12 Wealth Threats - new free report released

This week we released the new report I drafted. This report outlines 12 threats to a family's wealth and steps you can take to avoid them. Download the free report by clicking below:

12 Wealth Threats You Must Know About and How to Avoid Them

By David Otis Edwards, Estate Planning and Asset Protection Attorney

Truth about Estate Planning Workshop

Starting in October., our Truth about Estate Planning Workshop is the best first step for anyone who wants to explore planning options. Learn about the pitfalls to a successful plan and understand whether you need to give more attention to your planning. Anyone who already has a will or trust (that may need updating) as well as someone with no plan at all will find this workshop to be just the thing to get them started thinking about options. This workshop is done informally, with a maximum of 12 people per session, and leaves plenty of time for questions.

Thursday, Oct. 1
1:30 to 3 pm

Tuesday, Oct. 6
4:30 to 6 pm

Monday, Oct. 12
9 to 10:30 am

Friday, Oct. 30
1:30 to 3 pm

Thursday, Nov. 5
9 to 10:30 am

Tuesday, Nov. 10
4:30 to 6 pm

Thursday, Nov. 19
1:30 to 3 pm

All workshops are held in the Community Room at Edwards Group LLC, 4340 Acer Grove, Springfield, Illinois. RSVP required. Space limited. Contact Lynn Hanson, Client Coordinator at 217-726-9200 or lynn@edwardsgroupllc.com.

Example of topics covered: how to protect your family's wealth from threats of probate expenses, taxes, nursing home costs, lawsuits, divorces; how to protect your independence as you face aging and disability; common mistakes made in leaving an inheritance; why your will or living trust may not do what you think it does.

Please, not another blog about Michael Jackson

There are 2 kinds of people in the world. Some can't get enough of the Michael Jackson saga. Others are complaining about how all the real news in the world is being drowned out by old Michael videos and talking heads analyzing his dysfunctional family. If you're in the 2nd group, my apologies. But below is more about Michael and his estate planning.

Also, if you want another interesting take on Michael's estate plan, check out the blog post of my colleague Victor Medina - "Michael Jackson's Estate Plan - What He Did Right!"

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MICHAEL JACKSON: Part Two

1. Don't you want to avoid confusion? With Michael, there was a time period where it wasn't clear whether he had a Will or not. In fact, his mom went to court and told the judge there was not a Will and asked that she be given power as the administrator. Now things change once the Will is presented to the court. Good planning will avoid this limbo period where people are wondering if there is a Will and where it is. Good planning will make sure that the right people know how to quickly get their hands on legal documents that you have prepared.

2. Who is a good choice as guardian of your kids? Michael's mom is 79 years old. His youngest child is 7. If I have my math right, she will be 90 years old when he gets out of high school. Is she the best option as guardian? Under Illinois law, do you know who is qualified to raise your kids? Anyone over 18 who is not a felon but is U.S. citizen. So from that pool or people, the judge has to pick someone who is in the best interest of the child. In Illinois, the court will lean strongly toward following the parent's wishes in naming a guardian, but is not absolutely required to name the guardian you list in your Will. If you properly name a guardian in writing, then your choice has "prima facie" validity. This means that the court presumes that your guardian choice is best, but the court may approve someone else if evidence shows that is better.

3. What about the other parent? The mother of 2 of Michael's kids, Debbie Rowe, is to have nothing to do with them, according to his family at a press conference. She was not named as a guardian. I am assuming that she gave up all her parental rights because (in Illinois) the other surviving parent will continue to be the child's guardian, regardless of what the Will said, unless their parental rights had already been terminated.

4. No planning = 18 year old with money. I assume that Michael's trust provides for his children and gives instructions about how their money will be managed and when and how they can spend it or take control over it. But, if he had no plan or they couldn't find the documents, then the law (at least in Illinois), is that kids get their money at age 18. Would your 18 year old high school senior be ready to receive your wealth (home, retirement plan, life insurance, etc.)?

5. Don't be distracted by the big numbers. Don't get caught in the trap that only rich people like Michael need to do estate planning. We should just call it "planning" and get rid of the term estate. Every person, regardless of their wealth or family situation, should do some kind of planning for when they are disabled or pass away. Good planning to make things easier, better, cheaper, smoother, quicker - for you now and your family later. Even doing nothing is a plan in itself.

6. End up like Elvis? Part 1. Michael was afraid he would end up dying young like Elvis. Hopefully Michael's estate won't end up like Elvis. When Elvis died, his estate was worth about $10 million, but by the time expenses, taxes, lawyers, and probate fees were all paid, there was less than $3 million left.

7. End up like Elvis? Part 2. Despite Elvis' lack of planning for his death, his family has done very well with the family business. A few years ago, the family sold most of their Elvis rights for $100 million. From being worth $3 million to over $100 million in 30 years. Not bad. I say do both - set up good planning that handles your estate properly now, but also sets up your family for greater success later. Elvis's family overcame bad initial planning to successfully grow the family wealth. Don't make your family have to overcome that obstacle.

Wealth Transfer or Wealth Reception - Part #2 - The College Years

I went to U of I in Champaign-Urbana. Both undergrad and law school. A lot has changed since I left law school in 1995. Many new buildings, and tuition has gone way up. Do you know how much it will cost now for 4 years of undergrad, including tuition, books, room and board, etc.? Somewhere around $100,000.


Suppose your kid is ready to head to college this fall. He gets all his stuff packed, buys that little fridge, picks out a shower caddy thing, and is ready to head off to college. The day comes where you pack up the mini-van and head to Champaign. You help carry all the stuff into the dorm, give him a hug, tell him to behave himself. Then you pull out your checkbook and say "Well, since we know it's going to cost you about $100,000 to get through the next 4 years, I thought I would go ahead and give it to you now." So you write out that check, hand it over, get in the car and drive back home.


Assuming you had $100,000 sitting around that was earmarked for your child's college, would you do it this way? Would you hand the entire amount over on the first day he moves in to the dorm? No? You wouldn't do that? Why on earth not?


Well, I guess there could be a few "complications".

1. He might not spend it wisely. You know, parties or a new car or who knows what? Then runs out of money before he gets the degree.

2. He might be taken advantage of. If word got out that he had a big wad of money just handed to him, do you think he would have any new "friends" that might be interested in hanging out? I'm sure there would be plenty of kids willing to help him make some financial decisions.

3. He might be less motivated to work hard. Hey, you're only young once. Doesn't it make sense to have some fun with a little of that money now? He figures he can always get a job during his last year or two of college to make up the difference.

4. What if he gets in trouble? Maybe gets in a car wreck and gets sued? Or gets in with the wrong crowd and makes a bad decision that leads to property damage or criminal charges?

5. He isn't emotionally ready to handle that kind of money. You just handed him $100,000, even though he's never had more than $500 in discretionary money to himself before now.

6. What if his plans change? Maybe he flunks out, changes his major, takes a semester off, or drops out of school to start a band? Are you expecting to get change back on your $100,000 if he doesn't finish with a degree?

7. He might fall in love. Yes, love can do strange things to someone's financial decisions.



WEALTH RECEPTION?


Well, I guess you realize that people die all the time leaving assets to their kids. And those kids may not be any more ready to receive it than your college student was to receive that $100,000 right now.

Let's say something happens to you tomorrow and you left all your assets (house, retirement plans, life insurance, bank accounts, etc.) to your kids. Would the amount of money you leave them make an impact on their daily lives? How much impact? Very little, some, or a whole bunch? Would the lifestyle they could afford be changed?

Think of the specific amount of money you would leave if you died tomorrow. How much will it increase your child's net worth? Double it, triple it, make it go up 10 times or a 100 times? or more?

All those issues that cause concern about the college student are the same issues we address with clients in estate planning. These issues are what I call "wealth reception" issues. It's not just about how quickly we can get the check to the kids. More important is what impact, good or bad, will the money have on the kids after they get it. And will the wealth better their lives one year, 5 years, or 10 years after you're gone?



David Otis Edwards
wealth reception attorney
Edwards Group LLC
Springfield, Illinois

Wealth Transfer or Wealth Reception - Part #1

Successful Planning, Successful Living

I help clients carry out the goals they have for themselves and their families. However, I always want to make sure clients have developed goals with a full understanding of what all can be accomplished with good planning. Sometimes they limit themselves and don't explore some of the most important planning issues, until I prompt them to think a little broader.

You might ask yourself:

How do you define a successful estate plan?

How do you define a successful life?

Traditionally, many planning issues have focused only on the transfer of wealth. But most of us would probably agree that just avoiding probate or saving some tax money is not all that is required to have lived a succesful life. Isn't there more to life than that? And there's more to estate planning too.

There are so many more issues that clients want to address, once they hear about the possibilities. I think a good plan will carry out the goals you would have completed during your life, with enough time and resources. But since our time on earth is limited, we plan so our influence can continue.


1. If you could plan in a way that would protect your loved ones from risk or harm, would you be interested in hearing more about it?

2. If you could plan in a way that would set up your loved ones for greater success in the future, would you be interested in hearing more about it?

3. Is the focus of a plan simply to transfer the wealth, or to help that wealth accomplish the greatest good in our families and in the community?

4. What is money worth, except for what it can accomplish?

5. What could your money accomplish in those who survive you? Those you care the most about?

6. If you could communicate your wisdom, and your loved ones would apply it, what frustrations could you spare them?

7. What if you were able to transfer both your wisdom and your wealth, in what ways could that benefit those who survive you? How would it be better than just transferring one or the other?