Do a Google search for “online estate planning documents,” and you’ll find dozens of different websites. These sites let you complete and print out just about any kind of planning document you can think of—wills, trusts, healthcare directives, and/or power of attorneys—in just a matter of minutes. And the documents are typically quite inexpensive.

At first glance, such DIY planning documents might appear to be a quick and cheap way to finally cross estate planning off your bucket list. These forms may not be perfect, many consumers reason, but at least they’re better than having no plan at all.

However, relying on DIY planning documents can actually be worse than having no plan at all—and here’s why:

An inconvenient truth
Creating a plan using online documents, can give you a false sense of security—you think you’ve got planning covered, when you most probably do not. Relying on DIY planning documents is one of the most dangerous choices you can make. In the end, such generic forms could end up costing your family even more money and heartache than if you’d never gotten around to doing any planning at all.

At least with no plan at all, planning would likely remain at the front of your mind, where it rightfully belongs until it’s handled properly.

Planning to fail
Many people don’t realize that estate planning entails much more than just filling out template driven legal forms. These websites offer a one-size-fits-all solution to your unique situation, needs, and goals. Even worse, they provide no real guidance or counsel, which leads to a plan that misses the mark often—and the loved ones you were trying to protect will be the very ones forced to clean up the mess.

The whole purpose of estate planning is to keep your family out of court and out of conflict in the event of your death or incapacity. Yet, as cheap online estate planning services become more and more popular, millions of people are learning that taking the DIY route can not only fail to achieve this purpose, it can make the court cases and family conflicts far worse and more costly.

One size does not fit all
Online planning documents may appear to save you time and money, but keep in mind, just because you created “legal” documents doesn’t mean they will actually work when you need them. Indeed, if you read the fine print of most DIY planning websites, you’ll find numerous disclaimers pointing out that their documents are “no substitute” for the advice of a lawyer.

Some disclaimers warn that these documents are not even guaranteed to be “correct, complete, or up to date.” These facts should be a huge red flag, but it’s just one part of the problem.

Even if the forms are 100% correct and up-to-date, there are still many potential pitfalls which can cause the documents to not work as intended—or fail all together. And without an attorney to advise you, you won’t have any idea of what you should watch out for.

Estate planning is not a one-size-fits-all kind of deal. Even if you think your particular situation is simple, that turns out to almost never be the case. To demonstrate just how complicated the planning process can be, here are 4 common complications you’re likely to encounter with DIY plans.

1. Improper execution
To be considered legally valid, some planning documents must be executed (i.e. signed and witnessed or notarized) following very strict legal procedures. For example, California requires that you and every witness to your will must sign it in the presence of one another. If your DIY will doesn’t mention that (or you don’t read the fine print) and you fail to follow this procedure, the document can be worthless.

2. Not adhering to state law
State laws are also very specific about who can serve in certain roles like trustee, executor, financial power of attorney, and witnesses. Having an invalid person serving in an important role can cause your entire plan to fail.

3. Unforeseen conflict
Family dynamics are—to put it lightly—complex. This is particularly true for blended families, where spouses have children from previous relationships. A DIY service cannot help you consider all the potential areas where conflict might arise among your family members and help you plan to avoid it. When done right, the estate planning process is a huge opportunity to build new connections within your family.

4. Thinking a will is enough
Lots of people believe that creating a will is enough to handle all their planning needs. But this is rarely the case. A will, for example, does nothing in the event of your incapacity, for which you would also need a healthcare directive and/or a living will, plus a durable financial power of attorney.

Furthermore, because a will requires probate, it does nothing to keep your loved ones out of court upon your death. And if you have minor children, relying on a will alone could leave your kids vulnerable to being taken out of your home and into the care of strangers.

Don’t do it yourself
Given all these potential dangers, DIY estate plans are a disaster waiting to happen. And as we’ll see next week, perhaps the worst consequence of trying to handle estate planning on your own is the potentially tragic impact it can have on the people you love most of all—your children.

Dedicated to empowering your family, building your wealth and defining your legacy,

As we head towards the end of the year, we’re fast approaching the deadline to implement your family’s tax strategies for 2019. The Tax Cut and Jobs Act (TCJA) completely overhauled the tax code, and if you’ve yet to take full advantage of the benefits offered by the new tax law, now is the time to do so.

To qualify for some TCJA’ tax benefits, you’ll need to act by December 31, so don’t wait to get started. The following 4 tips could save your family big money on your 2019 tax bill.

1. Rethink itemization
Under the new tax law, itemizing your deductions might no longer make sense. That’s because the TCJA increased the standard deduction up to $12,200 for individuals and $24,400 for married couples filing jointly. So, if you’re filing a joint return, you need more than $24,400 in itemized deductions to make itemization worth it.

The law also places new limits on itemized deductions, including a $10,000 cap on property taxes, and the elimination of state and local income-tax deductions.

Given these changes, taking the standard deduction might be the best option, but other factors, such as your health expenses and charitable giving, could affect your decision, so consult with your CPA to make sure.

2. Maximize contributions to retirement accounts
By maximizing your contributions to tax-deferred retirement accounts like IRAs and 401(k)s, you can not only save for retirement, but also reduce your taxable income for 2019.
In 2019, you can contribute up to $6,000 to an IRA and up to $19,000 to a 401(k) if you’re under 50, and up to $7,000 to an IRA and $25,000 to a 401(k) for those 50 and older. If you can’t afford the maximum amount, try to contribute at least the amount matched by your employer, since that’s basically free money

You have until December 31, 2019 to contribute to a 401(k) plan and until April 15, 2020, to contribute to an IRA for the 2019 tax year.

3. Defer your income if you’ll make less next year
If you’re expecting to make significantly more income this year than in 2020, try to defer as much income into next year as possible. However, this strategy only makes sense if you’ll be in the same or a lower tax bracket next year.

This might mean asking your boss to delay paying a year-end bonus until after Jan. 1, 2020, or if you’re self-employed, waiting to invoice some clients until the new year. And whether you’re an employee or self-employed, you can also defer income by taking capital gains in 2020 instead of in 2019.

On the other hand, if you think you’ll be in a higher tax bracket in 2020, you may want to do the opposite and accelerate income into 2019 to take advantage of a lower tax bracket.

4. Save on the child tax credit
The child tax credit now offers up to $2,000 per qualifying dependent child. To qualify, your child must be 16 or younger at the end of 2019. The first $1,400 of the credit is refundable, so the credit could reduce your tax liability to zero, and you’d still receive a refund.

The cut-off for the tax credit is $400,000 for married couples filing jointly, and $200,000 for everyone else.

Take advantage of 2019 tax savings
Implementing these—and other—year-end tax-saving strategies could save your family thousands of dollars on your 2019 tax bill.  Don’t miss out!

Dedicated to empowering your family, building your wealth and defining your legacy,

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. 

If you’re planning to leave your children an inheritance of any amount, you likely want to do everything you can to protect what you leave behind from being lost or squandered.

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.

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
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.

In contrast, a Lifetime Asset Protection Trust gives the Trustee full discretion on whether to make distributions or not. The Trust leaves the decision of whether to release trust assets totally up to the Trustee. The Trustee has full authority to determine how and when the assets should be released based on the beneficiary’s needs and the circumstances going on in his or her life at the time.

For example, if your child was in the process of getting divorced or in the middle of a lawsuit, the Trustee would refuse to distribute any funds. Therefore, the Trust assets remain shielded from a future ex-spouse or a potential judgment creditor, should your child be ordered to pay damages resulting from a lawsuit.

What’s more, because the Trustee controls access to the inheritance, those assets are not only protected from outside threats like ex-spouses and creditors, but from your child’s own poor judgment, as well. For example, if your child develops a substance abuse or gambling problem, the Trustee could withhold distributions until he or she receives the appropriate treatment.

A lifetime of guidance and support
Given that distributions from a Lifetime Asset Protection Trust are 100% up to the Trustee, you may be concerned about the Trustee’s ability to know when to make distributions to your child and when to withhold them. Granting such power is vital for asset protection, but it also puts a lot of pressure on the Trustee, and you probably don’t want your named Trustee making these decisions in a vacuum.

To address this issue, you can write up guidelines to the Trustee, providing the Trustee with direction about how you’d like the trust assets to be used for your beneficiaries. This ensures the Trustee is aware of your values and wishes when making distributions, rather than simply guessing what you would’ve wanted, which often leads to problems down the road. 

In fact, many of our clients add guidelines describing how they’d choose to make distributions in up to 10 different scenarios. These scenarios might involve the purchase of a home, a wedding, the start of a business, and/or travel.

An educational opportunity
Beyond these benefits, a Lifetime Asset Protection Trust can also be set up to give your child hands-on experience managing financial matters, like investing, running a business, and charitable giving. And he or she will learn how to do these things with support from the Trustee you’ve chosen to guide them.

This is accomplished by adding provisions to the trust that allow your child to become a Co-Trustee at a predetermined age. Serving alongside the original Trustee, your child will have the opportunity to invest and manage the trust assets under the supervision and tutelage of a trusted mentor.

You can even allow your child to become Sole Trustee later in life, once he or she has gained enough experience and is ready to take full control. As Sole Trustee, your child would be able to resign and replace themselves with an independent trustee, if necessary, for continued asset protection.

Future generations
Regardless of whether or not your child becomes Co-Trustee or Sole Trustee, a Lifetime Asset Protection Trust gives you the opportunity to turn your child’s inheritance into a teaching tool.

Do you want to give your child the ability to leave trust assets to a surviving spouse or a charity upon their death? Or would you prefer that the assets are only distributed to his or her biological or adopted children? You might even want your child to create their own Lifetime Asset Protection Trust for their heirs.

Dedicated to empowering your family, building your wealth and defining your legacy,

As a parent, you’re likely hoping to leave your children an inheritance. But without taking the proper precautions, the wealth you pass on is at serious risk of being accidentally lost or squandered. In some instances, an inheritance can even wind up doing your kids more harm than good.

Creating a will or a revocable living trust offers some protection, but in most cases, you’ll be guided to distribute assets through your will or trust to your children at specific ages and stages, such as one-third at age 25, half the balance at 30, and the rest at 35.

If you’ve created estate planning documents, check to see if this is how your will or trust leaves assets to your children. If so, you may not have been told about another option that can give your children access, control, and airtight asset protection for whatever assets they inherit from you.

A Lifetime Asset Protection Trust safeguards the inheritance from being lost to common life events, such as divorce, serious illness, lawsuits, or even bankruptcy.

But that’s not all they do.

Indeed, the best part of these trusts is that they offer you—and your kids—the best of both worlds: airtight asset protection AND use and control of the inheritance. What’s more, you can even use the trust to incentivize your children to invest and grow their inheritance.

Not all trusts are created equal
Most lawyers will advise you to put the assets you’re leaving your kids in a revocable living trust—and this is the right move. But most lawyers would structure the trust to distribute those assets outright to your children at certain ages or stages.

And if you’ve used an online do-it-yourself will or trust-preparation service like LegalZoom®, Rocket Lawyer,® or any of the newer options frequently coming online now, you will most likely be offered only two options: outright distribution of the entire inheritance to your kids when you die, or partial distributions when they reach specific ages and stages as described above.

Either of those options leaves their inheritance—and your hard-earned and well-saved money—at risk. Indeed, once assets pass into your child’s name, all the protection previously offered by your trust disappears.

For example, say your son racked up debt while in college, which can sometimes happen. If he were to receive one-third of his inheritance at age 25, creditors could take his inheritance if it’s paid to him in an outright distribution.

The same thing would be true if your daughter gets a divorce after receiving her inheritance, only it would be her soon-to-be ex-spouse who would claim a right to the funds in a divorce settlement. And despite what you may have heard about an inheritance remaining separate property, once it’s in your child’s hands, outright and unprotected, those assets are at risk.

There’s just no way to foresee what the future has in store for your kids—these kind of events happen to families every day. And that’s not even taking into consideration that your kids might simply blow through the money and spend it all on unnecessary luxuries.

Airtight asset protection—and easy access
Lifetime Asset Protection Trusts are specifically designed to prevent your hard-earned assets from being wiped out by such risks. And at the same time, your children will still be able to use and invest the funds held in trust as needed.  

For example, even though the assets are held in trust, your kids would be able to invest those funds in things like stocks, a business, or real estate, provided they do so in the name of the trust. Plus, if your child needs to pull money out to pay for college, a new home, or medical bills, they can do that by asking a Trustee—who’s chosen by you to oversee the money—for a distribution.

Or, as will cover next week, you may even allow your child to become Sole Trustee at some point in the future, allowing him or her to make decisions about the trust’s management.

Dedicated to empowering your family, building your wealth and defining your legacy,

Whether it’s called “The Great Wealth Transfer,” “The Silver Tsunami,” or some other catchy-sounding name, it’s a fact that a tremendous amount of wealth will pass from aging Baby Boomers to younger generations in the next few decades. In fact, it’s said to be the largest transfer of intergenerational wealth in history.

Because no one knows exactly how long Boomers will live or how much money they’ll spend before they pass on, it’s impossible to accurately predict just how much wealth will be transferred. But studies suggest it’s somewhere between $30 and $50 trillion. Yes, that’s “trillion” with a “T.”

A blessing or a curse?
And while most are talking about the benefits this asset transfer might have for younger generations and the economy, few are talking about its potential negative ramifications. Yet there’s plenty of evidence suggesting that many people, especially younger generations, are woefully unprepared to handle such an inheritance. 

Indeed, an Ohio State University study found that one third of people who received an inheritance had a negative savings within two years of getting the money. Another study by The Williams Group found that intergenerational wealth transfers often become a source of tension and dispute among family members, and 70% of such transfers fail by the time they reach the second generation.

Whether you will be inheriting or passing on this wealth, it’s crucial to have a plan in place to reduce the potentially calamitous effects such transfers can lead to. Without proper estate planning, the money and other assets that get passed on can easily become more of a curse than a blessing.

Get proactive
There are several proactive measures you can take to help stave off the risks posed by the big wealth transfer. Beyond having a comprehensive estate plan, openly discussing your values and legacy with your loved ones can be key to ensuring your planning strategies work exactly as you intended. Here’s what we suggest:

Create a plan: If you haven’t created your estate plan yet—and far too many folks haven’t—it’s essential that you put a plan in place as soon as possible. It doesn’t matter how young you are or if you have a family yet, all adults over 18 should have some basic planning vehicles in place.

From there, be sure to regularly review your plan (and update it immediately after major life events like marriage, births, deaths, inheritances, and divorce) throughout your lifetime.

Discuss wealth with your family early and often: Don’t put off talking about wealth with your family until you’re in retirement or nearing death. Clearly communicate with your children and grandchildren what wealth means to you and how you’d like them to use the assets they inherit when you pass away. Make such discussions a regular event, so you can address different aspects of wealth and your family legacy as they grow and mature.

When discussing wealth with your family members, focus on the values you want to instill, rather than what and how much they can expect to inherit. Let them know what values are most important to you and try to mirror those values in your family life as much as possible. Whether it’s saving and investing, charitable giving, or community service, having your kids live your values while growing up is often the best way to ensure they carry them on once you’re gone.

Communicate your wealth’s purpose: Outside of clearly communicating your values, you should also discuss the specific purpose(s) you want your wealth to serve in your loved ones’ lives. You worked hard to build your family wealth, so you’ve more than earned the right to stipulate how it gets used and managed when you’re gone. Though you can create specific terms and conditions for your wealth’s future use in planning vehicles like a living trust, don’t make your loved ones wait until you’re dead to learn exactly how you want their inheritance used.

If you want your wealth to be used to fund your children’s college education, provide the down payment on their first home, or invested for their retirement, tell them so. By discussing such things while you’re still around, you can ensure your loved ones know exactly why you made the planning decisions you did. And doing so can greatly reduce future conflict and confusion about what your true wishes really are.

Secure your wealth, your legacy, and your family’s future
Regardless of how much or how little wealth you plan to pass on—or stand to inherit—it’s vital that you take steps to make sure that wealth is protected and put to the best use possible. A good plan should facilitate your ability to communicate your most treasured values, experiences, and stories with the ones you’re leaving behind so you can rest assured that the coming wealth transfer offers the maximum benefit for those you love most.

Dedicated to empowering your family, building your wealth and defining your legacy,

If you were to suddenly die today, would your loved ones know how to quickly find your estate planning documents? Would they know how to access all your financial accounts? How about your insurance policies? What about your login and password info to all of your digital assets?

One crucial part of estate planning that frequently gets overlooked is ensuring your loved ones can easily locate all your planning documents and other key assets upon your death or incapacity.

Don’t cause a logistical nightmare
Beyond burdening your loved ones with needless work and expense, if your planning documents, such as wills, prenuptial agreements, and insurance policies, can’t be located, it will be as if they never existed. The same goes for valuable assets like stocks, bank accounts, and other financial property no one knows about.

Given this, you should make sure someone you trust knows exactly where to find your planning documents – which should include an updated inventory of all your assets.

What to include in your planning binder or file
A little pre-planning and organization now can make things easier on your loved ones later.  Ensure you have updated copies (or the originals) of the following documents in one, easily accessible location:

  • An inventory of all your assets and their location
  • An advance healthcare directive
  • A will
  • Your living trust (if you have one)
  • Marriage or divorce certificate(s)
  • Instructions for your funeral and final disposition
  • Letters, cards, photos, and other treasured sentimentals
  • If you have minor children, a Child Protection Plan naming long and short-term guardians, along with detailed care instructions

Get your affairs in order—before it’s too late
Each family is unique, so this is just a baseline of what to include in your file. And because death or incapacity can happen to any of us at any time, don’t wait to get your affairs in order. Take steps now to give this gift to your family in the future.

Dedicated to empowering your family, building your wealth and defining your legacy,

If you’re like most people, you probably view estate planning as a burdensome necessity—just one more thing to check off life’s endless “to-do” list.

You may shop around and find a lawyer to create planning documents for you, or you might try creating your own DIY plan using online documents. Then, you’ll put those documents into a drawer, mentally check estate planning off your to-do list, and forget about them.

The problem is, your estate plan is not a one-and-done type of deal.

In fact, if it’s not regularly updated when your assets, family situation, and/or the laws change, your plan may be totally worthless when your family needs it. And believe it or not, failing to regularly update your plan can create its own unique set of problems that can leave your family worse off than if you’d never created a plan at all.

Keep your plan up to date
We recommend you review your plan at least every three years to make sure it’s up to date, and immediately amend your plan following events like divorce, deaths, births, and inheritances. We have built-in systems and processes to ensure your plan is regularly reviewed and updated, so you don’t need to worry about whether you’ve overlooked anything important as your life changes, the law changes, and your assets change.

You should also create (and regularly update) an inventory of all your assets, including digital assets like cryptocurrency, photos, videos, and social media accounts. This way, your family will know what you have and how to find it when something happens to you, and nothing you’ve worked so hard for will be lost to our state’s Department of Unclaimed Property.

We’ll not only help you create a comprehensive asset inventory, but we’ll make sure it stays up to date throughout your lifetime.

Properly title your trust assets
When you create a trust, it’s not enough to list the assets you want it to cover. You have to transfer the legal title of certain assets—real estate, bank accounts, securities, brokerage accounts—to the trust, known as “funding” the trust, in order for them to be disbursed properly.

While most lawyers will create a trust for you, few will ensure your assets are properly funded. We’ll not only make sure your assets are properly titled when you initially create your trust, we’ll also ensure that any new assets you acquire over the course of your life are inventoried and properly funded to your trust.

This will keep your assets from being lost, as well as prevent your family from being inadvertently forced into court because your plan was never fully completed.

Keep your family out of court and out of conflict
As your Personal Family Lawyer®, our planning services go far beyond simply creating documents and then never seeing you again. Indeed, we’ll develop a relationship with your family that lasts not only for your lifetime, but for the lifetime of your children and their children, if that’s your wish.

We’ll support you in not only creating a plan that keeps you family out of court and out of conflict in the event of your death or incapacity, but we’ll ensure your plan is regularly updated to make certain that it works and is there for your family when you cannot be. Contact us today to get started with a Family Estate Planning Session.

Dedicated to empowering your family, building your wealth and defining your legacy,

What if you could leave your wealth to your children knowing it would be protected, for the rest of their lives, from their own bad decisions as well as any malicious intent by outsiders? Well, you can.

There are proactive estate planning solutions designed to safeguard your adult children’s inheritance. And these planning protections aren’t just for the extraordinarily rich—even relatively modest amounts of wealth can be squandered or taken if not adequately protected.

Indeed, the planning strategies we describe here can safeguard your child’s inheritance from being depleted by events such as a divorce, a catastrophic medical expense, an at-fault accident, or even a simple mistake. You just never know what life has in store for your heirs, and our planning protections can ensure their inheritance is protected from practically all potential threats—even those you could never possibly imagine.
 
Big money can cause big problems
“Big” money is relative.  What might be a modest inheritance to a 50-year old could be an enormous windfall to an 18-year old.  And there are stories upon stories of heirs being negatively impacted by inheriting too much money at a young age. These cases occur quite often, and no matter how well adjusted your children or grandchildren may seem, there’s just no way to accurately predict how their inheritance will affect them.

One unique planning vehicle designed to prevent the potential perils of outright distributions is a Lifetime Asset Protection Trust (LAPT). These trusts last for the lifetime of their respective beneficiaries and provide them with a unique and priceless gift. With an LAPT, for instance, the beneficiary can use and invest the trust assets, yet at the same time, the trust offers airtight asset protection from unexpected life events, such as a lawsuit or serious debt, which have the potential to wipe out their inheritance.

Help your heirs handle their inheritance

When drafted properly, an LAPT can be used to educate your beneficiary on how to handle their inheritance. This is done by allowing the beneficiary to become a co-trustee with someone you’ve named at a specific age or stage of life, and then the beneficiary can become the sole trustee later in life, once he or she has been properly educated and is ready to take over.

The LAPT is discretionary, which means that the trust would not only protect your heir from outside threats, like creditors and ex-spouses, but also from their own mistakes. The trustee you name holds the trust’s assets upon your death. This gives the person you choose the power to distribute its assets to the beneficiary at their discretion, rather than requiring him or her to release the assets in more structured ways, such as in staggered distributions at certain ages.

Your direction and guidance are paramount
Many of our clients choose to provide guidelines directing the trustee on how the client would choose to make distributions in many different scenarios, such as for the purchase of a home, a wedding, the start of a business, and/or travel. Some clients choose to provide guidelines around how their successor trustees should make investment decisions, as well.

Meet with your Personal Family Attorney to see if a Lifetime Asset Protection Trust is the right option for protecting your family wealth and loved ones from situations and circumstances (no matter what they may be), which are simply impossible to foresee. Don’t have a Personal Family Attorney? Contact us today to get your questions answered.

Dedicated to empowering your family, building your wealth and defining your legacy,

Marc

If you’ve watched TV lately, you’ve likely seen ads selling reverse mortgages. A reverse mortgage can be a great tool to help you realize your dreams.  However, it is a very specific type of tool for a very specific type of situation.  If used incorrectly, it can cause a borrower to lose their home.  You owe it to yourself and your loved ones to learn the good, the bad, and the ugly of reverse mortgages.

How they work
A reverse mortgage is a loan which allows homeowners 62 and older to convert some of the equity they have in their primary residence into cash. The amount of equity required to obtain a reverse mortgage depends on your age. Younger borrowers need about 60% equity in their homes to qualify, while those over 80 may need just 45%.

Once approved, you can receive the money in one of three ways: as a lump sum, as monthly installments, or as a line of credit. Because you receive payments from the lender, your home’s equity decreases over time, while the loan balance gets larger, thus the term “reverse” mortgage.

With a reverse mortgage, you no longer have to make monthly mortgage payments, and you can stay in your home as long as you keep up with property taxes, pay insurance premiums, and keep the home in good repair. Lenders make money through origination fees, mortgage insurance, and interest on the loan balance, all of which can exceed $10,000 to $15,000.

Be aware, the reverse mortgage loan (plus interest and fees) becomes due and must be repaid in full when any of the following events occur:

  • Your death
  • You are out of the home for 12 consecutive months or more, such as in the case of needing nursing home care
  • You sell the home or transfer title
  • You default on the loan by failing to keep up with insurance premiums, property taxes, or by letting the home fall into disrepair

A still evolving industry
In 2011, the Consumer Financial Protection Bureau cracked down on some of the misleading advertising practices by lenders. All reverse mortgage advertisers are now required to disclose that the loans must be repaid after death or upon move-out. Additionally, advertisers can no longer claim the loans are a “government benefit” or “risk free.” 

In 2014, HUD developed new policies to better protect surviving spouses who were often being “left out in the cold” literally under the old rules. Now, if a married couple with one spouse under age 62 wants to take out a reverse mortgage, they may list the underage spouse as a “non-borrowing spouse” with rights to retain the home if the older spouse dies.

Despite these recent changes, however, the number of ads for reverse mortgages hasn’t declined and too many borrowers (and non-borrowing spouses) still end up going through foreclosure.  The industry continues to need to offer better protections for the elderly against unscrupulous reverse mortgage lending practices.

Dedicated to empowering your family, building your wealth and defining your legacy,

Marc

While most people assume only the uber wealthy need to worry about asset protection, those with less wealth and fewer assets may be at even greater risk. For example, if you’re a multi-millionaire, a $50,000 judgment against you might not be that big of a burden. But for a family with a modest income, home, and savings, it could be catastrophic.

Asset protection planning isn’t something you can put off until something happens. Like all planning, to be effective, you must have asset protection strategies in place well before you actually need them. Plus, your asset protection plan isn’t a one-and-done deal: It must be regularly updated to accommodate changes to your family structure and asset profile.

There are numerous planning strategies available for asset protection, but three of the most common include the following:

1. Insurance
Purchasing different forms of insurance—health, auto, watercraft, and homeowner’s—should always be the first line of defense to protect your assets. Whether you’re ultimately found at fault or not, if you’re ever sued, defending yourself in court can be extremely costly.

Insurance is designed not only to help you pay damages if a lawsuit against you is successful, but the insurance company is also responsible for hiring you a lawyer and paying his or her attorney’s fees to defend you in court, whether you lose or win. However, insurance policies come with various amounts of coverage, which can be exceeded by large judgments, so you should also seriously consider buying umbrella insurance.

Should your underlying insurance policy max out, an “umbrella” policy will help cover any remaining damages and legal expenses. We can help evaluate your current policies and ensure you have the right types and amounts of insurance for maximum asset protection.

2. Business entities
Owning a business can be an incredible wealth-generating asset for your family, but it can also be a serious liability. Indeed, without the proper protection, your personal assets are extremely vulnerable if your company ever runs into trouble. For example, if your business is currently a sole proprietorship or general partnership, you are personally liable for any debts or lawsuits incurred by your business.

Structuring your business as a limited liability company (LLC) or S corporation is typically the best way to go for many small businesses. When properly set up and maintained, both entities create an impenetrable barrier between your personal assets and your business activities. Creditors, clients, and other potentially litigious individuals can go after assets owned by your company, but not your personal assets.

If you own any kind of business, even just a side gig to earn extra income, you should seriously consider creating a protective entity to ensure any liabilities incurred by your company won’t affect your personal assets. We can help you select, put in place, and maintain the proper entity structure for your business operation.

3. Estate Planning
While each of the asset-protection scenarios shared above are “maybes,” there is one certainty in life—death. It’s going to happen to all of us. And your death, or an incapacity before it, is the biggest risk to your family’s assets. Planning in advance for what is certain to come is a gift to the people you love the most.

So, if you’ve been putting it off, now is the time to get it handled, and we’ve made it easy for you to do that.

You work way too hard to leave your assets at risk. Call us to schedule a Family Estate Planning Session, and let’s get this taken care of now. During your Session, you’ll become educated, informed, and empowered.

We don’t just draft documents; we ensure you make the very best legal decisions about life and death, for yourself and the people you love.

Dedicated to empowering your family, building your wealth and defining your legacy,