Early Estate Planning to Avoid a Huge Headache Later

This article was published in the Escape Artist Weekly Newsletter on October 16, 2018. If you would like to subscribe to the newsletter, please click here.

My grandfather was diagnosed with Alzheimer’s shortly after his long-time partner passed away. Over the next handful of years, as his condition continued to worsen, his four children, one of them being my mom, scrambled to piece together the unknowns of his self-managed estate.

My grandpa is an entrepreneurial, working-class family man and is always willing to try something new to support his family. He started many businesses out of the family garage, however, not many of them got too far off the ground. Because of his distrust of those outside of the family, his children were often the ones working beside him to get his ideas off the ground. Extra cash was not common, but they always managed to get by.   

Early Estate Planning to Avoid a Huge Headache LaterGrandpa and me in 2012.

Then one day, his life changed. He went to a real estate investment conference and learned how to build a business without using a cent of his own. There was no stopping him.  

He spent the next few decades learning how to negotiate, sell, and buy smartly. He did not trust financial advisors, attorneys, or anyone outside of the family who had access to his hard-earned cash, and as a result, his real estate business was run by one person, himself.  

He operated the business out of an enormous pile of shoe boxes, which had decades worth of receipts and papers popping out from beneath the lids. These boxes, stacked in many tall columns, took over his dining room. Although there was no order to the boxes, they were at least held together by a rubber band. It worked for him, more or less, but in reality, it was a mess and no one knew the extent.

Fast forward to today, 10 years after being diagnosed with Alzheimer’s, and his kids (plus my grandfather’s attorney) have pieced together the puzzle. His real estate has now been correctly structured, and bills are now being paid on time – but it was not easy nor inexpensive.

After years of headaches, my parents learned a very important lesson… the importance of estate planning and communication with their children. They were so serious about doing it correctly upfront that they took the liberty to set up appointments for my sister, brother, and me to get a will and Power of Attorney. In your early 20s, this is hardly something you think about.

Without fail, every time I visit Grandpa, he tells me the story about how he built his legacy without using a cent of his own. At 89-years-old, he still checks on his properties with his kids and proudly reminds us who he did this for – his heirs.

Early Estate Planning to Avoid a Huge Headache LaterGrandpa and his grandchildren.

Early Estate Planning to Avoid a Huge Headache LaterNo matter his age, Grandpa is still the master at chess.

I’m a lucky gal to have a role model like him and to have parents who encourage financial literacy… although I am the black sheep who decided to look at opportunities outside of our family’s home state of New York, let alone the USA.

So let’s take this conversation 1 step further and add the international component to estate planning. It gets even more intricate. There are many pieces of the puzzle depending on what you own and what you want to accomplish. In addition, there is a critical factor that plays a significant part in your planning – where your assets are. This will ensure that you structure asset ownership appropriately.

DISCLAIMER:  I am not an attorney nor a financial advisor, but Joel Nagel is, and I recommend chatting with him if you want to talk about your specific situation.  

I had spent years listening to financial experts talk about asset protection and estate planning at conferences. I would spend the length of their presentations ferociously writing notes in the back of the room trying to capture it all. I thought I had a comprehensive list:

  1. Set up wills in each country where I have real estate.
  2. With each country update, be sure to update my will in the States.
  3. You can set up structures (trusts, IBCs, LLCs) for efficient estate planning and added asset protection.

Early Estate Planning to Avoid a Huge Headache Later

There are many considerations when looking abroad, but don’t let that bog you down.

Because I didn’t have any assets to protect when I was starting out, I disregarded number 3 which ended up being a mistake.

Early on, the one piece of information I missed is that probate in Panama is a mess even with a will. The best way to avoid probate is to own the real estate in a corporation and not a personal name. This is where number 3 would’ve come in handy.Consumer Resource Guide

“ARE YOU KIDDING ME?!” I said to myself after learning this, extremely frustrated. I had spent the time and money to put together a will in Panama for a property that I didn’t title in the most efficient way possible. I was frustrated but took a deep breath and realized that if I was frustrated, my heirs would be even more frustrated. Not knowing the language, country, or law would be extremely complicated for them to get anything accomplished.  

My good friend from the States had a similar frustration recently. She opened a Belize international business company (IBC) with the intention of holding her plethora of overseas assets. What she didn’t realize was that this Belize company, being an international company, could not do business in Belize. So, when she bought a condo in Belize, she was surprised to learn she needed to set up ANOTHER company to hold her Belize condo. She hemmed and hawed, and then, acknowledging that she couldn’t get around this law, set up another company.

Want to know another fun fact? In Panama, Self-Directed IRA custodians are not recognized as legal entities to own real estate. So, when buying real estate in Panama through an SD-IRA, folks need to have an LLC/IBC owned by their SD-IRA to be the owner of their Panama property. Panama recognizes IBCs and LLCs, but not custodians.

Early Estate Planning to Avoid a Huge Headache LaterSetting up your estate to make sense for future generations is important.

You can see how it can get complicated really quickly, and we are really just skimming the surface. The point of this article is to make you aware of the importance of planning and hopefully encourage you to act. As Tony Robbins says, “Knowledge isn’t powerful, execution is.” So here’s the push for you to begin your execution. Don’t know where to start? I didn’t either, but Joel Nagel is a helpful, seasoned expert who can discuss your options with you.

This article was published in the Escape Artist Weekly Newsletter on October 16, 2018. If you would like to subscribe to the newsletter, please click here.