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Alexis Martin Neely
Q & A
Wear Clean Underwear!
1. What’s the shocking truth every family needs to know about estate planning? There are three shocking truths every family needs to know about estate planning: 1) it’s not something you do once and never look at again; it’s an ongoing process that must be revisited at minimum every three years and preferably annually; 2) it’s not just for old, rich people; it’s something that needs to be considered by all adults who care about the family they’d leave behind at their death; and 3) it’s about so much more than your financial estate; it’s about passing on your intellectual, spiritual and human assets and leaving the world a better place.
2. Why do so many people fail to name a guardian? Many parents fail to name a guardian for their kids for two reasons: 1) they can’t decide who to name and 2) they just don’t know how easy it can be.
3. How do you help parents to determine whom they should name as a guardian in the event of their death? I guide parents through a simple three-step process that helps to remove the emotion from the decision. In fact, I’ve never had a client walk out my door without making a decision about who to choose.
4. What are typical mistakes people make when they do name a guardian?
There are 6 common mistakes that most people make when naming a guardian: 1) they name only one person with no back up named; 2) they name a couple without directing what should happen if something happens to one of the partners of the couple; 3) they consider financial resources of their guardians instead of leaving enough behind through insurance or savings; 4) they don’t name anyone to take care of their financial resources for their children; 5) they name only guardians for the long-term and don’t consider what would happen in the immediate moments or hours after an accident until their long-term guardians could arrive; and 6) they fail to exclude anyone they know they would never want serving as a guardian.
5. Why do you say having a Will is not enough? If you have minor children who count on you at home, having a Will is a great start, but it’s not enough. Your Will names guardians to take care of your kids for the long-term, but it won’t generally be available for the short-term in the minutes and hours immediately after your death or if you are in an accident. In fact, a Will won’t work at all if you are in the hospital, alive but unable to communicate.
Parents must think through on a practical level, what would happen with their kids’ care in the short-term and ensure they’ve given legal authority to local friends and/or family who live within 20 minutes and would immediately be able to comfort their kids until the long-term guardians could arrive and be appointed by the Court. Parents should carry an ID card in their wallet, give legal instructions and documentation to their named short-term guardians and post instructions inside their home in a visible place.
6. What happens if you die without a will or a declaration of guardianship?
If you die without a Will or having named guardians, the decision as to who will take care of your money and your children is left up to a State Court Judge operating in a broken court system who doesn’t know you or what’s important to you.
7. What’s a Personal Family Lawyer™? A Personal Family Lawyer is a lawyer who guides your family to make the right decisions throughout life and is there for your loved ones when you can’t be. Unlike lawyers who prepare form documents and send you on your way without ongoing guidance and then bill you in 6 minute increments every time you call for help, your Personal Family Lawyer is someone you will turn to before making any financial or legal decision for your family and you’ll never get a bill in the mail. Your estate planning documents will be regularly reviewed and updated and if you ever move to another State, you’ll always be able to transfer your planning documents to another Personal Family Lawyer without having to invest in a whole new plan from scratch.
8. What are the five most important documents everyone must possess (i.e. – will, living will, etc.), and what percentage of American adults have of each one? Every adult person, regardless of whether they have $10 or $10 million dollars should have an Advance Health Care Directive naming someone to make health care decisions and expressing their desires for how they would want healthcare decisions made if they couldn’t communicate and a Durable Power of Attorney providing authority for someone to make financial and legal decisions. A Will is also a good idea if it’s important for you to direct what you want to happen to the money and other assets you are leaving behind. And a Trust is extremely important if you want to protect your family from having to deal with the Probate Court after your death. If you are a parent, you must have a comprehensive Kids Protection Plan to provide for both the short and long term care of your children so there is never any question about who should take care of them for the short-term or raise them for the long-term, if you can’t.
9. What inspired you to create the Family Wealth Planning Institute? I was inspired to create the Family Wealth Planning Institute when client after client asked me what would happen to their plan If something happened to me, a solo lawyer. I wanted to be able to provide my clients with the assurance that if anything happened to me, they’d always be able to turn to a lawyer who practiced with the same focus on relationship and life time planning that I offered in my firm. I was also inspired to teach other lawyers how to escape the broken business model of the traditional estate planning lawyer that leaves most clients families stuck with failed estate plans because of lack of regular plan reviews, hourly billing, and other traditional lawyer practices that give lawyers a bad name. By bringing back the idea of the Personal Family Lawyer, we are changing the way Americans think about lawyers.
10. In your new book, Wear Clear Underwear! you explore a number of real-life scenarios of what really happens when people die without a will, a guardian, etc. Why aren’t people scared straight after seeing just how bad things could get for their loved ones? People who read my book aren’t scared straight; they are empowered to take the easy steps to plan for their family. Every person who has read it has said, wow, you really opened my eyes to how important this is, even though I’m not in my 60s or 70s and how easy it can be to plan ahead. I thought it was so complicated and unnecessary before I read your book; now I know it’s important and easy.
11. How are you revolutionizing the world of financial and estate planning for families? First of all, I’m bringing back the idea of the personal lawyer as the family’s trusted advisor and making a personal relationship with a lawyer both affordable and accessible for families who need the regular guidance of a lawyer, but have not felt that was possible. I see too many people turning to stock pickers and insurance agents for legal and financial advice and getting taken advantage of because they don’t have enough in investable assets to get good, objective advice. The personal lawyer is the answer. Second, I’m helping people see that an estate plan is so much more than just a set of form documents, like a will or a trust, and it’s not something you wait until you are old, sick or getting ready to retire to think about; very often by then it’s too late. An estate plan isn’t something you “do” once and forget about. It’s a lifelong process that is about passing on not just your financial wealth, but your whole family wealth, including your values, insights, stories and experience. If you “do” it once and never look at it again, your plan is likely to fail.
12. Why do too many people think a downloaded form with fill-in-the-blanks is all they need to protect their wealth? Estate planning has become about the creation of form documents that are likely to fail when someone dies. Good marketing by sites like LegalZoom.com and Suze Orman with her Will & Trust Kit have led people to believe that’s all they need to make sure everything will be a-ok after they are gone and while I’m glad that people are starting to get educated about these issues, a set of form documents created on the internet or as part of a Kit aren’t even close to what a family needs after the death of a loved one. What your family needs after you die, is a trusted advisor to turn to for guidance and counsel. That comes from a Personal Family Lawyer.
13. How did a failed estate plan personally impact your life? Failed estate plans personally impacted my life three times…all when men in my life died without having planned adequately, though in each case they thought they had. First, when my grandfather died. After his death there was a huge fight between my grandmother and my grandfather’s children from a prior marriage. Second, my father-in-law died when I was in law school. All of a sudden, we were dealing with the probate court, which I couldn’t understand because I knew my father-in-law had worked with a lawyer to prepare an estate plan specifically so we wouldn’t have to deal with the probate court. I remember looking through his fancy estate planning binder and seeing a letter that said “Congratulations on your estate plan, now go transfer your assets into your trust.” Well, my father-in-law never did that and neither did his lawyer. At the time, I thought his lawyer must have committed malpractice. I was shocked when a few years later I went to work at one of the best law firms in Los Angeles and found out that it was the exact same way we did things; it wasn’t malpractice at all...it was common practice! Last, when my own father became ill with cancer at only 57, he did not have his own estate plan finished. We had been talking about it for a couple of years, but there were still many open issues. Once he became sick, it was impossible to talk about estate planning because it would have meant acknowledging he might die and he had to maintain the mindset that he was going to beat the cancer. My dad died with an unfinished plan that left my step mom with a big mess.
14. What other assets do people need to protect -- and how do you help them do this? Life insurance is a big overlooked asset that needs to be protected at your death.
15. Why do you suggest people create what you call a “family wealth inventory”? Every family needs to get their financial house in order and create a Family Wealth Inventory so their loved ones will know exactly what to look for if they become incapacitated or when they die. Right now there is $5.2 Billion dollars sitting in the CA Department of Unclaimed Property; much of that got there because someone dies and the family doesn’t know to look for small accounts or insurance policies; these can end up going to the State. When you have a Family Wealth Inventory that stays updated throughout your lifetime, you don’t have to worry that the State will get any of your assets after you are gone.
16. Does divorce or remarriage complicate one’s estate planning and guardian naming? Divorce and remarriage make estate planning even more important. If you died during a divorce without making specific provisions otherwise, everything you have would go to your soon to be ex. Most people don’t want that to happen. Second marriage situations always complicate things because you want to make sure your plan (or lack of a plan) won’t result in fighting between your new spouse and children from a prior marriage after you are gone.
17. Can you share some inside secrets every small business owner needs to know so they can take maximum business risk with minimal personal risk when it comes to estate planning? There are three insider secrets every small business owner must know to take maximum business risk with minimum personal risk: 1) an unincorporated business is not really a business; it’s a hobby. If you are serious about your business, you must establish a business entity to own the business and shield your personal assets from liabilities associated with the business; 2) there are three critical relationships for every business owner must have – a legal advisor, a tax advisor, and a money advisor – most business owners have none of the above, or at most one; and 3) if you know you have a home run with your business, you may want to consider setting it up in such a way that you don’t even own the business, but instead it is owned by a trust created for you by a parent; this is a specialized strategy that requires the guidance of a lawyer who is an estate planning expert.
18. Why do you recommend parents should videotape and write down their values, wishes, and personal stories? Most often when someone dies, their most valuable assets are lost – the values, insights, stories and experiences, or who they are and what’s important to them. When my dad became ill with cancer, I wanted to pull out the video camera and record him, but it felt uncomfortable because it was as if I did that, we’d have to acknowledge he was dying. At his death, he left no writings or recordings telling me his thoughts and feelings. Had he, it would have been the kind of thing that is more valuable than any amount of money. When we leave written and recorded messages for our loved ones, we are leaving behind what truly matters – a piece of us.
19. It seems even celebrities don’t plan their estates properly – James Brown, Heath Ledger and Anna Nicole Smith to name a few. How is it that people with so much at stake can be so irresponsible? It’s really not the fault of celebrities and other people who die without their estates in proper order; they just don’t know how important it is to make sure things are done right. The legal field has made planning unnecessarily complicated and seemingly painful. And, most lawyers have done a terrible job at ensuring their clients’ planning stays up to date, believing it is the client’s responsibility to contact the lawyer. I call foul on that – it is the lawyer’s obligation, if not legally, at least professionally, to keep us with his or her clients and ensure that estate planning stays at the forefront of their attention. We are immersed in it everyday. We know when changes in the law happen; we know when a client’s plan needs to be reviewed – we should be keeping in contact with our clients.
20. What tips do you offer for people to legally keep their family wealth out of the government’s hands? To keep your family wealth out of the government’s hands, plan ahead with the guidance of a personal lawyer. Don’t think that just because you are young, it’s too early. It’s really never to early to get started if you have children and money, you should at least talk with a lawyer to determine what would happen if you were to die or become incapacitated. Then, with that knowledge you can make the right decisions for your family.
21. What should you do to insulate your kids’ inheritance against divorce or a lawsuit? Protecting the money you leave your kids from their potential future divorces or lawsuits is one of the most underused and most valuable estate planning strategies. Most estate plans leave assets outright to a beneficiary, usually distributed at specified ages – most frequently staggered at ages 25, 30 and 35. The trust would then terminate after the final distribution, leaving the inheritance at risk if the beneficiary got divorced or was sued and subject to estate tax when the beneficiary dies. In contrast, when left in a properly drafted lifetime asset protection trust for the beneficiary’s lifetime, the beneficiary can receive control of the inheritance, but maintain the complete protection of a trust.