Family members can complicate a person’s estate plan, lawyer says | Company
Writing a good estate plan is mathematically easy. It’s the people involved who can make things difficult.
That’s why longtime estate planning attorney Samuel B. Ledwitz encourages you to talk about your entire family structure before deciding who gets what when you pass.
“We talk about the reality of this family and we respond to it,” said Ledwitz, president and managing partner of estate planning law firm The Law Firm of Bezaire, Ledwitz and Associates.
“That’s why cookie cutting doesn’t work. Each family is unique. You cannot create a single template for all families. »
And when discussing your family with your attorney, Ledwitz said, you really need to do some soul-searching and be honest about the people in your life who are most dear to you. It signifies their strengths, weaknesses and general realities.
“Your children are not all equal,” he said. “You can have a bad marriage. You may have special needs. You might end up giving money to a drug-addicted child. So the question becomes, did I help them with all that money, or did I hurt them by fueling an addiction? We need to look at money as a potential good and bad thing and see how it will work out.
There are a number of questions Ledwitz said he asks to understand your family structure before any major financial decisions are made.
“We talk about where your kids live, how do they act, do you have a good relationship with them, do they have a good relationship with each other,” he said. “No stone is left unturned. There are a lot of variables. It could be a perfect family or it could be more difficult than that. And that’s what we’re talking about.”
Since most families are far from perfect, Ledwitz said there are a number of things you can do in a proper estate plan to protect your assets as they pass to your family. heirs.
“Let’s say you have a child of any age,” he said. “Giving them that money when they turn 18 is usually a disaster. Statistically, they will be penniless at 19 or 20. So, we can create a spendthrift trust, where we can have a third party or a bank in charge of their money. This entity can distribute the money for, say, when the person turns 40 or whenever you think they will be mature enough.
What is a spendthrift trust?
“A spendthrift trust is when the money is blocked and a third party manages your money for the beneficiary,” he said. “The money will still be there year after year because a responsible party took care of it.”
Ledwitz added that spendthrift trusts can be used in other situations to protect everyone involved.
“If one of your children has a bad marriage, we could create another type of spendthrift trust to make sure your money doesn’t merge with the spouse of the child you don’t care about,” he said. -he declares. “If it’s a person with a disability, we can talk about a special needs trust to make sure they remain eligible for government assistance. Also, if we think we have someone with a drug problem, we can put drug testing language into the trust, it can last for life or until that person reaches a certain age.
There is another benefit of the spendthrift trust that can help your heirs down the road.
“It also protects if they are sued,” Ledwitz said. “Since the money is technically locked, it cannot be used as an asset against you, further protecting the money.”
Another situation that arises during the process is who will manage your estate when you die, he said. Assuming you have two or more children, this can become a very controversial topic, which is why Ledwitz said he always discusses this in detail with his clients.
“I always ask the person, ‘Which kid or which person of yours is better at handling money?'” Ledwitz said. “You can’t have two people making the decisions if they don’t get along. It’s not who you love the most. That’s who’s going to handle this in the most professional way. We still have a discussion about it.
And why is it good to have only one responsible person? Ledwitz gave this anecdote.
“It’s like two people driving a car with one steering wheel,” he said. “Unless they’re absolutely on the same page, we’re going to crash.”
There is another good reason to have one person in charge, he added.
“Having one person in charge also works for health decisions,” he said. “Let’s say you have two children, one lives in New York and the other here in California. It really should be the most geographically desirable person you choose to make those decisions.
While Ledwitz says he listens and lays out the best courses of action, he leaves the final decision on how to proceed to his clients.
“People tell me what they want to do and I tell them if I think it’s a good idea or not,” he said. “You have to say it in a nice way, but my job is to make sure their goals are achieved in the best possible way with the least amount of friction or fighting. I learned over time how to do this.
Additionally, Ledwitz said that while he realizes where assets go is a big priority, he believes in putting people first and really understanding their situation before moving forward.
“A lot of other lawyers want to know about your money and maybe how it’s invested,” he said. ” Yes it’s important. But the most important thing after your death is not the money. It’s the family structure. It’s about whether the family gets along, does it work.
Individuals wishing to discuss any aspect of an appropriate estate plan may call the law firm of Bezaire, Ledwitz and Associates at (626) 398-0100 or log on to www.SmartEstatePlans.com.