Money Matters

Estate Planning, always worth the time and effort

If I ever want to end a conversation with someone, I always find a way to interject the question, “Is your estate plan up to date?” This is almost a guaranteed conversation killer, and I can be certain I will be free to move on within minutes. I do not know why this has such a strong impact with people, especially when every one needs an estate plan of some type. And, if the plan is not current or well-designed, it can cost the person or their heirs thousands and can cause a tremendous amount of frustration.

If you have moved to Tennessee from another state and have yet to have your wills and related documents reviewed by an area attorney, this should go high on your to-do list. While you might believe everything should still be fine, the style in which your originals were drafted, the date they were drafted, and the state you were living in at the time they were written all have a bearing on how well they might work in Tennessee.

Additionally, there are other reasons to make sure you have completed proper documents. While some individuals may believe it is better to title everything so that your belongings automatically go to your heirs without the need of probate, there are times when this may be impossible or impractical. While joint tenancy with rights of survivorship (JTWROS) is a common method of titling bank or investment accounts, and the survivors receive the assets without significant paperwork, this method may not work when one of the future heirs is a minor. While having a minor as one of the owners of a JTWROS account is not an issue, what can become a concern is that they become the owner at the time of the death. For small accounts, this may not create a problem, but not all bank or investment accounts are small. If you are still unsure why this may be an issue, think back to when you were 18 or 22. Were you wise enough to truly handle being given $50,000 or more? If you answered honestly, most likely you said ‘no’. Titling accounts using survivorship registrations to pass the assets to your heirs does not take into consideration the age of your heirs or the contingent heirs.

To truly design the documents that will achieve your goals of passing your belongings to the proper heirs and take steps to help the future heirs preserve those assets can be done primarily through the use of a will or trusts. Most of us have worked hard to gather, grow, and preserve our wealth. To hand it off to the next generation without so much as a thought to continuing to preserve those assets is not unusual.

In the event of your marriage or divorce certainly requires your documents to be updated. But, so does the change in health of your successor trustee, personal representative, or guardian to your children. It is wise to reconfirm that the persons you have named in your documents to hold these positions are still willing and are still the most appropriate candidates for that responsibility. You should also verify your documents include all of your children. There was a time that some documents named your children, and while it is rare the document does not include the possibility of future children, it could be the case. One of my clients recently adopted her youngest sister’s child. While her own children are grown and I am certain she never expected to have another child, through special circumstances that changed. When I asked about her estate plan, she discovered her newest addition would not have been included in her estate, and that was not her wish.

It never hurts to hand write your own synopsis of how you wish your assets to be transferred. This summary can then be given to the attorney each time you have your plan reviewed, and they can ascertain that the documents still comply with current state and federal law, as well as your summary of transfer. If it has been a while since your documents were reviewed, I strongly suggest you conduct an estate fire drill and do so with a knowledgeable professional in estate planning or an attorney. This process will help you understand how your documents will work and show you what will be passed onto your heirs as well as what costs may be incurred.

This week has also been Long Term Care week. While it may not have made many headlines, if you are 45 years of age or older, this is planning tool you should know. While long term care insurance is not for everyone, it is a tremendous tool in sharing the risk of long term care expense with an insurance company rather than being solely responsible for the cost of care. If you have questions about this topic as well, seek a professional in our area or contact me at my office.


Would you like a response to a financial question? Send your question to Doug Horn, 115 W. Broadway, Maryville, TN 37801. Be sure to mark your envelope Money Matters.

Doug Horn, CFP, is an area financial planner with more than 24 years financial experience and founder of Quality Financial Concepts, located in downtown Maryville on Broadway.

Doug Horn, CFP, Registered Investment Advisor in Tennessee and Texas and Registered Principal, Branch Office of and Securities offered through CUE Financial, Member FINRA, SIPC.

© 2007 All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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