Debt Repayment, Irony in Action

As Willie Nelson fans know all too well, owing the federal government back taxes can lead to some very public and potentially embarrassing financial loses. It can easily lead to bankruptcy, and that in turn might very well mean the collectible beer stein display you've got in your basement goes on the auction block, too.

Everything is up for grabs when you get in real financial trouble. No matter how much you love it, or how long it has been in the family, it's fair game to the auctioneer if you get in deep enough.

This is exactly why the average John or Jane Doe needs to have a solid handle on their finances. It is also why those same folks need to avail themselves of some solid legal advice if they suspect all is not well on the economic horizon. The difference between the family that has to hunker down for a while by cutting back on cable television services, and the family that sees their belongings auctioned off in the front yard, is often nothing more exotic or mysterious than the fact that one family had a plan, and one did not.

How weird can all this get? That's a good question. Perhaps the story of Robert Kubick is a good way to illustrate the point. Robert went to jail in the great state of Alaska after being convicted of defrauding his creditors. Judges tend to frown on that sort of thing, and so Mr. Kubick was relocated to a state run facility that was designed to keep its residents from leaving until the judicial system agreed they had paid their debt to society.

The fact that he was incarcerated satisfied part of Kubick's ills. But there was still a financial aspect that had to be cleaned up. That's the part of this case that is a real eye-opener, because while Kubick's belongings were being liquidated as part of the bankruptcy settlement, some of his belongings were in the form of mounted and stuffed animals - animals like an African white rhinoceros, and a snow leopard. Both are endangered species.

Now, it's illegal to traffic in endangered species, so this is a bit of a sticky wicket. So the rare and less than entirely legal trophies weren't sold initially. Instead, they were transferred from federal office building to federal office building, where they were used to educate wildlife agents.

Eventually, all the educational benefits had been wrung from the stuffed animals, it would seem. With no pressing need on the government side of the equation to have possession of them any longer, a means of selling them off was settled on. It was agreed that as long as the buyers were fellow Alaskans, and the trophies would not leave the state, an auction could commence – and so it did.

And that is how the stuffed remains of two endangered animal species came to be on the auction block as part of a bankruptcy settlement – even though it is otherwise unlawful to traffic in these exact items.

Having a plan and some good advice in advance of economic disaster might have averted this whole mess. But then, that's so often the case, isn't it?

It's quite a story. And aside from the part about the endangered stuffed animals, it's all too common – and completely avoidable.

Three Classic Estate Planning Blunders

As we push our way through Tax Month, we are reminded of the importance of the basics of estate planning.  My estate planning colleague in Hawaii, Scott Makuakane, recently posted the following article to revisit three areas we should avoid in estate planning. His article reflects the practical experience that comes his practicing estate planning and trust law in Hawaii since 1983.

 

Three Classic Estate Planning Blunders

Too often, estate plans fail.  Here are the three most common reasons.

1.   FAILURE TO PLAN.  You have heard that failing to plan is planning to fail, and it is true.  People procrastinate with their estate plans for a variety of reasons, one of them being the refusal of some of us to accept our own mortality.  Not to rub it in, but passing into the Great Beyond is not an “if,” but a “when.”  It will make a tremendous difference to your loved ones, your pets, and your favorite charities, if you have made a plan for what happens to your stuff (everything you own) when you assume room temperature. 

Your estate plan should also take into the account the possibility of your becoming incapacitated someday.  This is an issue that has become more and more important as advances in medical science have made it possible for us to live longer lives.  Unfortunately, medical science is still working hard to find the causes, and come up with solutions, to the various forms of dementia.  Although we live longer today than in years past, a growing number of us ends up needing long-term care.  It is absolutely critical to plan for how you and your loved ones will deal with the issues of long-term care, not the least of those issues being how you will pay for it.

2.   FAILURE TO IMPLEMENT.  Having a plan is great, but failing to implement your plan renders it all but worthless.  One of the primary ways people fail to implement their plans is to neglect to transfer their assets into the right “buckets.”  If you have a revocable living trust, it should probably hold most, if not all, of your assets.  Yet many people die with assets in their own names, which, in turn, results in costly and time-consuming probate proceedings that could easily have been avoided with some simple asset transfers. 

3.   FAILURE TO UPDATE.  Once you have set your course with your estate plan, you have to remember that even the best of plans will require course corrections.  Your health will change.  Your stuff will change.  The law will change.  The list of people you like and trust will change.  It is important for your estate plan to change so you can be sure that it will work as intended.  The best way to do this is through a regular discipline of reviewing your estate plan and updating it when necessary.

I’m here to help you avoid all three of these “blunder” traps.  If I can help, please contact me or leave a “comment” on this blog post.  As a trained estate planning professional, my goal is to guide and support you through the estate planning process.