Bankruptcy can be an estate management tool

Bankruptcy can be a vital estate planning tool for some.  My colleague Suzann Becket is a fellow member of Wealth Counsel.  She recently posted the below suggestion that bankruptcy is one tool that fits into your estate management tool set.

What do Abraham Lincoln, MC Hammer, Johnny Unitas, and Walt Disney have in common? They all filed bankruptcy at some point in their lives. These men were all at the top of their field at some point in their professional lives. In some cases, such as Lincoln and Disney, the bankruptcy came relatively early. By taking stock of their situation, and availing themselves of the legal remedy to shouldering a debt they felt they could never recover from, Mr. Lincoln and Mr. Disney were able to start fresh. They both went on to great things afterward.

Johnny Unitas was a superstar quarterback for the Baltimore Colts, while MC Hammer was an entertainer with a highly lucrative career. But having a substantial income does not guarantee that business mistakes, lawsuits, or bad investments won't take their toll. In the case of Unitas and Hammer, their peak earning years were behind them when their financial troubles became insurmountable. Each of them sought bankruptcy protection and both of them were able to recover from their fiscal woes…..

It is likely that much of the public is not aware that bankruptcy can take multiple forms, depending on whether it is filed under Chapter 7, Chapter 11, Chapter 12, or Chapter 13. You may be able to determine which option is best suited to your circumstances by doing a little independent research. But you should never fear the process based on the feeling that you are on your own with no where to turn for help. That is just not the case.

There is also at least a slim possibility that part of the reason some people are resistant to the idea of filing for bankruptcy protection is the fear of embarrassment. The idea of being perceived as a deadbeat who is trying to run out on their obligations may cause some people who would benefit from the law, to continue to struggle and suffer the stress of serious monetary shortfalls month after month. Perhaps it would be worth reminding those people that the intent of the law is to provide options and solutions, not to ridicule an individual who has fallen on hard times, in many cases through no fault of their own.

Henry Ford, Mickey Rooney, Kim Basinger, Debbie Reynolds, and Donald Trump have all filed for bankruptcy protection. Yet their fame and their accomplishments are not diminished by the fact that their finances have left them suffering through sleepless nights, and mounting stress levels at one time or another.

Seeking bankruptcy protection is certainly nothing to be taken lightly.   But it can be argued that it shouldn't be avoided unnecessarily, either.  Perhaps it is of comfort to some when they realize that they may feel admiration for others who have found themselves in difficult times and sought the legal protection afforded by bankruptcy law. Maybe it is worthwhile to know that we are truly not alone during some of the more stressful and worrisome periods of our lives.

You may not consider bankruptcy as a first option tool in estate planning, but you should always keep it in mind as a potential tool.  Times have changed, and bankruptcy is no longer a sign of failure.  Rather it has become a business tool as well as a personal tool in managing your estate.  If you wish to explore the benefits of bankruptcy, be aware that knowing how and when to use this tool can be critical to preserving your estate from expensive court battles.  If this is a topic we should discuss, call me or leave a comment here.  

Eye-catching New Offices

One of the most recognized architects in the Puget Sound area is Vassos Demetriou.  His distinctive designs are well known, and his combination of eye catching design with practical functionality is much appreciated by the clients who own his designs. 

We’re quite excited that our new offices are being co-located on the top floor located of a building that Vassos specifically designed for his firm and a few other select tenants.  These new offices are located just off Lake Washington Blvd. and less than a block from one of Kirkland’s most inviting lakeside areas – home of our former offices -- Carillon Point.  We’ve kept our views of Lake Washington and the Olympic Mountain range in the distance.

And we’ve gained new offices that are more efficiently laid out, so they are highly functional for our tight-knit legal team.  Yes, it is ideal space for building delivering quality legal documents efficiently and accurately.  But it is also human-scaled space that lends itself to building the relationships between our team and our clients, so we develop intuitive understandings of each other.  

Tom and I practice “for ourselves” but not “by ourselves.”  Good understanding between us can allow us to often leapfrog the time-consuming exchange of information to identify goals and ambitions when time is of the essence.

Thanks to Vassos and his team we now have a human-scale office environment that supports our goal to become the personal partner in managing with our clients their legal affairs.

You’ll find us at our new address after our one block office move.  

5555 Lakeview Drive, Suite 201
Kirkland, WA 98033

Free parking below and a nice view above. 

Include your Digital Assets in your Estate Planning

"Digital" used to mean counting on your fingers.  Now, it means storing millions of bits of information in little 0s and 1s... so you can find it when you need it.  So, before we leave the topic of Digital Assets, I have one more excerpt from an article by Dennis Kennedy, who is an information technology lawyer and legal technology writer who publishes a monthly column in the ABA Journal.  You can find the full text of the article at http://www.abanet.org/lpm/lpt/articles/ftr03103.shtml. The rapid explosion of digital information and accounts is making this a topic of interest to nearly everyone of us.

Inventory Your Digital Assets.

I spent a large part of my early legal career as an estate planning lawyer.  In the case of either death or incapacity, the first important step is to track down and identify all of the assets, liabilities and other concerns that must be addressed.  Once an inventory is created, you can move forward with marshalling and collecting assets, identifying outstanding liabilities and paying them in a timely fashion, and dealing with outstanding issues, such as turning off utilities, canceling credit cards, arranging for storage or disposal and the like.

In the real world, your family and designated successors (personal representative of your estate, trustee of your trust or attorney-in-fact under a durable power of attorney) will be aided immensely by any list of assets and liabilities that you can prepare for them and leave in a place that is easy for them to obtain.

In your digital world, you also want to help your successors by creating an inventory.  The more detailed and accurate the better, of course, but even a small start can be of help.  Here are some of the things I suggest that you inventory:

• Hardware.  Inventorying your hardware seems like an easier project that it actually will be.  I suggest that you create a list of your hardware with a summary overview of what is on it.  Creating the inventory is likely to be an eye-opener for you.  You are likely to find that you have important information not only on the computer system you use everyday, but also on multiple other computers.  Many of us have at least one laptop and one or more desktop computers.  Many people keep copies of vital information on their work computers.  Where do you back up information?  You might have many USB flash drives, USB hard drives, backup CDs or DVDs.  There might be important pictures still on digital cameras and even information on iPods or other devices.
  
• Software.  Do you use Quicken or another financial program?  What income tax preparation programs do you use?  Do you create spreadsheets or Word documents with important financial information?  If you blog, is there a program that someone would need to use to post news to your blog?
  
• File structures.  Your inventory should sketch out the main folders and places where you keep personal, financial and client files and documents.  For someone like me, I also have audio and video of presentations and podcasts that I’d want someone to be able to locate and deal with.  You might have important collections of family photos or videos or work in progress.
  
• Online presence.  Create a list of your Web site(s), blog(s), Facebook and other social media accounts, online backup sites, online sites where you store documents, photos or other files, and listservs, groups or other sites to which you belong.
  
• Online accounts.  Amazon and other shopping sites make it easy for you to create accounts and include credit card information.  You might also have online access to bank and investment accounts.  In fact, in many cases, you might no longer be receiving paper statements for accounts.  If you don’t identify these accounts, it will be difficult for your successors to even know that they exist because there simply will be no paper trail.  Also, make a list of all the e-mail accounts you have and use.  Many of us have several e-mail accounts these days.
  
• Work information.  Lawyers might have access to client sites, collaboration sites, online document repositories or other information that no one else knows about.  In addition, they might have access to software, online tools or online databases that someone taking over their work will need to have.  In some firms, lawyers might have important network passwords, backup media or other digital assets the existence or value of which is not realized until they are gone.
  

At this beginning point, you really want to gather and collect as much information as you can for your inventory.  You can work on organizing and prioritizing later.

This is a new area of estate planning, and this information is helpful to trigger our thinking about our digital lives…..and which parts of our internet interaction, our home computer, and our business computer have become our digital assets that should be part of our estate planning.  My suggestion is that digital assets are  well worth organizing and treating as assets of your estate. Your comments or suggestions are welcomed to this blog.  And I am available to discuss  steps for managing your digital assets beyond the above list…..if advisable, let’s talk.