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MAKING CENTS OUT OF THE NEWS
Blog #05
(February 4th, 2010)
Don’t Do This! DO Do That!
By Tom McAllister, CFP®
I will never forget the seniors’ retreat I attended at a Catholic Church in Cocoa Beach, Florida a number of years ago. “Don’t Do That!” were the words shouted to the mostly World War II generation audience by the presiding monk. Clad in full brown robe and sandals, the monk was talking about how NOT to handle your own death. He was talking to the men, taking them to task for their almost universal habit of handling all family financial matters themselves, leaving their “little women.” in the dark. The monk berated the husbands for being very “private” about their finances, so that often even their children and closest financial advisors were not privy to the entire picture.
As a young stock broker and later as a pioneer Certified Financial Planner, I would often run into a similar challenge when doing business with my elders. It seems that among my own Depression-born generation as well as among the Baby Boomers who followed us, there is less of the male-controlled, overly secretive handling of finances against which the monk was railing. With the advent of “two earner” families, financial information and financial decisions are, thankfully, more likely to be shared.
It is interesting to note that I grew up in a family where the reverse was true - my mother ran the family books, doing so in a frugal manner that is part of my character today. What makes it interesting is that Dad, for all his inability (or unwillingness) to be bothered with the family finances, wound up in the position of city clerk treasurer of Vincennes and even served as president of the Indiana Clerk Treasurers' Association! Still, I guess, Mom did not trust him with the family finances!
Only last month, though, I was called by the wife of a business colleague, informing me her husband had died a few days earlier. She and her son had found a paper stating that I, Thomas McAllister, had been named to succeed him as president and sole principal of his FINRA member investment brokerage firm. Scrambling to remember, I recalled a phone conversation I’d had with her husband some years ago asking if he might fill in my name on the Business Continuation Plan required by our regulators. At the time, I recall, each of us looked upon the paperwork as a necessary regulatory chore for financial advisers, with neither of us devoting much thought to the actual prospect of death and any financial consequences it might bring.
Now, after reaching age 75, my colleague was gone. And, ignoring the warning of his poor health, he had not involved his family in his business affairs, despite repeated offers by his wife, a retired nurse, to share the financial responsibilities. It turned out that no one knew where my colleague had kept the signed copy of his out-of-date will (the attorney who drew it up had died years before and his practice was long closed). Missing as well were key passwords to his financial accounts, email accounts, FINRA internet entrance permissions, and safety deposit box, plus a substantial life insurance policy to which he had repeatedly referred during his life.
In frail health for years, my colleague’s condition had apparently worsened over the last two years of his life. In the weeks before his death his mind was not right, and he was therefore unable to prepare for his own death. Fortunately, a few months earlier, while very sick in the hospital, he had given his wife several codes and passwords to the corporate bank accounts. I was able to open those accounts, but another problem surfaced - the bank froze the business accounts, as my friend’s was the sole signature allowed on them! (FINRA requires that only a registered person of the firm can conduct its business, including signing checks; my colleague never thought to add me to the signature cards, nor had I been alert to the importance of taking that important step.)
I share this experience by way of saying, “Don’t Do This” to your heirs and loved ones! Make a list of where your business and personal records are kept, and inform your spouse or heir where to find your possessions. Keep a signed copy of your will and/or Living Trust in a safe, accessible place, in addition to maintaining copies in a safe deposit box and at your attorney’s office. Tell several people in your family where important papers are, including tax and financial records.
Be sure at least one of your heirs knows how to access the safe deposit box, where the key is, and how it can be used. If you happen to have any bonds or stock certificates in your physical possession, be sure to tell several heirs where they can be found. (In this day and age I don’t believe in holding securities physically. They should be held in a custodian account with a major securities firm such as Charles Schwab, Fidelity, or a major stock brokerage firm. Such accounts are insured, and are not accessible by creditors of the custodian entity.)
Lastly, allow me to recommend a “high tech” estate planning technique we used with my mother. One October afternoon I was in Vincennes, IN, my home town. My next younger brother, his wife and I sat down with Mother at her home. We explained that there appeared to be some confusion in the family as to her wishes as to the distribution of her jewelry and collectible items. It seemed, at age 76, she was becoming forgetful, promising certain items to more than one of her daughters-in-law and granddaughters. We proposed to solve this problem.
Asking for the key to her office safe (it was right where a burglar would look first, in the top drawer of her chest of drawers), Mike and I lugged it out into the living room and opened it. Using a supply of zip lock bags and a stack of yellow “sticky notes,” we took each item out of its container and asked Mom, in the presence of all three of us, to whom she wished to leave it. Labeled with the intended recipient’s name on a sticky note, each item went into a bag
We asked Mom to divide everything into two piles, one for jewelry and other things she would use during the rest of her life. The other held things she said she would never wear or use again. We then suggested she give these latter items to their designated recipients that Christmas, some eight weeks away. She thought this a “wonderful idea,” as gift shopping had become an increasingly difficult chore for her once she stopped driving. She did as we suggested.
That turned out to be her last Christmas; Mother died the following November. She had the great pleasure of giving her treasures to her loved ones in person and seeing them enjoy them. The remaining items were then given to their designated recipients at her wake.
“DO do that!”
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