Tax-efficient retirement planning is an important focus, and particularly for those who are at an age where they can reasonably work with their expert to implement strategies to acheive the best possible tax-free retirement income plan.
The focus on property-efficient life and asset planning is frequently overlooked while the tax-efficiency discussions are being created. But property-efficient planning is equally and sometimes more important.
No one likes to consider that our lives are fragile. Accidents, illness and debts are usually thrust upon us or upon our family members with little time to pivot and consider the short and long-term effect on our property. No one has, as it is said, the “crystal ball.”
So what do we do to acheive property-efficient life planning?
This series explores the many considerations that should be part of your discussions with your estate-planning attorney.
A start…
The best place to start is with a discussion about just what is a person’s “estate”. I am often confronted with the person who claims that they do not have an estate. They are of modest means and regular, but not to them “significant” property interests.
Everyone has an estate. We all have property interests of several types.
Your estate consists of all of the tangible and intangible things that make up your day-to-day existence. We have ideas and plans and information that we have gathered. Some of these are the subject of formal trademark, copyright, patent and other protections that are provided by statute and common law. These types of property interests are protectible and they have value, regardless whether they are the subject of current or future protections and filings. And the value may be or become nominal and unworthy of planning for future protection. But until that time, we need to talk about it.
You also may have businesses and business interests. These property interests are usually formalized by partnership or joint venture agreements or by stocks or other certificates. Or they may not yet be at a stage where they are included in formal agreements and entity registrations. So, some of these property interests are tangible and some are intangible. Regardless where we are at in the discussion, we need to talk about it.
We have rights created by contract – called, aptly, contract rights. The right to do or to get something, or to have the value of something or the value from some activity now or later. Think rights to royalties for songs or books written, rights to the use of our pictures or art or our own likeness, and rights to receive payment for something that we have created and that we are now or in the future going to give another the opportunity to use, for a price (or perhaps for free).
We have real estate interests. These are interests in real property of one sort or another. These include leases of real estate, title to all or a part of residential, commercial or other real property, and even interests in the real estate owned by another person or entity such as an “easement” or other right to use the other person’s real estate. And each of these interests have many actual or potential legal connections: the Condominium Association, the Landlord or Tenant, and the neighboring property owner, to name a few.
And, of course, there are all of the other “personal property” interests. Including, for example, furniture, equipment, jewelry, tools, automobiles and boats and other watercraft, and all of the other myriad ‘stuff of life’.
True. The person who leads a reasonably simple life and lifestyle may not have an “estate” with broad types of property interests. But they do have an estate nevertheless.
For most others, and not simply those who have become “successful” in their creation of wealth, judged by wealth, the scope of their “estate” becomes the important subject of discussion with their estate planning attorney.
Read on, as our series explores the many positive aspects of estate and property-efficient life planning.
