that comes through to him or her – all calls should be pre-scheduled when you are both ready and your lawyer can focus on your specific needs.

8. How will you proactively communicate with me on an ongoing basis?

Unfortunately, most lawyers do a horrible job of proactively communicating with their clients on an ongoing basis. The general thinking in the legal industry is that legal work is transactional in nature and clients will call when something changes. But, this is faulty thinking and in my opinion just pure laziness on the part of lawyers.

You want to look for a lawyer who will proactively communicate with you at least quarterly by mail via an informative, easy to read newsletter and monthly by email. I prefer to hear from the professionals I work with monthly by mail and weekly by email, but progress can only happen so fast.

If you are considering hiring a lawyer who does not proactively communicate with his or her clients, think again. This lawyer might be stuck in an old, outdated mindset that won’t serve your needs in the best possible way.

Don’t be afraid to ask these questions for you hire a lawyer to work with your family on your personal and business legal planning. You need to be satisfied by the answers you receive to these questions, as they often sneak up on families after-the-fact, and can be a major drain on your family’s cashflow.