Posts Tagged Estate Planning


In a prior blog post, I had compared the two most popular vehicles for establishing Educational Funds for Minors—the Uniform Transfers (also called Gifts) to Minors Account and the 529 Plan—linked, as follows: I prefer the UTMA, since:  investments may include all types of securities, and there is more flexibility as to using the money.  The investment process might also be educationally valuable to the child(ren), as well!

There was an interesting book, “Age Wave”, written by psychologist Ken Dychtwald, back in the late ‘80s.  In it, he traced the economic impact of the Baby Boomer Generation, as they passed through life’s stages:  infants; toddlers; young children, pre-teens; teenagers; to young adults.  Think about it:  Gerber’s; Mattel; Disney; cosmetics; Nike; autos, etc.  I believe that the investment process, behind funding an education, can be a learning process for the child, and a relationship-building opportunity for the parent or grandparent.

My Wife and I started an UTMA Account for our Grandson, Henry, when he was six months old.  Anyone can make annual additions to such an account up to $14,000 ($28,000 for a couple), and to each child, which would be exempt from the Federal Gift-Tax.  Personally, we believe that lifetime gifting is much more satisfying than just leaving a legacy through your Estate.

Henry will be four years old in six weeks; so, he is still too young to participate in the investment process.  But, I have been laying the long-term groundwork by investing in companies, as I see fit.  Once he’s approximately seven or eight, however, we’ll let him know that we have established such a fund, and point-out older cousins or family friends who have been to college—to build an interest.  But, great careers can certainly be made from vocational school and apprenticeships, as well!

Once Henry decides whether, or not, to become involved, he can initially suggest products that he likes; and over time, we can do computer searches to see if the sales have grown—as more of his age group wanted those products or services.  As he sees his account grow, he might find interest in tracking it on a spread sheet and, at some point, begin to see the advantages of products that he doesn’t use from an investment standpoint, and that the products he does like might not be economically feasible as an investment.  Any detailed analysis would only be at his suggestion.  Seriously!

The important goal here is to establish an account to fund higher education, if you can; but, it should not be used to force a child to go to college.  Likewise, allow the child to be as involved as they wish to be in the investment process, or prefer not to be.  Likewise, permit them to engage at times of their choosing!  Besides preparing early for education, the other important goal should be to have things that parents and/or grandparents might do with the children and young adults.



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Estate planning is just one of those things that people often wish to avoid or keep putting off.  Perhaps they prefer to keep their personal affairs private, maybe they cannot even consider their own mortality, or they have just never seemed to get around to it.  But, consider the fact that it is best to declare your various preferences while you can, before its too late.  My prior posts on the topic are linked as follows:

As you age; however, there are two other documents that I would suggest you consider, in addition to a basic Will. A Durable Power-of-Attorney, unlike a General P/A, remains in effect if you cannot act on your own.  It enables the designated person to handle your financial and administrative affairs on your behalf. A Health Care Surrogate allows you to name someone who can make medical decisions for you.  You can, in fact, name different people in the Durable P/A and the Health Care Surrogate documentation.

This question has recently come up with regard to adult children being able to discuss your medical situation with your doctors.  Generally, doctors and hospitals have forms you can use to provide such access for your children (generally just one); however, provide them with the Health Care Surrogate document, as well.  Depending upon your family situation, you might want to have access to children’s medical contacts too.

If your son or daughter lives out of your local area, you might also consider providing a close friend or relative with a copy of the surrogate documents.  In case of emergency, assuming that the close friend/relative might be at the hospital when your child arrives, you might want to give them a copy just in case the doctor/hospital cannot find their form.

Lastly, it is important that you consider confiding in whoever might be designated as your Executor in your Will, as well as named on other documents, and take them into your confidence.  Show them where your personal files (tax returns, brokerage and bank statements, insurance policies, etc.) might be, describe your finances and, if possible, arrange for them to meet your doctors, CPA, attorney, financial advisor, etc.  Make sure that they each have the other’s contact information.

NOTE: A General Power-of-Attorney usually becomes invalid when a person, naming the P/A becomes mentally or physically incapacitated, either permanently or temporarily.  The Durable, however, remains in effect.

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I have written Blog-Posts before about Estate Planning and the need to update your Will from time-to-time.   Also, as you get into your 60s and, perhaps, are thinking about Retirement, a Durable Power-of-Attorney (POA) and Health Care Surrogate are also important.  These documents are vital for you to name who you wish to settle your Estate, handle your business affairs when you cannot and, likewise, make medical decisions for you.  Be sure to name a Successor for each of those roles–not necessarily the same person–to act if the originally-named person cannot act on your behalf.

The linked article, by Michelle Singletary, “Get affairs in order before it’s too late”, is from the Columbus Dispatch,  Michelle writes The Color of Money column regularly and it is syndicated in various newspapers, generally on Sundays.

As you can read in her column, she is sharing a personal situation which very often happens.  Estate Planning is an important topic that everyone should address and, as Ms. Singletary has learned the hard way–before its too late.  Don’t put if off!

Many of us drive on busy streets and highways, dealing with careless drivers. and illness or injury can strike at any time.  Besides your Family and Friends, also think of the Health Care Professionals who will have enough to do with taking care of your medical needs; so don’t compound that with their having to deal with the Court System.

As the article notes, only about 35% of people even have a basic Will.  Update it every so often too; because, over time: people should be added or deleted from old documents; your finances have probably changed and if you moved to a different state, you will surely need new documents.

Make sure that whoever will be your Executor, POA and Health Care Surrogate know where these Documents are.  Review them with those appointed.  YOUR SAFE DEPOSIT BOX IS NOT THE BEST PLACE FOR THESE DOCUMENT; BECAUSE, (DEPENDING ON THE STATE) THE BOX MIGHT BE SEALED. If you have a cemetery plot, place a copy of that document, with the records, for your Executor.

It is also good to provide a Letter to your Executor to advise of your wishes for certain things of a more personal matter: do you wish to be dressed more formal or casual on your way out; disposition of personal items such as certain pieces of jewelry or other items; do you wish a religious or secular service, or None, and how about military honors?   How about a favorite beverage poured on your grave or, perhaps, your business vehicle in the funeral procession, if any?  Now, don’t laugh!

As an aside, we attended a secular memorial service for an avid fisherman who was retired.  He and a group of friends went out on a charter fishing boat five days-per-week.  His fishing buddies attended, wearing their fishing togs and one even gave the Eulogy.  The Boat Captain’s panel delivery van–with a big fish painted on the side–was a vital part of the funeral procession to the cemetery.  This was a very fitting touch!

You might think the expense of consulting with an Attorney to update your Estate Plan too costly; however, I would turn that around and say that it might be more expensive not to.  Sure, you don’t consider yourself particularly wealthy; however, take an inventory of what it might be if you were to pass away.  Add-up the value of any Life Insurance; Financial Assests, including IRAs; company-sponsored Retirement Plans; Business Interests, if any and other personal effects.  Any mistakes or omissions in the documents could end-up causing even greater expenses to your Estate or Beneficiaries.

NOTE: If you are incapacitated or otherwise cannot manage your affairs, a General Power-of-Attorney might be invalid.  Only a Durable POA would suffice at that time.


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As Parents get older (quiet, Daughter), Adult “Children” should gain some understanding of each Parent’s Personal Wishes, such as: who will the Executor be; Health Care Surrogate (to make Health Care decisions when they cannot) and do they have a DURABLE (very important word) Power-of-Attorney (to handle Mother or Father’s affairs when they cannot). Regular P/A’s cease to exist when someone is either temporarily or permanently incapacitated; however, a “Durable” continues to be in effect. (Normally, attorneys draw them up.)

Last July, I wrote the linked Blog Post, regarding your getting a handle on your Parents’ Affairs, and knowing when you or another Family Member needs to step-in, This Topic becomes more and more important as they grow older. Also, oftentimes the changes in mental or physical capacity are difficult to notice by someone who sees them regularly: so, count on Family or close friends who only do so on an occasional basis.

Besides the obvious, more basic points noted above, it would also be good for “Children” and Grandchildren to also catch-up on the Personal Side of the of things. The linked column, by Andrea Coombes, in the Wall Street Journal, lists some valuable questions to ask either Mom and/or Dad,

Most columns on this topic deal with the Estate, Health Care and Financial issues regarding the Elderly; however, Ms. Coombes’ approach is more oriented toward your keeping Family History alive, often-told stories and Mom and Dad’s preferences for eventual transfer of whatever assets that there might be.

Just think of the areas that, when its too late, you might have always wanted to ask:

1. Mom (in our case), why did you keep following Dad home? Dad, what were you looking for (if at all) in a Wife? Daughter, just don’t show this to Mom! Please!
2. Mom/Dad, which assets do you want to go to specific people? Think of favorite jewelry, prized tools, artwork, a vintage car, antique furniture or perhaps some other family heirlooms?
3. What was (Great) Grandma/Grandpa like? Historically, who in the Family am I most like? Or, tell us about that wild Aunt Sally or crazy Uncle Harry were like.
4. Depending on the normal Family Protocol, is it OK for us to have a luncheon or reception for the Family’s guests when you pass on? Remember that you will want to, at least, provide some snacks and refreshments for both local and out-of-town guests. Remember that we may very well never see some of them again.
5. In some cases, hiring a Professional Fiduciary (attorney or trust department) to be involved. can be helpful. Sometimes, there might be discord among Family Members–even Siblings. This way, that Professional (who regularly handles such matters, either acting as a Fiduciary or even just as an advisor (Agent for the Fiduciaries(s)) can provide the cover for why some things might need to be done in a particular manner. Make sure that that potential Fiduciary has agreed to be involved in handling the Estate–and reviewed the Documents ahead of time.
6. Mom/Dad, would you like to prepare a Personal Letter to your Executor(s)? For instance, some people may want to make sure that there is a Donation to a Favorite Charity, while others may or may not wish to have any military references at the Memorial Service or Cemetery? This should be suggested to Mom/Dad while they still can make their Personal Wishes known.
7. Once you get into this Discussion, keep it open-ended, take notes or record it and include as many Family member as possible. Be sure to let other interested parties know what transpired.
8. Obviously, you or others in your Family might have other topics or issues to cover, as well.

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With Tax Season having just passed, many people still have their various tax and financial documents handy. It’s a great time to make the extra effort and review your Estate Plan, and discuss it with your Spouse or Partner. When you are young, a Will might be all that you need, unless you have a considerable amount of money, there are special needs people who are dependent upon you or you have a medical condition that might warrant more consideration. As you age; however, besides the Will, you might also consider a “Durable” Power-of-Attorney and a Health Care Surrogate.

The linked article, from the NY Times, provides a good refresher, Without going into a lot of detail, I would draw your attention to ten reasons to, at least, dust-off your Plan:

1. Life changes–retiring, getting married, divorced, have children, or lost a Spouse or Partner?
2. Moving to another state? Review your old Plan with a Member of the Bar in your new home state, both to update your documents and make sure that they are valid under the new State’s Laws.
3. Make sure that you chose who will be the Custodian of Minor Children, if you and your Spouse/Partner pass away. Also, provide them the necessary financial assets to do so, if possible.
4. Update your beneficiaries–new ones, some are deceased, or ones that you just wish to eliminate. Be sure to account for beneficiaries who were minors (under your old Plan), but are now adults. Consider children of beneficiaries who pre-deceased you.
5. Do some potential beneficiaries need more financial assistance than others?
6. Should you update your choice of Executor, Trustee, or Successor of either. Generally, choose someone younger than you, knowledgeable and willing to serve.
7. Tax considerations, such as Trusts, Gifting, etc. T
8. Tax-Deferred Assets, such as 401(k)s, or Traditional or ROTH IRAs are generally conveyed directly through each of the Custodians. You might also want to consult your Tax Advisor on these.
9. Are their business interests? If so, do you have a Succession Plan? If not, who will advise your Executor with regard to disposition of the Business nor Assets?
10. Your attorney will probably have other points to discuss.

NOTE: Wills are generally filed in the County Clerk’s Office, and are accessible to the general public.


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Over the years, I have generally thought that so-called “Financial Planning Tools” were mostly sales gimmicks to entice people to move their Financial Planning needs to the Front Burner. There used to be a term: “GIGO” (Garbage In, Garbage Out). To me, that was what Financial Planning Tools were all about. Too much reliance on numbers, perhaps just picked out of the air.

In essence, these tools advised people to determine, let’s say, how much money they will need in Retirement and, then, you work backwards from there, deciding how much to contribute. Well, can you afford to contribute that amount, what about unforeseen emergencies, Growth of Family, etc? Remember that we don’t live in a Perfect World.

That’s truly putting the Cart before the Horse. If you are used to earning $100M in Family Income, you will not want it to go much lower. But: will you still have a Home Mortgage; Drive your car as much; have Kids in College, etc? So, perhaps your Cash Needs will drop more than you might think.

The linked Inter-Active Tool, from the NY Times on March 23 2011,, to me seems to make sense. Rather than merely making-up numbers, it’s focus is more of a question check-list for the various stages of your life. Things to think about in your Planning.

Keep in mind also, that in many cases (i.e. First Child, Divorce, Retirement, etc.), it might be the first time that you encountered it. In some circumstances, such as saving for a Child’s Education or Retirement, starting early is perhaps the best idea. For most other’s, taking a detailed inventory of your Assets and Liabilities and speaking with Friends or Relatives who have been through it, might also make you more aware of possibilities. Having competent Legal Advice is important, say for a Divorce or Estate Plan; but, keep in mind that attorneys often focus more on Legal Matters rather than have a realistic understanding of the people involved.


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Participation in a Company-Sponsored Retirement Plan (A/K/A “Qualified Plan”), normally enables the employee to make regular contributions–and the Employer might also make “Matching” Contributions (generally from three-to-six percent). These funds would be invested as the employee decides, within a range of (mostly) mutual funds.

Although Employee Contributions are usually made in small increments, coming out of their Payroll, they can certainly grow over time. Also, these funds would grow tax-deferred and the Employee might still be able to contribute to either a Traditional or a ROTH IRA.

An important point to be aware of, however, is that Qualified Plans are the Employer’s Plans. They control the Administration, Investment Options, and Withdrawals, among other things. As the linked article points-out, such Retirement Plans can be wrapped-up in Bankruptcy and other Legal Proceedings–and out of the reach of Employees, perhaps when they most need them. The article is in today’s NY Times, by Gretchen Morganson, When a 401(k) Is Locked in the Freezer,

Approximately six years ago, Federal Laws were changed to enable “In-Service” Roll-Overs, by persons who are at least 59 1/2, as long as the Plan permits. Generally, investment options are limited within a Plan; however, there is often considerably more flexibility within a personal IRA. Perhaps more importantly, especially if an Employer is having financial difficulty, having personal control of YOUR assets would be quite advantageous.

Many people who participate in 401(k)s, and the like, don’t really do their homework. They merely assume that the Employer is contributing Matchings Funds for their entire Account, which is certainly not the case. Also, the Configuration of the Plan is all at the discretion of the generally not so benevolent Employer. The Plan is generally established with keeping the costs to the employer as low as possible.

In today’s Economic Environment, I would suggest that Employees take control of their assets–especially if they are approaching Retirement–OR believe they might be laid-off. In-Service Roll-Overs can also be done on a partial basis; thus enabling the person who is not concerned about the financial stability of their employer, to shift assets incrementally to their personal control.

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