OT: any CPA's here?

[Bird]

keep your Wills updated

Yep, good advice. I'll have to admit I didn't have a will myself until we had two small children, so we got wills made that specified who would manage assets, who would raise the kids, etc. So, about 35 years later (should have done it sooner, of course), we had complete new wills made, along with general power of attorney, medical power of attorney, living wills, etc. I think we found a pretty good lawyer to do it all because he thought of things and asked questions that I probably would never have thought of.

 

[dmccarty]

Richard said,

and got on her about not having done it yet... she hung her head & said ya ya ya... I know... I'll get right on it again..... poof again!

I don't know why but folks seem to find any excuse to put some things off.Ric

That is my grandparents. They just did not want to deal with it. I'm not really sure why. They bought plots in a cemetary decades ago so its not like they had a problem with dealing with reality. They wanted to get all of this done so the family would not be burdened by their death but the paperwork just did not get done.

I suspect part of it may have been that they mentally where already declining and able to make these decisions.

I also wonder if Bird's comment about trusting family members was not part of the problem as well. The money was in three CDs with the idea being that the CDs would be given to the kids when the grandparents died. One of the kids might have spent the money before they died. Maybe. So that could have been a concern.

But I really wonder if mentally they were able to make these decisions. As we have had to churn through the finances we found out that there is an issue with the CDs. The money is locked up for quite a few years. Odds are the CDs mature well after my grandparents death. I'm sure they did this because it had a higher interest rate but it was not a good decision. My mom has been after the bank why they sold a CD with a long term to people in their 80s. For some reason the bank is not returning her phone calls...

Writing this up and having to think about it a bit really makes me draw the conclusion that when it was time to protect the money, my grandparents just where not there mentally...

Later,
Dan

 

[Bird]

My mom has been after the bank why they sold a CD with a long term to people in their 80s. For some reason the bank is not returning her phone calls...

Ah yes, when I bought the place in the country and moved my parents onto the place, I knew Dad had Alzheimers, but what I didn't know was that he hadn't balanced his checkbook in the past 2 or 3 years (he used to be a meticulous record keeper). And I discovered that about 6 months earlier a banker had sold him an annuity that wouldn't mature until he was over 100 years old. Fortunately, he didn't lose anything but about 6 months interest.

 

[Richard]

Lesson learned for me....now everything I have is "owned" by a Trust with multiple owners (wife, kids, me, etc..), to avoid Probate / issues with Wills.

Unfortunate path you had to take to get here but power to you for doing what I personally feel, is the best choice.

Interstingly enough, I've had many people say "I don't have enough money to need/use a trust"

I just shake my head... and try to explain to them that although a trust REALLY comes in handy if you've got a zillion dollars.... it has other benefits that it will provide for you or your loved ones if you DONT have the specific 'financial' need for it.

The funny part is... I'm not an attorney and if anyone ever listened to me as I play my pied piper role... I don't make a dime off it... so it's not like I'm trying to sell them anything regarding a trust... I'm really trying to give them my opinion on something that I feel will (potentially) save their loved ones some REAL hassels.

I once had a guy walk into office... he held I think six stock certificates in his hand. Some of the certificates were in his fathers name (deceased 20 years prior), mother and fathers name (mother deceased recently), mother and HIS name

I swear on my life... it took us about six MONTHS to clear these darn certificates up so they could be deposited into HIS account.

He had to go back and revisit his FATHERS estate from 20 years prior... to get the certificates out of his dad's name. This was the real stinker for him. Then after that, he of course, had to deal with taking care of his mothers estate stuff....

Had his mother dealt with this decades prior, then we could have taken care of him in a matter of a handful of forms and couple of weeks.

(side lesson there is don't take delivery of your certificates or if you DO have some, then shove them back into an account...it's MUCH easier for the owner to sign the certificate than a beneficary to have to get a court certified letter of testamentary, state tax waivers, stock powers....)

Double side lesson...

If someone DOES have to deposit certificates into an account after a loved one passes away...

I need a court certified letter of testamentary LESS than 30 days old, a tax waiver (depending on state, in TN, we need them), stock power... for EACH AND EVERY certificate that is being deposited. If you, or your grandparent has 25 different stock certificates (different companies) then I'd need 25 SETS of each of the above documents...

If however... the owner of the stocks THEMSELVES, put them into a stock account, then the person can sign them (or a stock power), deposit them and upon their demise... I would only need ONE SINGLE set of all that paperwork to rename the account and NOT a set of forms for each asset inside the account.

Now... if someone is giving YOU 25 different certificates, would you rather provide 25 sets of forms for me, or a single set?

If the answer is a single set and YOU have 25 different stock certificates in your name and in YOUR posession, then I'd ask you... why do you hate your children so much? GO deposit them NOW!!

 

[Richard]

And I discovered that about 6 months earlier a banker had sold him an annuity that wouldn't mature until he was over 100 years old. Fortunately, he didn't lose anything but about 6 months interest.

Not to write another book but I'm aware of a situation where doing that actually saved someone's assets...

I'm not saying this is the right or wrong thing do to... it's a story told to me from a collegue of mine and one of his clients.

Years ago, Mom retired, moved to Florida. Son went and bought her a condo for $50,000 using HIS money (first mistake). Seems the condo was put into HER name (second mistake) and she lived there for number of years.

Time marched on, she grew older and was heading to a nursing home. Son called my collegue & said "we've sold Mom's place, I've got $150,000 sitting here but since I bought it for her, I'm going to keep the money"

WRONG

The cash is his mothers and with the lookback medicair/medicaid has... they will take this 'gift" he's trying to do, divide it by the annual average expense of nursing home and will deny her any payment/coverage for that many months.

What to do....? The son didn't want to see "his" money frittered away so they bought for the mother, an immediate annuity (slightly different than the one Bird inferred his father ended up with)

Anyways... this immediate annuity was actually a purchase of cash flow. They did it with 10 years of cash flow guaranteed and now...instead of having $150,000 cash in mothers name, she had maybe $1,250/month guaranteed for the longer of either HER life, or 10 years....

(disclaimer: I'm making these numbers up to make the point, I don't remember what the actual numbers were)

She died about 3 years later and during that time, the nursing home ate up every dollar of her income (the $1,250 month, social security...) BUT once she died, the balance of the payments went to her SON so although he did not get a "wad" of cash, he ended up with 17 years of monthly income that might have otherwise (at $5,000/month) would have been easily eaten up over three years.

Food for thought (second disclaimer, I think some states are starting to see this and put the brakes on it, but I"m not sure about that)

 

[ultrarunner]

Very Interesting Read... Thanks for posting.

It raises all kinds of questions as to how do you plan, when you can't predict the future and you have no spouse or children?

I've seen estates where the Executor of the Trust was so secretive that I believe going to Probate Court would have been a good thing. At least the Estate would be public.

What is the conventional wisdom on Trusts... are Trusts always better than Probate?

What do you do with the old Homestead, Farm Equipment and Tractors when no one in the family has that kind of interest or it would be a burden to them?

 

[randy41]

trusts require annual tax filings of their own and any taxable income is taxed at a high rate.
your heirs will sell off any assets of yours they don't want.

 

[Richard]

At least the Estate would be public.

Which is exactly why some people choose to use trusts!

Again, I'm not an attorney so I'm not saying it's good or bad... just reporting various stories as I've been exposed to them.

Randy... my mother has a trust... it's in her SS number so maybe that's some kind of issue... but with that said, her trust doesn't do a tax return although I'm aware that anything it does is reported under HER SS number.

(I don't know if that's good or bad... it was a trust set up years prior to me not only being in this business, but...I think I was still a minor)

I know some trusts can/do have their own tax id number. I was kind of surprised that hers didn't.

 

[randy41]

sounds like your mother has a grantor trust which is not a real trust.

 

[California]

YOU have 25 different stock certificates in your name and in YOUR possession, then I'd ask you... why do you hate your children so much? GO deposit them NOW!!

Yes!!!

I finally persuaded Dad to establish an umbrella brokerage account and sign his stacks of paper stock certificates over to that single account. What he owned was mostly spin-offs from a single 1970's investment in ATT stock, then distributions taken in the form of stock certificates, then separate dividend reinvestment plans on many of these separate positions, - a big mess that he realized was out of control.

All he knew was that he was getting many little dividend checks from stuff he didn't even know he owned. AirTouch, Vodafone, etc, all successor phone companies that he didn't really understand. Fidelity Investments did a great job walking us through this consolidation so that every position was listed on a single monthly brokerage statement. Vanguard, Schwab, etc would probably be ok too.

As it turned out that was the last six months of his life. This was just as the market was crashing in spring 2000 so as POA and Trustee I sold everything the first business day after his death. Vodaphone, a british corp that had bought PacBell's cell phone division, was the only position I hadn't gotten into the account in time. It dropped from $45 to $13 per share before I could get control over it and get it sold.

Please, everybody, pool your assets so a successor can deal with a single umbrella account instead of the nightmare Richard and I have described.