7 Costly Risks that comes with Free or Low-cost Estate Planning

Attorney and Financial Advisor Chris Berry discuss the 7 costly mistakes of choosing a free or low-cost Estate Planning compared to a well-drafted Comprehensive Legal Plan.

Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.

Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.

Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.

With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.

 

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https://castlewealthlegal.com/home
https://michiganestateplanning.com/

 

Episode Transcript

Handling Flow Of Assets

Hey, this is Chris Berry with Castle Wealth Group. Today, we’re going to talk about the seven costly risks that come with free or low-cost estate planning documents. If you like this information, please make sure to subscribe to our YouTube channel, and also if you could comment down below.

Christopher Berry is a leading estate attorney and advisor in the area of retirement and legacy planning. He has been featured in publications such as for Forbes, Kiplinger’s, Crain’s Detroit and more. He’s the host of the weekly radio show and podcast, The Chris Berry Show. He’s a national thought leader as it relates to retirement and legacy planning, and has authored the Amazon best selling book, The Caregiver’s Legal Guide.

A lot of people look at estate planning as maybe a commodity, and there’s a lot of different ways that you can get your legal documents. You could download them off a legal Zoom. You could look to the Suze Ormans of the world through UAW legal service. Depending on which company you work for, they might provide you free legal documents, but is it the right tool for you? What I’m going to talk about is seven costly mistakes we’ve seen using these free or low-cost legal preparation opportunities or options for you versus having a well-drafted, comprehensive estate legacy plan that meets all of your goals.

The first thing is excluding family members from a trust or a will. It’s very important to understand how the flow of assets are handled inside of a trust or a will. Is it per stirpes? Is it pro-rata? Do you know the differences? Whoever or wherever you downloaded or got these documents from, did they go over the difference? There’s the difference between disinheriting your children or grandchildren versus the assets flowing where they’re supposed to go. The second big thing, leaving assets unprotected from creditors, so understand that each state in the state of Michigan has certain asset protection rules for individuals as well as married couples.

 

Asset Protection

Depending on how you title your assets, whether you fund them into a revocable trust, you might destroy some of that asset protection, or wherever you got those documents didn’t have the credentials, didn’t have the expertise to provide you an asset protection trust, because understand a revocable living trust really offers you no asset protection. Did they talk to you about using LLCs or asset protection trust to protect against creditors or bankruptcies not just for you, but also your beneficiaries?

Third costly mistake, preventing minor errors from accessing insurance or accessing payouts, so depending on how you structure that estate, the assets might be held. Maybe you want that minor child not to be able to manage the money, but maybe that money should be used for things like education or health or college or braces, depending on how you structure that trust or that will will depend on what your beneficiaries will have access to. Especially if they’re minors, we want to make sure that maybe there’s a trustee managing that for the minor beneficiaries.

Number four, receiving unwanted medical treatment, so it’s not all about wills and trusts. It’s all about what happens when you pass away. It’s also what happens if you don’t pass away, and what if you need medical attention? Having a well-drafted patient advocate designation or medical power of attorney that will outline which procedures you do or don’t want, maybe you should or maybe your loved one should have a DNR, do not resuscitate. It’s very important that these medical directives are thought out. Number five, choosing the wrong fiduciary for the task.

One of the things with regards to putting together these legal documents, and it’s not enough just to have the legal document, but a lot of times, people need counseling in who to choose as a fiduciary, who to choose as the successor trustee, a guardian of minor children, who to choose as the financial or medical power of attorney. One of the big problems we see is people without going through a full comprehensive estate planning process, they’re choosing the wrong people for the wrong reasons. Number six, missing out on the protections from long-term care.

A lot of my clients are not just concerned about passing away and where will their money go, but they’re also concerned about, “What if we need long-term care?” There’s certain types of trusts that can protect against the devastating cost of long-term care like a castle trust. Typically, this isn’t going to be something because it’s more complex, more advanced than just downloading something from legal zoom or going to that trust mill that just fills in the blank. They’re not going to talk to you about the different types of trusts out there.

 

1. Excluding Family Members from a Trust or a Will
2. Leaving Assets Unprotected from Creditors
3. Preventing Minor Heirs from Accessing Insurance
4. Receiving Unwanted Medical Treatment
5. Choosing the wrong Fiduciary for the task
6. Missing out on the protections from Long-term Care
7. It’s going to cost you more probably in the long run

 

State Taxes

There’s trust to protect against the state taxes. There’s trust that can help limit long-term care costs. There’s trust that can build in creditor or bankruptcy protection. There’s trust that when you leave the money to the next generation, it can be protected for their lifetime, so not taking into account that estate planning is not just about avoiding probate, it’s also about making sure your money lasts as long as you do, and missing out on the protections that can be built in to protect against that devastating cost of long-term care.

Number seven, and this is probably most important, it’s going to cost you more probably in the long run, because if it’s not set up properly upfront, understanding you might have assets that go through the nightmare of probate, and probate in Michigan, it’s a five-month process at the very minimum. It’s a court process. You have to go to court. It’s costly. 3% to 5% of any assets going through probate typically get eaten up in costs. I sat down with a client. His dad really didn’t put together a very well-drafted estate plan.

He was a doctor and he ended up having to pay to the probate court $50,000. All of that could have been avoided had they set up a proper estate plan to avoid probate, and done the full comprehensive planning, the full funding of the trust. Understand if you have just one asset that ends up not going into the trust or not titled properly, understand that might be going through probate. Now, your family might have a five-month to a year core process, plus 3% to 5% of any of those assets going through probate get eaten up in costs.

If you don’t have the medical directives drafted properly, someone has to get a guardianship where now they have to go to court and get court approval to make decisions for you. The most important thing is understand, “Sure, you might save a little bit on the front end, but you might cost your family a lot in terms of stress as well as financially on the backend.” That’s why we think it’s important to set up a comprehensive legal plan that dovetails into your financial and tax plan.

This has been Chris Berry with Castle Wealth Group talking about seven costly mistakes that you can make by choosing a free or low-cost legal plan. Thank you so much. Make sure to subscribe and comment down below.

Castle Wealth Group has clients across the nation, and helps families plan, protect and preserve what is important by creating a retirement and legacy blueprint.

 

 

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