Estate Planning, Business Organizations, and Asset Protection

Conversation with an Estate Planner

Written By: Jeff Skoubye - May• 01•12

It is interesting how many times I go through the same conversation with new people that I meet. The conversation often goes like this:

“So, you’re an attorney.  What kind of work do you do?”

“I do mostly estate planning.” (Puzzled look on the person’s face.)

“What kind of work is that?”

“I draft Trusts, Wills, and other types of documents, to name who will care for a client’s children, to protect their assets, to reduce taxes, and avoid probate.  A law school professor of mine used to call this work ‘dead people and their things’.  I also help clients with creating businesses such as corporations, limited liability companies, and partnerships.”

“Is there much of a market for that sort of work?”

“Actually, it is a type of work that everyone needs but most people never do. It is probably the easiest type of legal work for people to procrastinate. Unlike a lawsuit which forces your attention, Estate Planning feels like it can always be done later. I call it the immortality syndrome. People think they will never die or have medical problems. In any event, they feel they will be dead and won’t have to worry about it. Their children can work things out.”

“Isn’t that true? Doesn’t state law already provide that a person’s children receive their property when they die?”

“Yes, the state laws do provide that a person’s property passes to their ‘heirs,’ when they die. However the definition of heirs does not always match a person’s desires. Also, a probate is required to carry out this transfer of ownership which can cost time and money. There are also a number of other hidden costs to probate as well.”

“Well, I have a Will so I don’t need to worry about that.” “Actually, a Will will allow you to determine who receives your property, but in order for a Will to be effective it has to go through probate as well.”

“So why even have a Will?”

“As between a Will and no Will, having a Will is the better choice. At least you will be able to select who will manage and distribute your property, who will be the guardians for minor children, and who will receive your property. Without a Will state law and the courts will make these determinations. But there are a number of things a Will just can’t do.”

“Like What?”

“Like avoid probate. As I said, a Will is only effective in a probate proceeding and must be probated within three years of your death or you are treated the same as if you had no Will. A Will also provides no protection against another type of probate proceeding called a conservatorship. If at some point you are unable to manage your own financial affairs your relatives may be forced into a probate proceeding during your lifetime so that they can manage your affairs on your behalf. Again this can cost time and money.”

“So even if I have a Will I could wind up going through two probate proceedings.”

“That’s right. There are also many other things most Wills cannot or do not address, such as avoiding estate and gift taxes, avoiding potential litigation, providing privacy, dealing with terminal illness, and ensuring that assets are properly managed for children and distributed at an age when the children are sufficiently mature.”

“Is there any way to accomplish all of these things?”

“Yes. With proper planning, we can accomplish all of these.”

“It probably costs an arm and a leg to do though.”

“Actually, the cost is usually less than the simplest of probate proceedings, and if estate tax issues are involved, the savings could be in the tens of thousands of dollars.”

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