Estate Planning: Protecting Your Assets Part I

Overcome Misconceptions, Identify Blind Spots & Successfully Navigate the Current Political Climate

Andrew L. Howell, Esquire, with Garrett B. Gunderson

For years, I have encountered people that mistakenly think they don’t need an estate plan—or they have something they call an estate plan, but it is incomplete at best. Most important is consideration for a transfer of values, vision, and contribution through a statement of purpose, incentive-based trusts, or other perpetual strategies to take into consideration with one’s legacy.

In this two-part series, I have asked Andrew Howell, an Estate and Business Planning attorney, to address common misconceptions about estate planning, common blind spots that people have with this planning, and how the current political factors are impacting these decisions. Andrew really has a depth of expertise and the most passion around this work over any other person I have met. Let’s begin with the misconceptions.

Misconception #1: Estate Planning is Only for the Ultra-Wealthy

Most people think that estate planning is only for people with extremely high incomes and net worth. This is usually caused by people thinking that the sole purpose of estate planning is to deal with estate taxes and/or large accumulations of wealth.

But these issues collectively are only one component of estate planning. There are many other goals of estate planning and estate planning is a lifelong process, which applies to virtually everyone—at least those who care about the people they’ll leave behind when they pass away.

Many people choose to not engage in any sort of estate planning. As a result, they are at the mercy of their state’s laws regarding how the state feels their assets should pass.

For example, one critical component of estate planning is drafting your Last Will and Testament. This appoints guardians for your children and details your wishes concerning your children and assets, among other things. This is critical even for people with little or no net worth.

Another component is establishing a Revocable Living Trust, which serves a number of functions. It helps your family avoid probate, to ensure privacy in the handling of your estate. It can also assist in protecting your assets if done properly.

However, the primary benefit, in my estimation, is that you can take control and stewardship of how your assets pass at the time of your death, to whom they go to and provide those beneficiaries of your estate a way to receive those assets in a very protective manner.  Relying on your state’s probate code will not provide you these benefits.

And again, asset protection is not just for the ultra-wealthy. There are many people with moderate net worth who are exposed to liability issues on a daily basis as a result of their profession, business arrangements they are involved with, loans they have guaranteed, etc. We all have these issues, not just Warren Buffet.

As previously stated, it is paramount with all this planning that you properly protect your assets as they pass on to your children or for children’s benefit. If you don’t have estate planning documents in place detailing your desires, the state will do it for you.

In most states, the probate code stipulates that when children reach the age of eighteen, they get their share of your estate outright to do whatever they want with it. If that’s not what you want to happen with your children, you had better make sure you have detailed instructions in your estate planning documents—regardless of your current net worth.

Power of attorney documents are also critical. This gives your chosen agent (as opposed to one whom a court may choose for you) the power to make financial and health care decisions for you if you’re unable to make them yourself.

The well-known Terri Shiavo case should have driven that point home for every responsible citizen. After Terri was diagnosed by doctors as being in a persistent vegetative state, a legal battle ensued between her husband, who wanted to remove her life support, and her parents, who wanted to keep her alive. They fought it out over seven years because she hadn’t established power of attorney documents stipulating how to handle the situation.

Everyone, no matter how poor or wealthy, should have a medical directive in place, detailing your desires regarding life support for your family, friends, and health care providers. This ensures that your family doesn’t have to make that agonizing decision for you, but instead is now giving you the final gift of following your desires you have already expressed.

Misconception #2: “I’ll get around to it later.”

I can’t tell you how often I encounter that attitude with estate planning.

The truth is that if people procrastinate engaging in estate planning, it will most likely stay procrastinated. They’ll never get around to doing it until it’s tragically too late.

It’s amazing to me that we spend roughly 2,000 hours a year working to build an estate and acquiring assets, but we’re not willing to take an hour or two to protect those assets.

Speaking of getting around to it later, in part 2 of this article, we will address the blind spots especially on how money is distributed to children and other beneficiaries, plus dive into the current political environment and the changes that will impact you and what to do about them.

If you want to take a peek and see how your financial plan is shaping up: what is complete, incomplete, where you may have blind spots or exposure—take our free Financial Health Assessment at www.freedomfasttrack.com/cfw.

Get Garrett's free eBook, 101 Answers to the Toughest Financial Questions on Earth, by clicking here!

Andrew Howell is an estate planning attorney and partner in the Salt Lake based firm of Callister, Nebeker & McCullough.  (www.cnmlaw.com).  Although not a member of the Accredited Network, he works closely with those advisors who are in order to get the best result for Freedom FastTrack Members.

Mr. Howell represents clients with respect to estate planning, probate and estate administration matters, and business planning/corporate structure. He is being interviewed by Garrett for the upcoming Curriculum for Wealth Series in order to cut through the complexities of this planning and give the details necessary to understand and know the components of estate planning.