Puneet Cham joins Money Checkup to talk about the nuts and bolts of making your estate plan: Power of attorney for healthcare, power of attorney for property, guardianship for minor children, revocable trusts, a succession plan for your business, and more. Even if you feel like you won’t need your estate plan for many years, putting one in place will ensure that your family and your asset are protected.
“Estate planning documents are intended to reflect your family values, and as those change, so should your documents.”
Puneet Cham is a partner at Latimer LeVay Fyock who focuses on holistic estate planning and business succession planning.
KEY RESOURCES REFERENCED IN THIS EPISODE:
- Five Wishes: https://fivewishes.org/shop/order/product/five-wishes
ABOUT THE GUEST:
Puneet Cham is a partner at Latimer LeVay Fyock, a mid-size general business law firm in Chicago. He focuses on the development and implementation of holistic estate planning, tax planning, and business succession strategies. He grew up in Detroit in a family of physicians and studied law at the University of Illinois.
Social, website, book link:
https://twitter.com/estateplanneril
https://www.linkedin.com/in/puneetcham
EPISODE HIGHLIGHTS:
- Estate plans are about ensuring that the assets you accumulate during your life can supplement income for your children or heirs after you die. Unfortunately, none of us know when that time will come — so it’s important to prepare sooner rather than later.
- Powers of attorney are fairly easy to prepare — an estate planning attorney can often finish these in an hour. Puneet recommends attaching Five Wishes to an advance directive or power of attorney.
- Choosing guardians for your minor children is one of the most important choices you’ll make during estate planning. Consider geography, socioeconomic status and who exactly you’re designating — for example, only your sibling, or also their spouse?
- If you have assets in your name when you die, your assets will be administered in probate court. Creditors can file claims against the estate before the beneficiaries can access the money, so assets are frozen for at least six months.
- To avoid probate, you can create a trust and re-title your assets into that trust during your lifetime.
- Revocable trusts can be creditor and divorce protected, allowing you a lot of control over how your heirs receive their inheritance. Often, revocable trusts use boilerplate language that promises one-third of assets at 25, two-thirds at 30, and the remainder at 35. Puneet often suggests removing that provision and instead making the beneficiary a co-trustee at age 30, then the sole trustee a few years later.
- A letter of wishes can help people understand why they were chosen for the role you’ve asked them to play in your estate.
- Revisit your estate planning documents every 2-5 years, depending on your situation, so that if there have been any changes to your family relationships, your estate planning documents can be updated to reflect them.
- If you own a business and do not have a succession plan, start making one as soon as possible. Ensure that there is a buy-sell provision in place so that, if you have multiple partners and a co-owner becomes incapacitated, there is a mechanism for the other owners to buy out their share. If you expect your child to take over your business, proactively plan for that transition.
- After the 2018 tax law changes, if you and your spouse have an estate of around $22 million or less, you will have essentially no estate tax obligation. Some states have lower limits for the exemption, however — Illinois, for example, charges estate taxes on assets above $4 million per individual.
- Asset protection and estate planning are not the same thing — for example, assets in a revocable trust are not protected. To protect your assets, fully fund your retirement, buy life insurance, and own real estate in a separate entity. Professional advisors can help you navigate this.
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If you loved this episode, here’s another I know you’ll enjoy too! MCU #17: Asset Protection with Ike Devji
QUOTES FOR SOCIAL SHARING:
“Estate planning documents are intended to reflect your family values, and as those change, so should your documents.”
“Leave a letter of wishes. It has no legal authority, but it’s just a document that’s more personal, and it fills in some of the things that aren’t addressed in these legal documents… It’s a way for a client to say, hey, this is why I did it, and I think that helps ease some of the hurt that individuals might feel.”
“When it comes to business succession planning, the key is to start early. You want to put a plan in place a decade before you actually enact it.”
