Family Matters™
May 2006, Volume 2, Issue 2
With constant tax law changes, an unpredictable economy, a war on terror, and a climbing deficit, it’s hard to focus on doing any type of
financial planning. Have you ever felt like doing nothing, because you feel that everything will just change again anyway?
First and foremost, it's important to accept that change is a constant. Change often scares people and makes them uncomfortable. But
since we're stuck with change, the best approach is to take advantage of the opportunities that change brings, rather than becoming a
victim of it. Change isn't going away; you just need to find a proactive strategy to deal with it.
EDUCATION ROCKS!
Change can also feel overwhelming. It's possible that you don't have the time or desire to keep abreast of changes and the impact they
may have on your financial, estate, and tax planning. That's why it's important to work with a financial professional who you trust, and who
can help educate you and keep you abreast of changes that will affect you. A good advisor will assist you in staying abreast of changing
laws. He or she can help you with workshops, email alerts, memos, and newsletters. Don't throw in the trash the material that you receive
from your advisor ...read it!
FORMAL UPDATING & REVIEW
Ask your advisor to establish a formal check-up system. It can substantially improve the effectiveness of your planning. Your advisor can
review your assets, and catch anything that may not be coordinated with your estate plan. He or she can notice an approaching tax liability,
and help you plan for it. Together, you can discuss new concerns you may be facing, like college savings or approaching retirement, and
make sure that these concerns are planned for, not only financially, but also from an estate and tax planning perspective. Your financial
advisor is here to serve you. He or she is in the unique position to help you take advantage of the opportunities brought by change, rather
than fear it.
The Only Certainties in Life: Death and Taxes...and Tax Law Changes!
AVOIDING DISASTER FOR BLENDED FAMILIES
You don't need to be Elizabeth Taylor to be on your second, third, or even fourth or fifth marriage. If you've had more than one spouse, you
have special financial and estate planning needs. Neglecting these issues is a surefire way to create a less-than-desired result in the
event of illness, incapacity, or death. The best way to have a smooth transition upon disability or death is to create a comprehensive
strategy before you aren't here to execute the papers.
A SPECIAL STRATEGY
Remarriage may result in cordial, but often not close, step relations. Frequently, such people, thrown together by marriage, merely tolerate
each other until the biological parent dies or becomes disabled.
For example, if the spouse who has the majority of assets dies first, who wins? The surviving spouse? The children? If a parent is not
careful, his or her children may be unintentionally disinherited. If the children are protected, the surviving spouse may be disinherited.
What's a person to do?
A special plan for a blended family would include a pre-nuptial agreement, along with a fully funded revocable living trust. This can only be
accomplished by working with a trusted advisor who has specialized knowledge in extended families. Another key component in an estate
plan for a blended family is the successor trustee. It's essential that the successor is savvy, compassionate and, hopefully, familiar with
family issues.
A CHECKLIST TO GUIDE YOU
Here are some questions you should address with your advisor:
- How is the successor trustee selected?
- How will the successor trustee feel about paying money to the person who might not select him?
- How can the surviving spouse be prevented from changing the deceased spouse’s beneficiaries?
- How will the children feel about the stepparent spending their inheritances?
- How will the spouse feel about the children making cessation of life choices?
- What is the relationship between the successor trustee and the surviving spouse or the children?
- What role are the trusted advisors to play in making the succession plan go how it’s planned?
- How will the assets earned during the marriage be distributed?
- How should the required retirement plan distributions be made?
- How long should the children wait to receive their money, especially if the surviving spouse is only a few years older than the children?
WHO WATCHES THE CHEESE?
By addressing these issues now, you'll have greater peace of mind. You can ensure that your goals, aspirations and desires will be
carried out when you're no longer here to oversee them yourself.
The Safety Deposit Box Trap
The safety deposit box has always been considered the most secure place to keep your "important stuff". But what happens if you, or your
family, are unable to access these critical documents when you need them most?
There are three circumstances where this can happen:
A Health Crisis: Suppose you're in the hospital and need access to your living will or health care power of attorney. What if this occurs
during a weekend? Is your bank open? Which branch is it in? Where's the key? Do your family members even have the legal authority to
open the box?
A Mental Disability Crisis: What if you suffer a stroke, and are unable to speak? How will your family make decisions for you? Hopefully,
your power of attorney is not located in your safety deposit box to which your family may not have access.
After Death: In some states, the law freezes the rights to a safety deposit box until the family receives a court order from a probate judge. In
other states, the box is effectively frozen, because no one but the deceased has the legal right to open it. Thus, family members are locked
out without a court order. Check with your bank to make sure that a close family member has access to your safety deposit box. Make sure
that an attorney, or someone whom you trust, has copies of all the important documents that you keep there. Safety first: When it comes to
vital documents, it's important to think outside the box.
In Case of Emergency: I.C.E.
One of the difficulties that have long confronted emergency service workers is how to locate the next of kin of a victim who is unable to
respond to questions. Even if the victim is carrying one or more forms of identification, like a driver's license, it doesn't necessarily provide
information about how to reach relatives. This often results in delays as officials try to track these people down. This problem has been
addressed through a variety of means over the years. Some people carry lists of emergency contacts and vital medical details. Others
wear items such as bracelets or necklaces with engraved contact info. Still, more than 75 percent of the population carries no details
about to whom they would like to be contacted following a serious accident.
Enter Bob Brotchie to the rescue. Brotchie, a paramedic from London, England, has launched a world wide campaign to encourage
people to store emergency information in their cell phones. By entering the acronym ICE which stands for "in case of emergency" into your
cell phone address book, you can enter the name and number of the person who should be contacted if an emergency were to occur.
It's simple and easy; so don't forget to do it ... just in case!
For more information, please contact us.
