CINCINNATI BUSINESS COURIER
March 13 – 19, 1989
Investments
By Charles D. Vaughan
STOP THIEF! (Don’t let time rob your enjoyment of life’s gifts)
No amount of screaming will help; he just keeps running. He is at once the most prized of all human possessions and the most feared of all human foes.
Time is the original circular definition. It can only be defined by its passage and in being defined it destroys itself, while in the broad sense it is endless, for the individual it is very finite. During our time on earth we are endowed with varying degrees of certain other gifts: health, talent, personality, loved ones and wealth.
How we deal with the last has a lot to do with how well we enjoy the others. When I mention estate planning to a client, I usually get a response such as, “Oh, we have a will and don’t have enough to worry about estate taxes.”
This typical response suggests that estate planning implies death and nobody wants to talk about that, right? Absolutely not. Your “estate” should have more to do with your (and your family’s) general well being while you are alive than when you are not. Those facing declining health and imminent death would gladly trade all their wealth for the other gifts of life.
The best estate plan for most people has little to do with saving taxes. It has to do with taking care of themselves and their families while alive, in sickness and in health. It has to do with making sure that, when their time is over, property will go where they want it to in the smoothest manner and at the least cost.
Estate planning can get really complicated and should not be a do-it-yourself project. You should use an attorney to set up your plan. Be sure to get one who is understanding of what you want done. With this in mind here is a six point approach that does not require massive planning or great legal fees:
1. Plan for the possibility of disability. This is probably the weakest area of planning for most people. Even when employer or insurance coverage is adequate, most people aren’t ready. Payments often come in the name of the disabled person, who sometimes cannot sign them. Property is often tied up because it requires a signature. The general power of attorney ceases upon disability. A durable power of attorney or a springing power that becomes effective upon disability may be more useful.
2. Use joint tenancy sparingly and only between husband and wife. Its main use should be for current checking and savings accounts. Other types of property can and probably should be handled in other ways. Excessive use of this approach risks tying up assets during illness. It also stacks all the property into the last survivor’s estate.
3. Consider using a revocable living trust for the bulk of your negotiable assets. You can be your own trustee and can designate someone else to handle matters if you are disabled. Upon your death, the trust can maintain or distribute your assets according to your wishes. Best of all, this approach avoids the time delay, costs and lack of privacy caused by probating a will. One study showed that on average probate took 16 months. Costs, excluding taxes, ranged between 5 percent and 60 percent of the estate, averaging nearly 8 percent.
4. Beneficiary designation on life insurance policies and retirement accounts are very important. Find out what your policies and plans say. Do not have proceeds go into your estate. Consider in your overall plan if all these should go to your spouse or into a trust set up for the purpose.
5. Have a current will the simpler the better. This is not the place for complex matters. Its main purpose should be as a broom. It should sweep up loose assets not handled elsewhere.
6. Use gifts while you are alive. Many intra-family feuds begin over who gets prized possessions when someone dies. Why let people fight over specific items? Why let the court system take a cut on them? Do you really want your favorite nephew to wait 16 months to get your car? Give it to him in writing and borrow it back if need be. Money given to charities before death gives pleasure and income tax relief. Your property should bring joy not dissension.
No amount of screaming will stop the thief of time. It is a real, crying shame that we have to grow old and die. Few people realize until it’s too late that the only real thief is their own attitude. We can’t, stop time, but we can make the most of what we have while we are here and healthy.