Family Focus - Conclusion

We were able to learn a lot from our friends Bill and Susie.  In case you missed the first four installments of this series, they are available here:

PART 1

PART 2

PART 3

PART 4

As we saw with Bill and Susie, their life circumstances continued to change and evolve throughout their lives.  Although we can plan all we want, sometimes life just does not turn out according to our plans.  For this reason, it is extremely important to review and keep an estate plan up-to-date.

Another important task that can be accomplished throughout the estate planning process is to create an asset and liabilities listing.  This list, which can outline how assets are owned, beneficiary designations, account numbers, online accounts, passwords, etc., can all be kept with your important legal documents.  This "non-legal" type list will be extremely helpful to someone who has to handle your business and may not be familiar with it.

Like your estate plan, your asset/liabilities list should be kept as up-to-date as possible.  However, maybe most importantly, make sure someone you trust knows where to find your documents.  They do not do much good if they are hidden in a place where they will never be found.

As this series comes to a close, and we are in the midst of the holidays, I want to take the opportunity to thank those that followed along.  That being said, power off those devices, and spend some quality time with those who make this life worth living.  

Family Focus - Part 4

PART 1

PART 2

PART 3


Bill, the construction company owner, and Susie, his wife, are now in their late sixties and retired. They decide to make an appointment with their attorney and find out their attorney has also retired. Luckily for them, their attorney's son has taken over the management of the firm and is more than happy to meet with them. After some initial hesitation due to the age gap, they find their attorney's son to be very knowledgable and relatable. (Shameless self-promotion.)

Bill and Susie had very lucrative careers in the construction industry.  They now own all of their real estate outright, and they made a hefty profit on the sale of their business.  Their entire net worth is right around seven million dollars.

Little Billy, their son, graduated with a bachelor's degree and took his golf talents all the way to the Web.com tour.  However, his golf career was cut short with ongoing shoulder problems, and he went back to school to get his MBA.  With the help of a technology guru he met at grad school, they created a golf practice aid that is now widely utilized by PGA professionals and amateur golfers worldwide. He is now the part-owner of a company that employs approximately six hundred people.

Annie, their daughter, dropped out of college after two years to pursue an acting career.  Tragically, Annie was involved in a car accident late one night that left her severely brain damaged.  She was able to make a miraculous physical recovery, but only has the mental capacity of a twelve-year-old. Bill and Susie are very concerned about how their daughter will be cared for when they are gone.

Bill and Susie's attorney recommends that they execute Wills that create a Special Needs Trust for Annie.  After they are both gone, Little Billy is more than happy to act as the Trustee of his sister's Trust and to take over as her Guardian.  Little Billy is more than financially secure himself, and suggests that his parents leave everything they own to Annie's Trust.  They all mutually agree that anything not utilized for Annie's care should go to the Brain Trust, a charitable entity whose goal is to further the research on treating traumatic brain injuries.

Although Bill and Susie do not yet have any federal estate tax issues, the State they live in does present them with some estate tax obstacles.  Most of the couple's assets are owned by Bill.  Their attorney recommends that they equalize the ownership of their assets and create Family Trusts within their Wills to make sure whichever one of them survives does not own all of the couple's assets outright.  This plan should save them a substantial amount of tax when they are both gone and hopefully will provide the Brain Trust with an even larger donation.

Susie is still more than willing to act as Bill's agent under his powers of attorney.  Bill is willing to deal with Susie's healthcare-related decisions, but he has gotten pretty used to Susie handling the finances for them.  He suggests that his wife make Little Billy her agent for property-related matters in the event Susie can no longer handle the couple's business affairs.  Little Billy is more than happy to help out his parents after all the incredible opportunities they provided him during his life.          

Family Focus - Part 3

PART 1

PART 2

As we rejoin our construction company owner, Bill, and his wife, Susie, they are now in their mid-forties.  Although a downturn in the housing market substantially stunted Bill's business several years ago, he did not let that hold him back.  As the savvy entrepreneur, Bill capitalized on the down market and purchased several pieces of real estate through foreclosure sales.  He and his then skeleton crew renovated those properties and they now pay for themselves while providing his family with a small monthly rental income.

Their son, Little Billy, never took to football but became very passionate about the game of golf. After winning several local amateur tournaments in high school, Little Billy was offered a full-ride golf scholarship to a small private college in an adjoining state.

Annie, their daughter, is attending college at a large university in California.  Bill and Susie love the California climate, but the state to the far West seems like a foreign country when they visit their daughter.

The upturn in the housing market happened around the same time Little Billy and Annie were both in school full time.  This allowed Susie to utilize her undergraduate degree in accounting and help Bill with the books for the construction company.  Susie's shrewd money management skills have helped the couple to build up a very successful business and clientele.

Having had so many changes in their lives over the past several years, Bill and Susie decide to revisit their estate plan and discuss any necessary changes with their attorney.

Bill and Susie decide that, while they still want the surviving spouse to have everything the couple owns, they are more than comfortable with an outright gift of their assets to their children equally if Bill and Susie are both gone.

Given the untimely death of Bill's brother, Buck, and Susie's sister relocating to Canada after the most recent Presidential election, they decide that Little Billy will be more than capable to act as the Executor of their estates if their spouse is unable to do so.  Given his close proximity, they also determine that Little Billy will be a suitable successor Agent under all of their powers of attorney documents.

During their consultation, the couple discovers that the biggest potential threat to their financial security would be if one or both of them were to ever require long-term care at home or in a nursing home facility.  They make a commitment to contact their insurance agent to discuss the need for the level of life insurance they currently have and the possibility of obtaining long-term care insurance.

Next week, we will explore Bill and Susie's golden years and how the couple can protect their nest egg and revise their plan for a smooth succession of their assets.
  

Family Focus - Part 2

In case you missed it, PART 1 (link)

Estate Planning Meeting

Bill, a construction company owner, and Susie, a stay-at-home mom, decide to meet with an attorney to discuss estate planning.  After learning a little bit about their family and their financial situation, their attorney advises them that they should both have Wills that dictate where their assets should go if one of them were to die. They learn that if they do not outline where they want their assets to go, the laws of their State will control, and the State's plan is not what they had in mind.  Bill and Susie decide they want the surviving spouse to have everything, and if neither of them were alive, they want everything to be shared equally between their two children, Little Billy and Annie.

In addition to outlining where they want their assets to go, they also learn that they can nominate a guardian or guardians to care for their children if the children are minors at Bill and Susie's death. This is an easy choice, as Susie's sister, Sally, has always been the go-to caregiver for the kids when the need arises.  

After some consideration and discussion, Bill and Susie decide that they do not want their children to have direct control over any inheritance until they are at least 25 years old.  They believe that, although they have no reason to doubt their children's money management skills, the kids will be more mature and able to handle a larger sum of money when they are a little older.  Their attorney tells them that they can create a Trust in their Wills for the benefit of the children.

Nominating a Trustee to handle any inheritance for their children until they attain the age of 25 is not as easy of a decision for Bill and Susie.  Although Sally would undoubtedly raise their children as if they are her own, Bill and Susie have some reservations about Sally's ability to tell the kids "No" as they get older. Bill has one brother, Buck, but Buck has struggled with drug addiction for several years and refuses to acknowledge the problem.  Not wanting to burden their aging parents with the task, they decide to nominate the Trust Office at the local bank for the job.  This provides them with the peace of mind that someone who knows what they are doing will safeguard any inheritance, when and if the time comes.  

Although the Wills now take care of what Bill and Susie want to happen after they are gone, they have never considered what will happen if they are still alive but unable to handle their own affairs. Their attorney recommends that they nominate Agents to handle both their property- and medical-related decisions.  He also recommends that they give some thought to whether or not they want to be kept alive by artificial means, and if they do not, who they wanted to make that decision.

Bill and Susie dated throughout High School and College, and decide that if the other was still alive and able, their spouse would certainly be the best person to handle any business and medical issues. Neither want to be kept alive by artificial means, and they have discussed this with each other in detail.  Susie is confident that, if Bill was not alive or able to be her Agent, her sister, Sally, would be more than capable of doing so.  Bill has a friend from college who is a CPA who has agreed to be his Agent for property-related issues if Susie is not able to do so.  Bill knows that, if the need arises, although he has his own problems, Buck will be able to step in and make medical decisions for him if Susie cannot.    

After ironing out these details, Bill and Susie ask their attorney for any other suggestions on what they could be doing to help their children get ahead.  They discuss beginning to save for college. Bill secretly hopes that Little Billy will someday get a full-ride scholarship to a D-1 football school, and he is blown away when he hears about the projected cost of higher education.  Bill and Susie also decide that they should purchase additional life insurance to make sure they can pay off all their debts if something were to happen to them.  Finally, they decide that opening savings accounts for the children is a good way to teach them about the importance of saving.

Next week, we will fast forward a few years and see how life has treated Bill, Susie, and the kids.  PART 3

Family Focus - Part 1

As I type this post, we are entering the Christmas season.  It seems that this season continues to creep into our calendars earlier and earlier, but I think December is historically when the countdown truly begins.  While we are all seeking out the perfect gifts for our friends and family, I wanted to take some time to explore some of the somewhat intangible things we could be doing to take care of our families.

All families are composed differently, but for the purposes of this blog, let's meet our example family:



Bill, the patriarch of the family, owns a construction company and is married to Susie.  Susie is a stay-at-home mom and is overworked and underpaid taking care of their daughter, Annie, and son, Little Billy, full time.  Bill and Susie are in their late 20s, and Annie and Little Billy are not yet school age.

Bill and Susie have worked hard their whole lives, and have been able to accumulate a few assets. Bill owns their home, but he has very little equity at this point.  Bill has a small retirement account and attempts to save around $5,000 a year after all the family's expenses are paid.  Susie inherited a small cabin in another state that the family visits a couple times a year.  In addition to the mortgage, Bill still has student loans that it seems he will be paying for the rest of his adult life.  They have one car loan and pay off their credit card bill every month.  Annie and Little Billy are both very energetic, happy, and healthy children.

As Bill and Susie are calmly and rationally discussing their finances one evening, they begin to wonder how they could take care of their children if something were to happen to one or both of them.  Although they are not sure what they can do to plan for this scenario, they make the commitment to meet with a local attorney to discuss their options.  Next we will explore what they learn.  PART 2