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Personal Succession Planning – Part IV – You Can’t Take It With You

Sigma Investment Counselors

February 5, 2015

Having worked as a financial professional since the mid 1980’s, I have worked with many families with a vast assortment of dynamics: “normal” families, “dysfunctional” families, and everything in between.  There is nothing that will drive a family to dysfunction quicker than money or transitioning the responsibility of financial decisions.  In this, the final installment of my series on Personal Succession Planning, I will review Wills and the Revocable Living Trust.  Although both of these documents deal with the transition of wealth after you die, only the Revocable Living Trust avoids probate (legal fees).

A Will tells the court how to divide your property after your death.  It does not avoid probate and it is a matter of public record. Therefore, if privacy and the avoidance of legal fees are important to you, then you should consider establishing a Revocable Living Trust.  A Revocable Living Trust survives you and dictates an orderly distribution of your assets.  A well crafted Trust will consider a multitude of generational scenarios (children, grandchildren, etc.).  We have all heard the saying “you can’t take it with you” and know it to be true.  Though you can’t take it with you, you can continue to control your assets from the grave. 

When considering the transfer of your wealth to the next generation and beyond, think about who your beneficiaries are today and who they will be ten years from now.  No document can account for all circumstances, but a Revocable Living Trust can deal with many seen and unforeseen future situations such as divorce, illness, premature death, and substance abuse issues just to name a few.

You should also consider the value of your estate today and what it may be twenty years from now.  Would your beneficiaries be able to manage a lump sum distribution?  Would it be more prudent to make periodic distributions based on their age and time progression?  A couple that I work with has two adult children, both of whom have had difficulty handling their personal financial affairs and have failed to save for retirement.  They have stipulated that their son and daughter will receive payments every five years, the final and largest payment at the age of sixty five.  In essence, the parents are protecting their children from themselves and planning for their children’s retirement.  They are hoping that by the time the final distribution occurs, both children will have figured out how to properly conduct their financial affairs. 

Like it or not, we all will eventually need estate documents.  Unfortunately, many do not consider putting a plan in place until the documents are needed and often times it is too late.  As you move forward in the process of personal succession planning, remember to protect yourself with Durable Powers of Attorney, and protect your hard earned savings and beneficiaries with a Revocable Living Trust.

All suggestions and comments are welcomed.

Suzanne Antonelli, CFP®

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