The End of an Era

barbara-bush 2Barbara Bush was one of our country’s most cherished Grande Dames of politics and we were all saddened recently when she passed. With her signature white hair and pearls and her no-nonsense attitude, we were a little in awe, as well as inspired, by her example of family loyalty, faith, public service and good manners. She broke boundaries as the First Lady and championed education issues in her life, while remaining a loving wife and strong matriarch for her family. Regardless of what you think of her family’s politics, Barbara Bush was a woman to be admired.

Part of her legacy will now be the grace and dignity with which she managed her end of life. Surrounded by family at her home, she left this earth with the peace and comfort that we all might aspire to. Achieving that smooth and tranquil transition requires some planning, however. There are certain things that can and should be arranged and recorded ahead of time so that one’s loved ones are not unduly burdened and so that your own comfort and care are well-managed.

Caroline Feeney, in an article on wealthmanagement.com, recently outlined some of the lessons learned by watching Barbara Bush. We think these are valuable to review.

1.Understand Probate – Anyone who has been through probate will tell you to avoid it! Probate can be expensive, time-consuming and becomes part of the public record. Protecting your assets with proper titling and using a revocable or living trust can keep assets from going through the probate system. All revocable trusts remain private and anyone can set one up for their beneficiaries.

2.Plan for Contingencies – Think of all the scenarios that might come up. Select trustees and successor trustees with care and with a back-up plan. Consider the age, health and circumstances of beneficiaries, like substance addiction or divorce protection, when determining the age or terms of your designations.

3.Personal Property Memorandum – These are the softer, more sentimental items that you own. Houses and cars are protected by a trust or designated titling and a personal property memo provides a plan for the smaller tangible items. Someone will have to address these personal belongings when you are gone and, since you know them best, you should outline your plans for taking care of them. You only need to refer to the memo in a will or trust for it to be legally recorded. The list can be changed and updated, as you see fit, without involving a lawyer each time!

4.Palliative Care – Less than 30% of people have a Health Care Power of Attorney (HCPOA) that spells out the kind of care you want to receive and the people that you want making the decisions on your behalf if you cannot. The HCPOA allows an agent to make health care decisions, if you are incapacitated, for things like life support, tube feeding or organ donation. Consider those that might not be overcome with grief as agents who are tasked to comply with your wishes.

5.Prepare an inventory of all accounts – This includes a list of all bank and investment accounts with passwords, as well as all digital assets, including social media accounts. You can use a password vault or keep a handwritten list in a safe and then give access to one of your designated trustees.

6.Have Tax Planning Up to Date – The estate tax limits have increased in 2018 ($11.2M individual/$22.4M married couple), so most of us will not need to worry about estate taxes, unless the legislation changes again! It is still a good idea to have all of your information gathered, organized and up to date to make it easier for your executors, trustees and beneficiaries.

7.Designated Beneficiary Planning – We always help our clients make sure that all assets are titled properly, including real estate, investment accounts, qualified plans, bank accounts and life insurance policies.

8.Review Plan Regularly – Once you have a good plan in place, you should review it every year or two or as there are any life changes. At DWM, we keep copies of your documents with our own summary “estate flow” to help manage this.

9.Use Professionals! – This includes a recommended estate attorney to prepare your plan, as well as a professional wealth manager, like DWM, to review it.

10.Everyone Can Have an Estate Plan – You don’t need to be a famous, well-connected political icon, like Barbara Bush, to be thoroughly prepared.

Estate planning can be a daunting and sometimes complicated task. Many of our clients have trepidation about the process when starting, but every one of them feel a great deal of relief and accomplishment when they have done all the work and have a good estate plan in place. Helping our clients navigate all of the requirements and considerations of estate planning is a very important and satisfying part of what we do at DWM. We are not lawyers, but we know our clients well and can help them understand the many objectives and appropriate pieces of a good customized estate plan. Please let us know if you would like to review your estate plan with us!

Estate Planning – Put Yourself in Charge!

estate plan ducks in a rowTalking about death is uncomfortable and estate planning is one of those topics that no one really likes to discuss. This fall, we were saddened at the passing of three clients and helped their families work through the process of tying up their estates. It reiterated how important these discussions and plans really are. More than half of Americans don’t have wills or any sort of estate plan in place. Estate planning attorneys call this the “do-nothing” approach and the technical term for having no plan when you die is called “intestate”. Basically it means that everything you own, all of your assets that you have accumulated and imagined leaving to your heirs someday, will now be appraised, managed and distributed through the probate court system, not by your family or beneficiaries. As you can imagine, there are tremendous fees and legal costs to this process, requiring probate attorneys for public and lengthy reviews by the court system. In South Carolina, for example, a probate account must remain open for at least 8 months and assets can be frozen while it is sorted out. The process can take well over a year or more to settle the estate.

Aha! So we will just have a Last Will and Testament that spells out all of our wishes, you say. It’s true, a will helps set out the guidelines for how you want your estate to be distributed. However, the will is still administered by the probate court, not your family, and it becomes public upon your death. All of the costs associated with probate will still be there. Probate fees can run as much as 5% of your gross estate value, assessed on the total even before all of your liabilities are paid off! Probate court is not just for estates of the deceased, either. There is a Living Probate, which means your estate can go to probate if you are alive, but become mentally incapacitated. Then the probate court steps in to appoint an agent to control all your personal affairs in a “conservatorship.” This may become more of an issue as people are living longer and we face increased age-related cases of Alzheimer’s or dementia.

You may also have some of your assets titled in Joint Tenancy, short for Joint Tenancy With Rights of Survivorship (JTWROS). The right of survivorship gives ownership to the last remaining owner. Married spouses will often hold property this way so that their asset will automatically transfer to their spouse or joint owner. However, once both of the spouses or both owners have died, the asset, unless it was retitled earlier, will still have to go through probate. And neither a will nor the Joint Tenancy will prevent a Living Probate if one of the owners becomes incapacitated.

One good way to protect your assets and make sure they are managed and distributed the way you wish is to establish a Revocable Living Trust. Used in conjunction with your will, it controls all your assets while you are alive and after your death. Basically, you title all of your assets to your trust, and, with the trust as owner, you (or you and your spouse or others) are your own trustee(s), which means you control your assets just the same as you do now. IRA’s and 401K’s are treated separately and won’t be titled in the trust. You will then designate a successor trustee to take over and manage everything when you die. But when that happens, the assets are not in your name, they are owned by the trust and so there is no need for probate. The successor trustee immediately steps in as your estate manager and can distribute or manage your assets as you have designated. You can also write instructions of how to manage things should you become incapacitated, avoiding the need for a Living Probate. It is a win-win.

Take some time to look at your current estate plan, titling of all assets and all beneficiary designations. Discuss with your financial advisor, perhaps at Detterbeck Wealth Management, and your estate planning attorney the best way to protect and title them. It can take some work to track down lost stock certificates, deeds or account numbers, but it will be worth it in the time, angst and costs saved by avoiding probate. Your loved ones and beneficiaries will be grateful.