By David Hoefferle, and
Hartford’s Guide to Help Prevent Family Manipulation
an article by Kristin Hetzer
With 32 years in the finance industry, I am occasionally surprised when someone refuses to implement my estate planning advice. Too often, these people tell me they’ll let their beneficiaries take care of it themselves. They say, “What will I care? I’ll be dead!!”
I’ve been caught more than once with my mouth hanging open, unable to express what I really think.
Refusing to protect your assets past your death, my friends, is the wrong attitude. Even though you won’t be around in the future to watch your heirs struggle with the legal and tax consequences, it would have been so much easier to make life easier for the people you care about and the money and assets you worked so hard to obtain. While it may take hundreds or a few thousand dollars to have your estate clarified or established now, it will make their memory of you so much better.
I have had too many experiences where those who have been left behind have taken years to transfer and close an estate. I one case, it took nine years and cost a large percent of the estate.
As a former Trust Consultant and college instructor for Certified Financial Planning candidates, along with being a tax practitioner and investment advisor, I found Estate Planning, in many cases, can be very simple. Of course, depending on the individual circumstance of how the estate is to be distributed, and who will receive the assets, it can also be very complex, that’s why you need to find the right people to help.
Everything hinges on the type of Estate Planning Portfolio, which documents are needed, and what needs to be updated, such as the following:
- A Simple Plan, which includes the minimum documents you should have Last Will and Testament, Powers of Attorney for Finance and Health Care with a Do-Not-Resuscitate directive (DNR), and a Living Will.
- A Complex Plan: Revocable Living Trust, Certificate of Trust, Pour-Over Will, Powers of Attorney for Finance and Health Care with a DNR, and a Living Will
- Direct Transfer Documents which often avoid probate include:
- Beneficiary Deed which transfers your home at the death of the last owner to die;
- Beneficiary notations on transferable products as assets, such as Qualified Retirement Plans, IRA, 401k, 403b, 457, etc.; Annuities; Life Insurance Policies, Etc.
- Transfer on Death for Brokerage and Investment Accounts (Non-Qualified) and Personal Assets such as Vehicles, Time Shares, etc.
- Payable on Death for Bank checking and saving accounts, etc.
- Business Ownership can be transferred numerous ways, such as Family Limited Partnership (FLPs), LLC, LLP, Corporations, etc.;
- This list can continue using Wills, and other transfer documents
Then, there are Complex Transfer methods for larger estates, such as Private or Simple Foundations; Irrevocable Life Insurance Trusts (ILIT); Charitable Remainder Trusts (CRT, CRAT, CRUT, etc.); Grantor Trusts; Self-Cancelling Loans; Etc.
This information is solely from my own experience. I encourage you to contact a qualified estate legal advisor who can assist you with properly organizing your estate plan.
The next part of the blog, provided by Hartford Financial Group, by Kristin Hetzer, is an excellent reminder that a large amount of money in the hands of your beneficiaries can sometimes cause unneeded and avoidable disputes.
Estate Planning Protection:
Keeping Your Plan Safe from Family Influence
A 5-Step Guide to Help Prevent Family Manipulation
For Hartford Financial Group; By Kristin Hetzer, Principal, Royal Palms Capital LLC
Inheritances can go awry sometimes. Parents usually aim to divide their assets equally among their children but imagine a situation where two children end up with most of their parents’ substantial assets, leaving the others with almost nothing. Trying to resolve this in court is tough—it’s costly, it can tear the family apart, and proving that an inheritance was stolen is challenging.
I know because it happened to me.
How to Protect Your Inheritance From Manipulation
Most people don’t believe their kids would manipulate an inheritance for their own benefit, but it happens more often than you think. Sometimes, the temptation of money can override ethical behavior. So why risk it with your assets?
Having a plan in place can ensure your assets are distributed exactly as you intend. Here are five-points that can help you during the process:
A Five-Point Strategy
1 Plan: Begin by finding an experienced estate attorney. Share your wishes with them, and they’ll suggest the best tools for your situation, such as wills, trusts, and more. For straightforward estates, a will might be all you need. However, for more complicated estates, trusts can offer greater privacy and control. Your estate attorney can help you determine which is the right choice for you.
2 Inform: Decide whether to discuss your estate plan with your kids. There are pros and cons to consider:
Discussing your estate plan with your kids has pros and cons. While it can provide clarity, prevent future conflicts, and help prepare them for their roles, it may lead to dis-
agreements and stress up front.
An estate planning attorney, drawing from their experience with other families, can help you make this decision.
If you choose to share your plans with your adult kids, such as how you intend to divide your estate, you don’t need to disclose specific dollar amounts. Additionally, consider adding an “inform” disclosure that requires any changes to the legal documents to be communicated to all beneficiaries. This provision can deter anyone from altering documents for personal gain.
3 Safeguard: This step involves selecting a trustworthy trustee who will follow through on your estate plan wishes. In this role, this person or company will be in charge of implementing your wishes after you die according to the estate plan.
With trusts, you can appoint more than one trustee. Doing so can help navigate complex family dynamics or conflicts of interest, providing a neutral balance of power.
Trust administration can be time-consuming and complex. Outsourcing this responsibility to a professional third party can provide impartial decision-making and free up time and effort for beneficiaries and other family members. Many financial institutions have extensive resources dedicated to trust administration.
4 Execute: Execution involves making sure your assets are properly titled, e.g., real estate, bank accounts, or investments. Having your assets titled in a trust means transferring ownership of those assets from yourself individually to the trust entity. This allows for efficient management, distribution, and protection of assets according to your
wishes after your incapacity or death. Assets that aren’t properly titled may not be governed by the terms of the trust and could still be subject to probate or other legal complications upon the individual’s incapacity or death.
5 Review: An estate plan trust should be reviewed periodically to ensure it remains up-to-date and aligned with the grantor’s wishes and current circumstances. While there is no one-size-fits-all answer to how often an estate plan should be reviewed, it’s generally recommended to review the plan and trust at least every three to five years, or more frequently if there are significant life changes or events.
A Proactive Approach Can Help Safeguard Your Wishes
Those with any amount of wealth should be aware of the potential for inheritance manipulation by family members, as it can pose significant risks to the preservation of their assets and family harmony. While not all families experience inheritance manipulation, it’s prudent for wealthy individuals to take proactive steps to safeguard their estates and minimize the risk of disputes.
Next Step
Find a professional, experienced estate planning attorney. Your financial professional may be able to help you find one.
Kristin Hetzer, CMT, CIMA, CFP
David Hoefferle and Kristin Hetzer are not affiliated with Hartford Funds. The views expressed here are those of the author. All information provided is for informational and educational purposes only and is not intended to provide investment, tax, accounting or legal advice. As with all matters of an investment, tax, or legal nature, you should consult with a qualified tax or legal professional regarding your specific legal or tax situation, as applicable.
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