◊ What does Estate Planning for High-Net-Worth People look like?

            High-net-worth individuals and couples have specialized Estate Planning needs. In addition to all the usual reasons to have an Estate Plan, high-net-worth people have unique tax considerations and asset protection needs.  Following the letter of the law so as to minimize the amount of your assets that will go to the government when you pass is an obvious priority.  In our litigious society, asset protection is another obvious priority for those whose assets may tend to make them a target.  Specialized tools and strategies are available for ownership and protection of assets for high-net-worth people.  Similarly, careful Estate Planning can reduce the tax bill your heirs will face, and help you pass as much of your estate as possible on to them.

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◊ What About the Children?

            What happens in a worst-case scenario when you—or both of you—can’t be there to take care of your children any longer?  Many parents who’ve thought about this have someone in mind they hope would step in to take care of their children—usually a relative, be it Grandparents, or a brother or sister.  That relationship—taking care of someone’s children when they can’t—is called “Guardian.”  Some folks may have even spoken with the person they would like to see as Guardian to make sure they would be willing to do it.  That’s important.  Even more important is putting that choice in writing in your Trust when you have your Estate Plan drafted.

            In that worst-case scenario, you want a written record of exactly who you want to take care of your children.  A lot of people could go to court and tell the judge they should be the one to take care of your children—and this happens, especially where money is involved.  Some of those people telling the court they want to take care of your children may not even be your second or third choice.  What is going to persuade the judge?  Your wishes, written down, in your Trust, signed, dated and notarized.  Of course, the Trust can take care of making sure the assets in your Estate are there to help your children.  But a properly drafted Trust can also take care of making sure the court knows who you think is the best choice to provide the care and affection that, in a worst-case scenario, you can’t be there to give your children. 

            Estate Planning is about peace of mind.  You can’t control everything.  But with a good Estate Plan, you can be sure the important decisions have already been made.

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            ◊ Estate Planning Terms

[These are technical legal terms with very precise definitions that change depending on the circumstances.  The following is only a general introduction to a very few of the ideas for purposes of understanding Estate Planning basics. It is not legal advice.]

            What is a Will?  A will is a written document that leaves instructions about what you want done with your property—money, real estate and possessions—after you pass.

            What is a Trust?  Ownership of property has to change after the person who owns it passes.  If you don't have a will, or if your estate is worth more than $184,500 in California, your heirs will have to go through Probate to change the title to your property.  In Probate, a judge enters an order that transfers the property of someone who passed away to its new owners.  A Trust can also transfer the property to its new owners--without having to go through probate.  A Trust can do this because it is a legal document which separates the control and the ownership of property.  Done properly, you can still control the property, can still have all the benefit of the property, but the Trust will be the technical legal owner.  The Trust can then transfer the property to your heirs without having to go through Probate.  And even though the Trust will be the technical legal owner, you will be protected because you can change or revoke the Trust any time you want.  There are other ways to transfer property, especially for smaller estates, and Keith Denny, APC will be happy to consult with you about those.

            What is an Advance Health Care Directive?  An Advance Health Care Directive is a legal document in which you can specify who you want to make health care decisions for you if you become unable to do so.  It also gives you a chance to say whether you want to be kept alive using “heroic means,” for example, feeding tubes and the like.  Similarly, it gives you a chance to say how hard you want medical professionals to try and revive you.

            What is a Springing Power of Attorney?   A Power of Attorney is a legal document that gives someone the ability to manage your affairs, sign documents on your behalf—in the eyes of the law, that person becomes you.  A Springing Power of Attorney is one that does not come into effect until a certain event.  Before that event, it does not have any effect.  In Estate Planning, that event is incapacity—and when it happens the Power of Attorney “springs” into effect.  It can be a handy Estate Planning Tool because it is usually the same person as your Trustee, and allows them to take care of anything that wasn’t in the Trust, as well as any other issues that come up.