A note from Lee R. Phillips

You may be starting to see warnings about your estate planning in 2010.  The estate tax has been repealed.  All Right!!!  It is a great year to die.  NOT SO FAST.  Don’t kill yourself yet.  All is not what it seems to be.

First a little reassurance that what you have done using the LegaLees system is ok.  The warning says that under a lot of estate plans the surviving spouse (spouse that lives after the first one of the couple dies) can be left out in the cold.  That won’t happen with the living trusts and wills in the Accumulation and Preservation of Wealth set.  The warning is for wills and trusts that try to control estate taxes by passing all or part of the estate directly to the children, not the surviving spouse.

My goal is and always has been to protect the surviving spouse.  The trusts are set up so that a shelter trust is created which removes the maximum amount that the deceased spouse could pass to the children without an estate tax (the “exemption equivalent” as the amount is called in the legal industry).  That amount changes.  It has been going up for the last decade, from $1 million to $3.5 million last year.  So if a couple had $4 million in assets and the husband died in 2009, a trust (Trust B) would have been created to “shelter” $3.5 million from estate taxes when the wife died.  This whole thing is explained in detail in my book, Guaranteed Millionaire.  It is a great read (not a boring financial book). (more…)

By Kristy Phillips

This is the Phillips family “off year” for Thanksgiving; our family is going to be spread across the country at the in-laws. Our oldest son is spending the day with us. I love Thanksgiving because I have so much to be grateful for. My family tops the list. I have three great kids. Ten years ago as I saw my children growing up and leaving the home I wished that I could freeze time. Well it didn’t happen, but honestly I can’t imagine life without our two cute daughter-in-laws, our son-in-law and our six wonderful grandchildren.

I have heard other grandparents muse that they wish they could have skipped the kids and gone right to the grand kids. Grandkids really are that much fun. There is a certain déjà vu about seeing your grandkids do something their parent did that is indescribable. I am around the grandkids enough to hear so many cute things they say and do. My heart melts. I don’t suppose my feelings are much different than most of yours. The peace of mind that comes from taking care of your estate and planning for emergencies so you can protect your family is one of the biggest reasons I can think of to get your will and trust in place. If you haven’t taken steps to put your affairs in order set a goal to get it done so you can enjoy the holidays.

Here are some more great questions from some of my students.

Q. I have a home with equity of $400,000. Should this be in a trust?

A. No matter the value of your home, holding it in a trust will let you avoid probate and if you have the correct trust, let you avoid estate taxes. Guaranteed Millionaire will explain this in detail.

Q. I am interested in protecting my dad’s assets from a woman he is not 100% sure of. I would appreciate any information you can give me on transferring the assets into my name (only child) and giving him a life estate.

A. You asked if I had any info on transferring your dad’s assets into your name and giving him a life estate. Yes, you can have your dad transfer the property into your name with a life estate, but you will probably get better tax treatment if you inherit the property, because you will get a step-up in the basis of his property at his death. You may be able to accomplish the same thing by having him form a trust. That way he still “owns” his property, but he can tell his girlfriend it is in trust for you.

Q. I owe $100,000 in credit card debt. How do I protect myself and my wife from having our bank accounts attached or having a lien put on our real estate holdings?

A. You asked how to protect yourself from the $100,000 you owe the bank in credit card debt. Unfortunately the time to protect yourself is before you get in trouble. Property that is transferred in anticipation of bankruptcy or litigation will be brought back by the court using fraudulent conveyance statutes. You remember how the court brought back the property Bernie Madoff transferred? If you have three years before everything caves in, then you will want to get Accumulation and Preservation of Wealth and structure your assets accordingly.

Q. How do I protect an estate from being scammed by probate lawyers?

A. Unfortunately, I know where you are coming from, because I have seen this happen in my own family. In Guaranteed Millionaire, I write about my wife’s uncle who flew his plane into the ground and how the lawyers litigated the estate until the money ran out leaving the children penniless. The best way to avoid that type of lawyer is to avoid probate. Having a trust is not enough. A trust will only avoid probate if it is properly funded and used. Guaranteed Millionaire discusses how to fund your trust.

Q. I want to put all my assets (home, vehicles, etc.) into one entity name where that entity is owned/controlled by myself and my children and thus cannot be divided by death, divorce or otherwise. Thus all assets belong to the entity. How do we do that?

A. Unfortunately, I don’t know why you want to move all your assets, so it is hard to advise you what entity to use. There really isn’t anything that can do what I think you want to do. You will own the entity, whichever one you use, and as one of your assets, it will be subject to all the issues any other property you own is exposed to. You will want to use a trust to avoid probate and probably an LLC to hold assets. I discuss and describe the different entities and how to use them in Accumulation and Preservation of Wealth. (more…)