Without realizing it, people plan for the possibility of disaster everyday. Installing a sump pump in one’s home is preparing for the possibility of a flood. Airbags and seatbelts prepare us for the possibility of an accident. Bike helmets prepare for the possibility of falling of your bike. And most forms of medical insurance prepare for the possibility of a traumatic injury.
Given our tendency to be prepared for disaster, it seems surprising that many people do not have a well planned estate.
An Alaska court case, Battley v. Mortenson demonstrates the necessity to plan ahead in estate planning like you do in other aspects of life. In this case, Thomas Mortensen executed a trust to protect his assets and transferred assets into his trust without leaving any assets outside of his trust to maintain costs of daily living. Mr. Mortensen was also buried in debt at the time the trust was enacted. His strategy was flawed, the asset protection trust failed to adequately protect his assets. Asset protection trusts only work if implemented before creditor issues exist.
The lesson in this case is to plan ahead for disaster in estate planning. If you want to leave a solid legacy for future generations, do not wait to use asset preservation techniques until after financial troubles arise. Plan your estate now so you can be well prepared for disaster. You can’t install a sump pump after the flood or put on a helmet after you fall; the same principle is true for estate planning.