Who Do You Trust?

A day doesn't go by without a newspaper or TV story about kids mistreating their elderly parent's money. Money that was saved through a life of sacrifice and hard work. Even the wealthy aren't immune from their children's greed. One of the richest women in the world, Brooke Astor, lay on her New York City apartment sofa, sick, in pain, eventually dying while her son absconded with tens of millions. Locally a client of mine pulled her investment account from me because her son 'had helped her pick out a Medicare insurance policy', and was more qualified to handle her investments than I was. We'll see how well that turns out.

Another client of mine, after her husband died, instructed me to make all her investment accounts joint equally with all her children, there were five adult kids. I objected, telling her if she wanted to buy something or go on a trip and four of the five said okay and one said Nyet she couldn't do what she wanted. She didn't listen. Eventually the kids wrested control from mom and split up the money.

It's okay to make your kids beneficiaries on all your savings, insurance and investment accounts. It's a real mess when you start putting all the kids on as joint owners because someone put a bee in someones bonnet about the horrors of probate or the kids don't trust one another.

For most of us we don't need fancy trusts or pricey estate planning. We can do just fine by properly setting up beneficiaries, drawing up a Will and a Durable Power of Attorney for finances and make sure that you establish a health care directive. The whole magilla shouldn't cost you an arm or leg and be fairly reasonable. Have a lawyer draw up the papers instead of going the cheap route of on-line forms, in which case if you do something wrong, well you won't be around to know but it may cost your estate everything you've saved keeping things simple squandered on legal bills to straighten things out. The problem with blank do it yourself kits is they are great for folks who sort of know what they are doing but dangerous for those of us who don't have a clue and we hope we're filling out the right papers.

Don't, please don't, name two or three or more of your kids to act upon your behalf. If you're unable to make financial or other decisions for yourself and you've named a committee of kids to do it for you, kiss this world goodbye. What makes you think they'll get along any better for your benefit than they do for theirs? If you want efficiency name just one kids, a relative or a good friend who has nothing to gain or lose as your personal representative.

In almost every family there is one child that mommy loves more. I have seen it so many times when mom names that 'special' child as the only beneficiary with instructions to share with the rest of the kids. Once mommy is gone Suzie develops amnesia. Remember a named beneficiary trumps anything named in a will. Once Susie has the money she doesn't have to play nice and share with everyone.

If you have stocks, investments other than retirement plans or savings accounts at banks or credit unions you can name beneficiaries on those accounts and best of all its free. Naming beneficiaries means no probate and all the beneficiary needs to do is produce a death certificate to have the accounts re registered.

These are just a few ideas. I am not a lawyer and neither I nor my firm gives tax or legal advice but my friend Larry does. When I need legal and tax advice I see him. I suggest that you consult a competent tax and legal advisor to discuss your personal circumstances and options.

If you have questions on anything contained in this blog call Paul Stanley @ 877 783 7080 or write pstanley@westminsterfinancial.com. Send Paul your email address so you can be notified of financial news and updates.