Do-It-Yourself Estate Planning – Always a Bad Idea

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Never write your own will.

I don’t care how many do-it-yourself books you’ve read or how many seminars you’ve attended.

Writing your own will is always a bad idea.

Here’s why.

Wills Are Inexpensive

Here in western Massachusetts you can easily find an experienced attorney who will draft a basic will for $100 or $200.

The cost may rise based on your circumstances.

For instance, you may pay more if

1. You have a large estate (over $1 million).

2. You’re remarried and you have children from a previous marriage.

3. You want to make an unusual bequest (e.g., leave your estate to a charity, donate your body to science, etc.).

But for everyone else a simple and inexpensive estate plan will work.

So, rather than waste your time and money on a do-it-yourself will, simply call a few lawyers in the area and find one who’s willing to assist you for a reasonable price.

Mistakes Are Costly

At best, you’ll save a few hundred dollars by drafting your own will.

However, if you make a mistake it could cost your estate thousands of dollars.

A mistake could also add months or even years to the probate process.

Here are some very common mistakes that do-it-yourselfers often make:

1. They name far too many heirs in their will.

2.  They make too many itemized bequest (e.g, “my jewelry to my niece”, “my antique clock to my grandson”, etc.)

3.  They make conditional gifts.  For example, “I leave $10,000 to my granddaughter, if she graduates from college.”

4.  They fail to give adequate authority to their personal representative.

These are just a few of the errors a layman is likely to make.

Any one of them can cost thousands of dollars in legal fees and court costs to correct.

D-I-Y Wills Are Always Given Extra Scrutiny

Here’s a common scenario.

A local lawyer drafts a will for an elderly client.

A few years later the client dies and the family contacts the lawyer to probate the will.

The lawyer brings the will to probate court.

The lawyer knows the court clerks and they know him.

They’ve seen his wills for years

They know that he’s a competent estate planning attorney.

After a quick glance at the paperwork to ensure that there are no glaring defects, the will breezes through the probate process.

This happens because the clerks assume that the will was done correctly.

The opposite happens when a stranger goes to probate court to file a do-it-yourself will.

The clerks are likely to assume that something is wrong with the will.

They’ll closely scrutinize it and they’ll be far more likely to spot an error.

3 Bad Reasons for Going to Law School

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There’s only one good reason to attend law school:  you want to practice law.

This means using the law to help people—help them dispute a debt, start a business, plan their estate, etc.

People who attend law school for other reasons are often wasting their time and money.

In fact, recent surveys show that many young lawyers are unhappy with their career choice and regret their decision to attend law school.

I believe that much of this unhappiness and regret stems from their misguided reasons for attending law school in the first place.

Here are three terrible—but very common—reasons people choose law school.

1. You Like to Argue

If you enjoy arguing, then you’ll probably hate the law.

This is because most legal problems are fixed through negotiation and compromise.

Not argument.

In fact, lawyers who like to argue often get the worst results for their clients.

Arguing wastes time.

It creates hostility.

And it often leads to litigation.

Most lawyers want to avoid this.

Instead, a good lawyer will resolve his clients’ legal problems in the quickest, most cost-efficient way.

He argues for his clients when necessary, but he doesn’t go out of his way looking for a fight.

So if you want to argue find another profession.

2.  It Will Look Good on Your Resume

Every year law schools admit many students who have no intention of practicing law.

Why are they there?

They’re there because—in their minds—a law degree will look good on their resume.

It will make them more competitive in some other field—teaching, accounting, lobbying, etc.

No other professional schools experience this anomaly.

Think about it.

Who would get a doctorate in dentistry or pharmacy in order to get a job outside of those professions?

It makes no sense.

Law school is meant for only one type of person—an aspiring lawyer.

If you have other career goals in mind, then direct your time and talent elsewhere.

3.  You Want Justice

If you have high ideals about justice, then the law is going to let you down.

Good people get screwed on a regular basis in courthouses and government offices across America.

Why?

There are a number of reasons.

But none is more common than procedural regulations.

They are countless.

And they often delay or completely thwart a person’s access to real justice.

As a lawyer you’ll often do no more than ensure procedural rules are followed.

You won’t be making grandiose arguments about justice and equality.

Instead, you’ll be filling out government forms, tracking deadlines and dealing with apathetic bureaucrats.

It’s not a bad job.

But it’s certainly not a heroic fight for justice.

Who Needs an LLC?

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Are you starting a business?

If so, then you’re probably getting all kinds of unsolicited advice.

And you’ve almost certainly been told that “You have to form an LLC.”

But, contrary to general opinion, not every business needs to form an LLC.

Cost

In most states, forming an LLC is easy and inexpensive.

Simply file some paperwork with the state, pay a one-time filing fee (usually $50 to $200), and your LLC is up and running.

Here in Massachusetts, things are never that simple.

Instead you’ll need to file your certificate of organization with the Secretary of the Commonwealth and pay a start-up fee of $500.

Each year after that, you’ll need to pay an additional $500 fee known as an “annual reporting fee.”

This certainly won’t be the largest expense you pay as a business owner.

But why give the government more money than you already have to?

How an LLC Works

To know if an LLC is right for your business, you first need to understand how LLCs work.

An LLC protects your personal assets (e.g., your house, your personal bank account, etc.) in two ways.

Personal Injuries

First, it will protect your personal assets if an LLC member or employee, other than you, behaves negligently and injures someone.

For instance, say you own a landscaping business.

One of your employees, while driving the company’s truck, runs a red light and causes an accident.

In that scenario only the LLC’s assets would be at stake if the company were sued.

Your private property would be off limits.

However, say that you were the one driving the truck.

You ran the red light and caused the accident.

In that case, both your assets and the company’s assets would be subject to any court judgment that resulted from the crash.

Debt

Second, in some cases, an LLC can protect your private property from creditors.

If you incur a debt in only the LLC’s name, then only the LLC’s assets can be seized or made subject to liens if the LLC defaults on the debt.

Unfortunately, the vast majority of creditors negate this advantage by having you sign a “personal guaranty” in order to receive their loan.

This means that both the LLC and you personally are taking responsibility for paying the money back.

Thus, if you default, both your business and personal assets could be lost.

Corporate Taxation

There is one last advantage to forming an LLC.

You have the option of filing a corporate tax return.

This means that at least a portion of your profits could be taxed at a much lower rate.

Here’s an (overly simplified) example.

You form a sole-member LLC.

The LLC earns $300,000 a year.

You need only $100,000 to live and pay your personal bills.

You could file an income tax return for that $100,000.

Then file a corporate tax return for the remaining $200,000 and have it taxed at a much lower rate.

There is one caveat, however.

You will need to treat yourself as an employee of the LLC.

This means that you will need to pay payroll taxes and all other expenses associated with having an employee.

So Who Needs an LLC?

Now that you know how an LLC works, it’s easy to see who can benefit from forming one.

Employers and Business Partners

If you’re hiring employees or working with business partners, it makes sense to form an LLC.

Like I said, if they hurt someone on company time, your personal assets would likely be protected if the injury caused a lawsuit.

On the other hand, if you’re operating a single-member business, then this isn’t an issue.

Your negligence would put both your business and personal assets at risk.

Financially Successful Businesses

If your business is making more money than you need for personal income, then you could also benefit from an LLC.

Speak with an accountant and see if it’s worth it to file a corporate tax return and potentially reduce the burden of paying a hefty personal income tax each year.

Businesses Incurring Debt

Finally, if you anticipate incurring a lot of debt, then you should consider forming an LLC.

Again, most creditors will demand that you personally agree to pay them back.

Nevertheless, there are some private lenders, landlords, and other easy-going business people who will not require a personal guaranty.

Therefore, having an LLC may be to your advantage.

How to Handle Boundary Line Encroachments

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Is part of your neighbor’s fence, shed, driveway or deck on your land?

If so, it’s important that you address the matter.

Doing nothing could lead to you losing part of your land.

Adverse Possession

According to Massachusetts’ law, if a person openly and continuously uses your land without your permission for 20 years or more, that person can take ownership of the land he used.

This is the doctrine of adverse possession.

For example, say your neighbor builds a fence.

The fence extends five feet onto your property.

It remains in place without your permission for 20 years.

At that point—after 20 years of the fence being on your property—you can no longer force the neighbor to move it.

In fact, the neighbor can seek a court judgment establishing his ownership of the portion of your land encompassed by the fence.

So how do you prevent this from happening?

Get a Survey

First, have your land surveyed.

The average survey costs between $150 and $200.

The survey will show if there is in fact a boundary line encroachment.

It will also show the extent of the encroachment.

Once you’ve confirmed that there is a boundary line issue, you have two options.

Allow the Encroachment

If you don’t mind the encroachment, you can simply give your neighbor written permission to be on your land.

This should prevent any future claims of adverse possession.

Your written authorization should do all of the following:

  1. Clearly describe the encroachment
  2. Expressly permit the encroachment
  3. State that you may revoke your permission at anytime

The document should be signed, notarized and recorded in your county’s registry of deeds.

The recording cost will be $75.

Demand That the Encroachment be Removed

If you want the encroachment removed, it may take some work.

Start by sending a “No Trespass” order to your neighbor.

Here’s an example.

The law is defined in M.G.L. ch. 266 § 120.

You should have the notice delivered by the sheriff’s department.

It will cost about $50.

If the neighbor ignores your notice, then you will need a court order forcing him to remove the encroachment.

At that point, you will almost certainly need to hire an attorney.

Bureaucracy – 4 Tips for Dealing with Government Agencies

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Bureaucracy is unavoidable.  It pervades almost every aspect of our lives.

Think about it.

Are you getting married?   Then you’ll need a license.

Building a deck?  Not without a permit.

Hiring an employee?  You’d better tell the state.

Dealing with the government at any level—federal, state or local—is never easy.

But how you approach the situation can minimize your frustration.

Here are a few tips that may help.

Understand the Bureaucrat’s Mentality

First, you need to understand that you’re dealing with a check-the-box mentality.

You either have the information or paperwork that the bureaucrat needs or you don’t.

If you don’t, then no amount of reasoning or arguing is going to help you.

So it’s best—before you submit anything to a government office—to understand exactly what they need from you.

 If You Don’t Know What You’re Doing—Say So!

Many bureaucrats talk down to people.

The moment they realize you’re confused about their policies or procedures, they treat you like the village idiot.

You should always admit your ignorance.  If you don’t know what you’re doing, say so.

Then ask for help.

This will disarm most bureaucrats and encourage them to act more like helpers and less like regulators.

Write Down Everything

Even bureaucrats can’t comprehend all the rules and regulations they enforce.

I often get conflicting advice from bureaucrats that work in the same office.

It’s possible to get their advice, do exactly what they say and then have them reject your paperwork when you finally submit it.

This is why you need to take notes.

When you ask for guidance always write down what you’re told to do.

Record the date and the name of the person who gave you the information.

Read everything back to them.

When you return to submit your paperwork—days, weeks, or months later—bring your notes with you.

If they tell you that your paperwork is incorrect, show them your notes and name the person who told you what to do.

At this point they will be forced to either accept your documents or contradict their coworker.

Keep Your Composure

Whatever you do, don’t lose your cool.

Yelling and losing your temper will almost guarantee that your paperwork or your case get the lowest priority.

Even the most efficient bureaucracies move like molasses.

Don’t give them any reason to put your matter at the bottom of their list.

Keep calm.  Be polite.  But remain persistent.

Like I said, dealing with these offices is never easy.  But if you follow my advice it should help reduce your aggravation and hopefully speed up whatever it is you’re trying to accomplish.

Overdraft Fees – How to Get Your Money Back

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Banks collect about $32 billion a year in overdraft fees.  The banks’ success in collecting these fees is based on the assumption that you’ll simply pay for the overdraft and not take the time or effort needed to contest the fee.

This is unfortunate because contesting an overdraft is easy and almost always successful.

Here’s how it’s done.

CFPB Complaint

First, file a complaint with the Consumer Financial Protection Bureau.

The complaint form is easy to access and fill out.  The process takes only a few minutes.

You’ll need just the bank’s name and your account number.

In the complaint simply state that the bank applied the overdraft fees to your account without your knowledge or consent.

Within 15 days the CFPB will notify the bank of your grievance and ask the bank to resolve the matter.

In the meantime you should call your bank, inform them that you’ve filed the complaint and ask if they’d like to return your money before the CFPB contacts them.

Demand Letter

In addition to the CFPB complaint, you can send your bank a demand letter based on Massachusetts General Law Chapter 93A.

According to 93A, any business that receives a demand letter has 30 days to respond to the customer with a reasonable settlement offer.

If the business ignores your letter or fails to make a reasonable settlement with you, then the business will be liable for “treble damages” when the matter goes to court.

In other words, the business could owe you three times the amount of your original claim.

Details about 93A and a sample demand letter can be found on the Attorney General’s website.

Small Claims Court

Finally, if both the CFPB complaint and the 93A demand letter have failed, simply file a lawsuit in small claims court.

This may seem like a daunting task.  But small claims court is very informal and inexpensive.  You’ll need to fill out a one-page complaint and pay a $40 filing fee.

Remember to state in your complaint that you’re seeking the overdraft fees and treble damages.  So if the bank took $140 in overdrafts, you’re now seeking $420 plus your $40 filing fee:  a total of $460.

In most cases, the bank will not hire an attorney to appear in small claims court to dispute a few hundred dollars.

Instead, a bank representative will contact you and offer to return your money in exchange for dropping the case.

At that point you should ask for at least your overdraft fees and the court filing costs.

Conclusion

You’re likely to succeed using any of these methods—a CFPB complaint, a demand letter or a small claims filing.

But when you use all of them together, you’re almost guaranteed to get your money back.