Why not just create your own estate plan using fill-in-the-blanks documents that you can find on the Internet?
There are a number of answers to this question, but the thing that we would like to point out here is the need for a custom crafted estate plan.
Do you know what legal devices are best for your specific family dynamic, your financial standing, and your intentions? If you assume that you should use a last will you may be making an uninformed decision.
Let’s look at some common scenarios that exist that would all require specific estate planning steps.
Some people are in a position where asset protection is very important. This would commonly include individuals who are surgeons, landlords, and other people who are inherently vulnerable to lawsuits.
There are a number of things that can be done to protect your assets, such as the creation of a family limited partnership or a limited liability company. Some people absolutely must take action to protect assets.
Providing for Poor Money Managers or Heirs With Personal Problems
Not everyone is a perfect person. You may have someone in the family who could be described as a spendthrift. Perhaps you have a loved one with a drug or alcohol problem.
If you do in fact have someone on your inheritance list who is not good at handling his or her finances you could account for this by making this individual the beneficiary of a sentry trust.
Assets that have been conveyed into the trust are protected from the beneficiary’s creditors. The beneficiary can receive distributions from the trust in accordance with your wishes. However, he or she does not make decisions with regard to the principal.
You name a trustee who manages the funds. This can be a person known to you, or a professional entity like a trust company.
When you use a bank or a trust company you don’t have to worry about the trustee passing away.
To provide for someone with personal problems you could create an incentive trust. With these trusts you include incentives that must be met before distributions are given out.
Children From Former Marriages
Another circumstance that would require a particular brand of estate planning is that of the blended family situation. If you get remarried and you don’t take steps to protect the interests of your children from previous marriages you are taking quite a risk.
For that matter, if you don’t do anything to protect your own interests you are taking a huge risk because over 60% of second marriages do not last.
It is possible to protect yourself and your children while still providing for your new spouse in the event of your passing if you implement the appropriate strategies.