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How to Leave Your Assets to YOUR People – Not Uncle Sam

So… this happens more often than you’d think. You make – or inherit – money. Then when you pass on, you assume (assuming is dangerous, by the way) that your estate is going to magically be divided exactly how you want it to be. 

But – if you didn’t create an estate plan, there’s NO magic (and that will be tragic). The State of California will decide everything for you…. after a very long and often very expensive wait. 

How can you keep that from happening? With an estate plan. Hear me out…

Estate plans protect your estate.

Shout your wishes from the (legal) rooftops, because if you die without an estate plan, California has its own ideas as to what happens to your money and property. The state’s plan doesn’t know you, your desires, or wants. It’s pretty much the same plan for everyone (take a number, get in line) – and almost guaranteed – your assets won’t be divided the way you think they should be.

Want Fido to be taken care of? Better put that in writing, fur parent. In fact, you can spell out everything you want to happen with your estate (including Fido) when you make a plan. A family trust is that kind of plan. 

A properly funded trust is your treasure map – ahoy, mate – keeping you on course to avoid the costly, time-consuming, and public court process known as probate. Probate is no joke. A trust spells out exactly what should happen to the money and property owned by the trust. The trust instructions break down who will receive the money and property, how much the person will receive, and when they will receive it. Simple. Straightforward. No BS.

And here’s a twist for you to think about: How about creating a discretionary trust for your beneficiaries, to protect the money and property that you leave them? Discretionary trusts put a trustee (of your choosing – but not Fido) in charge of the trust. That trustee uses their discretion to determine when and how much money and property to give to your heirs. 

The good news is that because your heirs are then not guaranteed a specific amount of money or a particular piece of property, the funds are better protected from any of your heirs’ future creditors or former spouses. By picking someone you trust to run your trust (yep, it’s even perfectly named), you can make sure your heirs are taken care of the way you want, without jeopardizing the wealth you’ve built. 

In addition to a legal document like a trust agreement, you’ll be able to write a personal note to your loved ones without worrying about legaleze (which most people don’t speak). You can explain your goals and wishes in your own words, so you’ll be heard loud and clear. This can help stop family infighting by explaining why the money and property are being divided and distributed the way they are, describing how you want multiple generations to benefit, and giving instructions on how your heirs can preserve their inheritance (don’t spend it all in one place, family). 

What the heck are lifetime gifts?

Even though it may sound a little weird to give money to someone who is not – shall we say – financially savvy, lifetime gifts can help them learn how to best use the money… while you’re still around to show them. We see it a lot. Heirs squander their inheritance because they don’t know how to manage their money. If you’re concerned about your wealth lasting for future generations, think about tax exempt lifetime gifts.

Ready – set – start!

Taking care of multiple generations through your financial and estate plans is a great legacy to leave behind, but you have to make sure it’s done properly so you can avoid probate. First, meet with your professional advisors.

  • Here at Sapere Law, we will help you communicate your wishes and instructions in a legally enforceable document (we do all the legalese for you).
  • Your financial planner can show you how to structure your finances so your wealth can grow for future generations.
  • Your tax pro can advise you on the short- and long-term tax consequences of any financial or estate plan you’re thinking about or have already drawn up. 
  • And depending on the type of estate planning strategy you use, your insurance professional can help protect your assets with the right insurance.

Now, it’s time to think about having an honest conversation with your family. Talking about death and money is never –  ever – easy, and it can stir up many different emotions… that’s for sure. To have your wishes carried out smoothly, your family should be let in on your plans ahead of time. If they know and understand your plans, it’ll be easier for them to honor your wishes. In the end, that’s what you want. 

It’s time to create an estate plan to protect your wealth now and for future generations. We know the pitfalls, and we help you avoid them (and the dreaded probate). 

We’ve got your (and Fido’s) back.