Steve Rensch is a practicing attorney and, according to Curt, was a coach and teacher in Milwaukee Wisconsin before going to law school. He graduated with a Law Degree from The University of Southern California and is in his 43rd year of practice. He started as a civil litigator in Maricopa County and then found his passion in the area of estate planning.
Taking a look at his audience, save Luke, he touched on the importance of young families and the danger for them in not having proper guardianship documentation should they both die suddenly. Too many times, young couples fail to plan in this important area and if both parents should die, and there is not proper documentation for guardianship, police will arrive and take the children into custody, turn them over to CPS and ultimately a foster home until such time as guardianship can be established through the court. This what you don’t want to happen. It’s important to educate you children so the best decisions can be made for your grandchildren in our case.
The next topic is estate planning options. There are three – Trust-based Estate Plans, Wills and, worst of all, nothing. Remarkable 70% of Americans fall into the category of failing to plan for their estate. If you don’t have a plan, rest assured your State will have a plan and that estate will go to probate court and the survivors will have minimal to no input on how it is managed. The State decides who will receive the assets and the whole process is completely public.
Wills can be effective if properly drafted and attached with the proper ancillary documents. A will provides the ability to control assets and the location of minor children. Problems that arise with a will: 1) Even with a will the estate will have to go to probate court; 2) A will provides no flexibility to take advantage of changes that might occur in the tax code; 3) a will only takes effect after death (postmortem) and provides no protection should the testator become incapacitated. That issue would again have to be settled in court. Wills are also not equipped to address blended family issues. Are they cheaper, yes but not really.
Consider the scenario: a family estate of approx. $390,000 ( a modest house worth $230,000, a couple of cars $20,000, cash and savings of approx. $20,000.) Of a total estate of $390.00 the average cost of the probate process will be 5% of the estate or $16,17,000. The cost for the administration of a trust would be 1% or $3,900.
People just do not plan for death.
Trusts -allow for the avoidance of probate court. The can be extremely effective if two conditions are met: 1) is the trust funded (in other words, are all your assets titled to the trust? and 2) ensure there is a comprehensive inventory of assets. Oftentimes, the administrator of the trust will be unsure of the entirety of a person’s assets. Trusts have to be continually modified to be effective. There are, according to Rensch, three reasons people resist executing a trust: 1) Cost; 2) a general awkwardness or inability to speak about one’s own death and 3) procrastination (especially among younger couples). This is such an important topic. Rensch closed by stating, “ successful people , when they get up, do the hardest task first, the rest of the day is easy. “Once estate planning is done and done properly, one has a peace of mind.