Lawyer's book wades through death and taxes
By Dan Nakaso
Advertiser Staff Writer
|||Making inheritance less painful
Tips from David Larsen on planning for "death and taxes."
Lawyers give the first meeting for free. Take them up on it. It isn't going to cost you a thing.
Every person should have three, possibly four, documents: A will. Power of attorney. Living will. And possibly a living trust. You don't need anything more ornate or expensive than that.
It costs less to have your papers done ahead of time than to pick up the pieces later on. On average, lawyers get seven times the fee to straighten out a mess.
"A will is not for you. You're dead. It's for your family, you knucklehead," Larsen said. Don't leave your family without a will because it's going to be a mess.
Don't give children their inheritance too soon. They'll spend it frivolously. Instead put it in a trust and have a trustee pay it out as needed, or in installments.
Larsen has been practicing law at Cades, Schutte, Fleming & Wright for 29 years and has seen hundreds of people try to avoid probate, inheritance and gift taxes for their heirs only to create bigger problems for themselves while they're still alive.
And they still didn't do anything to prevent the tax liabilities, Larsen said.
"Some of these people told me about their problems and I'd say, 'You can't be serious,' " Larsen said. "There are some crazy misconceptions out there swirling around the community, over the back fence, at the beauty parlor and at the Elks Club."
In his third book giving readers advice on probate and inheritance issues, Larsen culls through the more than 300 columns he wrote for The Advertiser and cuts through the misinformation that surrounds the issue of avoiding tax and financial problems.
The children of an 80-year-old woman from Hilo convinced her to put her home in their names. Five days later, the children had her evicted and Larsen had to go to court to get the deed straightened out.
Another Hilo woman added her son's name to her deed and he, in turn, put his half of the house in his wife's name. The son died before the mother and his widow demanded that her mother-in-law buy out her half.
"The bottom line is, don't add your kids' name to an asset," Larsen said. "When you croak, Uncle (Sam) won't let you avoid the inheritance tax."
Instead, Larsen offers a series of suggestions, such as signing a living trust that gives people control over their assets while they're still alive and avoiding many of the tax problems.
Larsen, who is a white-haired 58 years old, isn't afraid of making fun of his own mortality. He also enjoys some of the occasional light moments that can come along with preparing clients' affairs for their death.
One woman wanted to be cremated and Larsen asked whether she wanted her ashes scattered at sea.
"Oh no," the woman replied. "I can't swim."
"Death and Taxes" (145 pages, University of Hawai'i Press) has an initial printing of 3,500 copies. The book is available at major bookstores and booksellers statewide. All profits will go to the Hawai'i Humane Society.