Tuesday, December 23, 2014

Encouraging Behavior with Incentive Trusts

Courtesy of
Virtually all parents have at some point worried about their children's future choices in life, whether they be educational, career-related, or moral.  This article will describe how some parents use "incentive trusts" to try to nudge their children toward a certain path in life, long after the parents are in the grave.

There is no question that a large inheritance can transform a young person's life, positively or negatively.  Bill Gates and some other tycoons from his generation are so concerned about the potential of a large inheritance to destroy their children's will to work, that some are severely limiting the size of their children's inheritance, giving the majority of their fortunes to charity.  But it is not just technology billionaires that have to worry about the effect of a sudden windfall of money for their children.

Saturday, December 13, 2014

Estate Planning re: Online Accounts

Courtesy of Sofiaperesoa
One of the hottest topics in estate planning right now is "digital estate planning," which involves managing your online legacy after your death.  In this post, I will focus on three topics:  1) Inventorying your online assets, 2) managing your passwords, and 3) making instructions for the handling of your social media and other online accounts.

Sunday, December 7, 2014

A Well-Drafted Living Trust does not have to create "Trust Fund Kids"; Learn from Philip Seymour Hoffman's Estate Plan

Courtesy Justin Hoch
In the months following Philip Seymour Hoffman's untimely death this year, details of his estate plan began to emerge.  Hoffman was beloved in his craft, and had noble intentions in his estate plan.  Specifically, the acclaimed actor desired that his children not become "trust fund kids," and reportedly rejected the advice of his attorney to create a living trust for their benefit.

While it is certainly understandable that people of great wealth would not want their children to become part of the "idle wealthy," ending up as reality TV caricatures, it is not correct to assume that a living trust per se will spoil them. On the contrary, a living trust typically offers far greater flexibility in planning the distribution of one's property than an ordinary will:

Tuesday, December 2, 2014

Giving to Loved Ones with Money Problems

Courtesy of Ralf Roletschek
If you have a family member who struggles with addiction, gambling, a controlling spouse, a party lifestyle, or bad financial planning, estate planning can be a dilemma.  On one hand, you may wish to provide the family member a share of your estate to show that he or she is loved just the same as other members of the family.  On the other hand, you worry that any inheritance will end up in the hands of creditors, a manipulative partner, at the casino, or fueling a drug addiction.  This post will discuss how spendthrift trusts are used to responsibly provide for family members who may not be able to manage an outright inheritance:

Monday, December 1, 2014

Estate Planning Without Borders

This week my family and I moved back to my hometown of Naperville, Illinois, after seven years in the Air Force.  During that time, I frequently drafted estate plans for military members with property in multiple states.  Today’s post will discuss what happens when people die with property outside their state of residence.  I will use my family’s story as an example:

As an Air Force officer, I lived in three US jurisdictions:  North Dakota, Ohio, and Guam (a US territory in the Western Pacific – see picture above).  In 2010, we purchased a home in Guam, while maintaining Illinois residency, an arrangement that is common in the military.  We loved owning our little slice of paradise in the tropics.  But what would have happened if we had died with some property in Illinois and a house in Guam?