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Dealing with Addiction in Estate Planning

I have worked with a number of clients whose lives were impacted by alcoholism, chemical dependency, gambling and other self-destructive behaviors (collectively “addiction”.)  Statistically, 43 percent of Americans have been exposed to alcoholism in their families and the outlook for the future is not improving.  In a recent study, 1 in 8 Oregon children 12 and older reported using an illegal drug in the 30 days prior to the survey.  How many will become addicts or alcoholics?  Will they be your children or grandchildren?

Estate Planning--Back to the Basics

I would like to start off the year with a new year’s resolution challenge for all of my readers:    no matter your level of wealth or marital status, you should have in place at least the basics of an estate plan:

· Last Will and Testament. Known simply as a Will, this document appoints a personal representative to administer your estate on death, appoints guardians of minor children, if any, and designates how assets are to be distributed on death.     The Will is particularly important if you have minor children because if you don’t nominate a guardian, the Courts will choose one (and it may not be the person you would choose).

Challenging POD Accounts

The following article will appear in the Arizona Republic regarding how one might challenge a pay on death (POD) bank account.   It is based on a question posed to me by a reader:

Estate Tax a Moving Target-Stay Prepared

As many readers know, the current estate tax exemption is $5,000,000.00 (5M). This means that a single individual would not pay an estate tax on the first 5m of his estate, and a married couple, with proper planning, on 10M. The size of these exemptions, in my opinion, gives one the false sense of security that estate planning is not necessary. This assumption is, in my opinion, incorrect. First, the current law expires at the end of 2012, and no one can predict what Congress might do then. Second, estate planning is necessary for a myriad of reasons other than tax. I have covered many of these reasons in other articles in the blog section of my website. However, even if one were to focus solely on tax, and assume that the current estate tax laws are “stable”, here is a brief summation of the many laws passed by Congress affecting taxes, including the estate tax. This is a moving target and one should always plan for the worst, hope for the best, and be prepared with an effective estate plan at all times.

Model Maintenance Plan Clients

In January of 2009 my office established a maintenance plan for our trust cllients.    This is a brief story of clients who have taken advanctage of their membership in the plan and who, in my opinion, are models for our plan.

Randy and Pam established their joint trust in 2007.   They have two adult daughters, Kari and Erin.    Kari is unmarried and has had drug and alcohol problems, which were ongoing in 2007.     Erin is more stable but has been in a questionable marriage for several years.     In their trust, Randy and Pam created separate trust shares for Kari and Erin.    We call these "lifetime protective trusts" because they are designed to remain intact for the lifetime of the beneficiary, providing creditor and predator protection.    For Erin, the major protection sought was divorce--such that Erin wouldn't co-mingle her inheritance or risk losing any of her inheritance in divorce.    Because of her stability, Erin was chosen as trustee of her own trust share.