If a loved one has been diagnosed with a terminal illness, time is precious and there are 5 things you need to do.  In part 1 of this article, we discussed determining your loved one’s wishes, helping your loved one document his love, and making sure his estate plan is comprehensive and up-to-date.

Here, we continue:

4.  Listen

Your loved one will likely feel the need to talk about his life and you are helping by simply listening.  He may at times feel angry, ripped off, wishful, sad, happy, satisfied, and scared.  All of these feelings are normal.

5.  Accept Help 

Recognize that you can’t provide everything your loved one needs and that others will feel better if they are able to help.  Let friends and family help where they can, recognizing that not all folks are good at the same things.

• Some family members may be good at dealing with professionals such as the estate planning attorney, CPA, insurance professional, and financial advisor.
• Others may work well with the doctors, nurses, social workers, and hospice team.
• Some may help by cleaning out the garage, while others help by making meals, getting the taxes filed, or running errands.
• Others may contribute by sitting beside or with physical care.

Three More Tips

If you missed it, please continue reading at 5 Things to Do When a Loved One is Dying (part 1 of 2.)

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

If a loved one has been diagnosed with a terminal illness, time is precious and there are 5 things you need to do.

1.    Determine Your Loved One’s Wishes

Ask your loved one what he wants regarding end-of-life medical treatment, burial, and funeral services.

Specific questions would be:

• Do you want a living will so your life is not artificially extended with medical heroics and machines?
• Where do you want to be cared for?  A hospice facility or at home?
• Do you want to be cremated and/or buried?
• What kind of funeral, memorial service, or celebration of life would you like?

2.    Help Your Loved One Document His Love

Ask your loved one to leave a legacy by talking about his life and leaving physical evidence of his love through:

• Identifying the people and places in old pictures
• Taping a conversation about thoughts, family, and/or his life
• Leaving a letter to loved ones
• Leaving a sentimental gift to loved ones

3.    Make Sure Estate Planning Documents are Up to Date

Having a current and comprehensive estate plan will best ensure that your loved one’s wishes are carried out.

It also helps family members carry out those wishes with greater ease.

If the plan doesn’t reflect your loved one’s current wishes, is older than three years old, or isn’t comprehensive, encourage your loved one to update the estate plan right away.

Two More Tips

Please continue reading at 5 Things to Do When a Loved One is Dying (part 2 of 2.)

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

The best way to pass significant assets to the next generation is in trust, as opposed to outright.  But some folks think it’s wise to have the trust distribute assets at certain times.  It’s isn’t.  Never, ever, never, ever force assets out of your child’s trust.

Attachable by Creditors

If assets can be forced out of your child’s trust and your child is going through a divorce, bankruptcy, lawsuit, medical crisis, or has any other creditor in the wings, that creditor will be able to take your child’s inheritance.

If the assets stay in trust, only distributed for your beneficiary’s needs, they can’t be taken from them.

Subject to Spendthrifts

Often outright inheritances are wasted and not there when the beneficiary needs them.

It’s been observed that people who come into outright inheritances spend all the money within 18 months.   Trust assets that are pushed out of a trust can be used on anything, including fast, red cars; shoes; and the like.

A Danger to Beneficiaries with Addictive Problems

In addition, if your beneficiary has an addictive problem such as drugs, alcohol, or gambling, his inheritance can make the problem worse or even kill him.

The Easy Solution:  Lifetime Trusts

Lifetime trusts are the solution.  Lifetime trusts make sure the assets are there when your beneficiary needs them for health, education, or maintenance, but aren’t seized by creditors, wasted, or used to fund an addiction.

If you haven’t yet read Part 1 of this article, Never, Ever, Force Assets Out of Your Child’s Trust, check it out.  In Part 1, we help you to identify forced distributions.  Questions?  Consult with a estate planning attorney.       

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

The best way to pass significant assets to the next generation is in trust, as opposed to outright.  But some folks think it’s wise to have the trust distribute assets at certain times.  It’s isn’t.  Never, ever, never, ever force assets out of your child’s trust.

Why?  What’s Wrong with Trust Distributions?

It’s a common question.  “What’s wrong with trust distributions?  I don’t want to control from the grave or bind my children’s hands.”

There’s absolutely nothing wrong with trust distributions.  There is a lot wrong with forced trust distributions.

What are Forced Trust Distributions?

Forced distributions are those that are ordered by the trust.

For example:

• 1/3 of the trust assets shall be distributed when my beneficiary attains the age of 30; another 1/3 third shall be distributed when my beneficiary attains the age of 35….

• 25% of the trust corpus shall be distributed outright to my beneficiary at 5 year intervals starting 5 years after the date of my death….

Consequences of Forced Trust Distributions

Forced distributions are bad news.  They can be seized, wasted, and even hurt your beneficiaries.  Forced distributions are:

• Attachable by Creditors
• Subject to Spendthrifts (i.e. Money Wasted)
• A Danger to Beneficiaries with Addictive Problems

Please continue reading at Part 2 of this article, Never, Ever, Force Assets Out of Your Child’s Trust, for details on the consequences of forced trust distributions and the easy alternatives.   Questions?  Consult with a qualified estate planning attorney.   

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

Do you appear to others as though you have a lot of money, a deep pocket?  If yes, you need asset protection for 2 reasons.

1. Someone who thinks he may have a claim against you is more likely to pursue a lawsuit, if he thinks you have lots of assets.
2. A trial attorney is more likely to take the case if you look like you have deep pockets and that he/she can collect.

How Asset Protection May Prevent a Trial Lawyer from Suing You

Trial attorneys work to earn money; they are paid on a contingency fee.   This means that they only get paid:

1. If they win the case and
2. If they can collect on the jury verdict or settlement

Being entitled to payment and being able to collect payment are not the same thing.

If you have asset protection measures in place, trial attorneys are more likely to say that suing you is just not worth the effort.  They can make more money by taking another case and suing someone who hasn’t done comprehensive estate planning with asset protection measures.

If you are a deep pocket, consult with a qualified estate planning attorney to get a strong asset protection plan in place.  If potential liability arises, suing you may just not be worth the effort.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

There are prevalent misconceptions about asset protection planning.  For example, many folks think asset protection always involves rich people putting assets offshore to evade taxes.  In this article, we’ll cure those misconceptions, while overviewing what asset protection planning is and what it isn’t.

If you would like to know how asset protection applies to your life, finances, and estate planning, consult with a qualified estate planning attorney.

The Goal of Asset Protection Planning

The goals may vary as clients vary, but the main goals are:

• To keep assets in the family
• To avoid lawsuits and guard against risks
• The lessen the financial destruction of lawsuits
• To level the playing field with plaintiffs who can sue by paying a trial attorney on a contingency basis
• To provide peace of mind

What Asset Protection Planning Is

Asset protection is:

• Necessary for everyone
• Part of a comprehensive estate plan
• As basic as purchasing umbrella liability insurance or
• As complex as placing assets in a trust sited on the Isle of Man
• Making efforts to keep assets in your family
• Avoiding lawsuits
• Organizing assets to minimize or eliminate risks to those assets before a potential creditor is identified

What Asset Protection is NOT

Asset protection is not:

• Avoiding taxes
• Defrauding creditors
• Hiding assets
• Based upon secrecy
• Making fraudulent transfers

Your most important take-away from this article is two-fold.  First, you need asset protection planning as part of your overall estate plan; and, second, asset protection planning must be done in advance (i.e. before liability arises.)  Consult with a qualified estate planning attorney.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

Some form of asset protection needs to be part of every estate plan.  Why?  Huge jury awards to get a desired result (not necessarily based upon law) and the access to legal representation (created by contingency fees) have created a boom in litigation.

If you don’t have asset protection, you need it.  Although we explain the first lines of defense in this article, consult with a qualified estate planning attorney about your individual asset protection needs.

What Does Asset Protection Mean?

Asset protection planning means that, in advance, you take action to organize your assets and your business affairs to protect against potential risks.

Asset protection planning can be used to protect personal assets, business assets, real estate, and a professional practice.

Insurance is the First Line of Defense

Insurance is the first line of defense in asset protection planning.  Be sure you have strong coverage for your personal and professional lives, including basic property and casualty insurances as well as umbrella liability insurance and malpractice insurance.

Limited Liability Company and Family Limited Partnership

Consider limited liability companies and family limited partnerships to hold and protect personal assets, business assets, professional practices, and real estate.

These entities both insulate liability so a risk within one entity doesn’t expose assets in other entities.

In addition, assets within each entity can be protected as well.

Look at your own financial world and your estate plan?  Do you have assets at risk?  Do you look like a deep pocket?  What asset protection actions taken now may protect your assets later?

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

If you own your investment real estate in your individual name, it can be seized by creditors (legitimate or not.)  For example, if you own rental houses in your own name, these assets can be taken in any successful lawsuit, no matter the source.

California’s Community Property Laws

While some states have Tenancy by the Entireties asset protection laws for married couples, California does not.  California is a community property state and community property is subject to seizure by a creditor of either spouse.

This means that your rental real estate can be taken by your own creditors as well as your spouse’s creditors.   In addition, your other investments can be taken by a law suit arising out of your rental property ownership.

Limited Liability Companies Protect

One common way of owning a business or real estate is in a Limited Liability Company (LLC.)

• The LLC insulates liability and keeps it within the affected entity.

For example, if you own each investment real estate property in a separate LLC, a lawsuit on one property will not affect an investment in another property.

In addition, if you are sued individually (i.e. stemming from a car accident or malpractice claim), your LLC membership interests cannot be attached.  This means that if there is a successful settlement or verdict from a car accident, your real estate held in an LLC cannot be taken from you.

If you own investment real estate, consult with a qualified estate planning attorney to determine whether an LLC is a good fit for providing your hard work with asset protection.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

You might not immediately see the need for asset protection for your beneficiaries.  In fact, you may think the best way to provide an inheritance or a sizeable lifetime gift is outright, free and clear, no strings attached.  In truth, you would be mistaken.

In most cases, the best way to provide an inheritance or lifetime gift is in a lifetime asset protection trust.  It’s not as complicated as you might think and you’re not tying your beneficiaries’ hands, unless you want to such as in the case of a drug or alcohol addicted beneficiary.

Here are 5 Reasons Your Beneficiaries Need Asset Protection that They Can’t Get for Themselves

1. Divorce
2. Bankruptcy
3. Medical Crisis
4. Law Suit (i.e. car accident and slip and fall)
5. Malpractice Claim

Trust Protections

When you pass assets with trust protections and a co-trustee or independent trustee serves, those assets can’t be taken by a divorcing spouse, in bankruptcy, because of a medical crisis, or in a lawsuit or malpractice claim.

Your Beneficiaries’ Needs are Met

Your beneficiaries have access to their individual trust shares for their health, education, maintenance, or support.  This means that if your beneficiary wants to purchase a home, the trust can purchase a home; or, if your beneficiary wants to start a business, trust funds can be used to do so.

Trustees

To get the highest level of asset protection, your beneficiary should not serve as the sole trustee of his or her own trust share.  Instead, your beneficiary can serve with the co-trustee of his or her choice, such as a CPA or trust company.

If you estate plan does not yet contain asset protection for beneficiaries’ inheritances and lifetime gifts, consult with a qualified estate planning attorney.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.

With an untimely death, Whitney Houston will no longer produce any more songs, concerts, or movies.  Therefore, the value of her current collection will cause her estate to soar.

As an example, Forbes.com reports, “Houston’s most famous song, I Will Always Love You, was the most downloaded single on iTunes the day after her death, sales spurred by fans such as the one who blogged that the Queen of Pop sang ‘the soundtrack to my life.’”

Like many celebrities, Houston struggled with a public separation from her husband, Bobby Brown, and with drug and alcohol addiction.

It’s predicted that Houston’s estate may make the Forbes magazine’s annual list of top-earning dead celebrities in 2012.

Last year (2011), other top earning estates were the estates of:

• Michael Jackson ($170 million)
• Elvis Presley ($55 million)
• Marilyn Monroe ($27 million)
• Charles Schulz ($25 million)
• John Lennon ($12 million)

Singer Amy Winehouse’s, who died at age 28 in 2011, estate also soared.  Fortunately, after her divorce, she did update her estate plan so her parents and brother were beneficiaries, not her ex-husband.

Many of the rights to Whitney Houston’s work are owned by movie and record companies; so, they will benefit financially from her untimely death.  It is not yet known whether she had comprehensive estate planning or whether she updated any existing plan after her separation, or not.

Legacy APC, A Trusts & Estates Law Firm is a member of the American Academy of Estate Planning Attorneys.