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wealthy dollar bills

There is a rumor that has been floating around that only the rich need estate planning. That is extremely false. Everyone needs an estate plan, but the wealthy don’t need estate planning as much as the middle-class and working-class folks. If this contradicts everything you’ve ever thought about estate planning allow me to explain.

The Case of Kingston Lear

Suppose Kingston Lear (get it?!), a wealthy Iowan, decides he doesn’t need a qualified and experienced estate planner, he can do it himself, or use an online, one-size-fits-all service. Hey, Lear figures, this way he’s saving both time and money. Also, nothing is going to happen to him for a while, he can get around to doing a proper estate plan with a proper estate planning professional “someday.”

Of course, “someday” never comes, but Lear’s death does. His three daughters are aghast that Lear has no real estate plan. The template resembling an estate plan is completely inadequate for the size and complexity of Lear’s assets.

A Matter of Trusts

Lear could have easily, with the help of a professional advisor, set up a trust (even a plain, “vanilla” revocable living trust would have worked) to avoid probate. But, the online service he used didn’t even explain the difference between wills and trusts. So, Lear’s assets all must go through probate. This means that the time and money Lear though he was saving is gone in a flash.

Probate Costs and Fees, If You Please

Probate fees are going to equate to at least 2% cut of Lear’s estate. Remember, Lear’s estate is large and complex and valued at $10 million, so the actual figure is probably going to be more like four percent.

Using 4% as the figure for probate fees means a loss of $40,000 ($10 million X .04 = $400,000). This is $400,000 that could have been passed down to his daughters through a trust, or split generously between his heirs and charitable organizations near and dear to Lear’s heart.

Also, court costs may amount to another 1%, or loss of $10,000 more ($10 million X .01 = $100,000).

Loss of Privacy

Another major benefit of a trust—again, not explained to Lear because didn’t seek any individualized advice—is privacy. A will (or most any document that goes through probate, absent very special circumstances) is simply a public document. Anyone can read, copy, share, and write about it.

Consider one of Lear’s major assets was an ongoing business—a Shakespearean-themed jousting complex, where families could have fun practicing jousting.

horses at fence

Unfortunately, in some of the probate papers, it was disclosed that there had been numerous complaints by the Iowa Horse Association about the treatment of horses. It isn’t long until this hits the blogs, and some of the more sensational aspects of the report (though hotly disputed) goes viral. The jousting park, which had been quite profitable, is now eschewed by all the good people of the area. The daughters are forced to sell the business asset to preserve the family’s good name (or what’s left of it) and sell at a loss. While the jousting park had been worth as much as $1 million, the daughters have to sell, so there’s a “paper loss,” but nonetheless less a loss, of another $900,000.

Loss of Future Profits

The $900,000 is a conservative figure; it doesn’t include lost future profits. If not for the scandal becoming public, who knows how long the jousting park could have remained really popular and this profitable. Years? Decades? It’s quite difficult to quantify, but it’s certainly probable that there are some lost profits. The question is: how much?

Costs of Cases

Because Lear’s will wasn’t drafted by professional, there are many ambiguities and loopholes. It’s not long before the three daughters begin fighting and, with unclear direction from their father, they wind up suing each other.

Taking a court case all the way to trial can easily mean $50,000 in attorney’s fees, plus each daughter will want and need her own attorney. So, another $150,000 is lost to attorney’s fees!

Total Losses Equal?

Lear could have had his estate plan done by an Iowa professional for a few thousand dollars. Instead, he lost a total far greater than that:

  • Probate Fees: $400,000
  • Probate Court Costs: $100,000
  • Loss on Sale of Jousting Park: $900,000
  • Loss of Future Profits of Jousting Park: Incalculable?
  • Attorney’s Fees for Daughters’ Litigation $150,000

This is a hit for the inheritance of $1.55 million, leaving $8.5 million (rounded up), or a little less than $3 million per daughter. But you know what? That still leaves an inheritance of $8.5 million to be split amongst three sisters.

The Rich Can Afford Bad Estate Planning

crown silver

Lear acted unwisely, arguably recklessly! A great deal of his money was wasted that could have been used for great charitable work in Iowa through local nonprofit organizations. But, for all his foolishness, Lear’s daughters still end up with $3 million each. Will the daughters incur much suffering with “only” $3 million? No.

That’s the rub; the rich can afford to make big (and small) estate planning mistakes.

You Can’t Afford Poor Quality Estate Planning

Let’s look at this from a normal Iowan perspective. At least 2% in probate costs and fees, a huge drop in value in a key asset, attorney’s fees for litigation…can a middle-class estate merely shrug these kinds of losses off? Not a chance.

The rich aren’t like you and me. They can badly botch estate planning. You and I can’t afford to make mistakes with our estates; there’s no room (and not enough money!) for error.

Need an estate plan but aren’t sure where to start? It’s easy from start to finish. Fill out my obligation-free Estate Plan Questionnaire or contact me.

cute puppy

In the lead up to Valentine’s Day, I’m exploring here on the blog how love can translate to estate planning. Thus far we’ve covered the best V-Day gift to give your spouse, advice on where to store your estate plan (and it’s not a chocolate heart box!), and how an affinity for football makes understanding estate planning easy. Romance and gift guides aside, this #PlanningForLove series would be incomplete without featuring the love for your pet.

Let’s be for real for a minute. The relationships we have with our pet(s), be they a dog, cat, amphibian, pocket piglet, parrot, or pony are some of the most comforting and consistent. Who else will lick your face, eat snacks out of your hand, demand belly rubs, or get the most Instagram likes? Our pets are a part of our family and it only makes sense to include them in estate planning documents and decisions concerned with the continued care for our loved ones.

cat with flowers

The best way to include your furry and feathered friends in your estate plan is with an animal care trust (sometimes known as a pet trust). This is a special kind of trust different from a living revocable trust or an inter vivos trust. An animal care trust specifically provides for the care of your pet in the event that something were to happen to you. In the trust you’ll likely want include the following information:

  • Sufficiently identify your pets and include a provision that describes your pets as a class through phrasing such as  “the pet(s) owned by me at the time of my death or disability.”
  • Describe your pet’s standard of living, care, and include any regular and special instructions. You can get as specific or general as you want at this point. For example, if your bird only likes a particular brand/type of food, or your dog thrives when she plays catch once a day, this can be specified in a trust agreement. If you want your pet to visit the veterinarian for check-ups three times a year, this can also be written in.
  • Determine the amount of funding that’s needed to adequately cover the expenses for your pet’s care. Generally, this figure can’t exceed what may reasonably be required given your pet’s standard of living.
  • Designate a trustee, caregiver, and remainder beneficiary. Also, designate successor trustees and caregivers if for some reason either becomes unable or unwilling to fulfill their role. The remainder beneficiary is who receives the trust assets if trust funding outlives the beneficiary (your pet).
  • Specify how the funding should be distributed to the caregiver from the trust.
  • Provide instructions and wishes for the final disposition of your pet (for example, via burial or cremation).

Check out and feel free to share this infographic with your fellow pet parents. (Click here to see the pdf version.)

gordon fischer law firm animal care trust

Valentine’s Day is coming up, so let’s discuss how to show your continued love for your pets, even if something unexpected were to happen to you. Contact me via email or phone (515-371-6077).

strand fo valentine

People can say “I love you” in many different words and through many different actions. This Valentine’s Day I want every Iowan to consider creating an out of the ordinary gift…an estate plan! An estate plan is not just an important legal document that saves your friends and family time, money, and potential heartbreak. A quality estate plan is also a way of expressing care, commitment, and, yes, even love…be it adoration for your significant other, for your family, or even just out of respect for your life and legacy.

I could go on and on about the importance of having health care and financial power of attorney documents in place well before you hopefully never need it. I would be happy to share more than you’d ever want to know about the nomination of a guardian for minor children. Don’t get me started on the importance of detailing your wishes in the disposition of final remains document. But, I thought we could have a little fun with these sharable valentines (use the tag #PlanningForLove!) to get you inspired to take that first estate planning step and fill out my free Estate Plan Questionnaire.

Love is When

Help your favorite people avoid any reason for in-fighting or litigation. Have a quality estate plan made by a professional and then discuss your decisions with those close to you.

Love is when quote

Great Love

For any great love, you’ll want to continue providing and supporting that individual even after your passing. Talk to your estate planner about what tools and strategies, like a living revocable trust, would be best for your situation.

Great Love Quote

Saved Up Wishes

There’s no better way or place to detail your wishes for what you want to be done with your hard-earned assets than in an estate plan. For instance, if you want to give a portion of your estate to the charities near and dear to your heart, you can do so in your will.

love letter illustration

Look in the Same Direction

If you’re married you and your spouse both need your own individual estate plan! Many married couples do have the same estate planning goals and opt to have the same estate planning attorney draft both of their plans. Other times couples opt for separate attorneys. (Give this piece a read for more information.)

Coral and Teal Heart Pattern Valentine's Day Card

Of course, I would love to receive a Valentine from you, but I would also like to talk with you about your estate planning needs and how, oddly enough, this legal document makes the perfect Valentine’s Day gift to yourself or someone you love. Contact me at any time via email or phone (515-371-6077).

Buckingham Palace with gate

Britain’s Royal Family has been very much in the news lately. There was the recent wedding of Prince Harry and Meghan Markle. There’s also the hit Netflix series The Crown. (Who else can’t wait for season 3?!) Trump broke royal protocol multiple times on his recent trip. Prince George just turned five. And, earlier this summer (June 2 to be precise), Queen Elizabeth II marked the 65th anniversary of her 1953 coronation ceremony.

In front of more than 8,000 guests, including prime ministers and international heads of state, she took the Coronation Oath to serve her people. She was handed four symbols of authority—the Sovereign’s Orb, royal sceptreRod of Equity and Mercy, and the royal ring of sapphire and rubies. The Archbishop of Canterbury, Dr. Geoffrey Fisher, then placed St Edward’s Crown on her head to complete the ceremony.

An Unavoidable Unknown: Life Expectancy

I doubt very few of those dignitaries present would have guessed that Queen Elizabeth would reign for 65 years (and counting). In fact, I’ll bet if you told folks present at the ceremony that she would continue as Queen for well more than six decades, they would have thought you were, in English parlance, “crackers!”

But, one never knows about any one person’s life expectancy. Queen Elizabeth’s reigning longevity is surprising, but so, in reverse, is life of both celebrities and our family/friends alike cut too short.

There is a macabre and unfunny joke among estate planners: “Not everyone dies when they are supposed to.”  We all hope to live to be a ripe old age, like Queen Elizabeth II, and look back on a happy, fulfilling life. But it doesn’t always happen.

Ultimately Queen Elizabeth will pass away too. Everyone does. That’s why everyone needs an estate plan, even though you’re not the Queen of England and even if you’re not wealthy; even if you’re single; and even if you’re young.

Be prepared for the best, or be prepared for . . . less than the best. Have an estate plan in place so that your loved ones will not have to deal with the stress, ambiguity, and heartache of struggling with the confusion that comes with of intestate succession and not knowing your wishes or wants.

queen's crown

Royal Benefits of Revocable Living Trusts

A revocable living trust may make sense for many folks, not just royally wealth. The benefits of trusts are many, but one of the main ones is that assets avoid probate. This saves time and means distribution of assets to heirs more quickly and easily. Trusts avoiding probate generally mean less costs at death—less attorneys’ fees, less court costs, and, typically, less taxes. Living revocable trusts are also super flexible; in a single trust instrument you can name guardians for your minor children; protect assets from creditors; give to your favorite charities; and set up an endowment.

Along with a living revocable trust, you’ll also want several other legal documents: a power of attorney for health care; a power of attorney for financial matters; and a disposition of final remains, to name a few.

You don’t have to be a royal to know that estate planning is a smart, strategic, crowning achievement you can be proud of. Just like Queen Elizabeth’s longstanding legacy, you too can cement your place in history (if even just within your immediate family and with the charitable causes you care for). If you don’t have an estate plan yet, the best way to get started is by filling out GFLF’s free Estate Plan Questionnaire, or contact Gordon. If you already have an estate plan and want to invest in the benefits of a living revocable trust, don’t hesitate to reach out via email or by phone (515) 371-6077.