What A Professional Basketball Owner's Scandal Teaches About Estate Planning

On the surface, the salacious news story of an octogenarian pro sports team owner, his ill-advised racist diatribe, and the attempts by his sport's commissioner to throw him out of the league would seem to have extremely little to say about estate planning. But, in realty, those considering the creation of their estate plan can learn a lot from the saga of Donald Sterling and the National Basketball Association's Los Angeles Clippers franchise.

To begin with, neither Sterling, nor his wife Shelly, actually own the Clippers team -- the Sterling family trust does. Donald and Shelly serve as the trustees of the trust. This status goes a long way toward explaining how Shelly may potentially be able to sell the basketball team without Donald's approval. Similar to many estate planning trusts, the Sterlings' trust says that, if one trustee becomes mentally incapacitated, then the mentally competent spouse takes over as the sole trustee of the trust. In the Sterlings' case, Shelly had Donald analyzed by several medical professionals who diagnosed him as incompetent. As a result, Shelly claimed she was the sole trustee and free to sell the team if she chose.

Most estate planning trusts do not involve pro sports teams as assets, but, in general, a married couple's living trust will name both spouses as co-trustees and state that, if one dies, resigns or becomes mentally incompetent, then the other spouse becomes the lone trustee. For a married couple where everyone is "on the same page," an arrangement like this has many advantages. As illustrated by the Sterlings' case, this can streamline the management of assets when a spouse suffers mental capacity issues. The Sterlings had a trust that, in cases where medical professionals certified one spouse as incompetent, permitted the other spouse to assume control of the trust's assets, including the Clippers franchise. Without the trust, the law would have required Shelly to go to court and get an order declaring Donald incompetent and naming her as the conservator of his assets. These legal proceedings can be complicated, time consuming and expensive. Generally, living trusts for married couples operate similarly, allowing a spouse to assume sole power over the trust if two or more doctors diagnosis the other spouse as mentally incompetent, thereby allowing the competent spouse to continue managing the family's assets in a seamless manner without the need of an order appointing a conservator. 

Some families, however, have more complex considerations that may require more intricate planning. Perhaps one or both spouses were married previously and have families from those prior relationships. In these and certain other situations, complete estate planning may be more extensive than just creating two simple wills or even just one revocable living trust. Some couples may benefit from the creation of separate living trusts for each spouse, or implementing other estate planning tools to make sure that the interests and objectives of each spouse are respected, regardless of death or incapacity.

In other words, estate planning involves an extremely wide array of options and what seems like the simplest answer may not be the most effective solution.

Summary: The story of the family trust that owns the NBA's Los Angeles Clippers, and the husband and wife pair who serve as the trust's trustees, offers some clear lessons for others planning their estates. A trust may offer distinct benefits in some situations for allowing the seamless continuation of the management of assets in the event of a spouse's mental incapacity. Multiple trusts may suit some situations where the family dynamic is more complex.   

Estate Planning Has Heightened Importance for Same-Sex and Other Couples in Non-marital Relationships

People in relationships that the law does not recognize, whether they are same-sex or opposite-sex partners, face a very unique set of challenges in ensuring that their preferences and choices are honored by those around them. Proper estate planning can provide substantial benefits in making sure that, if you become incapacitated, your beloved partner can continue to be a part of your life and, if you die, your partner can share in the wealth of your estate.

As of mid May 2014, federal judges had made Oregon and Pennsylvania the 17th and 18th states to allow same-sex marriage. This is a dramatic change, as the Massachusetts Supreme Court became the first state jurisdiction to recognize same-sex marriage only 11 years ago. Common-law marriage has witnessed a change in the other direction. In the last 50 years, five states have passed laws explicitly refusing to recognize this type of relationship. For couples in either of these situations, or any other non-married domestic partnership, their circumstances can be complicated and problematic largely because, in the eyes of the law, they are strangers.

As one example, in 2007, Indiana courts faced the case of a man whose parents used the occasion of his massive stroke to obtain a guardianship over their son and then refuse to allow his same-sex partner of the last 25 years to have any contact with the man. The man's partner had to battle all the way to the state supreme court just to be allowed visitation.

Regardless of what the statutory law in your state says about your relationship, there are ways to protect yourself and your loves ones. Part of the problem the man in Indiana faced was that he had no estate plan. Thorough estate planning is absolutely essential for any person who has close loved ones with whom he/she shares no legal relationship. A carefully crafted will or living trust can make sure that your partner shares in your estate and you can provide for him/her after your death. If you die without a will, and you and your partner have no legally recognized relationship, your partner gets nothing from your estate.

Additionally, estate planning documents like powers of attorney are particularly useful for people in these situations, especially if one or both partners have relatives who disapprove. A detailed power of attorney can help make certain that the people closest to you and whom you trust the most are the ones making your decisions for you, not a family member whose decision-making may be skewed by their disapproval of your relationship.  

Furthermore, for unmarried couples co-parenting the legal child of one partner, a comprehensive estate plan can help preserve the continuity of your family. Depending on your state's laws, it is very possible that, if the partner with the legal relationship to the child dies, the other partner will lose all rights to the child, and may not even be able to visit the child, unless a proper plan is in place naming the partner as the child's guardian. 

This article is published by the Legacy Assurance Plan of America and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at www.legacyassuranceplan.com.

The Many Ways That An Estate Plan That Avoids Probate Can Help You

It is true that, is some situations, the probate process can be very time consuming. While your family might find this disadvantageous due to the stress of having this legal process hanging "over your head," the possible drawbacks of a time-consuming probate process go beyond that. In some circumstances, a drawn-out probate process can mean that your money might be tied up for weeks or even months without your loved ones having it available. That means that, while your bills, ranging from final expenses (if you don't have final expense insurance) to property taxes and utilities to legal fees all must be paid without access to that money. With an estate plan that successfully avoids probate, your money may be made available to pay for your final bills in a much faster manner.

Some people are also concerned about the potential loss of privacy that goes with many probate processes. In this age of identity theft and a wide array of other scams and predators, creating a public record of your wealth and the amount of wealth your loved ones will receive from you is something a lot of people might reasonably want to avoid. Creating this public record has other possible drawbacks, as well, depending on where you live. In some states -- Michigan is one such example -- the easiest way for your unsecured creditors to go after your assets is through your probate estate. If your estate avoids probate, and there is no need to open a probate case file at all, then you may be able to transfer your wealth to your loved ones without those creditors even knowing. 

Probate can be costly. Like most any legal process there may be lots of fees. A fee to open a probate estate. A fee to obtain what's called letters of authority or letters of administration. Inventory fees. And so on. What's more, the more wealth you have in your probate estate. the bigger those fees often are. Many states have considered or enacted significant increases in probate fees as a way to pay for a shortage of the funds needed to keep the state's courts running.

A few years ago, to address a budget shortfall, the state House of Representatives in Florida considered raising formal probate administration fees from a few hundred dollars to as much as $5,000. In Connecticut, the state addressed a $32 million probate court budget shortfall by increasing the price of probate fees such that those fees now pay for the probate courts' entire budgetary needs. An estate of just $600,000 (which for some people, is just the value of a home and personal property) carries a filing fee in excess of $2,000. If, for example, you are a small business owner with a $5 million probate estate, the administration fee, under the new law, is now more than $20,000. If your estate is more than $7 million, it's more than $30,000. 

However, with a carefully crafted and executed estate plan that avoids probate, you can protect yourself against the many threats, logistical hurdles and ever-increasing costs that go along with the probate process. A qualified estate planning professional can help you decide what type of plan works best for you.

Summary: If you've done much research about estate planning, you're probably familiar with probate and the notion of avoiding it. Avoiding probate may be beneficial because the probate administration process can be costly in terms of time, money and privacy. But the potential issues with the probate process, and the possible benefits of probate avoidance in terms of time, money and privacy, go beyond just want you may immediately think of. The advantages of an estate plan that is properly constructed and carried out to avoid probate, when it comes to saving you and your loved ones time, money and privacy, are actually even greater than what may appear on the surface.   

3 Dangerous Estate Planning Techniques When it Comes to Your Home @LegacyAssurancPlan

Legacy Assurance Plan: Fans of Saturday Night Live during the early 1990s will likely recall one of the show's most famous parody commercials, "Bad Idea Jeans." The crux of the joke in this sketch is that each idea the actors espoused was blatantly, obviously bad ... yet they discussed them as if they were perfectly common-sensical notions. The difference between good and bad estate planning techniques is often the exact opposite of a "Bad Idea Jeans" commercial -- things that are potentially very dangerous are often far from obviously bad; rather, they may often appear to make perfect sense. With that in mind, here is a list of 3 ill-advised yet common estate planning techniques related to your home that may seem like good ideas, but are really very bad ones.

(1) Adding your children to your home's deed. One method some people use to avoid probate is simply adding to the property's deed a child or other loved one to whom they would have left the home in their will or trust. While this can effectively avoid the need to probate that asset upon your death, this benefit will come at a steep price. First, it exposes your home to any potential liability that may cross your child's path. Whether it's a divorce, a failed business or an injury lawsuit, any court judgment that is entered against your child could place your home in jeopardy of being lost to that creditor. Even if your child is never sued, this technique carries certain tax consequences. Adding your child to the deed is actually a taxable gift in the eyes of the IRS and may require you to file a gift tax return and/or pay gift taxes. Furthermore, this technique may have very damaging capital gain tax consequences if your child later decides to sell the property.    

(2) Pocket deeds. This a technique where you, as the owner, execute a deed transferring your home to the person you want to receive it on your death. Instead of recording it, you simply store the deed someplace secure and, when you die, your loved one records the deed and takes possession of the property without the need for a probate administration. Like adding children to a deed, this can successfully avoid probate but carries numerous potential dangers. One is possible loss of control. The person to whom you deeded the property is under no legal obligation to wait under your death to record the deed. Legally, she could record the deed, take possession of the property and demand that you leave immediately... and be 100% within her rights. Also, the use of pocket deeds may increase the risks for other future problems, like a cloud on the title of the property, which may cause problems with obtaining title insurance. Furthermore, this method can cause harm in terms of capital gain taxes. For calculating this tax, the pocket deed will lead to your loved one having a smaller "basis" in the home, meaning that her capital gain tax obligation will be higher if she sells it.

(3) Transfer-on-death deeds. Transfer-on-death (TOD) deeds are not universally bad ideas. There are several situations where they can serve an essential role in an estate plan. In some other situations, though, they have the potential to be problematic. Say, for example, that you have several children and that your plan goals dictate that all of your children take an equal portion of your wealth, including your home. In this scenario, a TOD deed has the potential to generate more headaches than benefit. If you name all of your children as co-beneficiaries on your home's TOD deed then, once you die, all of them must agree in order to act. All of them must agree on a realtor who will sell the property. All of them must agree on the sale price. All of them should chip in equally to pay for the home's upkeep until it sells. Even if all of your children are agreeable when it comes to decisions about the home, securing consensus on all of these decisions can be a logistical hassle. In this case, placing the home in a trust where decisions are managed by a trustee you name might make more sense and save your children time and stress.

Legacy Assurance Plan (Summary): Estate planning, like any form of planning, has a wide array of tools and techniques that can be used. Some tools can be very helpful in some circumstances, and very harmful if used in the wrong situations. Other techniques are almost always very bad ideas that can have very dangerous consequences. For many people, the centerpiece of their estate is their home. In order to make sure that your plan accomplishes your true goals regarding your home and does so with the least amount of stress upon you and your loved ones, it is important to make sure that your plan avoids the potential pitfalls presented by using tools that are "bad ideas."

Legacy Assurance Plan - Estate Planning for Your Treasured Collectibles

Legacy Assurance Plan - In 2012, the New York Times published an article that mentioned a Georgia woman named Sandy Paschal and her collection of "Department 56" holiday villages. While the name "Department 56" may conjure to mind your mother or grandmother's collection of Snow Village pieces she dusts off and displays every year at Christmas time, Paschal's menagerie was something much more. It numbered thousands of pieces and had an appraised value in excess of $100,000. Many people today possess collections, ranging from coins to baseball cards to comic books to model trains to vintage dolls. Whether your collection has a large monetary value like Paschal's or holds much more worth in terms of sentimental value than dollar value, you probably care about what happens to your collection after you die. Creating an estate plan and including your collection in your plan is a great way to help ensure your goals for your collection are met.

As a starting point, it may help to know how much your collection is worth. Given that some individual stamps, coins, comic books, baseball cards and "Star Wars" figurines are worth thousands of dollars, your collection, especially if you've had it a long time and taken great care of your pieces, could hold more monetary value than you'd think. This is important for multiple reasons. For example, if you have a coin collection that turns out to be worth $25,000, and you have a specific loved one you wish to receive it, you may want to factor that $25,000 figure in when you decide how much to leave that person (and your other loved ones.) Also, if you consider giving that collection to your preferred recipient during your lifetime, there are tax implications of doing this that you should take into consideration before you transfer the collection's ownership.

Regardless of whether your collection is worth $100 or $100,000, you likely cherish it very much and want it to pass to someone who will enjoy it as much as you have. You may have a child whom you love and trust and definitely desire to include in the distribution of your wealth, but whom you anticipate would take you beloved collection and immediately put it on ebay, donate it to a thrift store or simply unload everything in a yard sale. There are ways to plan to avoid that outcome. One way is to sell the collection yourself. By selling the collection in your lifetime, you control the way in which the collection is offered for sale, and vastly increase the odds that the person who receives the collection is a like-minded collector who will appreciate the collection for more than just its dollar figure. Similarly, giving your collection away during your lifetime also allows you to assert some greater control over who receives your collection.

If you decide to hold your collection until your death, it is very important that you make sure your estate planning documents are sufficiently specific so that your loved ones know how how to handle your collection. Things like china or collectible figures generally do not have ownership documents and, in the abstract, would be considered to be just another part of your household effects. So, if you don't want your 19th Century china collection and your Department 56 villages lumped in with the dishes and the knick knacks you bought at Target last year, your plan documents need to say so in clear detail. If you have an estate plan that includes a revocable living trust, your trust has a place (often labelled as "Schedule A") that can help you in doing this. You can specifically list things like your Cabbage Patch dolls or your collection of Lionel trains or your vintage Louis Vuitton handbags as assets that you are expressly funding into your trust using your Schedule A. Then, in the section of your trust that spells out the details of the distribution of your trust's assets, you can state exactly what you want to happen to each of those collectibles.

Summary: One of the great benefits of estate planning is control. If you are someone who possesses a cherished collection, that control may be particularly important to you. Through proper planning, you can make sure that the person who owns your collection after you is someone who will appreciate it as much as you have. If you have an estate plan with a revocable living trust, you can control the distribution of your collectibles by funding them into your trust using Schedule A and then providing detailed distribution instructions in the asset distribution section of your trust. 

New Laws May Put a New Spin on Your Estate Plan | Legacy Assurancec Plan

There are lots of reasons to consider getting an estate plan "check-up" in the first quarter of a new year. People use the changing calendar to engage in many resolutions, including ones related to getting organized and better caring for themselves and their loved ones. And, what better way to get organized and to best care for yourself and your loved ones than to ensure that your estate plan is still in tip-top shape, right? This is all definitely true, but there is also another reason to use the early months of a new year to get an estate plan review: changes in the law. January 1 is a common date for new statutes to take effect, and some of those statutes may offer you new estate planning opportunities.

Many aspects of the law have changed recently as a reflection of changing culture. Same-sex marriage is legal in all 50 states. This matters in many ways, including estate planning. As author Angela D. Giampolo recently pointed out in The Legal Intelligencer: "There are 1,138 identified federal statutes in which marital status is a factor in receiving federal benefits, rights and privileges." Another legal shift that has followed a cultural shift is that more and more states' laws are catching up to the modern relationship that many people have with their households pets, where the pet is seen less as merely a piece of property and more as a beloved and vital part of the family. Pet trusts and estate planning for pets are recognized in more states than ever before.

Other legal changes have taken place independent of any social/cutlural shifts. The number of states that recognize transfer-on-death (TOD) deeds, for example, has nearly doubled in the last few years. That's because, in 2009, a group called the National Conference of Commissioners on Uniform State Laws drafted the Uniform Real Property Transfer on Death Act. This spurred many states into action. Just over a dozen states recognized TOD deeds in 2009. Today, two dozen states plus D.C. have laws giving these deeds recognition.

In addition to these changes, there are also the alterations that take place after each legislative session. Each state's legislative body considers numerous bills every session, and passes many of them. Some of those relate to estate planning. These changes may require your plan to undergo no changes. But, sometimes, the changes in the law do dictate that you should consider altering your plan. These alterations may be needed to take advantage of new opportunities and benefits that have only now come available thanks to the new changes in the law. On the other hand, your plan may need changes to avoid new pitfalls that the changed laws have created for plans like yours.  

It's somewhat like income taxes. Each year, there are new changes to the laws and regulations governing income tax returns. Sometimes, they're big. Other times, they're very small. Regardless, you want to make sure that your accountant or tax preparer is creating your return using the latest rules. The same goes for estate planning. A thorough "check-up" can make sure that your plan has been analyzed, and optimized, for the current state of law. 

Summary: There are lots of reasons to consider an estate plan review each year. In addition to taking the opportunity to review any life-event changes you've experienced, an annual plan review can make sure that your plan is optimized for any changes that have taken place in the law. New laws may have opened doors to new opportunities, or trap doors to new pitfalls. A thorough review can make sure that your plan is working at its best in light of any new estate planning laws your state may have. 

5 Common Mistakes When It Comes to Estate Planning - Legacy Assurance Plan

As with any area knowledge, estate planning is something that may seem very mysterious or overwhelming to some. For others, they may think they know about estate planning, but as the old quote from English essayist Alexander Pope says, "a little learning is a dangerous thing." In order to make informed decisions about your estate plan, it helps to know what is truth, what is misconception and what is myth. With that in mind, here is a group of five erroneous thoughts people have about estate planning, and why they can be dangerous.

(1) I don't have enough wealth to justify creating an estate plan. Experts universally agree that, regardless of the size of your estate, you should create an estate plan. Even if you have only modest wealth, chances are that you care about the legacy you'll leave behind and who receives your assets. If you don't create a plan, the state makes one up for you and the distribution plan your state creates probably won't match your wishes. Additionally, a thorough estate plan does a lot more than just distribute your assets. It also can enhance your control regarding who manages the affairs of your estate after you die, who would make decisions for you if you became incapacitated and who takes over as the guardian of your minor or special-needs children.

(2) I already have a will, so my estate plan is set. Not necessarily. A will is an integral part of any estate plan, but a will by itself is rarely enough. Your will allows you to dictate directions regarding the distribution of your assets, but it does provide you any assistance regarding who acts on your behalf if you were alive but unable to make decisions for yourself. A complete estate plan would, in addition to a will, also include a financial power of attorney that allows you to designate an agent who would step in to manage your finances when you're unable, as well as documents that would allow a person of your chooisng to make decisions for you regarding personal, healthcare and end-of-life choices.

(3) Living trusts are only for the very rich. Not true. While it is true that living trusts can offer certain tax-related benefits to people with large estates, they also provide advantages that people with any size estate can receive. Properly created and maintained, they avoid probate. This has the potential to save your family time and money distributing your wealth after your die. Also, probate administrations matters are public in most states, while the process of wrapping up a living trusts is typically carried out without the creation of any public records. So, if you're concerned about privacy, this can be a substantial benefit.

(4) I created a plan with all of those documents. They're signed, notarized and safely stored. I'm all finished. Also not true. Your estate plan is similar to your car, your home or your health. They need regular care and maintenance. A periodic analysis, or check-up, can ensure that the plan you executed is still in optimal condition. Maybe something in your life has changed. Maybe the law has changed. Or maybe you just changed your mind about something. A periodic review can make sure that your plan meets your goals as they stand today.

(5) Anyone can create an estate plan. This is a mistake, too. You may have found a form book at a library or an office supply store. Or maybe it was a page on the Internet. Those documents were probably drafted by capable professionals, but they may not have been lawyers from your state, and they definitely weren't created based upon a personal consultation with you. The best estate plans are those whose documents are customized based upon the unique estate planning laws of your state of residence and the specific parameters of your desires and objectives. Also, be careful about picking just any lawyer. You probably wouldn't want an expert in patent law to defend you in a murder trial and you also probably wouldn't choose a mergers-and-acquisitions attorney to handle your child custody case. Similarly, an attorney from your home state who deals regularly with estate planning cases can offer you advice, insight and strategies that other lawyers might not have.

Summary: People have lots of things they think they know about estate planning. Sometimes they're right, sometimes they're a bit off-base and sometimes they're wrong. By educating yourself, you can learn why experts universally agree that everyone needs an estate plan, as well as how to move pro-actively to ensure you get the best plan possible for you.