Trust and Estate Strategies

Max Osbon - May 30, 2018

Trust and Estate Strategies: Boring or not, they’re worth your time


However unpleasant or dull the idea might seem, the trust and estate planning process is the true backbone of your family’s wealth. What happens after you’re no longer around to make family wealth decisions will either be based on your clearly documented instructions or the decisions of a judge. Shouldn’t you be the one to decide what happens? Here are some trust and estate items that should not be left to chance.

Illiquid assets

Stakes in private investments are hard to value and even harder to sell and are often the family’s most important and interesting assets. Forced liquidations through probate or divorce are a painful reality for many wealthy families who don’t have proper plans in place. It’s not at all surprising that there is a sizable and profitable market for buying distressed assets that end up in court proceedings. Don’t end up being someone else’s lunch; consider in advance how tricky assets will be distributed.

The family game plan – Guardianship

Who will care for your children if you die? Without a plan for guardianship for younger kids, the probate court – without knowing you, your children or your wishes – will decide for you. Designating guardians and forming family trusts bypasses the court processes and saves your loved ones from the additional emotional and financial grind of the court system. In many states, Massachusetts included, parents can even name a guardian for situations where they are living but become incapacitated.

Should all heirs receive the same inheritance? Maybe not. Consider using a Pot Trust to distribute assets to the next generation based on need rather than a simple equal division. A 25 year old with a steady job has fewer financial needs than a younger 17 year old sibling who is headed for an expensive university program.

Details within details. Where is your primary care physician?

Anyone who has ever worked and lived in different states (NY and MA in particular) knows that state governments aggressively compete for your tax dollars. States go so far as to do their own research to find evidence of residence. Cover your bases. Make it clear where you live and where you should be taxed. Where are you registered to vote? Where does most of your mail go? What state issued your driver’s license? Where do you attend church? Where is your primary care physician? Small details. Big difference.

When marriages don’t last

Divorce rates in the US are 40-50%. That means millions of couples dividing up assets each year. It can be messy. Prenuptial agreements can help, especially when illiquid assets and debt must be divided. Trusts can shelter these assets from nasty surprises and prevent ex-spouses from ending up as unintentional shareholders or board members of your family’s company. If you feel your children should have pre-nups, it may be easier for them if you dictate your prenuptial ideas and standards to them directly and even shoulder some of the blame and awkwardness that may arise when they discuss the topic with their fiancé.

Don’t have the time?

Trust and estate preparations can be complicated and time-intensive. If you can’t tackle it all right away, then at the very least you and your family members should fill out a health care proxy form (Massachusetts .pdf) to appoint a health care agent. Massachusetts doesn’t assume that family members have the right to make medical decisions on your behalf. You can find more information on health care proxies here.

We’re here to help

This stuff is a burden, but you’ll feel true relief when you have all your plans in order. We’re here to help. Ask us for initial guidance on your trust and estate process. It’s a good idea to refresh your wills and trusts every five years or so, especially as your net worth continues to grow and your world continues to evolve.

– Max Osbon

 

 

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