Attorney & Mediator
Attorney & Mediator
Estate Planning – Getting Ready to Retire?

Estate Planning – Getting Ready to Retire?

You have met with your financial advisor and determined that you are ready economically to retire. The finances are in place. You are already planning how to spend your newly created free time.

Have you updated all of your estate planning documents and made certain that all of your legal matters are ready for this next phase of your life?

I know that many people are very private about their financial and personal information. I urge you to share information with your children even if it feels uncomfortable. They will be able to assist you in getting all your matters organized. In so doing, they will then be able to help you in the future when you need that help.


Make a listing of all accounts, where they are held. Check to see if there are the appropriate transfer on death or beneficiary designations on the accounts. Don’t assume that you did it. Check!

This might be a good time to streamline your finances – make it easy on yourself. Consolidate accounts to one bank and one financial adviser. This will make administration easier and it will give you a better idea of what you own.

This is a good time to streamline bill paying. Set up automatic bill paying where possible. You can still check your statements monthly, but it will eliminate the need to keep track of all the due dates.


If you have insurance, this is the time to review. Are the policies appropriate? Are you over or under insured? Are the correct beneficiaries on each policy?

If you are uncertain, set up a meeting with your insurance advisor to review the policies.

Legal Documents:

When was the last time you looked at your estate planning documents? Review all of them. Are the choices you made when you executed the documents the ones that you want today? Maybe things have changed.

Do you have up to date Durable Power of Attorneys and Patient Advocate Designations? These are so important. Without them, your family may have to go to the Probate Court to obtain a Guardianship or Conservatorship in the case of an emergency. This takes time and money.

Is your Will or Trust up to date? Take a look. Are the distributions correct? Are the agents (Personal Representative or Trustee) appropriate?

Living Arrangements:

What is your plan as you age? Is your current living situation working? What would you want to do if you became ill and could not live independently?

It is important to discuss this with your family members. They should be informed as to your wishes. Without that knowledge, they cannot assist you in the way you would want.

Is there money to pay for an illness contingency? You need a plan.

Medical Information:

Make a listing of all your doctors, their addresses and phone numbers. Also list what they are treating you for.

Make a listing of your medications and the dosage. These are important facts your family may need to pass on in the case of an emergency hospitalization.

Make copies of your health care cards.

Discuss with your family what your treatment wishes are – today while you are healthy. Let them know what you want and what you do not want. It simply is not fair to leave them guessing.

By taking the time to organize this information and share it with trusted family members, you will be positioning yourself for a steady future.

Then, next step – Retirement.

Estate Planning - Leaving a Roadmap to Assets

Estate Planning – Leaving a Roadmap to Assets

You have a Will or a Trust. You are finished with your estate planning, right? Not quite.

You know what you own, but will your Personal Representative or Trustee?

Make a listing of your assets – better yet – make copies of documents and include these with your estate planning documents so that your Personal Representative or Trustee will have a clear outline of exactly what you own.

Real Estate: How many parcels and where are they located? Make a copy of the deed(s) and a property tax statement for each.

IRA's, 401 K's, Annuities: Prepare a listing of all of your tax deferred assets together with the beneficiary for each. Make a copy of your recent quarterly statement for each so that your Personal Representative or Trustee has the name of the financial institution and the account number.

Life Insurance: Get the policies together. If you don't know where they are, someone else won't either. List the policies with the name of the company, the value and the beneficiary.

Cash Assets: Make a listing of the accounts. Make a copy of your recent quarterly statement for each account showing the name of the financial institution or bank and the approximate value. If you have listed a beneficiary on the account or have a transfer on death (TOD) provision, note that as well.

Vehicles, Boats and Trailers: Make a listing of these items together with their identification numbers, physical location and value. Make copies of the titles for each.

Valuable Personal Property: Precious metals (gold or silver bullion or coins), stamp collections, wine collections, artwork, antiques, should all be listed with identifying information, the physical location of the item and the approximate value. Best is to take a photograph of each item and place the photographs with the listing.

This roadmap will be invaluable for your Personal Representative or Trustee. The death of a loved one is a stressful time. It will ease the burden if your estate is organized.

Do you really need a trust?

Do you really need a trust?

The estate tax is gone for all but the wealthy as the estate tax exemption has increased to beyond $11.4 Million dollars for each of us.

You may not be wealthy. You may not have businesses or multi-million-dollar assets to dispose of.

Therefore, do you really need to consider a trust?

First, it will avoid probate court proceedings and make the assets immediately available to the beneficiaries.

Next, it can assure that bills are paid, and financial matters are handled appropriately during an individual’s lifetime if he/she becomes disabled. More and more individuals are suffering from dementia or Alzheimer’s.

If you are in a second marriage situation, it may be critical. A Will cannot allow for the care of your spouse until his/her death and then the balance to your own children. This can only be done within the provisions of a trust.

If you have children under the age of 30, or if they are older but are not financially savvy, it may be very important. This will permit the distribution of assets over time and possibly for specific purposes, eliminating the risk of the money being wasted.

If you have a child with special needs who is on government benefits, it is absolutely necessary. If such child receives a distribution of assets, it will disqualify him/her from the government benefits until the inheritance is exhausted.

While Trusts are more expensive to establish, it is better not to be penny wise and pound foolish.

IRA Mistakes

IRA Mistakes

The rules for IRA distributions can be confusing. Many errors are made by beneficiaries after the death of the IRA owner. Here are a few to watch out for.

Owner’s Last RMD. If the decedent owner was over the age of 70 ½ and had not taken the RMD prior to death, the designated beneficiaries must take the distribution. The income tax will be reportable to each of the beneficiaries on a pro-rata basis.

RMD Failed Distribution: There is a 50% penalty for failing to take an RMD.

Roth IRAs: The owner and spouse are not required to take RMDs. Beneficiaries must take RMDs. If they fail, there will be a 50% penalty.

Rollovers: These are only available to the surviving spouse. There are no roll overs for beneficiaries.

Inherited IRAs: The beneficiaries cannot contribute to an inherited IRA. Inherited IRAs from different parents cannot be combined. An inherited IRA cannot be mixed with other retirement assets in an account.

Inherited IRAs are not Creditor Protected: While there is protection for IRAs for the owner from creditors, there is not protection for inherited IRAs. Therefore, inherited IRAs are available to the beneficiary’s creditors.

Probate Court cannot fix IRA problems: The IRS will not recognize state court orders that alter or fix IRA problems.

The rules are complex. If you are inheriting an IRA, get advice. This is not a good subject to do-it-yourself.

Choosing a Trustee

Choosing a Trustee

When choosing a Trustee, individuals often look to family members or friends. There are many reasons for this. They are the ones who know what the grantor wants. Also, they will probably not charge for their services.

Do they have the right skills? It is not a bargain to appoint a family member or friend because they will not charge, if they create a mess when handling the trust.

Even if they are skilled, are they the right person? Will it cause resentments with other family members? Do they have a conflict of interest? If the trust’s primary intent is to care for the current beneficiaries (children?), and then distribute the remaining residue to beneficiaries of whom the Trustee is one, will he/she knowingly or unconsciously refuse to make reasonable distributions to preserve money?

Or, alternatively, will the family member be too nice? Will they be able to stand up to the pressure of the primary beneficiaries’ requests for funds?

It can work best when there is only one child. If he/she is the Trustee, it makes the most sense.

If there are multiple siblings, naming them as co-trustees can work, if they can work together. If not, it can be a mess. It can become unworkable.

For these reasons, Grantors will often name a Corporate Trustee (bank or Trust Company) to administer the trust.

The downsides are the fiduciary fees that they charge and their tendency to be conservative when it comes to investments.

The upsides are many. The Corporate Trustee will easily handle unreasonable beneficiaries. They will also go on forever so there is no concern with the Trustee dying.

There is no “right” answer for choosing a Trustee. Family dynamics and finances may direct the choice. It is important for the Grantor to consider all of these issues without automatically defaulting to the oldest son or daughter.

When your primary wealth is in IRA’s

IRA piggybank

Estate planning addresses the varying wealth of the client together with his or her desires in passing on this wealth.  For those with cash assets and land as their primary financial holding, a revocable trust may be the right answer to control those assets for the benefit of future generations.  But, what if the primary assets are held in IRA’s?

First, IRA’s cannot be a part of your revocable trust.  To transfer them during your lifetime into your trust (as you would your home and bank accounts) would be a distribution of the assets, subjecting them to income tax.  Most individuals, therefore, simply name beneficiaries on their IRA’s to receive the balance of the funds when the individual dies.

The so-call “stretch” provisions allow for a calculation or re-calculation of a Required Minimum Distribution (RMD) for each of the beneficiaries based upon each of their life expectancies.  They each must take this RMD annually, or be subject to a 50% penalty.  The distribution of the small RMD’s is usually in line with the wishes of the individual who has died.

Many clients desire a plan where the child withdraws only the RMD, gradually over his or her lifetime.  What if the child decides to withdraw 100% of the principal and pay the tax in one year?  He or she can do this as there is no prohibition on doing so.

How can the distribution of an IRA be controlled in the same way as the assets in a revocable trust so that the wishes of the client are honored?  By establishing a separate Conduit Trust.  These IRA trusts are specially drawn to comply with the requirements set forth by the IRS so that the money is able to pass through the conduit trust in the specific manner desired without being subject to the large tax penalties that would result if the entire amount were distributed in one year.

This type of trust is ideal for the client that has a revocable trust and desires to set up a mechanism to control the distribution of his or her IRA so that it stretches over the lifetime of the child.  It is a free-standing trust and requires a trustee.  It can protect the large IRA from being wasted by children who are not mature enough to handle the large principal amount that would otherwise be available.  It also provides an income stream to that child, gradually, over his or her lifetime.

While a Conduit IRA Trust is not for every client, it is the right estate planning tool for individuals with considerable wealth in IRAs who is concerned about limiting the distribution of the principal upon death.