Myths and Mistakes of Estate Planning for Business Owners, II
In part I of this series, I discussed two of the most common myths and mistakes around estate planning, should you be brave enough to venture into this process. My goal, again, is to help steer you past these myths and mistakes, like a tour guide of unknown territory. Here are a few more to avoid in order to end up with your desired results.
Mistake: Using your corporate or real estate attorney for this process
Lawyers, like doctors can be highly specialized. If my general doctor notices an issue, typically he will refer me to a specialist to ensure the best outcome. Lawyers should be used in the same manner. Do not use a general practitioner attorney to do your trust and estate documents. This is a very specific area of the law that has seen some very large and complex changes in the last five years. If you care enough to start this process, use the proper professional. The wrong lawyer for the job, and the documents they create on your behalf, will cause havoc at your death or unforeseen event and will cost $100,000's to fix.
Myth: Estate planning is for the wealthy
While it is true that the wealthy can benefit greatly from estate planning, it is not for the reasons you assume. Estate planning has always been a tax discussion but really the affluent have used this process for some other very valuable consequences, such as distribution designations to keep family peace, charitable intentions, or asset protection from frivolous marriages, lawsuits or spendthrifts. People with net worth under $10,000,000 can use the estate planning process for the same reasons, as well as to mitigate taxes should out tax landscape change as it has many times in the last years.
Mistake: Selecting the wrong trustee
Selecting a trustee can be challenging, especially if more than one person has to agree on the selected parties. It is large, overwhelming and common mistake when the business owner selects just one trustee over an asset. Yup just one trustee. How many movies, stories family histories can be told about the person everyone trusted being the one person to betray it all? It is a story as old as humanity itself. Please, if you go to the trouble to set up a trust select at least two trustees and some back up replacements. If that is too challenging, cough up the money for a fiduciary or corporate trustee that has some accountability and liability.