RJP Estate Planning

Robin Williams Set Up a Trust: What About You?

Robin Williams was many things — a genius comedian, an Academy Award winning actor and generous philanthropist. He was also a father. Early reports suggest that he also tried to protect his children from the hazards of "affluenza" often seen when children receive a massive inheritance at one time, when they are potentially too young to manage it.

Early reports indicated that Robin Williams created a trust to control the distribution of assets to his children. His children, 22-year-old Cody, 25-year-old Zelda, and 31-year-old Zachary each were reported to receive money in incremental stages, not all at once. At age 21 they each would receive one-third of their share; at 25 they would receive half of what remains; and when they reach age 30, they each would receive the remainder of their full share.

Now, it is being said that these trusts are not currently part of his estate planning. But the trust talk begs the question: how much should you give to your heirs in trust and when should you give it?

According to a recent MarketWatch article, titled "Robin Williams got it right on kids’ trust," he looks to have done a great job as a father and put a lot of effort into his estate planning. Williams thought about what amount of money was appropriate for his children and when his children should receive the funds. The trusts reportedly were not dependent on his passing, and he made efforts to create and fund the trusts before his death.

Some people choose, as Williams did, to distribute their wealth to their adult children while they are still alive. MarketWatch explains that a big plus of doing this is that you can assist your children in their financial decisions, which can be very satisfying as a parent.

The original article cautions that if you leave assets to your children outright at your death, you risk handing a large amount of money to a person who might not be ready to handle it. That can spell disaster. Trusts are a great idea as an alternative because parents can establish criteria for the disbursement of the funds. In addition, trusts offer some tax benefits and asset protection.

Williams decided to distribute the funds to his children in three stages when they attained specific ages, which is a common method. Trust terms, which govern how the funds are given to heirs while the assets are in trust, can differ based on the circumstances and the objectives of the creator of the trust.

A qualified estate planning attorney can walk you through creating a trust that will be appropriate for you and your loved ones. Make an appointment with an attorney today.

Reference: MarketWatch (August 14, 2014) "Robin Williams got it right on kids’ trust"

For more information on how to put together a proper estate plan contact us at 480-947-7447 or www.rjpestateplanning.com

A Planning "Must Do" For New Parents

There are countless things to consider and evaluate when you are going to become parents. In addition to all of the new furniture purchases, college planning, budget changes, and baby-proofing, there are two very important things that new parents need to review – their life insurance and estate plan.

A recent article in The Kansas City Star, titled "Money Matters: Two things that new parents should not put off...but usually do," lists several items that new parents should consider when examining their life insurance.

Childcare. If one spouse is no longer in the picture, odds are the surviving spouse is going to have to work outside of the home to keep paying the bills. Childcare can take a big bite out of your take-home pay.

Mortgage and Other Monthly Debt. This category can make or break many household budgets. The mortgage and regular monthly bills come due the same time every month without fail. The original article suggests that you purchase at least enough life insurance to satisfy the balance of the mortgage if one parent passes away.

College Tuition: Even if college is a long way off, the sooner you start saving, the better. Some parents carry enough life insurance to pay the full cost of four years of college for each of their children. Some parents also might have private school expenses before college kicks in.

In addition to these categories, The Kansas City Star also discusses income replacement and the importance of creating a will. A will is the most important thing you can do to ensure that your child has the care he or she needs in the event you are incapacitated or pass away suddenly.

Life insurance, your children's future, and planning for your own passing are heady subjects that few want to tackle. Nonetheless, it is essential you do so. Speak with your estate planning attorney and create a strategy that will make a big difference for your family’s future.

Reference: The Kansas City Star (August 14, 2014) "Money Matters: Two things that new parents should not put off...but usually do"

 

For more information on how to put together a proper estate plan contact us at 480-947-7447 or www.rjpestateplanning.com

Johnny Football Doesn't Look To Be An All-Pro Planner … Yet

Jonathan Paul Manziel got paid. The most talked-about quarterback in college football since Tim Tebow recently signed a four-year contract with the Cleveland Browns. According to an official press release by the National Football Association, insiders believe that the rookie from Texas A&M will earn $8.3 on his first NFL contract. Just a few weeks before becoming a millionaire, however, Manziel was named as a defendant in a bizarre federal lawsuit that could have been avoided with the right planning.

The case was filed by a federal inmate known to file baseless civil actions using the names of people in the news and entertainment industries. Here he used the name of a CNN reporter. The claim said that Manziel had sexually harassed the plaintiff by posting inappropriate pictures on Instagram.

The Cleveland Browns flamboyant rookie quarterback has been making news, much of the time for his off-the-field behavior, and for being sued in some crazy suits. In addition, tabloid reporters follow Manziel from nightclubs to casinos to pool parties. A recent insurancenews.net article titled "Heisman Trophy Winner and NFL Rookie Quarterback Needs an Estate Planning Playbook Opines?" explains that he appears "to enjoy football, beautiful women, nightlife, and money, and not necessarily in that order." This could be a problem. The way Johnny Football is running around Vegas and spending his money—as well as defending all of the goofy lawsuits—it is possible he could have money problems down the road.

The original article also reports that 78% of NFL players experience some form of financial hardship, even though they earn millions of dollars every year. Worse yet, many of these players will one day file for bankruptcy.

When you have an $8 million payday, it is not surprising that you gain numerous friends. These people will be looking for their own paydays. The best play Johnny can call, even if he does ride the bench for a while, is to speak to an estate planning attorney now so that he can begin to game plan his asset protection right away. One “player” in this type of strategy is an irrevocable trust. This will give him outstanding pocket protection against blitzing sham plaintiffs, gold diggers, hangers-on, and other unsavory linebacker-types who are looking to sack him and get his money.

If Johnny places his NFL income into an irrevocable trust, he would in effect be blocking access to his money from others. When the assets are in an irrevocable trust, they do not belong to Johnny—they belong to the trust, and the trustee is in charge of the books. An irrevocable trust would allow him to be paid out of the trust so that he can maintain the lifestyle to which he has so quickly become accustomed: pool parties, blackjack, and pompom girls. An irrevocable trust would keep him in check so that he is not scrambling for cash when he is 40.

Note: Irrevocable trusts can be extremely complex, especially when asset protection is the goal. Be sure you work with an estate planning attorney with considerable experience both with irrevocable trusts and asset protection planning.

Reference: insurancenews.net (August 14, 2014) "Heisman Trophy Winner and NFL Rookie Quarterback Needs an Estate Planning Playbook Opines?"

For more information on how to put together a proper estate plan contact us at 480-947-7447 or www.rjpestateplanning.com

Am I Too Young To Plan My Estate?

After what sometimes seems like endless years spent raising a child, their adulthood—and all the rights that go with it—may creep up suddenly. And much as you hope you’ve prepared them to take care of themselves, you may still be their fallback for emergencies. Getting the necessary authority to play that role can be a rite of passage and a learning experience for both parent and child.

Take a look at these two fundamental estate planning documents – the durable power of attorney and the health care proxy. Even though they are usually thought of as only for older adults and seniors, younger people need them just as much. If a young adult does not have these, typically parents will not have the authority to make health care decisions or manage money for their kids after they are 18. It does not matter if they pay their college tuition, include them on their health insurance, and claim them as dependents on their taxes. In fact, without these fundamental documents, parents might need to seek court approval to act on behalf of their young adult children in the event the children are in an accident and become disabled.

A recent Forbes article, titled "Two Documents Every 18-Year-Old Should Sign," states that accidents are the number one cause of death for young adults. In addition, a quarter-million Americans between ages 18 and 25 are hospitalized with non-lethal injuries annually. With those numbers, it pays to have the documents in order so that you can help take care of your young adult child.

A health care proxy, also known as a "health care agent" or "health care power of attorney," permits another individual to decide medical issues on your behalf. In addition, this document also allows the agent to access your medical records. The companion to this is a living will. This document lets you state your desires for your end-of-life care.

A parent is typically designated to be authorized for medical and legal matters, but in some cases it may be another family member, such as an aunt or older sibling. Either way, you should designate an alternate in case your child’s first choice is unable or unwilling to serve when needed.

It can also be extremely beneficial to have a signed power of attorney when your son or daughter travels abroad, too. In the event some happens overseas, the power of attorney can help you cut through some of the red tape in a foreign country.

Hopefully your son or daughter understands the significance of having these documents. If not, perhaps you delegate this “conversation” to your estate planning attorney. He or she can draft a back-to-school package, speak to both of you, and explain the documents. Paying for this consultation may turn out to be an excellent investment.

Reference: Forbes (August 15, 2014) "Two Documents Every 18-Year-Old Should Sign"

For more information on how to put together a proper estate plan contact us at 480-947-7447 or www.rjpestateplanning.com

 

 

Save Your Results … Now!

In life as in computing, a little planning now prevents a lot of pain down the road. Goodbyes are never easy, particularly if the relationship was a cherished one. Such was the case for me and my beloved hard drive. Its capacity for capturing great conversations, thoughts, and images felt irreplaceable. My heart sank as the computer technician conducted its last rites. But thanks to technological advances, a mirror image of my hard drive’s legacy resided only a download away. The online backup reduced my anxiety and helped me resume my daily activities. Preparing for the inevitable allowed me and my hard drive to appreciate our time together and live life with no residual regrets.

A recent Time article, titled "How Writing a Will Is Like Backing Up Your Hard Drive," asks why most of us do not devote the same energy to our estate planning as we do to our PCs. To make sure our computers work effectively, we conduct updates, check for viruses, and clean up unwanted material. Being unorganized only leads to trouble and added expense. Making our loved ones deal with unorganized financial affairs and estates only creates more stress and adds to the grief.

In one way, if you do not back up your PC's hard drive or do not have an estate plan, you are not alone. However, that really is not good news. Just because a lot of people flunk the final exam does not make the conversation with your parents any easier. So too, in estate planning—being unorganized only makes more work for your family and your estate planning attorney. On top of that there will be more expenses involved.

As noted in the original article, a 2012 survey found that 41% of Baby Boomers and 71% of people age 34 and younger do not have wills. That is truly a failing grade.

Taking the steps necessary to get your estate plan organized is well worth the effort, both to you now and to your loved ones after you pass away. Working with your estate planning attorney to draft your will requires you to designate responsible and trust-worthy people who are able to settle your estate (executors), care for your minor children (guardians), and manage any of the trusts (trustees) you start for the benefit of others. While you are at it, make sure you have an up-to-date list of your financial assets and liabilities. Nowadays, this also includes your online accounts and passwords. Your estate plan should also have a durable power of attorney, durable power of attorney for health care, and a living will.

So start today: Back-up the PC hard drive, check for viruses, and call your estate planning attorney to get organized!

Reference: Time (August 18, 2014) "How Writing a Will Is Like Backing Up Your Hard Drive"

For more information on how to put together your estate plan call RJP Estate Planning at 480-947-7447 or visit us at www.rjpestateplanning.com