Keeping it in the Family by Protecting Your Estate

Kolleen Schocke |

An estate takes lifetimes to build but can be lost in the blink of an eye. Most of us don’t imagine the assets that took decades to accumulate being drained in a few short years, but in some cases, this is exactly what happens. Here are some risks to an estate and ways to manage those risks. It’s important to note that these risks, and the strategies to deal with them, are best dealt with while the person looking to leave a legacy is still alive and healthy. It’s far more difficult to protect an estate “after the fact”.


Counting on death AND taxes

A quality estate plan considers the fact that if we die with significant wealth, Uncle Sam is going to take a big piece of the pie.

This is particularly painful if assets aren’t easily liquidated. Consider the example of an individual or couple that is heavily invested in real estate. Vacation homes and commercial properties make a wonderful gift for the next generation, but if their value is significant enough, they can trigger high estate taxes. Even if a family wants to part with these hard-earned assets, it can take months or years to sell, and in the meantime, the taxman needs to be paid.

This is a situation where the right kind of insurance may provide enough cash on hand to pay estate taxes on these properties and keep them in the family for generations to come. This way the full value of the real estate is kept by the inheritors, the government is paid in full, and the estate plan is fulfilled without drama.


Inheritors are unpredictable, especially when nobody is watching

When leaving significant wealth to children and grandchildren it’s hard to know what they will do with it. Personal issues like spending habits, failed relationships and substance addictions can quickly deplete even the best funded inheritance.

In cases like these, it can make sense to consider putting assets into a trust to control the pace and purpose of distributions. As an added benefit, a trust can help protect assets from creditors, meaning that inheritors who are sued or owe money won’t necessarily lose their inheritance to a lender or litigious third party. Trusts can be expensive and often difficult to establish and maintain. It is recommended that you seek the counsel of a legal professional to discuss your specific situation.


The costs of nursing homes and late life care are rising dramatically

Few things are more frustrating than a well thought out estate plan, built on a lifetime of savings, that is depleted by escalating end of life care costs. Medical technology has done marvels increasing life spans, but this means that it’s possible to survive with debilitating illnesses and injuries for years. The level of care needed to cope with these health issues can make quick work of even the most robust savings and investments, leaving nothing for the families of the afflicted.


Long-term care insurance is a potential way to offset the risk this poses to an estate. The right coverage can provide funding for nursing costs and leave an estate intact for years. Insurance policies contain exclusions, limitations, reductions of benefits, and terms for keeping them in force. Your financial professional can provide you with costs and complete details.


C-J Advisory, Inc. is a registered investment adviser located in San Jose, CA. Registration of an investment adviser does not imply any level of skill or training and is not an endorsement of any regulatory agency. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.