Chat@Caregiving: The Estate Planning School of Hard Knocks

The other day I took a huge giant step in estate management for my parents. We finally moved their assets into a trust.   There are a lot of reasons to take this step, but part of our motivation was to relieve my mom of the burden of managing their assets. Though she was glad to be rid of the worry, it was also difficult for her to let go of the control.  All the legal documents had been signed and the accounts were set up.  It was time to move the assets.

When the day was over, I felt a real sense of accomplishment, but I also felt like I’d just run a ninety-nine yard touchdown.  I looked back over the past few months and decided I’d share a few financial lessons with you that I had to learn in the Estate Planning School of Hard Knocks.

1.  Things change when your back is turned.  Every step along the way, from the moment my parents indicated they might be ready to downsize and get some help with their investing, to transferring the assets to the trust, there was a lot of research for me to do.  I’d discover everything I thought I needed to know about something and then I’d present the findings to the family.  Next would be the inevitable lag.  In my research I would discover something that had to be done before we could take the next step or my parents would balk at what needed to be done or the timing was wrong or whatever.  When I overcame whatever obstacles we encountered, I’d learn that something along the way had changed.  Either they’d lowered the interest, changed the qualifying amount, raised the deposit, discontinued the fund or something.  Often that meant that a move which had once been a viable choice, was now not going to work and I’d have to go back to the drawing board.  The bottom line – watch for and expect changes.  Just because you knew the answer to a question last week or last month doesn’t mean anything today.

2. Nice people aren’t always nice.  We talked to a lot of people along the way and you can’t help but like some of them better than others.   You also can’t help trusting someone you like more than someone you don’t connect with.  However, that whole liking thing can get you into trouble.  We were days away from putting a lot of money into an annuity, because we felt really comfortable with the financial adviser.  (I’m not warning you away from annuities, there are good ones and bad ones.)  Virtually on the eve of setting up the account, my husband asked one more question.  I liked the financial guy and I’ll confess I was impatient with Bill, because it felt almost as if he were being needlessly tedious about the details.  However, had Bill not asked that question, we would have made a huge mistake.  Maybe the guy really was giving us what he thought was good advice or maybe it was just the changes in the economy since we began the discussion, but if we’d have just gone forward trusting this nice guy, we’d have been paying more in commissions than we would have made in returns.  You can trust somebody about places to eat or movies to see, but don’t trust anyone when it  comes to money – especially if they are nice.

3. Trusts are weird.  The word “trust” is a game changer.  You’ll likely need a new tax id#.  You’ll need completely different documentation to set up accounts.  You’re paid completely different amounts of interest.  The list goes on and on.  We only set up accounts for the trust in we institutions we already had accounts with.  We knew the drill.  Correction – we THOUGHT we knew the drill.  Bottom line – before you talk to anyone about accounts for a trust, be sure whoever you’re talking to knows that you are a trustee who wants to set up an account for a trust.  It’ll save you a lot of time and frustration.

I could go on and on, but beyond these three golden nuggets, we’re getting into specifics and there are no universal answers.  However, if you remember (1) things change, (2) nice people can get you in trouble and (3) trusts are weird; you’ll be way ahead of the game.

Do you have an estate planning nugget you want to share?

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