A Domestic Asset Protection Trust (DAPT) provides one of the highest levels of asset protection planning without going “offshore” (planning in a foreign country). The DAPT is an irrevocable trust with spendthrift provisions. In regular English, this is a legal fiction (the trust) allowing a person to shield their assets from lawsuits and creditors. Unlike most irrevocable trusts, you are not completely giving up the use or benefit of the assets in the trust. [Read more…] about Asset Protection Attorney Definitions: Domestic Asset Protection Trust
Personal Representative vs. Power of Attorney
Many people don’t understand why they need a Personal Representative AND a Financial Power of Attorney. However, let’s first start with the definitions of the two:
Personal Representative (sometimes an Executor or Administrator) – this is when an individual has the right and responsibility to manage the finances, property, and other assets of the deceased; the individual is appointed by the Court during the probate process, having been designated in a last will, or the individual is chosen by the court if there is no will.
An aside: If the deceased has chosen to avoid probate, then there is a Trustee instead of Personal Representative and is the person in charge of administering the trust.
Financial Power of Attorney (a.k.a. Durable Power of Attorney) – this is when you give another person legal authority to act on your behalf, by making financial or legal decisions for you, when you are incapacitated or otherwise unable to.
They sound similar and they kind of are BUT the Personal Representative comes into play after death and the Power of Attorney is in effect any time that you are alive, but unable to communicate for yourself. So, a person designated as your agent with Financial Power of Attorney would be able to act on your behalf if you are in a coma, in the hospital, or out in the woods outside of cell phone reception and there’s an emergency in your family or business.
You can give your agent with Financial Power of Attorney as much or as little power as you’d like. One example is that Colin was able to fill out legal banking documents on my behalf while I was out of town because he is designated as my agent with Financial Power of Attorney.
(My debit card number got stolen. Colin and I were adamant about working with and supporting a more local bank and although they win at customer service most of the time, it *can* be inconvenient if you have a jet-setting lifestyle)
The Personal Representative duties can also be divided up. For instance, we have known people who have designated a separate Administrator or Personal Representative for their business and for their personal estate.
An estate planning attorney can help you decide what structure is right for you.
Colin Ley is a Seattle estate planning attorney. He is also the co-founder of LayRoots along with his wife, Shreya.
Asset Protection Attorney Definitions: Irrevocable Trust
An irrevocable trust is a part of most serious, asset protection strategies. In the business of estate planning and asset protection, there are countless categories of trusts. And they all sound very serious. When Lawyers create new categories of trusts, they often create names that are very similar, often using many of the same words, as trusts by a different name. There are a number of main features or characteristics that differentiate every trust or every category of trust, and one such characteristic is whether a trust is revocable or irrevocable. [Read more…] about Asset Protection Attorney Definitions: Irrevocable Trust
“What are the 5 pillars of estate planning?”
At a recent Estate Planning Workshop, a parent asked what I considered to be the 5 main pillars of estate planning. If one parent is asking, then I guessed that other parents are wondering, so here goes:
- Trustee or Personal Representative. This is choosing a person to manage your money and other assets. This person handles the distribution of your estate by serving as Trustee (if you have chosen to avoid probate) or as Personal Representative through the probate process. Most people choose a trusted friend or family member who is well-organized and responsible.
- Beneficiaries. Beneficiaries are the people or organizations you choose to inherit your estate. SO, by choosing beneficiaries, you are choosing who will receive your money and other assets when you die. You choose these beneficiaries in a last will or trust, or if you don’t have either of these documents, state law will determine who gets your stuff.
- Guardians. Choosing guardians to care for your children. If you are a parent to minor children you should nominate an individual or couple to serve as guardian/s (i.e., a person or a family to care for them in the way that you would want them to be cared for) in case you are incapacitated or die unexpectedly. It’s good practice to choose one or two alternate guardians after your first choice.
- Power of Attorney. Many people think that personal representative and power of attorney are the same, but they are not (see here). Financial Power of Attorney is choosing who will make financial decisions if you are incapacitated. This allows another person to make financial and legal decisions on your behalf if you are unable to speak for yourself. Choose wisely, my friends.
- Healthcare. Choosing who will make healthcare decisions if you are incapacitated. If you are unable to speak for yourself, for example while unconscious in surgery or after a car accident, you may designate a person to advise your doctors and make decisions for you.
Those are the top 5 for most people and families. Some close runners-up are 1) properly completing beneficiary designation forms, tax avoidance (capital gains or estate) and business succession planning.
Colin Ley is a Seattle estate planning attorney. He is also the co-founder of LayRoots along with his wife, Shreya.
Is Your Single Member LLC Safe From Outside Creditors?
Many solo-preneurs or spouse-owned businesses (“Single Member” Limited Liability Companies or business entities) think that simply registering their business as a Limited Liability Company (LLC) protects them and their families from lawsuits. You may be surprised, however, to learn that you might not be as safe as you think unless you take some additional steps. [Read more…] about Is Your Single Member LLC Safe From Outside Creditors?
What is a Confidential Letter of Exclusion?
Letter of Exclusion
Know somebody in your family who you’d never want raising your children if something happened to you? You should consider writing a confidential letter of exclusion. Check out the video below for what you should do about it.
Colin Ley is a Seattle estate planning attorney. He is also the co-founder of LayRoots along with his wife, Shreya.
