DO YOU REALLY WANT TO MAKE YOUR CHILDRENS’ AND GRANDCHILDRENS’ INHERITANCE CONDITIONAL ON THEM DOING THINGS YOUR WAY?
In thirty years as a lawyer, I have had very few estate planning clients suggest conditioning gifts to their progeny on the kinds of restriction described in a recent Wall Street Journal article, excerpted and linked at the Taxprof Blog. I can’t recall a client ever even suggesting that a gift should be conditioned on marrying within the family’s faith tradition, for example. I agree that those kinds of conditions can have detrimental unintended effects.
When a client suggests that gifts should be conditioned on specific future events or activities, I typically simply point out that it’s impossible to predict the future, and equally impossible to even know what circumstances might exist at the future time when those conditions will have to be applied. Usually, the client will agree that they don’t want to put the person who would have to enforce those conditions in what might be an untenable position.
My motto is: keep it simple.
Probate is the process of changing the ownership of the assets of someone who has died. That’s how I describe probate (better referred to, in my opinion, as estate administration) when I am explaining it to clients, and that’s really what it’s about.
The message that estate administration is best avoided has been hammered so relentlessly by some purveyors of estate planning services that many consumers are, perhaps unnecessarily, biased against it. They don’t necessarily know what probate is, but they know they don’t want it.
My Estate Planning Law Report for October is an effort to clear up some of the myths, and give my loyal readers better information, about estate administration so that they can make informed decisions when planning their estates.
The Report is posted now in the News & Events section of deconcinimcdonald.com. If you’d like to be added to my mailing list so that you’ll receive my newsletter directly every month, use the “subscribe to newsletter” button below, or send me an email from the link on the home page of this web site.
I’M NOT INTERESTED IN INVESTING IN AN ENTERPRISE THAT DOESN’T CONSIDER THE RETURN ON MY CAPITAL TO BE ITS FIRST PRIORITY
If I invest in a company, I’m an owner. Why would I, or any other owner, countenance that company being managed in any way other than placing a return on my capital at the top of its priority list?
What I’m talking about is simply the fiduciary duty that company managers have to company owners (stockholders). This quote neatly summarizes the problem with CEOs pledging to prioritize the interests of “stakeholders” other than stockholders:
Capitalism is not named after the managers; it is named after the providers of capital, the shareholders. Its foundation is the strict and scrupulous fiduciary obligation (“the punctilio of an honor the most sensitive,” as Justice Benjamin Cardozo said in Meinhard v. Salmon), that gives credibility to capitalism by addressing the agency cost risk of entrusting money to others. Why should investors entrust their money to people who want to turn the fiduciary duty of strict loyalty into some version of “just trust me?”
EMPLOYEE/USER-OWNED BUSINESSES ALREADY EXIST, THERE’S NO GOOD REASON TO FORCE EXISTING COMPANIES TO ADOPT THOSE STRUCTURES
Cooperative associations and mutual companies are business organizations that are owned by their own employees or customers (users). There’s a good chance that you already participate in a mutual company through your insurance, as many insurance companies are mutual companies.
Since these types of business organizations already exist and are free to compete in the marketplace with investor-owned corporations, there is no compelling reason to force existing investor-owned corporations to give stock to their employees, or to force them to put employees on their boards of directors. I’m not sure what the proponents of such measures think they would accomplish, but I am sure that one of the results would be to make companies that are forced to take those measures less profitable and less able to provide good compensation to their employees.
If you’re unsure of how to deal with digital assets in your estate plan, my new Estate Planning Law Report might give you a place to start. It’s about the Revised Uniform Fiduciary Access to Digital Assets Act (the “RUFADAA” for you acronym mavens).
My Estate Planning Law Report, both the current and past issues, along with my Real Estate Law Updates and Tax Law Special Reports, are available for your perusal in the news and events section of deconcinimcdonald.com.
Actually, the general subject of my August Estate Planning Law Report is something you should deal with, so that your loved ones don’t have to: instructions on funeral and burial. The situation that I hope you don’t have to confront is what happens if there is a disagreement about this often sensitive subject. If you deal with it, then there shouldn’t be any disagreement. Does that make sense?
In the Report I also provide information that I hope will be useful to you on the always timely topic of telephone scams. Regular readers know that’s a topic that I keep up with, because the scammers aren’t going to go away.
Read all about it in my Estate Planning Law Report for August, now posted in the publications section at deconcinimcdonald.com.
If a person dies without a will, it’s called intestacy. Another formulation is that someone who died without a will died intestate. Intestacy laws are laws that govern what happens to the assets of a deceased person who dies intestate. Those rules are necessarily one-size-fits-all to some extent.
A law professor thinks that intestacy laws “cannot truly reflect diversity of lifestyles and associations.” I can’t disagree with that. The Professor suggests “using big data to create personalized rules, tailored to the personal characteristics of each decedent.” I don’t know what data the professor is talking about, but it sounds complex. It’s also completely unnecessary.
It’s easy to avoid having the intestacy laws decide what happens to your assets. How easy? As easy as making a will. That’s personalized, and it avoids intestacy.
The message of a post on the Cato blog is that the reporting on how people responded to a poll question about financial preparedness is misleading. Read the post for the whole story, but the upshot is this: the assertion that 40% of Americans can’t handle a $400 emergency expense is not supported by the evidence.
A recent news item reports on a supposed trend of parents cutting back on their retirement savings to fund their grown childrens’ lifestyles. I’m always skeptical of this kind of report, but if this is in fact a trend, it dovetails with advice I have been giving for a long time about estate planning: if your children (or grandchildren) don’t have their act together by the time they are about 30, they probably never will, so there’s no point in delaying the distribution of their share of your estate past that age. If you don’t think they can be trusted with their share of your estate at age 30, then assume they won’t ever achieve that status, and plan accordingly.
A living will is a written statement that controls health care decisions that can be made on your behalf. That’s pretty important.
To learn more about what a living will is (and what it is not), how a living will works, and what alternatives exist for executing a living will, you will want to read my February newsletter. It’s available now in the publications section of deconcinimcdonald.com.
The contents of this blog, this web site, and any writings by me that are linked here, are all my personal commentary. None of it is intended to be legal advice for your situation.