Your estate plan must safeguard your children, who are counting on you to ensure that they will always be taken care of by the people you want, in a way you want, no matter what happens.
At Sky Unlimited Legal Advisory, we are very passionate about planning for the well-being and care of the children you love. Over the years, we have developed an expertise for advance planning for the care of children in the event of the death of one or both parents. Without this advance legal planning, unthinkable events can (and do) take place:
Ø Your children could be placed into the care of the California Department of Social Services ... even if you have a will in place ... and even if you have a living trust! (Likely this circumstance would be temporary, but you never want your children in the care of strangers - not even for a minute.)
Ø Your children could be put into the custody and care of someone you would never choose, like the one family member who may have good intentions, but you don't want raising your kids!
Ø A judge, who doesn't know you or your family, will decide who will raise your kids, even if it is the last person you would ever want.
Ø A long and nasty custody fight could ensure or there might be a challenge to the guardians you have designated.
Ø Up to 5% of the value of your gross assets could be lost to court costs and other unnecessary fees through the probate process that can tie up your assets for years and deprive your kids of the resources they need.
Ø Unscrupulous people can take advantage of children when they turn 18 and get a check for whatever assets are left.
With advance legal planning, these problems and more can be avoided. A majority of estate planning attorneys do not address these issues. They do not plan from a parent's perspective and they do not have the expertise to do a comprehensive job.
Yes, these occurrences scare us, too! That is why we offer a Kids Protection Plan® with every estate plan we do for families with minor children.
Our Kids Protection Plan® includes a specific set of instructions, legal documents, and an ID card for your wallet. If you are in an accident, your Kids Protection Plan will help to make sure your children are never taken into the custody of Child Protective Services or anyone else you would not want. These clear instructions inform the Police and ensure your children will be raised by people you have selected.
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Yet many of us put more effort into planning for our vacations than we do to prepare for a time when we may no longer earn an income.
Whether you’ve put off planning for retirement altogether or failed to create a truly comprehensive plan, you’re putting yourself at risk for a future of poverty, penny pinching, and dependence. The stakes could hardly be higher.
When preparing for your final years, it’s not enough to simply hope for the best. You should treat retirement planning as if your life depended on it—because it does. To this end, even well thought-out plans can contain fatal flaws you might not be aware of until it’s too late.
Have you committed any of the following three deadly sins of retirement planning?
1. Not having an actual plan
Even if you’ve been diligent about saving for retirement, without a detailed, goal-oriented plan, you’ll have no clear idea whether your savings strategies are working adequately or not. And such plans aren’t just about calculating a retirement savings number, funding your 401(k), and then setting things on auto-pilot.
Once you know how much you’ll need for retirement, you have to plan for exactly how you’ll accumulate that money and monitor your success. The plan should include clear-cut methods for increasing income, reducing spending, maximizing tax savings, and managing investments when and where needed.
What’s more, you should regularly review and update your asset allocation, investment performance, and savings goals to ensure you’re still on track to hit your target figure. With each new decade of your life (at least), you should adjust your savings strategies to match the specific needs of your new income level and age. The plan should also take into consideration unforeseen contingencies, such as downturns in the economy, health emergencies, layoffs, and inflation.
Failing to plan, as they say, is planning to fail.
In fact, earning big money is often even more possible when in your “growing up” years because most people are a lot more willing (and able) to take risks before they get bogged down with the “realities” of life.
While the old adage of “a penny saved is a penny earned” is applicable when you are talking about slowly growing a nest egg, incremental saving is usually an impractical route to millionaire status.
Many self-made millionaires in their 30s maintain that working smart and working hard can bring you from just making ends meet to a 7-figure income in as little as a decade. Focusing on these steps at any age can set you on the path to riches quickly.
Expand Your Earnings
Think big. Working a typical 9-5 schedule likely won’t make you a millionaire. Find ways to boost your income. Get creative and consider ways to make money on the side, start to create passive income streams, and start a business.
Many self-made millionaires have several streams of earned income, “passive” income and investment income. Multiple income streams can get you on the fast track to 7-figure status.
Invest Your Money
Saving is important, but it won’t launch you into millionaire status by your 40s. Elon Musk, famed tech billionaire, invested all his proceeds from his sale of Zip2 (which was the basis for PayPal). Instead of spending the money or putting it in savings, Musk, then just in his late-20s, invested every penny back into his next business ventures and even had to borrow money to pay his rent.
Musk’s strategy of investing rather than spending is tried and tested. Grant Cardone, another self-made millionaire, recalls he was still driving a Toyota Camry when he made his first million because he was putting everything he made back into his businesses.
An agent is someone you designate to handle your estate after you’ve gone or who can make decisions for you if you cannot make them for yourself. Here are the kinds of agents everyone needs:
An executor is the person you designate to carry out your wishes for distributing your assets as listed in your last will and testament. You can choose a family member, a trusted friend or even a professional to fill this role.
If you and your spouse die before your children reach adulthood, a guardian is the person you designate to take care of your minor children as well as handle their finances. Sometimes people decide to split the roles – one guardian to raise the children and another to handle the finances. Choosing a guardian (as well as a backup in case your first choice cannot serve) ensures your kids are taken care of by the people you know, love and trust, no matter what. One of the best ways to protect your children is to have a comprehensive Kids Protection Plan®. Without it, your children are at risk of being taken into the care of strangers if the people you've named as permanent guardians don't live nearby or if your legal documents cannot be located.
In the first part of this series, we discussed a unique planning tool known as a Lifetime Asset Protection Trust. Here we explain the benefits of these trusts in further detail.
While most lawyers will advise you to distribute the assets you’re leaving to your kids outright at specific ages and stages, based on when you think they will be mature enough to handle an inheritance, there is a much better choice for safeguarding your family wealth.
A Lifetime Asset Protection Trust is a unique estate planning vehicle that’s specifically designed to protect your children’s inheritance from unfortunate life events such as divorce, debt, illness, and accidents. At the same time, you can give your children the ability to access and invest their inheritance, while retaining airtight asset protection for their entire lives.
Last week, we discussed how Lifetime Asset Protection Trusts differ from the standard way that most revocable living trusts and wills distribute assets to beneficiaries. Today, we’ll look at the Trustee’s role in the process and how these unique trusts can teach your kids to manage and grow their inheritance, so it can support your children to become wealth creators and enrich future generations.
Total discretion for the Trustee offers airtight asset protection
As mentioned last week, most trusts require the Trustee to distribute assets to beneficiaries in a structured way, such as at certain ages or stages. Other times, a Trustee is required to distribute assets only for specific purposes, such as for the beneficiary’s “health, education, maintenance, and support,” also known as the “HEMS” standard.
We referenced this planning tool in the context of how it could have protected Clare Bronfman, the heiress to the multi-billion-dollar Seagram’s fortune, who was manipulated into blowing much of her $200 million inheritance by financing the cult-like group known as Nxivm.
Yet Clare’s case was quite extreme in terms of both the amount of her inheritance and the circumstances that wiped out her wealth. Though an LAPT would have almost undoubtedly protected both her and her family’s fortune, this planning vehicle can benefit families with far less wealth than Clare’s—and offer asset protection from far less outlandish threats.
Indeed, LAPTs are primarily designed to protect your loved ones and their inheritance from much more common threats, such as divorce, serious debt, devastating illness, and unfortunate accidents. At the same time, LAPTs can provide your heirs with a unique educational opportunity in which they gain valuable experience in managing and growing their inheritance while enjoying airtight asset protection.
To demonstrate how LAPTs can provide protection to families of all asset profiles, here we’ll describe another true story involving a tragic—yet much more relatable—life scenario. While the following events are entirely true, the individual’s name has been changed for privacy protection.
The flooded penthouse
Eric was staying at a friend's apartment in New York City. The apartment was the penthouse of the building, and Eric decided to run himself a bath. While the bath was running, another friend called and invited Eric to go out with him, which he did.
At about 2 a.m., Eric came back to the apartment and discovered he made a huge mistake and left the bath running when he left the apartment. The resulting flood caused more than $400,000 in damage to the apartment and the one below it.
While there was insurance to cover the damage, the insurance company sued Eric for what's known as "subrogation,” meaning the company sought to collect the $400,000 they paid out to repair the damage Eric caused to the property.