Challenges to wills and trusts are more common than you might think.

These disputes can turn very ugly, very quickly. Resentment between family members can last a lifetime, and the financial consequences can be devastating for all parties involved. Here are several ways to prevent potential disputes from arising in the first place, avoid estate litigation, and help ensure your wishes are carried out.

(Photo Credit: wpcsd.k12.ny.us)

Try to treat siblings as equally as possible
Granted, in some family situations this may seem easier said than done. However, the principle is sound and can help avoid a number of potential problems. If you have two children, leave each of them the same amount. However, the “equality principle” doesn’t just apply to money. There is also the issue of control. If one of your children seems better able to manage money and you name him or her as executor of the estate (or trustee of the trust), the other child will likely feel slighted. Naming a corporate executor or trustee can nip this thorny issue in the bud. Another potential problem is when inheritances are left to grandchildren, and one sibling has more grandchildren than the other. However,

if you follow the equality principle, many conflicts can be avoided.

Never underestimate the emotional value of certain family heirlooms and other tangible property
That vase in the foyer or old sofa in the living room might not seem valuable to you, but to certain members of your family it could hold special meaning and value. A statement in a will or trust that essentially says ‘tangible personal property should be divided as my heirs see fit’ can lead to a host of conflicts. By putting specific items that you believe are of interest to certain family members in writing, and discussing these decisions in advance, many emotionally charged disputes can be avoided.

If you gave money to one heir in the past, don’t forget about it your plan
Let’s say that several years ago you gave one of your sons $20,000 to help with the down payment on a home. Since your goal is to treat all of your children equally, you might want to address this gift in your will or trust. For example, it can be classified as an advancement, with the $20,000 counting as part of the money you ultimately leave to that particular son.

Consider putting a no contest clause in your will
If you suspect that one of your children, or his or her spouse, might make trouble over your will, a no contest clause can help avoid potential problems. In essence, this clause makes the risk of challenging your will outweigh the potential benefit of doing so.

A no contest clause typically stipulates that if a beneficiary contests the will’s validity its provisions, his or interest in the will is forfeited. Of course, you have to leave the heir in question enough of an inheritance to motivate him or her not to challenge the will.

Prove that you are of sound mind
This might sound “crazy,” but it’s not. Challenges to wills often involve allegations that the maker of the will (the testator) was not of sound mind when the will was signed. This tactic is particularly common when changes have been made to the will shortly before the testator’s death. You can help prevent this type of challenge by obtaining an evaluation from a treating physician and a psychiatrist right before you sign or make changes to your will.

If you are going to disinherit someone, make sure it is noted clearly in your will
Our children can and sometimes do disappoint us. Sadly, the level of disappointment may be so severe, the behavior so egregious, that the only solution seems to be disinheriting the son, daughter, or grandchild entirely. If you find yourself in this situation, make sure your decision is noted in your will. You don’t want to give a reason for your decision, as this could become the foundation for a potential lawsuit. However, you need to make it clear that your decision was intentional.

Depending on who you talk to, your estate planning specialist might recommend wills over trusts or trusts over wills. Let’s walk through some of the differences between these two planning tools to see if one might be a better fit for your needs.

(Photo Credit: blogs.dallasobserver.com)

If you are planning to use a will as your primary tool, bear in mind that your assets must first go through the probate process in order to be eventually received by your beneficiaries. Some states have lengthy and cumbersome probate processes, meaning that it could take your beneficiaries a while to actually receive the assets. Probate is also very public, meaning that details about your financial situation will be shared in a less-private forum. If you’re concerned about this, a trust might be a better option.

In comparison, trusts tend to pass by the court system for the majority of the administrative process. Since these are privacy documents, there’s less public scrutiny into your finances or your plans, and some clients prefer this confidential approach. Unlike wills, which become active on your death, a trust can be rendered effective immediately. Additionally, trusts can also be used for incapacity planning, adding another layer to their usefulness.

Both wills and trusts can do tax planning for credit shelter trusts. The bottom line is that it depends on your needs. If you are not concerned about the red tape of the probate process, there are still advantages (especially regarding privacy) for the establishment of a trust. We work with clients to create a customized plan for you since we recognize that each client is unique. To talk more about the kinds of trusts we can help you establish or to begin generation of your will, contact us today at 732-521-9455 or through e-mail at info@lawesq.net

Security breaches seem to be on the rise. Target’s customer data breach impacted 110 million Americans and the Neiman Marcus breach affected 40 million, and it seems like we are hearing about new breaches every few weeks. Staying ahead of the curve is critical for those in the hospitality industry, and hoteliers have an excellent opportunity to consider their own risk reduction and planning tools in the wake of security breaches across other industries.

(Photo Credit: http://en.wikipedia.org/wiki/Target_Corporation)

Hotels are major targets for financial and identity theft. Since all hotels work through credit and debit cards on file, this already exposes a lot of risk for private customer information. Those credit cards can be accessed and digitally “swiped” any number of times during a guest’s hotel stay- whether it’s at the bar, ordering room service, or for a spa charge. Every swipe opens the door for identity theft without the hotel’s knowledge.

One common gaping hole for hoteliers is unsecured wireless internet. While a hotel owner may think he or she is doing the right thing by providing free and easy access, an unsecured network really poses a big threat. Hackers can more easily access your network and programs in order to steal information and records from your service.

There are a few steps hoteliers can take to beef up security. Restricting access to data and collection of data is one way to protect customer privacy. Critical identifying information should be stored securely and a database should be created about under which computers and servers various information is kept. Encryption is one easy way that hotels can store information safely, reducing the risk of guest identity or financial theft. This is a great opportunity to review your existing procedures and policies to determine the risks.

If you’d like to talk more about how planning can help you prevent problems & how asset protection planning can help you to shield your assets from such liabilities, contact us at 732-521-9455 or info@lawesq.net today.

Today’s high net worth individuals are deeply sensitive to the risks they face with state income taxes. Since state income taxes can be such a burden for a wealthy person, more individuals are transferring billions of dollars’ worth of assets to trusts in states without tax, like Alaska, Nevada, and Delaware.

While these moves are currently quite legal, they are getting attention from officials in places like New York. New York officials have recognized a $150 million a year loss from avoiding taxes using out of state trusts. Wise wealth planners are clued in to these kinds of strategies, recognizing that many clients are concerned about the negative hit their assets will take when subject to such taxes. Wealth planners report that more clients are asking for assistance in protecting their money wherever possible, and out of state trusts are proving to be a vibrant market with many opportunities.

(Photo Credit: localsmile.com)

Although these transfers are happening at the individual level, they seem to mirror corporation behavior, too. Companies like Google have moved across national borders in order to cut down on the high taxes they are forced to pay if they stay in the U.S. Likewise, some people who want to sell their companies move shares out of home states and into out-of-state trusts to protect gains from state income taxes.

Estate attorneys that are in the know look at every aspect of a client’s portfolio to find the best ways to promote growth and protect from risk. Any client with a substantial portfolio might want to consider this strategy to cut down on the high state taxes that would otherwise be paid. Clients have been successful and satisfied with moving assets across the spectrum from several hundred thousand all the way up to hundreds of millions.

Nevada and Delaware have been engaged in a decades-long battle to get business from wealthy Americans through trusts. Part of the strategy for getting this business is by writing laws that make it simpler to transfer property across several generations and reduce the risk that assets will be attacked by creditors. As a result, Nevada has no state income tax and Delaware doesn’t place a tax on any out-of-state beneficiaries.

One of the most popular strategies is to use a Non-Grantor Trust, known as NING (Nevada Non-Grantor Trust) and DING (Delaware Non-Grantor Trust). Wealthy individuals who live in high-tax states can make the best of friendly policies in other states without the fear of violating any state or federal laws. In fact, a growing number of individuals are moving the assets just far enough outside their control so that they aren’t responsible for state income tax while also protecting them from being hit with a 40 percent gift tax. Most of these trusts are private, so there’s no clear data yet about just how many people are taking advantage of these incredible trust opportunities, but planners and attorneys are both reporting higher numbers of clients getting on board.

Owning and operating your own business is an exciting venture, but it can present you with challenges when you are unwilling or unable to continue managing the business. If you are considering passing the company on to your children or grandchildren, make sure you put some time into the planning process so that the transition is as smooth as possible.

(Photo Credit: Darlingonlinemarketing.com)

Start Early

The best recommendation for succession planning is to start five years in advance of when you might need an exit strategy. Many people make the mistake of assuming that they will only need to consider this need later in life. With rising numbers of people impacted by a disability, succession planning is something you should consider early. Getting the planning done well in advance gives you room to alter your plan if needed. Throughout this process, keep your family members engaged in the conversation so that relevant individuals understand their role.

Consider Options

While you have many options as a business owner, you should consider the talent of your children and grandchildren in order to decide how they might fit into the bigger picture. It’s critical that you are realistic about this decision. While it’s important for whoever takes over for you to have the passion and interest in running the business, you should also evaluate business skill and potential in making your decision. If you have several children, it may not be feasible for them to each own an equal portion of the company. In this circumstance, you should plan to transfer the whole business to a child who wants to follow you as the owner. Other assets can then be transferred to other children. This may be the most effective move for your business and future family harmony, too.

Plan For Existing Employees

Unless you are the sole person managing a company, it’s likely you have a team behind you. Make sure you have considered what will happen to these employees after you go as well. Will then be incorporated into the transition phase? Are there key employees who could help your children understand the big picture and smaller operational issues as well? Remember that in the event of a major disruption in a company such as the departure of a longtime leader, key employees may not want to stay. Having a conversation with them about your succession plans, as well as providing incentives for them to stay, may be in your best interest. Keeping valuable and knowledgeable employees on the team after you leave will make the transition easier for all and is less likely to cause financial issues for your business.

Train and Document

Once you have decided the best approach for your planning, train those individuals that will play a role at the time of your departure. Keep them clued in to vital issues. Remember that it’s much easier to update your succession planning once it has been documented. Working with an experience estate planning attorney will give you confidence and peace of mind about your decision.

Software or online programs to help you plan your estate are popping up everywhere, but that doesn’t mean they are the best choice for your needs. Many of these programs lead you to believe that generating your will is easier than it truly is. Heirs might find out too late that your self-created will doesn’t really match up with your state laws or even your own intent.

  (Photo Credit: rightscale.com)

When it comes to estate planning, intent is everything. Too often, the wishes of an individual don’t come across clearly in self-generated wills. Many modern court cases have focused on the determination of the testator’s intent, but judges are hesitant to cross certain lines to clear up confusion. As a result, your heirs may discover that your wishes aren’t carried out as you planned at all. Simply put, doing your will on your own can have big consequences.

Consider the Estate of George Zeevering. Last fall, a Pennsylvania appellate court was evaluating an unclear DIY will. Since the testator had not worked with a lawyer to generate the document, which was incomplete, it was difficult to determine the true intentions of Mr. Zeevering. In one aspect of the case, property had already been titled in the names of a son and a decedent as joint tenants. Mr. Zeevering stated that “the failure of this will to provide any distribution” to his daughters was done on purpose.

The case got sticky when the residuary and residuary estate totaled over $200,000 after debt payments were made. There was no provision within the DIY will for what should happen to those assets. In the end, the court determined that when a will doesn’t provide for the disposal of an entire estate and fails to include a residuary clause, the residuary estate must be divided under intestacy laws.

This case is but one example of where estate planning on your own can go wrong. Although it may not have been Mr. Zeevering’s intention to distribute the remainder of his estate under intestacy laws, that’s what happened. Despite his wishes, the law overrides an incomplete or improper will. While online and computer programs argue that wills and estate planning documents are easily done on your own, that minimizes the true complexity of document generation and estate laws.

Estate planning can be very complicated for an individual but it’s easily done under the guidance of an estate planning attorney. An added benefit of using a legal professional “in the know” is that he or she is clued into state and federal laws about estate planning, which always have the potential to change. An estate planning attorney is an excellent resource for all your questions as well as giving you the peace of mind that your estate will be carried out in the manner you wish. Cutting corners with a do it yourself tool is your choice, but do so at your own risk. If you want the assurance of totality and legality, contact an estate planning professional today.

Captive insurance companies are private insurers that are owned by a parent company. Although a captive insurance company has some of the same benefits of a regular insurance company, captives collect the premiums that a company would have paid over to a regular insurer while taking the responsibility for any claims against the parent company. Captive insurance companies are uniquely situated for certain situations.

(Photo Credit: saveourpostoffice.com)

Manage Risk and Protect Assets

Many businesses have particular needs for risk management because the risk it outside the typical market. In that case, insurance either can’t be purchased or the price is so high that the company is forced to self-insure. In still other cases, the business might have insurance for some risks, but that comes at a cost of premiums and deductibles. This is just the type of risk that sits well with a captive insurance company. Typical general liability insurance seems like a “coverall”, but in reality there are so many exclusions that a business still stands exposed to high risk. That’s where insurance from a captive company can help by filling in the gaps from those exclusions.

Every dollar spent by the company and sent to the captive serves as a $1 reduction in operating business assets. In the event that the business collapses, the company is not at risk of losing those dollars that have been transferred out of company property and over to the captive insurance company. Captive insurance companies are known for accumulating high amounts of assets through reserves and surplus. In certain disaster situations, some of those funds may be available for a business owner. Although a business owner might face some tax consequences of doing so, you can think of those funds as an emergency fund that could be there if you need it. It’s an extra layer of protection that can give a business owner peace of mind.

Exert More Control

Captive insurance companies typically create customized policies for the needs of each specific business. Unlike many commercial policies, policies through captives have the added benefit of drafting the policy in a manner that makes it virtually impossible for third-party claims against the business from being approved. The individualized nature of policies means that protection is aligned directly with business needs rather than generally accepted amounts and terms.

Going through a commercial carrier has another downside: you give up the option to select your own attorney. Defense counsel connected with insurance companies often handle large volumes of cases, taking away that personalized attention for your case. The fact that these counsel handle upwards of 200 cases each year from referrals also calls into question whether that attorney is looking out for your best interests- or the hand that feeds them. Since insurance companies that hire counsel are budget-minded, you also don’t know the quality of attorney you’ll be receiving through the appointment process. With captive insurance carriers, business owners control the captive and therefore maintain control over selection of an attorney.

From a business owner perspective, these few advantages represent big benefits. Guard yourself against risks, protect existing and growing assets, and exercise more control over how things are handle by working with a captive.

If you or someone you know is planning a wedding anytime soon, there are many things to consider. One of the most important of which is finances. You must discuss money with your future spouse, even if doesn’t sound romantic.

(Photo credit: Wikipedia)

Talking about finances is at least as important as discussing the reception or honeymoon. Maybe more important.

Talking about finances — budgets, insurance, savings and so forth — could be critical to ensuring a happy marriage, says a story on cnbc.com.

Setting a specific time to sit down and talk about how you want to organize your finances after marriage is key. Will you have joint checking accounts or separate ones? Who is going to manage the money and pay the bills? These are just some of the questions that must be asked.

It is also critical to set a budget and put your expenses and financial goals down on paper. It is important that each partner be okay with the other’s spending habits.

If there are disagreements, the couple may want to obtain the advice of a marriage counselor or financial advisor.

Other areas to discuss are life insurance ( a “must” for most couples, according to the article); debt, if there is any;  disability insurance; homeowners insurance; health insurance; and an estate plan, or at least a plan to designate beneficiaries in case of one’s death.