Estate Law Articles
11 Problems That Could Cost Your Family a Fortune – and Their Solutions
Problem #1: Probate. Probate is the Court-supervised process of passing title and ownership of a deceased person’s property to his or her Beneficiaries. The process consists of assembling assets, giving notice to creditors, paying bills and taxes, and passing title to property. Probate can cost your loved ones a portion of your Estate. The biggest portion of the costs are Probate Taxes and the fees charged by lawyers and personal representatives for their services for the estate, in addition to filing fees, costs of publication, fees for copies of death certificates, bond premiums, appraisal and accounting fees, and so on. Like surgery, probate can be simple and easy, but frequently probate can have very drastic and damaging results. Accordingly, like surgery, because of its uncertainty in terms of both the potential for problems and high costs and fees, probate is something best to prepare for if you can. You can avoid a substantially larger probate process by having an estate planning lawyer work with you to set up your estate plan. You may save your estate and family many thousands of dollars.
Problem #2: Lawsuits and Creditors. Protect the property you leave to your spouse and children from the claims of their creditors and ex-spouses.
Problem #3: Probate Taxes. In some situations, you can avoid or reduce estate taxes include setting up (1) an Irrevocable Trust for your children, grandchildren or other heirs, (2) an Irrevocable Life Insurance Trust, (which detaches your life insurance benefits from your estate), (3) a Charitable Remainder Trust, (4) the use of Beneficiary Designations and (5) the use of Joint Ownership with Rights of Survivorship.
Problem #4: Income Taxes. A family can lower its overall income taxes by making use of the Principal Residence Exemption, the Lifetime Capital Gains Exemption, Spousal Rollovers, Spousal Trusts, Post-Mortem Elections, Prescribed Rate Loans and Children’s Trusts and the use of Spousal RRSPs.
Problem #5: Lawsuits. Protect your assets from lawsuits by doing any or all of the following, as appropriate: (1) purchasing an applicable insurance policy, (2) setting up a Limited Liability Partnership or Corporation and a Corporation. Further, you can protect your children or spouse from lawsuits by putting their inheritances into a Discretionary Trusts. This is especially important if your children are likely to become professionals subject to potential malpractice actions or, on the other hand, are spendthrifts!
Problem #6: Inexperienced Beneficiaries. Protect your assets from being wasted by young or inexperienced family members. Most beneficiaries spend their entire inheritances in less than two years, regardless of the size of the Estate or the beneficiary’s socioeconomic background. Your lawyer can set up your Family Trust with protective provisions that provide guidance and safeguard your life savings.
Problem #7: Guardianships. Protect your assets from the high costs of incapacity by (1) setting up an Alter Ego Trust so you avoid the need for a guardianship, (2) drawing up an Advance Healthcare Directive, and (3) drawing up a Power of Attorney for Property.
Problem #8: Nursing Home Care. Protect joint assets from the high costs of nursing home care. Buy insurance that covers nursing home care and provides a death benefit that returns the money spent on nursing home care to your Beneficiaries.
Problem #9: Unwanted Emergency Care. If you have a terminal illness, you can draw up and sign a “Do No Resuscitate Medical Directive that will tell emergency personnel not to resuscitate you in the event of a medical emergency in addition to a Power of Attorney for Personal Care and an Advance Health Care Directive. This directive is often referred to as a “DNR”.
Problem #10: Ineffective Estate Plans. Protect your assets from an ineffective Estate plan. Don’t depend on pre-printed “cookie cutter” form kits or document preparation services for your estate plan. Contrary to what you may have heard or read, one size does not fit all! You may think you have precisely what you need. But you will never know – because your family members will have to clean up the mess. You see, after you die, your family members will try to use your documents to settle your estate. And if the documents weren’t drafted correctly, they will cause additional expense and long delays because a probate will have to be done to convey title to your assets.
Problem #11: Unqualified Lawyers. Many lawyers are getting into estate planning because it’s less stressful than other areas of law. Not surprisingly, most have never dealt with the problems and pitfalls that we see in estate litigation matters every day and most do not know the keys to plan to avoid the problems and pitfalls. Most have never dealt with dependent relief proceedings or family law proceedings and do not appreciate the necessary planning to avoid these types of problems. If you have young children or are in a blended family, make sure you choose a lawyer familiar with a variety of types of Trusts, Life Insurance, Separation Agreements, Child Support obligations and an appreciation of the minimum provisions to so that adequate and proper support is provided and lawsuits can be avoided. This will help ensure that the lawyer you choose has the knowledge, skill, experience and judgment necessary to fully protect your family and your assets, and to give you advice and counsel that is in your best interests.