Thursday, February 09, 2006

Looking for the Perfect Valentine's Day Gift - Create A Love Drawer

Category: Estate Planning, Probate and Estate Administration

Now, before you get thinking "those" thoughts, a "love drawer" here is not what you might think. It is a catchy term for giving your family the gift of having all your financial records in one place, and letting them know where that place is.

From CBS News Setting Up A Love Drawer February 7, 2006�13:34:28: "Still looking for that perfect Valentine's Day gift? Presents like candy, flowers or jewelry are always nice - but financial author and radio host Dave Ramsey tells The Early Show co-anchor Rene Syler that a real gift of love can be giving your family peace of mind in case something happens to you.

Ramsey has come up with a concept he calls the 'love drawer.' It's a place where you keep together important documents, such as wills, insurance and financial information.

'It's an ideal Valentine's Day gift if you're smart enough to put chocolates and roses with it,' Ramsey jokes. 'It's an ideal gift. When you're a real man, a real woman, the way you say 'I love you' to your family is you're prepared. You've got your act together if something happens to you. "

The need for a "love drawer" is very real. In assisting a family with administering the estate, sometime the most difficult part of the process is finding out what the deceased person had. Not to be facetious - but given the nature of an estate administration, you can't exactly ask the person "where is your original will??". Not only is this frustrating, but can be very costly in terms of increased legal fees (if a copy of a will needs to probated for example, or the time spent tracking down whether or not an asset even exists before a date of death value can be obtained) as well as increased expenses (banks and brokerage houses charge for having to go back through their records when you don't have them).

So consider setting up a "love drawer". In there should be copies of:
Living Will.
  • General Durable Power of Attorney.
  • Last Will and Testament.
  • And all Trusts created by you, where you are a Trustee, or where you are a beneficiary
  • Last years statement for all bank accounts, investment accounts, annuities, IRA's, 401(k), life insurance (basically, anywhere you have assets).
  • Any stocks or bonds you hold in certificate form. To do your family a real favor, transfer those stock certificates to a brokerage account.
  • A list of your advisors and their contact information, including your attorney, accountant, financial planner, investment advisor, insurance agent.
  • Your burial wishes.
  • A list of who should get what personal property.

So give a little love this Valentine's Day season.

Tuesday, February 07, 2006

Sounds too Good to be True? Financial Scams Targeting Seniors on the Rise

Category: Elder Law, Estate Planning, Financial Planning

An article on an unfortunate trend from - Financial scams expected to boom as boomers age addressing the issue of aggressive marketing of estate and financial planning seminar to seniors, where the products offered through the seminars don't meet, or are inappropriate for the senior's needs.

"While people 60 and older make up 15% of the U.S. population, they account for about 30% of fraud victims, estimates Consumer Action, a consumer-advocacy group.

As this gargantuan generation of boomers starts to retire, 'You're going to see more of these seminars and more of these sales pitches,' says James Nelson, assistant secretary of state in Mississippi. 'Wherever retirees are congregated, you're going to have these people preying on them.'"

There is real money controlled by baby-boomers, which unfortunately can make them targets for unscrupulous marketers of products. The article states that "[b]oomers have more than $8.5 trillion in investable assets. Over the next 40 years, they stand to inherit at least $7 trillion from their parents, research firm Cerulli Associates estimates."

This does not mean that all seminars geared to estate planning and financial planning are scams - just the opposite is more likely true. Seminars are a wonderful opportunity for attorneys and financial planners to educate the public about complex areas of the law that may effect them, as well as investment opportunities to reduce those risks. But, you should exercise some caution and common sense in following up from these seminars. Some things to keep in mind.

  • Only a licensed attorney in your state can prepare a Will, or should prepare any estate planning document, including a trust. You can contact your state or local bar association to see if the attorney is in good standing and if any complaints have been successfully filed against him or her.
  • You and your goals and needs should be an attorneys first concern - not the goals of your children, the financial planner, or the attorney. If you don't feel that your goals and needs are the first priority, see some-one else.
  • There are no magical solutions to estate and tax planning - there are tried and true techniques that an experienced estate planner can apply to your situation. If someone claims to have the secrets of a good estate plan, you need to know that there are no secrets.
  • There is no one magic financial product that solves all woes - as with estate planning, the right product for you must be tailored to your specific asset mix, income, needs and goals. An experienced financial planner will not recommend a product until he or she has analyzed your needs. And be sure to ask for (1) the charges for the product, (2) the agent's commission, and (3) any penalties that might exist in liquidating the product.

If you do think you have been a victim of fraud, there is a sidebar in the article talking about your options.

Monday, February 06, 2006

Personal Property Distribution in Your Will - The Small Stuff Really Matters

Category: Estate Planning

This article from a local Maryland Paper - the Herald-Mail reminded me of one of the strange truths about administering an estate after someone dies - the biggest issues are often over the items with the smallest extrinsic value, but the largest emotional value. For the most part, if you have a will, the distribution of your "main assets" (bank account, stocks, bonds, real estate, etc.) is pretty cut and dried - liquidate the assets, pay expenses, and divide up by the percentages set forth in the will. In most cases, that means that each child gets an equal share, and there are limited issues (unless there is a claim of undue influence, etc.).

However, it is not so cut and dried when it comes to your "stuff" - think here clothes, furniture, jewelry, decorations, family photos - items that may have no value to anyone outside of your family, but a huge value to your family members. Combine that with the fact that most personal property clauses in a Will are something like "To my then living children, to be divided among them as they shall determine, or if they cannot agree, as my executor shall determine. Any items not so distributed shall be liquidated, and the proceeds distributed to such children."

The problem comes in when the children don't agree - and this disagreement is set against a context of a lifetime of family jostling between siblings. You may think neither child would want your collection of crystal pigs for example - but wait to see the fireworks that fly when one child takes the pigs because "Mommy wanted her to have them" and the other children don't agree. The issue here isn't the thing itself, as much as the memories attached to it. Memories are harder to divided up into equal percentages than a bank account.

Some possible solutions?

In New Jersey, pursuant to NJSA 3B:3 11, you can write a letter stating who gets what for your personal stuff and sign it - no need to go through the formalities of a Will. This informal letter can only control the distribution of your "stuff", not your hard assets. However, it is very useful as you can keep changing it without having to go back to the attorney.

In other States (like New York) that do not allow for a personal property distribution, one idea is to a formal codicil (amendment)to your will to address personal property. You should see your attorney each time you want to change the codicil, but at least you will only be changing a smaller document.

Another idea is the "Stand in Line and Pick" concept - somewhat like the football draft. It goes something along the lines of kids drawing numbers, and then child with the highest number getting to pick any item (or from a specified group of items such as photo albums, jewelry, keepsakes collections, guns) and then the next in line can pick and so forth.

However, if you absolutely want an item to go to someone (1) let all your children know, while you are alive, that it is your wish for your engagement ring to go to your eldest grandson for example, not just the family you are leaving the item to, so there is no miscommunication down the road, (2) write down, whether formally or informally as your state allows, where you want your assets to go.