Michigan Estate Planning Blog

Avoid Common Estate Planning Mistakes

 

Otherwise sound estate plans can be undermined by critical mistakes. A recent article from The National Law Journal, “Estate Planning Mistakes—2025 Annual Refresher—Part 3 [Podcast],” outlines how to avoid a number of common mistakes and protect the estate plan and the family from the effects of these missteps.

Not providing complete and accurate information. Transparency is critical when creating an estate plan. There are times when life’s circumstances may be sensitive and difficult to share with a professional. However, secrets can tear estate plans to bits. If assets are being hidden to avoid paying taxes or if there is an unacknowledged biological child, the integrity of the estate plan could be jeopardized.

This is especially relevant in a blended family. If a prior marriage or a child from a prior marriage is not disclosed, the result could be litigation between heirs. Hidden debts or undisclosed assets may surface after death, leaving executors and heirs with tax liabilities and family strife.

Failure to coordinate estate and financial instruments. Financial investments, life insurance policies and estate plans are rarely all started and completed at the same time. However, these and other accounts need to be coordinated so they work together. If a will says all three children should receive equal shares of an estate, but only one child is named as a beneficiary on a life insurance policy, the three are not going to receive equal shares. Provisions with different instructions in trusts, wills and beneficiary designations will only lead to trouble.

This is a relatively easy problem to solve; it just takes time and attention. Review estate planning documents every few years, including wills, trusts, any account with a beneficiary designation, power of attorney documents and life insurance policies. An estate planning attorney is always willing to speak with a financial advisor and CPA to ensure that the estate plan and financial tools will work together.

Talk with your family about your estate plan. A lack of trust and communication leads to estate plan failure and family fights. If you are uncomfortable talking with family members, consider setting up a family meeting with your estate planning attorney. If the family is spread across the country, an online video meeting can be coordinated.

Even the best of intentions can lead to problems. If one family member is struggling financially while the others enjoy robust earnings, parents may wish to leave more of their estate to the child having money problems. Talking about this openly with all of the siblings while parents are still living is far better than giving the family a major jolt when expectations aren’t met. If the conversation doesn’t happen, a painful legacy may be created.

Relying on Joint Tenancy to transfer assets. It may seem like joint tenancy is an easy way to transfer assets upon death. However, it can undo the intentions of a will or a trust. Assets held in joint tenancy pass directly to the surviving tenant, transferring outside of the estate plan. If a parent puts one child’s name on a joint account but not others, the child on the account is under no legal obligation to share the asset with their siblings, setting the stage for family discord and often, litigation.

Joint tenancy should be reviewed along with all other ownership and estate planning documents to consider how it will impact the estate plan. Revocable trusts may offer the same flexibility, while also ensuring that assets are distributed according to the intent of the overall estate plan.

Relying on informal agreements. A verbal promise between close family members may feel good. However, it won’t be enforced if one party fails to live up to their promise. This situation arises frequently when family heirlooms or personal possessions are promised but end up in another person’s hands. Documenting these promises and discussing decisions with heirs can avoid disputes and damaged relationships.

Effective estate planning requires attention to detail, communication and the guidance of an experienced estate planning attorney. Ensuring that the estate is properly planned has the added bonus of protecting the relationships between family members, which is the most valuable legacy of all.

Reference: The National Law Journal (Dec. 17, 2024) “Estate Planning Mistakes—2025 Annual Refresher—Part 3 [Podcast]”

How to Choose a Successor Trustee?

 

Trusts are a popular estate planning tool, allowing for control and protection of assets and tailored to meet specific needs. A trust requires both a trustee or successor trustee, says a recent article from Kiplinger, “You’ve Got a Trust: Now Who Should Be the Successor Trustee?”

If you have an irrevocable trust, you might want to have two different people to serve as trustees. The investment trustee is in charge of managing the investments in the trust, while the administrator trustee manages the operations aspect of the trust. One person could perform both roles, but having two people may provide a second layer of oversight. Irrevocable trusts require the grantor to give up control of the assets in the trust, which may be more acceptable when two people are in charge of the trust.

Revocable or living trusts allow the grantor to be a trustee and have complete control over the trust. A successor trustee is named so someone can take over the trust if the grantor is incapacitated or dies.

The grantor may again choose to have two trustees. One can be the trustee in case of incapacity, and the second can be the trustee when the grantor dies. If you name an adult child as your executor and they are also the trustee of your revocable will, one person is responsible for everything. Dividing the roles could lighten the load for busy adult children. If a trustee lives far away, it may be challenging for them to act on your behalf during incapacity and you may wish someone more local to serve in this role.

Successor trustees have a number of duties. They have a fiduciary duty to identify and protect trust assets, pay bills, oversee finances, manage investments, manage the distribution of trust assets, file tax returns, make tax elections and manage any legal or financial issues relating to the trust. Depending upon the size of the trust, this could be a time-consuming responsibility.

Before automatically naming the eldest child to serve as successor trustee, take some time to think about whether or not they are the best person for the job. If the trust estate is passing to the children and the successor trustee’s role will be simple—dividing assets evenly among beneficiaries—this might be an easy decision.

Suppose there are more complex matters, like a distribution being held back because one of the beneficiaries is a minor or has a drug dependency issue, and distributions are at the discretion of the trustee. In that case, the trustee may face repercussions from family members.

Naming a successor trustee is like choosing someone to serve as your executor. They have to be honest, organized, good with financial matters, and able to communicate with heirs even when there’s little or a lot of resentment about their being in charge. They must also be available to interact with your professionals, including an estate planning attorney, financial advisor and accountant. There are instances when a bank, private fiduciary, or estate planning attorney may be a better choice for a successor trustee.

Your estate planning attorney can help you sift through the personalities and skill sets of possible trustees to determine the best candidate for the job.

Reference: Kiplinger (Dec. 18, 2024) “You’ve Got a Trust: Now Who Should Be the Successor Trustee?”

Why Your Children Need You to Complete Your Estate Planning

 

Parents of minor children need an estate plan to protect their children’s future. The article “Estate Planning Series: For Parents” from Colorado Parent explains what can happen if a family with young children doesn’t have an estate plan.

Estate planning is more than distributing assets or even planning to avoid an estate going through probate. A last will and testament is the legal document used to name a guardian for minor children if both parents should die or become incapacitated.

Without a will, the court appoints someone as the children’s guardian. Most people would instead make this decision themselves, naming a person they trust and know will help their children thrive. If parents name their own parents or anyone in a generation above them, they need to carefully consider whether or not those people can raise the children as they age.

Parents don’t have to name a family member to be their children’s guardian. Parents may get some push-back on this decision. However, they know their children and family best. It may be better for children to be raised by a trusted friend who has agreed to take on this task than the children’s grandparents. Family members who are perfectly capable of dealing with toddlers may be too elderly when children reach their teenage years and need a different kind of parenting.

A Power of Attorney is essential for everyone over 18. When someone becomes incapacitated, another person can take over the business of their lives, maintaining a house and managing day-to-day bill paying. Without a POA, a family member must have a guardianship or conservatorship approved by a judge. The judge might appoint a professional guardian who doesn’t know the person or their family or a family member who has a fraught relationship with the incapacitated person.

An estate planning attorney can create a POA to suit individual needs. A document downloaded from the internet is likely to be riddled with potential disasters, including the possibility of giving someone more decision-making power than you would have wanted.

Estate planning for families with young children also addresses how the children’s living expenses will be paid. If life insurance is purchased, what happens to the proceeds if one of the parents dies? If a child is the life insurance beneficiary, a court-appointed custodian may be appointed to receive and manage the funds. By placing the life insurance into a trust and naming a trustee, the parent can be confident the proceeds will be used solely for the child’s upbringing.

These are just a few issues parents must consider when creating an estate plan with young children in mind. Speak with an experienced estate planning attorney to protect your family and their future. Once it’s done, you can return your attention to all of the ups and downs of parenting.

Reference: Colorado Parent (December 2024) “Estate Planning Series: For Parents”

How Dying Without a Will Leaves Heirs an Extra Dose of Grief

 

Don’t delay having a will prepared by an experienced estate planning attorney, warns a frank article from Barron’s, “What Happens if You Die Without a Will? You Could Leave Heirs—and Pets—With Even More Grief.”

If you die without a will, a probate court will name heirs to receive assets and guardians to raise children. However, no one will be required to protect your pets. In worst-case scenarios, assets with no designated beneficiaries, including bank accounts, real estate property and retirement accounts, can end up in the state’s unclaimed property department.

If you’d rather choose who will be your heir, assign a person you know and trust to raise your children and want to ensure that your beloved animal companions live comfortably after you’ve passed, then you need a will.

A family member embarking on a search to identify property might be able to glean some information from the prior year’s tax returns. They’ll still first have to find the tax returns and then go to court to be appointed administrator of your estate. If you have digital assets, including cryptocurrency, and haven’t made a plan for someone to take control and manage those assets, your family may never see those assets.

Having assets titled with preferred beneficiaries is as important as having a will. Retirement accounts with named beneficiaries, including 401(k)s, supersede directions in a will. If most of your wealth is in a 401(k) or other accounts with the ability to name a beneficiary, make sure that those names are correct.

In community property states like California, spouses are entitled to community property, and asset distribution follows state law.

If you have children, and especially if they are still minors, you want to have a will to explicitly state who you want to raise your children if both parents die. While other family members can petition the court for guardianship, your children could become the center of a family blowup if more than one person wants to take custody.

If you care about what will happen to your pet, you must also plan for them. Even the most well-intentioned family member isn’t required to take your pet into their home. Shelters have many senior dogs and cats left behind when their owners die and are less likely to be adopted than kittens or puppies. Most states allow you to create a pet trust, where you set aside funds for the care of your pet and name a person to be the pet’s guardian and another person to be in charge of the trust. You can name the guardian to be the same person as the trustee, or you can keep the roles separate.

Unless you want to create a maelstrom for your family and let other people make important, life-altering decisions for those you love, schedule a meeting with an estate planning attorney to review your estate and create a will, along with other necessary estate planning documents.

Reference: Barron’s (Dec. 6, 2024) “What Happens if You Die Without a Will? You Could Leave Heirs—and Pets—With Even More Grief”

What Is a Living Trust?

 

Estate planning isn’t a one-size-fits-all process. Every family situation is different. What works great for your brother-in-law, may not work for you and your spouse. Living trusts pass wealth on to the next generation. However, they are one of many ways to accomplish estate planning goals. A recent article from msn, “Is a Living Trust Really the Best Way to Pass an Inheritance to Your Family?” takes a closer look.

A living trust is created to be a legal entity separate from the person who creates it, known as the “grantor.” Sometimes referred to as a “revocable trust,” it can be changed or dissolved at any time as long as the grantor is alive. Trusts are created by estate planning attorneys and tailored to the specific needs of the individual.

There are many benefits to using a trust. Assets placed in a trust pass directly to beneficiaries without going through probate. When someone dies, their will is submitted to the local court and reviewed by a judge who determines whether or not the will is valid and if the executor is acceptable to the court. Until the court approves the will and the executor, the estate is in limbo, and nothing can move forward.

Depending on how complicated the estate is and how well the local courts perform, it can easily take six months to a year for the court to approve the will. If the decedent owned property or other assets in different states, these all have to go through probate in each state.

A trust has a trustee and a successor trustee. If the decedent was the trustee, the person in charge of the trust, then the successor trustee can step in and manage the trust. If assets were placed in the trust to pay bills while the estate is being settled, the successor trustee can do this without waiting for probate to be completed. Beneficiaries can be given their inheritance upon the death of the decedent without delays from the probate process.

Most people don’t know this. However, a will becomes a public document in the probate process. Estranged relatives, ex-spouses, creditors and thieves can all view the will. This is why families who have suffered a loss are targets of scammers and recipients of phone calls and direct mail from people seeking to buy the decedent’s home or serve as financial advisors, assuming an inheritance is being received.

A living trust also allows for great flexibility to respond to changes in life. If a family member gets divorced or married, welcomes a new baby, or dies, the trust can be changed easily to adapt to new circumstances. The same is true for financial changes in life. If the grantor needs access to the assets in the trust, they can be taken out, or the trust can be dissolved. You can’t do this with an irrevocable trust.

Meeting with an estate planning attorney is the best way to determine if your circumstances warrant a trust and which is best suited to your goals. There are trusts to protect blended families, structure donations to charity, pass wealth to grandchildren and trusts for disabled individuals. A conversation with an experienced estate planning attorney will answer questions about trusts and provide peace of mind, knowing that you’ve done the right thing for your family.

Reference: msn (Dec. 1, 2024) “Is a Living Trust Really the Best Way to Pass an Inheritance to Your Family?”

How Estate Planning Cares for Future Generations

 

Building and owning a business or saving prudently can lead to more than a comfortable life—it can create a legacy to be passed on to family members and charitable groups. Estate planning for a legacy takes many forms, explains an article from Cincinnati Business Courier, “Taking Care of Future Generations: Estate Planning Strategies and Trends.”

The primary purpose of estate planning is to transfer assets smoothly and when possible, without court involvement. High net-worth families use estate planning to use existing tax opportunities to structure their assets, so they may be passed to the next generation in a tax-efficient manner.

Estate planning is also necessary to allow assets to pass without turmoil and stress. Having a detailed estate planning, where wishes are clear and assets are carefully inventoried, prevents heirs from having to undergo legal and logistical contortions to receive an inheritance.

The planning process varies from state to state. However, the general process is the same. An estate planning attorney discusses the family, the business or other assets and the wishes to be achieved. Some states, like Kentucky and Pennsylvania, still have inheritance taxes in addition to state estate taxes. As of this writing, few families are impacted by federal estate taxes, although this may change in the future.

Wills may be the best known part of estate planning. However, the will is only part of an estate plan. If prepared properly, most property passes without a will and, therefore, without probate. Trusts are the most commonly used tool in estate planning. Trusts are created to serve as separate legal entities which distribute assets upon the death of the grantor (the person who created the trust). Assets distributed by a trust don’t go through probate and are distributed according to the language of a trust. This level of control, in addition to taking out any court involvement, are one reason why trusts are so popular in estate planning.

A Power of Attorney is very important in estate planning. The person who has been named the POA steps in to handle general financial matters and helps maintain the normal course of life—paying bills and maintaining a home—if someone becomes incapacitated. A Medical Power of Attorney gives the power to talk with treating physicians and make decisions.

An estate plan also includes naming an executor, the person in charge of administering the estate. You’ll want to select a person who is, above all, trustworthy. They will also need to be organize, financially savvy and able to manage the beneficiaries and the family’s dynamics.

Estate planning often involves lifetime gifts, also known as planned giving. Giving to charities while living allows the donor to see the impact of their generosity, which can be very rewarding. The same can be said about giving to loved ones. The benefit of taking assets out of the taxable estate is a motivating factor for some, but not all, lifetime giving.

Giving is also done through family foundations and donor advised funds (DAFs). The DAF is becoming more popular because the charitable deduction is created when the fund is created, while there is still access to the funds. Foundations are typically created only by extremely high net worth families, as there are extensive costs involved in creating a foundation. However, a family foundation is an excellent way to bring younger generations into the tradition of philanthropy.

An estate planning attorney will walk you through the necessary steps, explore options and help outline your wishes for the legacy you wish to leave to loved ones. It is a gift to the family, providing peace of mind for you and a plan for the future.

Reference: Cincinnati Business Courier (Nov. 15, 2024) “Taking Care of Future Generations: Estate Planning Strategies and Trends”

Make Life Easier for Heirs: Get Your Estate Organized

 

The holiday season is not when most of us think about death and dying. However, we do think about gift-giving. Estate planning is a gift for your family. Wouldn’t you prefer a package wrapped in festive paper and decorated with ribbons than an unwrapped item hastily stuffed into a shopping bag? The article “5 Things to Do Now to Make Your Estate Simpler for Your Heirs” from The Wall Street Journal offers a starting point.

Update all estate planning documents. Failing to update estate planning documents, including finalizing new documents, can wreak havoc on families. One example is a woman who took about two decades to update her will and then died before signing the papers. Her will included giving assets to stepchildren she hadn’t seen in more than twenty years. Her adult children are spending thousands to have the new will enforced by a judge, even though it’s unsigned.

When did you last examine the beneficiary designations for all your financial accounts? Life insurance, retirement accounts, bank and investment accounts, pensions and other financial accounts provide an opportunity to name a person or people to receive the assets directly upon your death. If your old college pal is the person you thought of when you started your 401(k) with your first job, your wife may not appreciate his receiving hundreds of thousands of dollars upon your death.

Named beneficiaries receive assets directly from the financial institution and do not go through probate. No matter what language is in a will or even a living trust, these assets belong to the people you named to receive them. You should have a list of all of these accounts and know who the beneficiaries are.

Digital assets are now part of estate plans. There are very few people today who don’t have digital assets. These include the content in your emails, photos stored on the cloud, websites, content on social media platforms, online businesses and anything you’ve created online. Most people don’t understand the Terms of Service Agreement they make between the service provider and themselves when they click on the link to approve the TOSA. However, this is a legally binding contract delineating what the platform owns and what the user owns. You may not own books, movies, or other digital assets; you might have rented them unknowingly.

Digital assets need to be organized for heirs, since there isn’t a paper trail for them to follow like in previous decades. You can create a spreadsheet, use a password manager or a pad of paper. However, there should be a means for your digital executor to identify and access your digital assets.

Some digital platforms allow you to name a “legacy” contact who can take care of your digital assets after you’ve passed. You’ll need to go through each of your digital assets to find out which platform has this or related features. If it seems annoying, imagine how your heirs will feel trying to untangle your digital assets.

If your estate includes cryptocurrency, this is especially important. Millions of dollars of crypto have been lost because people have failed to secure their pass keys or digital wallets.

Deal with personal property now. Especially if you have multiple heirs, hoping the kids “work things out” could be a recipe for disaster. Make a list of your personal items and who you want to receive what. In some families, this is relatively straightforward. However, your adult children will be grieving after your passing and vulnerable to disputes. Another tactic: give items while you’re living.

Get your estate planning documents organized. Create a three-ring binder with all essential documents. Contact information for your estate planning attorney, CPA and financial advisor should be provided. Include a list of bills paid online, like utility, mortgage, taxes, health insurance, car insurance, etc. Also included are Power of Attorney, Health Care Power of Attorney, Living Will, Trusts and other estate planning documents. Tell your executor and adult children where the folder is.

An organized estate plan helps avoid family conflict. Having documents prepared, property assigned and accounts recorded all takes time. However, by doing so, you’ve minimized the work for loved ones and minimized reasons for quarrels during what will already be a difficult time.

Reference: The Wall Street Journal (Nov. 14, 2024) “5 Things to Do Now to Make Your Estate Simpler for Your Heirs”

How Does a Trust Work in an Inheritance?

 

It’s not easy to create an estate plan without the guidance of an experienced estate planning attorney. They can help work through the many moving parts and address concerns about how family members will respond to your plan to pass on assets. A recent article from msn, “3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family,” says. At the same time, you may think keeping things simple with a last will and testament may be sufficient, but there are also good reasons to use a living trust.

If you have many beneficiaries, a living trust allows you to control assets while living and after you’ve passed. If you have a large family and want to include grandchildren, nieces and nephews in your estate plan, the living trust is easier than a will. Beneficiaries can be easily added or removed, as events like marriage, birth and divorce occur within the family.

The living trust allows you to get very specific about exactly how much of which asset you want to pass to each beneficiary. If your heirs include minors, a living trust consists of a trustee who can manage their assets until they reach a certain age. You can also determine at what age you want beneficiaries to receive your wealth. You might, for instance, decide to give a grandchild their inheritance not when they reach the age of majority (legal age) but when they turn 30.

Do you own real estate property? This asset can be tricky to bequeath in a will, especially if you own property in multiple states. Your estate would have to go through probate in each state, which all have their own rules and laws. This becomes expensive and time-consuming. Retitling real estate property into a living trust means the properties don’t need to go through probate. Your estate planning attorney will help make this an efficient process.

Trusts should be in your estate plan if privacy is important to you. Most people don’t know their wills become public documents as part of probate. This means anyone who is interested can read your will. This could be an estranged family member who feels they were wrongfully left out of the will, an ex-spouse, creditors, salespeople and thieves.

The public nature of probate is another reason why wills should not contain any specific account information, like account names, numbers, or the amount of money in the accounts. For the same reason, the names of digital assets, including user names and passwords, should never be included in a will.

Trusts are one of many means of passing assets to heirs without anyone except the grantor (the person creating the trust), the trustee (the person in charge of managing the trust), and the beneficiaries knowing about the trust’s existence and what it contains. This is especially important if your situation includes someone you wish to keep in the dark about your assets or your intentions.

Meet with an experienced estate planning attorney to discuss the different ways to pass wealth to loved ones, including a will and trusts. Learning what options are available will allow you to make an informed choice.

Reference: msn (Nov. 2, 2024) “3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family”

What are the Top Estate Planning Mistakes?

 

A cornerstone of creating family success is proactive planning for the future. This includes working with experienced advisors, including estate planning attorneys, who can guide the family to making informed decisions. A recent article, “Top Estate Planning Mistakes Families Make—And How To Avoid Them,” from Forbes, advises readers to include thoughtful planning, organized financial records and estate planning to create a legacy to span generations.

The biggest mistake families make is not having an estate plan. The second biggest mistake is trying to create an estate plan without the help of an experienced estate planning attorney. Families often turn to an attorney who has helped with transactions, like buying a house or settling a homeowner’s insurance claim. However, this is a costly mistake. It’s like asking a podiatrist to perform brain surgery—they may be well-meaning. However, they don’t have the necessary experience and knowledge.

Disorganized financial and legal record-keeping leads to unnecessary estate planning and administration complications. Good record-keeping helps families make good decisions regarding spending and saving and makes estate planning more effective. For example, creating a budget for retirement without accurate information could lead a couple to overspend and run out of money or live so frugally that they don’t enjoy their retirement.

Financial records must be organized, so real estate, investment accounts, savings accounts, pensions, credit card debt, mortgages and personal property can be accurately valued. Creating a successful estate plan needs to include information on cash flow and spending to guide decisions on how assets will be distributed and what liquidity is needed.

Family wealth is not created by passing large assets to the next generation without restrictions. Long-term estate planning is needed to retain wealth. When large inheritances are passed on without planning or education, most of the money disappears by the second generation, and whatever’s left is usually gone by the third generation. The family’s wealth shouldn’t be viewed as a bank account to be depleted.

Trusts are often used in estate planning. However, a common mistake is to create a trust and then neglect to fund it. Funding a trust involves moving assets into the trust’s ownership. Deeds, titles and financial accounts must be changed to identify the trust as the owner rather than the person who used to own the asset. Some estate planning attorneys will have their office manage this process, while others require clients to do this themselves. Either way, funding the trust must be completed to perform as desired.

Maintaining an estate plan is just as important as creating one. Financial records and documents in the estate plan need to be kept up to date. If the estate executor dies, the will needs to be updated. If a guardian is named to raise minor children, which is done through a will, and the person moves away, a new guardian needs to be named in a revised will.

Estate plans also involve documents to protect the living. A Power of Attorney assigns another person the ability to manage financial and legal matters if a person is incapacitated by injury or illness. A Healthcare Power of Attorney is needed to have another person manage medical decisions. The name of this document varies by jurisdiction. However, without it, a family will need to go to court to be involved with a loved one’s medical care.

Estate planning can be viewed as organizing one’s life and planning for the future. It is a gift to loved ones and establishes a legacy of caring.

Reference: Forbes (Nov. 7, 2024) “Top Estate Planning Mistakes Families Make—And How To Avoid Them”

Planning to Protect Your Children’s Inheritance: Asset Protection

 

No one likes to think about the possibility of losing a lifetime of earnings through unfortunate events like divorce, spendthrift heirs, or litigation. However, ignoring these risks won’t prevent them. A recent article from Kiplinger, “Want Your Kids to Inherit? You Need an Asset Protection Plan, ” explains several asset protection strategies used to protect wealth from disappearing in nefarious ways.

Prenuptial agreements aren’t the most welcoming topic when your adult child announces their engagement. Still, this should be discussed and encouraged no matter how much you love your prospective new family member. A prenuptial agreement or prenup is a contract between two adults agreeing on how they will distribute assets in case of divorce. This legally binding document addresses assets, debts, spousal support, alimony, gifts and inheritances. It’s also helpful as a supporting document if one of the spouses should die unexpectedly. However, the couple should have a will, power of attorney and other estate planning documents created as soon as they are married.

Depending on the state, there may be laws concerning when the prenup is signed for it to be valid. Signing a prenup under duress could make it invalid, so this needs to be addressed in a timely manner.

Another option is to create a postnuptial agreement (postnup). Spouses may contractually agree to terms outlining the distribution of assets in the event of a divorce after the wedding.

Asset protection includes determining and formalizing how assets will be passed on to heirs. Parents should consider creating trusts as part of their estate plan. Trusts allow grantors (the person creating the trust) a much higher degree of control over who receives the assets in the trust and takes them out of the probate estate.

For example, the trust may call for a beneficiary to receive a portion of their inheritance at ages 30 and 40 and the balance at age 50. An heir with a drug dependency might be required to complete a rehabilitation program or maintain employment over a steady period of time before the trustee can distribute some or all of the assets in the trust.

If assets are left through a will, a number of vulnerabilities are created. First, they are part of the probate estate and subject to federal and state taxes. Second, the will becomes a public document when it goes through probate, so creditors can learn if someone is receiving an inheritance. Creditors may include ex-spouses, credit card companies and financial institutions.

An experienced estate planning attorney is familiar with the tools used to protect assets and ensure that they pass to the next generation according to your wishes. Protecting a lifetime of hard work is a worthy endeavor, creating a legacy and providing security for those you love.

Reference: Kiplinger (Nov. 9, 2024) “Want Your Kids to Inherit? You Need an Asset Protection Plan”