Our approach is to offer information on the various tools and the implementation of those tools necessary to protect your asset. The protection to be discussed extends from your present daily activities to your beneficiaries. We talk about Insurances, POAs, Wills, Trusts, Partnerships, and Corporations.
This presentation starts as if we were sitting down and talking about asset protection for the first time with your financial consultant.
Do you have a will? Is it current? Do you know where it is? Who else knows its location? Please review it at your earliest convenience. If you don't have one, draft it ASAP! This is a first step to ensure your assets go where you want. If you were to die intestate (without a will) means that a judge and prevailing state law will decide where your assets go. There is no real protection of your wishes.
You may have a do-it-yourself will: simply sit down and write it out in your own handwriting; have it witnessed and dated by at least two adults. In some states three witnesses are required. The courts seem to like handwritten better than typed if you elect to do it yourself.
When you start this process, either on your own or in preparation for your attorney, there are certain issues that must be addressed and thought out. You must select a Personal Representative (PR), executor or executrix, the title varies by state. This will be the person in charge of your final affairs. If you are married, normally this is done by your spouse, but a contingent should be appointed in case both of you die at the same time. This duty as a PR can be onerous and carry difficult decisions, duties, and liability in conducting fiduciary duties. So choose with thought. We selected our second son for our PR after my wife and me because he is local, knowledgeable in finances and our affairs, and most importantly because the other kids trust him.
In the Will you say that your 'fair and just debts' are paid. Next specify who gets what. It is easy to say to divide the monetary assets between the heirs, sell the house and divide the proceeds. BUT when it comes to one of kind items, the old clock, the silver, or other heirlooms that everyone wants, it is important for you to specify who gets what. In that way, the others are mad at you and not each other. But remember, you will no longer care.
If you can't decide, establish a system. Tell the kids to draw straws, flip a coin or something. One of the more original ideas we have heard was a direction by the deceased to have each of the heirs receive $10,000 in play money and hold an auction. Well, anyway it was a system. What you are trying to avoid is something we have heard more than once."I haven't spoken to my brother since the funeral." This is often followed by: "It was not his fault, but that wife of his is something else."
Next comes your selection of a Durable Power of Attorney. Which in our context, always means Durable even though we may abbreviate to POA? Durable means that the appointed person can act on your behalf when you are unconscious in the hospital. The regular POA, without durable, is only good when you are of sound mind. In any case, all POAs are voided at your death. At death the designated PR is appointed by the Courts and takes charge of your affairs. Once again, the power normally goes to the spouse and then, in our case, to that same son for all the same reasons.
The worst case scenario that I have heard is when the kids use the POA to sell the house out from underneath the parents, putting them on the street. On the other side, there is the story of the couple who were all ready to sell the ranch for big bucks when she suffered an aneurysm the night before signing. They had no POA. Even in community property states there will be no sale without both signatures. In the above cited case, she eventually died and the ranch went to probate. That sale did not happen for years. The lesson: have a POA in place with people you trust.
If your Will is simple and straight forward with no anticipated complications, a do-it-yourself might be okay, but when you go to an attorney, he/she will do several other important forms as a package for you. First, two important interjections:
1. If you own real property in more than one State, you must have that non-residence property placed in trust to avoid probating your entire estate in every State that you own property. Establishing this kind of trust is no big deal but doing multiple probates is.
2. If you are in a second marriage with kids from a prior marriage, have your will crafted by an attorney. Some of the bitterest discourses we have heard are from the children of a first marriage of the first parent to die. Somehow they wound up with nothing.
Other decisions that come with drafting a will are living wills and POAs for health care decisions. Do you want to have them pull the plug if there is no hope? Check with your local hospital to see what they will accept, and next, do it for your peace of mind and for those people having to someday make that call. It is terribly important to those faced with the decision, especially if there is a relative out there who is prone to second guessing.
Asset Protection
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