The Wolf is Always at the Door
I did something really cool this week and it turned out to be incredibly gratifying and it gave me a ton of peace of mind. What did I do? What did I do? Here’s what I did.
I met with a Financial Planner and got my financial future locked down so that if something should happen to me and/or my wife… my kids will be fine.
Here’s the thing, we’ve been planning on doing it for a while now and for whatever reason we kept putting it off, rescheduling it or just postponing the appointment.
I don’t know why, maybe because it’s kind of morbid to plan for “the end”. Maybe it was simply the hassle. Or maybe we just didn’t think we had enough stuff that it… mattered. I don’t know but this time we went. And it was us great.
We’re in our fifties and have been fortunate enough to amass some real estate, some stocks, some… stuff. So now that we have this stuff and because the wolf is always at the door we finally decided it’s time to… check the locks.
What’s that look like?
It was easy, we met with our Estate Planner (he’s really good) in his office and after the normal pleasantries he asked, “What are you wanting your estate plan to do for you?”
I’m sure he knew the answer, he’s a lawyer and the kind of guy who doesn’t ask questions if he doesn’t already know the answer. He asked because he wanted to determine if we knew what we wanted. Like I said, he’s good.
After some false starts we worked it down to we want three main areas of protection:
1. Protection against the IRS.
2. Protection against Bad Decisions and Unforeseen Outcomes.
3. Protection against Accidents, Creditors and Bad Actors.
Protection Against the IRS
This is the will. Without a will at best your stuff can get tied up in probate and even though it’s better than the alternative it still can be very stressful, time consuming and expensive for your heirs.
At worst, things can go really sideways. Without a will, the State steps in and determines who gets what and it may not be the Who’s and What’s you wanted. And, of course, it can take forever, be very stressful and really expensive.
The smart play? Be a smart beach investor (that’s right, I just worked the name of the podcast into the story ) and make things easy for your heirs… make a will.
Protection Against Bad Decisions and Unforeseen Outcomes
These get interesting fast. Let’s say you and your wife die in a tragic hang-gliding accident while vacationing in the Swiss Alps and your estate goes to your kid(s). Are your kid(s) mentally and emotionally equipped to handle your estate and the big financial windfall that comes with it?
After coming into money will little Johnny go out and buy a fancy sports car and a bunch of toys? Maybe finance a new hip nightclub even better… a skate park. That is cool if you want him to but not so cool if you don’t.
Maybe it makes sense to create a trust that leaves control of your stuff in the hands of a trusted relative, a friend or a paid professional with instructions to give young Johnny 33% when he turns 30? That way, if he’s not ready for the responsibility he only blows part of his inheritance.
Then maybe he gets another 33% when he turns 40. Hopefully by then he has a good grasp on things.
Finally, he gets the rest when he turns 50. If he hasn’t figured it out by then… you kind of got what you got.
Here’s another fun one. You die and your spouse gets all your stuff. Fair enough. Now let’s say he or she gets remarried so now your stuff is THEIR stuff. Let’s add this to the stew: your kids don’t get along with the new spouse. You with me here?
What happens when your spouse dies leaving someone you never knew with… your stuff? The kicker? The kicker?
This person who doesn’t get along with your kids (and maybe has kids of their own) cuts your kids off and doesn’t give them your stuff – in other words – the stuff you intended your kids to have! Is that cool?
The percentages, circumstances and instructions can change but you get the idea – be a smart beach investor and protect against bad decisions.
Protection Against Accidents, Creditors, and other Bad Actors
This is where you want to protect against accidents and sharks. Let’s say you, your kid, or one of your employees are nice enough to volunteer to drive four of your kid’s friends to the soccer tournament one weekend when things suddenly turn tragic and the car, they are driving goes out of control jumping the curb and crashing into a park where the law practice of Dewey, Cheatem and Howe are having their company picnic. Fortunately, no one is killed but several are injured, and the lawyers are… mad.
Do you see where this is going?
Be a smart beach investor and protect yourself against accidents, creditors, and bad actors.
Got It, Protect Your Stuff. How?
My wife and I set up a will to address the probate issue and then we set up a walls of protection around our assets, designed to keep creditors, the IRS and anyone else that may have eyes for our “stuff”… away.
We got LLC’s set up properly to protect us from the inside out (if someone slips and falls inside one of our investment properties it’s much harder for them to come after any of our stuff outside the LLC).
And we set up trusts to protect us from the outside in (if we are outside driving and get into an accident, it’s now much harder for someone to get our stuff that is inside our Trust(s)).
Then we made sure our insurance was tightened up for maximum protection and finally, we adjusted how some of our “stuff” is owned to max out the protection there.
Again, it’s very satisfying sitting here typing this newsletter knowing that my wife and I and our kids are secure when it comes to our estate. And that’s a very good thing.
Most People Aren’t
-The older you get the more likely you are to have a will and the more money you make the more likely you are to have one – that’s the good news. Still way too many folks do not have a formal plan for what happens to their “stuff” when they die. Caring.com did a survey of 2,500 Americans to determine who is engaging in estate planning and they found what many others have – most people (more than 50%) do not have a will or some kind of estate planning.
Horror Stories
The famous are renown for messes when they die.
Prince
The Purple Rain guy – had no will or trust when he died. Now a Minnesota judge is deciding how to distribute Prince’s estimated $300 million estate among six siblings. Other potential heirs have surfaced, too, including a federal inmate claiming to be Prince’s son. Clearly Prince had the money but for whatever reason didn’t do any estate planning.
James Gandolfini
The actor who played Tony Soprano was reportedly worth $70 million when he died in June 2013 of a heart attack in Rome. His will provided for his widow, daughter and two sisters (his son from his first marriage was provided for in other ways). But Gandolfini didn’t use proper tax planning. The result: The estate ended up paying federal and state estate taxes at a hefty rate of 55 percent.
Pablo Picasso
The famous artist – died in 1973 at the age of 91, leaving behind a fortune in assets that included artwork, five homes, cash, gold and bonds. Because Picasso died intestate and left no will, it took six years to settle his estate at a cost of $30 million. His assets were eventually divided up among six heirs.
Steve McNair
The NFL player Steve McNair had it all—fame, fortune, and a beautiful family. But when 36-year-old McNair was shot and killed by an alleged girlfriend, who is believed to have committed suicide after killing McNair, the truth came out—that he had, in fact, had a girlfriend, and he never bothered to create a will.
Act Now
As you can see, it doesn’t matter how old you are, how much money you have or if you think you have plenty of time – you never know what is going to happen. But you can know what will happen if you take some time and get your pan together of what is going to happen to your stuff when you die. And just as important protecting it while you are still here.
If you are in the group of folks that have a plan for your estate and you are protected against the IRS, against Bad Decisions, and against Accidents and Unforeseen Circumstances, and Bad Actors… good for you – keep up the good work. If you are not and you do not have a will and some sort of estate plan, I encourage you to meet with a professional that is trained to create a plan that works for you as soon as possible. Before something tragic happens.
I don’t know where to go.
If you don’t know where to go or how to find a good estate planner – send me a text or email and I will be happy to ask my guy for a reference. I sure between the three of us we can find you someone very good.
Note:
I am not an Accountant, a CPA, a Lawyer or an Estate Planner – I am just a guy that is in a position of having some stuff that I want to make sure is protected and that there is a plan for what happens to that stuff when I that is trying to provide some insight, perspective and advice based on my experience that hopefully will help you avoid any problems
Committed to your success,
John Moran – CEO
AT THE BEACH TEAM
Certified Luxury Home and Condo Marketing Specialists
Keller Williams Realty Emerald Coast