Imagine this: Harold and Jane are a married couple on the verge of retirement; they have two grown children, one of whom is engaged to be married.  Harold and Jane own (jointly) the home in which they live… they also own a rental property—a small apartment complex—which they are ready to hand over to their children. Unfortunately, this scenario is not as easy as it might seem.  You see Harold and Jane worry that their son, although well-intentioned and smart, may not have the maturity to manage this kind of responsibility quite yet.  And although they trust their daughter completely they aren’t quite sure about her new fiancé. What are Harold and Jane to do?

Luckily, they have an option called a Family Limited Partnership which allows them to own property in partnership with each other, their children, or any other family member. Creating a Family Limited Partnership (or FLP or sometimes called FLIP) would allow Harold and Jane give both of their children an interest in the property income as limited partners, while Harold and Jane retain control over the financial decisions as general partners. As the kids gain maturity Harold and Jane can allow them more and more decision-making responsibility, or they can simply wait for the kids to inherit the general partnership when Harold and Jane pass away.

Another benefit to the Family Limited Partnership is that Harold and Jane are able to give partial ownership of the valuable property to their trusted daughter, while keeping it out of the hands of the questionable fiancé. Even if their daughter were to get married and then divorced, her ex-husband would have no claim on the apartment complex in the divorce because it was never fully the daughter’s asset. The most the ex-husband could possibly claim would be a portion of the income received by his wife, and Harold and Jane as general partners would have the power to decide how much income to distribute to each of the limited partners.

A very compelling side-effect of creating a Family Limited Partnership is explained very well by this article on MSN Money; dividing the ownership (and control) of a large asset lowers the value of the property for tax purposes.  One of the children could theoretically sell their interest in the property, but the value of that interest is low because the buyer would have no decision-making control over the asset.  Harold and Jane may also choose to have the income from the property go to the limited partners, retaining very little of it themselves, essentially lowering their income and placing them in a lower income tax bracket—something that might be appealing to Harold and Jane as retirees.

A Family Limited Partnership can give every family the options they need to protect their real estate (or other) assets, and the flexibility they need to keep the property in the family. An FLP might be exactly what your family needs—call our office and let us help.


Popularity: 14% [?]

It goes without saying that nobody wants to give up control of their finances and put themselves at the mercy of someone else’s decisions; which is why most people spend hours and hours considering who to name as their agent when they sign a power of attorney. But what happens if you pick the wrong person? This article about an elderly mother and the daughter who stole from her is a sad example of just how important it is not only to choose your agents wisely, but also to relinquish control wisely as well.

It is commonly believed that simply adding your “agent” as a joint owner on your bank accounts is the easiest (or cheapest) way to gradually “hand over the reins”; but giving someone else unfettered access to your bank accounts is a dangerous risk in the best of circumstances—all too often it leads to the tragic exploitation and abuse mentioned in the article above.

he good news is that there are safer ways to give your agents the powers and access they need without completely handing over the keys to your kingdom:

• A Durable Power of Attorney that goes into effect when two doctors have declared you incapacitated
• Naming more than one person as your agent (This can lead to a slower decision-making process, but it does provide you with checks and balances and oversight. If you’re worried about disagreements between agents, name a third party to serve as a mediator or tie-breaker.)
• Naming a financial institution as your financial agent
• Choose a professional advisor or overseer through whom all decisions must be approved. This has the added benefit of giving your agents someone to whom they can go for advice in a tough situation.

Any of these options may be safer than joint ownership of your bank accounts, but every family and financial situation is unique, so ask your trusted attorney about which options may be best for you.

Popularity: 4% [?]

Do you have an e-mail account?

Do you participate in Facebook or other Social Networking sites?

Do you do any of your banking, bill paying or investing online?

If you answered yes to any of these questions then you might want to think about this next question… what will happen to all of your online assets and accounts when you die?

As we move further into the 21^st century more and more of our lives are moving into the digital realm. This includes friendships, networking, business and banking. The beauty of this is that it gives us unprecedented freedom and global access; the downside is that huge portions of our lives are locked away behind password protected accounts, many of which our friends and relatives aren’t even aware of. Online accounts are incredibly convenient, but they can create huge problems if your executor or agent has no way to retrieve your online passwords, assets or contacts after you die.

Some large online service providers are developing policies to deal with the transfer of accounts upon the death of the user, as noted in this article by Alejandro Martínez-Cabrera, “but the process is rarely a simple one.” Some companies require a death certificate before they will agree to shut down an account or turn over the contents, but rarely will an online company transfer actual ownership. It could take months or years of headaches and frustration before your heirs have access to any assets or information locked behind these online protections.

What this means for estate planning is that when you talk to your attorney about your will or your trust it’s not just about physical assets anymore; digital and online accounts and assets must be part of the conversation.

Popularity: 4% [?]