The Investment Coach

Every year, the plethora of holiday and Christmas cards remind us of the passage of time. We love the family pictures of young men and women who not that long ago were babies. My daughter reminded me that her “baby boy” will turn 14 in 2017, and already he is talking about his “instructional driver’s permit” at age 15. In four fast moving years, he will be an adult under the law in Georgia.

Time flies, people get married, divorced, or remarried. Children grow into adults. Family and individual circumstances change, but how often do we revisit our living and testamentary estate plans? Every year we hear of a death of a family breadwinner who died without a will.

In Georgia, if a married person dies without a valid will (dies “intestate”), what passes to the spouse depends on whether or not the deceased has living descendents, children, grandchildren, or great-grandchildren. If they do, they and the spouse share in the intestate property equally, except that the spouse’s share cannot be less than one-third.

A couple have two minor children. The husband dies with a number of assets in his name only. The wife inherits a third of those assets, with the other two-thirds held in trust for the children until they are adults. The point: if you do not have a will, the state has one for you, and the provisions may be less than ideal. We also see circumstances where an ex-spouse appeared with an old will that never was revoked.

When it comes to property disposition, a will is only part of an estate plan. If you own assets jointly with another person, such as joint tenants with right of survivorship (JTWROS), the property passes outside of a will directly to the survivor. The same thing happens with a Payable on Death (POD) designation.

Beneficiary designations on retirement plans such as 401(k) plans or similar, IRA accounts, life insurance or annuity contacts, etc., pass assets directly to the named beneficiary or beneficiaries. Disposition of assets held in a trust are governed by trust provisions.

As people age and their estate grows with a variety of assets, some liquid and some not, a multiplicity of accounts, property in state or out of state, business interests, and other complexities, we find that the estate plan they think they have, is not the one they have in reality.

If you died today, are you certain that your assets would pass in accord with your wishes? Even if you are not subject to estate taxes under current law, there are income tax implications in an orderly transition of property. Is your estate plan tax efficient?

If you own business property and interests, do you have a plan to maximize value to your heirs and surviving business partners?

Succession planning for a closely held business is an orderly, structured plan for the transfer of the ownership, control, and management of the business. Each element—ownership, control, and management—must be evaluated and a transition plan developed.

If you own real property in another state, a Revocable Living Trust may be in order to avoid probate in more than one jurisdiction.

The twins Junior and Suzy have turned 18 and both are off to university in their shiny new cars. They are adults and if they had a bad accident and were hospitalized, you, mom and dad, under privacy laws cannot get medical status on your “child.”

Without a Durable Power of Attorney for Health Care appointing you as decision makers, you are powerless. As long as you are responsible for your young adult, a will, and powers of attorney for assets and health care should be in place.

Review your Umbrella Liability Insurance on any automobile owned by you and driven by your child or young adult. Accidents happen and people are hurt or killed. Lawsuits are a threat to your hard earned net worth. Umbrella Liability protects above underlying limits on an auto, boat, or homeowner’s policy. You should carry enough insurance to protect your net worth and the amount should be upgraded as your wealth grows.

Action plan for 2017: review your estate plan, check all beneficiary designations, review all legal documents. Schedule an insurance audit, including life, disability, health and long term care. If you have outgrown your plans and documents, changes should be made.

Note: Capital Insight Group is not a law firm and does not make legal recommendations. Our purpose is to raise questions for discussion with qualified legal counsel. The estate plan that you have may not be the one you think you have!

Lewis Walker is a financial planning and investment strategist at Capital Insight Group; 770-441-2603. Securities and advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative and investment adviser representative of SFA which is otherwise unaffiliated with Capital Insight Group.

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