An Overview and Cost of Services
There are two broad categories of persons that don't need to concern
themselves with estate planning and asset protection. Those who don't own
anything, and will never own anything; and those who know precisely when they
will die or be named in a lawsuit. If you fall into either of those
categories, you might want to go back to watching TV, because reading anymore
of this, will be wasting your time.
Now, it is a perfectly legitimate estate plan to have your will read,
"being of sound mind, I spent it all." Unfortunately, unless you
fall into that second group of people that know precisely when they are going
to die or be sued, in order to die a pauper, you must live a pauper; a most
unpleasant prospect for most of us. Indeed, most us dream of basking in the
glory of our accumulations right up to the last moment, and then passing a
vast fortune on to our children, even if they don't deserve it, and would be
better off if they had to earn it as we did.
To choose to die a pauper, is one thing; to die a pauper because you
failed to protect yourself, and your family, is quite another.
Basically, there are three goals at which we aim, when establishing an asset
protection and estate plan. First we try to protect our estate from lawsuits
and creditors; second, we hope to reduce or eliminate estate taxes; and
finally, we try to reduce income taxes along the way. Fortunately, there are
dozens of tools that we can easily and inexpensively use to protect our
estate, depending on our individual circumstances.
Limited Partnerships
If you are in a high liability situation, and your main concern is in
protecting what you have from lawsuits and creditors, probably the best all
around tool is the family limited partnership. By transferring the assets you
wish to protect into a limited partnership, you can legally and very
inexpensively prevent the property you have worked all your life to
accumulate, from being taken away from you. But in addition to that, by
transferring your limited partnership interests to your children or other
heirs, you can reduce your estate and estate taxes and still retain 100%
control over all of your assets. Moreover, by splitting income among your
children you can reduce income taxes as well. For more extensive details on
Limited Partnerships, please see, "Limited
Partnerships".
The cost of preparing and implementing a limited partnership is, of course, a
function of individual circumstances and the extent and nature of the property
to be transferred to the Limited Partnership. However, the typical cost is
$1,000.
If you think a limited partnership may be of use to you, but you are still
not sure, you may be interested in my booklet on limited partnerships. The
booklet contains a detailed explanation of how a limited partnership works,
how to set it up, and how to maintain it. It includes all the agreements,
transfer documents, and even tax forms with instructions. Moreover, I will
send you a floppy disk including all the agreements and transfer documents,
so that you don't even have to retype anything. The price of the booklet is
$59.00. Send check or money order to Ken Sisco, 4469 Pedley
Avenue, Norco, CA 92860. Tell me what word
processor you use, and give me two weeks for delivery.
If you buy the booklet and establish your own limited partnership, I will
review all of your documents for an extra $200.00, to make sure you have done
it right. If you buy the booklet and then decide you want me set up the
partnership for you, I will give you a $150.00 credit; but you must read the
book so that I don't have to spend so much time educating you.
Revocable Living Trusts
If your primary concern is reducing estate taxes and avoiding probate when
you die, then the tool of choice is the revocable living trust. Probate is
completely public; a trust is completely private, both before and after the
death of the party creating the trust.
A trust will allow you to name a person you trust to help your spouse with
the estate after you are gone. It will allow you to protect your children by
a previous marriage, and it will allow you to protect your children in case
your spouse remarries. And, of course, with a trust, a married couple will
save a great deal in estate tax and/or administrative fees. For more
extensive details on Revocable Trusts, please see, "Revocable
Living Trusts".
The cost of preparing and implementing a Revocable Living Trust is, of
course, a function of individual circumstances and the extent and nature of
the property to be transferred to the Trust. However, the typical cost of
preparing a trust, pourover will and durable power
of attorney, for a single person is $750.00 and for a married couple $850.00.
The conventional wisdom is that practically everyone, should have a revocable
trust. While I won't dispute that proposition, where it is necessary to
choose between a trust and a family limited partnership, particularly
where there is high liability and a concern about lawsuits, in my opinion the
family limited partnership is the best choice.
Private Annuities
If your estate is large and will likely incur a large estate tax, an
excellent tool for favorably reducing your estate, is the Private Annuity.
The Private Annuity will allow you to reduce any potential estate tax, while
keeping the property in the family. For example, you could give to your
children X number of dollars in exchange for their promise to pay to you for
the rest of your life, an annuity that would be determined according to IRS
tables set up for that purpose. Your estate would be reduced by the cost of
the annuity, and when you pass on, the children's obligation on the annuity
will be terminated. For more extensive details on Private Annuities, please
see, "Private Annuities".
The cost of preparing and implementing a Private Annuity is, of course, a
function of individual circumstances and the extent and nature of the
property to be transferred for the annuity. However, the typical cost is
$500.
Charitable Remainder Trusts
If you have to sell a capital asset, and you are concerned about the
outrageous capital gains taxes you will have to pay, even after the tax cut,
I can show you an almost magical way for you to not only avoid all these
capital gains taxes, but actually take an income tax deduction, as well. For
more extensive details on Charitable Remainder Trusts please see, "Charitable Remainder Trusts".
The cost of preparing and implementing a Charitable Remainder Trust is, of
course, a function of individual circumstances and the extent and nature of
the property to be transferred to the Trust. However, the typical cost is
$1,000.
Copyright ©1998
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