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MAGELLAN LAW PROTECTOR
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JUNE 2019
THE TRUTH ABOUT LIVING TRUSTS
I dedicate this front page article to address one of the sacrosanct beliefs held by all respectable and educated persons — namely, that trusts avoid probate. HERE’S THE MYTH: The marketing says that you need a “Living Trust.” Otherwise, your loved ones will need to spend thousands of dollars struggling through the horribly long probate process. Not only that, but all your family information becomes public. How could you put your distraught loved ones through that while they’re grieving your loss? THE REALITY: First, going through the probate process isn’t so bad. In fact, I probated both of my parents’ estates. Assuming your family isn’t fighting, the cost is around $5,000 if you use a lawyer. However, simple probates can be done by yourself using forms available online. There is some time investment up front. The whole process takes about six months, but most of that time is simply waiting for the four-month creditor waiting period to lapse. A huge advantage is that, at the end of the process, you know with absolute certainty that there aren’t going to be any creditors coming out of the woodwork. Second, having a trust doesn’t guarantee that you avoid probate. However, having a well-drafted trust does increase your odds of avoiding probate. Around the retirement addressing myths and “shiny objects” that don’t work. This month, I’d like to
communities here in Arizona, you’ll see billboards that advertise “Living Trusts” for only $297. I can see this working if you have limited wealth that isn’t going to significantly impact your heirs’ lives. Also, it requires that your heirs don’t take each other to court, fighting over who gets what, and that you properly transfer your assets to the trust. Third, and I think most importantly, a trust becomes problematic if you have any significant wealth accumulated (for instance, more than $100,000 per heir). That’s the point at which your heirs’ inheritance can do more than just pay off their credit card debt and car loans. The vast majority of people inheriting wealth can’t hold onto it for more than a few years. One study says that happens 70 percent of the time, though I suspect the actual percentage is higher. There are also other options for distributing your wealth. Rather than simply giving everything to your next of kin when you die, you can distribute it in stages — for example, 25 percent immediately, 25 percent in five years, and 50 percent when they reach age 65. If you have at least $500,000 (including life insurance proceeds), you could have a corporate trustee hold it in trust and distribute it only as needed. It’s very common to say that beneficiaries are entitled to receive distributions for their “health, education, maintenance, and support.” For larger estates, this could mean
that your heirs get monthly allowances so large that they no longer need to work. Did you really work so hard during your lifetime so your kids and grandkids could sit around and live off their inheritance? Finally, merely having a living trust does not prevent your heirs from fighting with each other or with the trustee. These fights often end up in probate court (the division of the judicial system that handles disagreements involving trusts). There are ways of preventing this from happening, including (a) having a Trust Protector with authority to amend the trust or resolve questions of interpretation, (b) requiring that all disagreements be resolved using mediation or arbitration, and (c) including a no contest clause that states that anyone who contests the trust will lose his/her inheritance. (The information in this article is not to be construed as legal advice, and this newsletter does not create an attorney- client relationship. Your particular situation is unique, and you need to consult with an attorney (such as me) to discuss your particular needs.)
–Paul Deloughery, Esq.
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THE GREAT MYTH ABOUT PARENTING
I f you’ve been paying attention to the news over the last few months, you undoubtedly read about the scandal involving actress Lori Loughlin, Felicity Huffman, and others bribing college officials and lying on admissions applications — all in the name of “helping their kids be successful.” There is a myth in America (and probably around the world) that we ensure our children’s success by helping them as much as possible. As a result, many parents do whatever they can to make life easy for their kids. Some parents, like the celebrities already mentioned, go so far as to not even trust their kids to fill out a college admissions application correctly. These parents pay companies to complete admissions applications for their kids. (For the record, I filled out my own college applications in 1984. In my opinion, if you can’t fill out a college admissions application, maybe you don’t belong in college.) tasks on their own. The Swarovski family (the owners of the Swarovski crystal business) has owned their world-famous business for 140 years. I’m told by a friend who invests their money for them that the grandchildren are extremely successful and ambitious. How did that happen? Because their parents didn’t let them watch television or have computers until they were 15 years old! They read books instead. As a result, the grandchildren speak six languages fluently and are extremely smart, ambitious, and good at business. In reality, kids who grow up to be the most successful have parents who gave them emotional support but let them complete
the more lenient parent has the biggest effect on how the children turn out. There is a saying: “Hard times create strong men. Strong men create good times. Good times create weak men. And, weak men create hard times.” It’s not inevitable. It’s possible for strong men (and women) to decide to raise strong children like the Swarovski family did. Here’s a less obvious way that parents harm their kids by not allowing them to do the hard work. Let’s say the young child wants something, a popular toy, perhaps. One parenting tactic is to say, “Well, we don’t have money. Sorry. You can’t have it.” The parent isn’t even letting their child imagine how they could get the toy. That gets ingrained as being a victim of circumstance, unable to do anything. A better parenting tactic would be to simply ask, “Well, how are you going to get it?” That opens up the creativity and puts the responsibility on the child to figure something out. This is in alignment with Peter Diamandis’ book “Abundance.” According to Diamandis, focusing on how bad things are and the reasons you can’t do something is fear-based. This is how your brain thinks when the primitive amygdala part of your brain — the lizard brain at the stem — is in control. However, if you can calm down and see things more rationally, you can start to find a solution to whatever challenge you’re facing. Asking your kids “How are you going to get it?” instead of saying, “We don’t have the money” is a way of engaging the rational part of your kids’ brains.
In my 20-plus years of practicing law, I’ve found it surprisingly common for parents to have conflicting parenting styles. Usually,
–Paul Deloughery, Esq.
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A GREAT ADDITION TO YOUR FATHER’S DAY CELEBRATION
HABIT 4: THINK “WIN-WIN” — MOVING FROM “ME” TO “WE” This habit explores the fundamental paradigm of seeking mutual benefit, or the “Golden Rule.” HABIT 5: SEEK FIRST TO UNDERSTAND … THEN TO BE UNDERSTOOD — SOLVING FAMILY PROBLEMS THROUGH EMPATHIC COMMUNICATION Every person looks at the world through their own eyes, which guide their implicit assumptions about the way the world is and the way it should be. This habit points to one of the main reasons behind communication breakdown, which occurs when two people interpret the same event differently. HABIT 6: SYNERGIZE — BUILDING FAMILY UNITY THROUGH CELEBRATING DIFFERENCES The key to creating synergy is learning to value, and even celebrate, the differences between members of the family unit. HABIT 7: SHARPEN THE SAW — RENEWING THE FAMILY SPIRIT THROUGH TRADITIONS In addition to renewing interpersonal family relationships, the family itself must constantly nurture its collective conscience, social will, social awareness, and common vision. If you are looking to implement some positive and life-altering changes in your family dynamic, Covey’s 7 habits are a good place to start.
Many families all across the world will set aside time to celebrate an important annual event this month: Father’s Day. Family-centric holidays like this one remind everyone of all the hard work and sacrifice that goes into being a parent. Strong families don’t just happen; they need the combined effort and dedication of all members in order to thrive. To help parents, grandparents, and kids focus on what matters, New York Times bestselling author Stephen R. Covey penned “The 7 Habits of Highly Effective Families.” Covey explains how difficult it is to build a strong family culture in a turbulent world that is constantly trying to impose changes on the way that children are raised. Because he and his wife, Sandra, had nine kids of their own, they used their shared experience to come up with the following seven habits. HABIT 1: BE PROACTIVE — BECOMING AN AGENT OF CHANGE IN YOUR FAMILY Remember to really stop and think about your responses to family stimuli rather than immediately reacting to them. HABIT 2: BEGIN WITH THE END IN MIND — DEVELOPING A FAMILY MISSION STATEMENT Based on the principle of vision, this habit helps parents create a clear, compelling vision of what you and your family are all about. Our family mission statement is “Keep Moving Forward.” HABIT 3: PUT FIRST THINGS FIRST — MAKING FAMILY A PRIORITY IN A TURBULENT WORLD One of the worst feelings in the world is when you realize that the “first things” in your life, like your family, aren’t getting the attention they deserve.
WORD SEARCH
GRILLED BEEF RIBS
June Word Search
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Nothing feels more paleo-appropriate than digging into a giant rack of beef ribs. This largely hands-off recipe requires plenty of hands-on eating, making you feel like one of our cave-dwelling ancestors.
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INGREDIENTS • 1 5-lb. rack of beef ribs • Kosher salt and black pepper, to taste
DIRECTIONS 1. Heat a charcoal, wood-burning, or gas grill to medium-high. Once heated, move heat source to one side or turn off half of the burners to create an indirect heat zone. 2. Season ribs with salt and pepper and char on the hotter side of the grill, turning occasionally, for 12–15 minutes. Once charred, transfer to the other side of grill and cook until the thickest part of the rib reaches 130 F, about 2 1/2–3 hours. 3. Let meat rest for 15 minutes. If desired, serve alongside grilled veggies.
BEACH
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SUMMER TRAVEL
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HOT PLAY
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SUMMER TRAVEL
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Inspired by Saveur magazine
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INSIDE THIS ISSUE
The Truth About Living Trusts page 1 The Great Myth About Parenting page 2
A Great Addition to Your Father’s Day Celebration
Grilled Beef Ribs page 3
Become a Pillar in Your Community page 4
MAKE A POSITIVE IMPACT
3 STRATEGIES FOR GENUINE COMMUNITY INVOLVEMENT
JOIN A PARADE This sounds unconventional, but sometimes it pays to think outside the box. Most towns put on a Fourth of July parade in the summer, so why not join in? Building a float could be a great team-building exercise, and a lot of people will turn up and see your mobile advertisement in the parade. Being in the parade shows that you’re part of the community, and when you top it all off by tossing candy to the kids, you’ll really make an impact. WORK WITH LOCAL SCHOOLS Your company could donate school supplies or even sponsor a program. Art and music programs are often the first to suffer from budget cuts, so support from a local business could make a huge difference. Donate art supplies to the classroom, sponsor high school theater productions, or offer scholarships to help young musicians pay for new instruments. Keep the arts alive by helping the kids in your community do what they love. These suggestions require time and resources to pull off, but making the effort can transform your company from just another business in a sea of many to a pillar in your community.
Even if most of your clients are located in other parts of the globe, the place your business calls home is a huge part of your identity. When a company makes a point to get involved locally, it’s doing more than making new connections and getting its brand out there — it’s also making a positive impact on the place it calls home. Most companies experience a slowdown in the summer. Here are some strategies to take advantage of that lull and create a plan for your business to get involved in the community and be a good neighbor. SUPPORT A LOCAL CHARITY Every town boasts its share of charities and nonprofits looking to make a difference. Find a cause you believe in, then help out. This could mean donating a portion of your revenue to a local women’s shelter, volunteering as a company at the soup kitchen, or sponsoring a gala that raises money for a children’s hospital. Supporting charities demonstrates your values and attracts the kinds of customers who share them.
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