Estate planning involves making sure you are protected in the event of incapacity. However, it also involves the passing of wealth from one generation to the next. If not done correctly, there is a chance that wealth can be lost. When I meet with clients, we talk about how the transfer of wealth and assets will occur. You don’t have to be rich to engage in estate planning. As I often tell folks, “The less you have, the more you have to lose.” Here are some common issues I’ve seen over the years.
1. Parents give outright distributions of inheritance to children who are knowingly irresponsible when it comes to handling money. Once that child inherits, they burn through the money. If not them, then others influence them to spend it foolishly.
2. People who are facing bankruptcy or other creditor trouble and then inherit money can easily find themselves taking that inheritance and giving it to the creditors. Did you really work that hard over the years so your child’s creditors can inherit your estate?
3. Some children inherit money then put that money in a common account. During a divorce a year or so later, their ex-spouse takes half the inheritance! Again, did you work that hard to finance your ex-daughter-in-law or son-in-law?
4. I’ve seen many clients put clients on title to their house or other real estate. By doing so, they’ve added a bull’s-eye to that asset. Remember, anything with the child’s name on it is fair game for a creditor, lawsuit, or ex-spouse. There are other ways to make sure your real estate gets to your children without exposing yourself to these issues.
5. Clients with children who have substance abuse problems can find their family’s wealth squandered on drugs, alcohol and other vices.
These are just some quick examples of how wealth can be lost within a short period of time. There are legal tools that can be used to minimize the risks of such loss. Remember, wealthy people are not wealthy by mistake. They plan ahead. Shouldn’t you?
If you wish to discuss your estate-planning situation, please feel free to contact my office at 661-414-7100 or visit www.MansourLaw.com. I also practice personal injury law. To learn more about that, visit www.ValenciaLawyer.com.