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Common Sense Estate Planning Rules.

By Rob Lambert - Email Editor

Date : 17-May-2007

Dear Subscriber:

All Asset Protection Planning involves estate planning. You might even say that Asset Protection is estate planning. For this reason, I think it may be helpful if I outline some of my basic estate planning rules.

ALWAYS INVOLVE AN ESTATE PLANNER WITH THE PROCESS

Most estate planners know very little about Asset Protection Planning. Many don’t even think Asset Protection should be a major component of all estate planning. (These guys are wrong by the way!) With that said, the estate planners should always be involved in the process.

Remember, the estate planner is much more likely to be involved with the client when the Asset Protection Planner is only a distant memory. It is wise to take the time to make sure that the local estate planner understands and approves of the plan. It is also wise to make sure that the Asset Protection Planning integrates seamlessly with whatever estate plan is in place now and in the future. One certainty: The estate plan will need to change.

It is my strong preference when Asset Protection Trusts are used that they not be amended. Often self-proclaimed Asset Protection experts get a form from some trust company and attempt to integrate all of the current estate planning technology into the trust. The problem is that this technology changes every time there is a change in the tax law, and the disposition scheme will change every time there is a death, birth or major (and sometimes minor) life change with family members. In my mind, it is not wise to have an Asset Protection Trust which needs to be amended...ever. Instead, it is better to have the Asset Protection Trust structured so that the disposition of protected assets is handled by whatever will or estate planning document the client is utilizing.

In short, a good plan should always integrate with whatever estate planning device or devices the client activates; however, the Asset Protection Plan should not contain the complex dispositive provisions which are guaranteed to change over time.

KEEP THE FOX OUT OF THE CHICKEN COOP

An issue which often comes up with Asset Protection Planning is what to do with the minor children if both parents are dead. Every couple confronts this issue. The typical solution is to choose some trustworthy person to take care of the kid or kids. This is always better than having the state do it for you. One big mistake is to think this “trusted” person can also be trusted with money. Never make this mistake. Why put your “trusted” caregiver into a conflict of interest? Instead, have a professional money person take care of the assets, and have a different person take care of the kids. This is almost always better and saves a lot of headache and heartache.

Next week I will review a few more common sense estate planning rules which you confront with almost every Asset Protection Plan.

Until then, I wish you a healthy and protected week.

Rob Lambert

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