Affairs in Order?

Now’s the time to plan and organize.

Some people avoid certain topics like the plague: politics, religion and the big doozy, “who gets what after I’m gone.”

After all, it’s much easier to come up with a “Bucket List” of things you want to accomplish before you die than it is to come up with an “I’ve-Kicked-the-Bucket List” of things that must happen after you die. And while it’s certainly not pleasant to talk about your own demise, doing so with those who stand to inherit (or pick up the pieces) after you’re gone can ease some of the pain of not having you around anymore, as well as ensure they are taken care of.

“Everyone’s life, and death, brings with it unique circumstances,” says John Habig, senior vice president of wealth management at Morgan Stanley Smith Barney. “Organization and prioritization are the keys to taking care of your present needs and making plans for what you will do in the future.”

Even if you’re a young and vibrant senior, you should have a basic estate plan in place in the off chance you die or become incapacitated. At the very least you should have a will or a trust, but also a power of attorney (naming someone in charge to parse out your wishes) and a living will/health care directive (a document that spells out what to do if you have a stroke or are in a coma and can’t make your own decisions).

“If you have anything to lose, you should be thinking about it. Even if you’re single, you should always have your affairs in order,” says Thom Brueckner of Senior Financial Resources Inc. in Nashua.

First you want to think about what you own. “When you really start to look at it, people own more than they realize,” says Steve Fritch of Charter Trust Company. “They may have a bank account, a retirement account, 401(k), maybe some real estate, paintings or other collections, clocks, furniture …”

Estate Essentials

Wills are basic, but they take a long time to sort out in probate court, can be expensive and are very public. “A will guarantees that a judge who has never met you and that you’ve never met determines whether what you wrote down is still what you meant to say,” he adds. For these reasons, he recommends a revocable living trust.

You don’t have to be Michael Jackson or have a huge net worth in order to have a trust, either. Although “it’s like killing a fly with a hand grenade to do a trust if you don’t have three coins to rub together,” says Brueckner, “any middle-class retiree who wants to avoid a lack of privacy and the unknowns of probate court should think about creating a trust.”

A revocable living trust, he explains, is like a suitcase or container that you carry your “stuff” around in. You still own it, it’s just owned through the trust instead of you. “It’s like a holding company wherein you still own your stuff but you own it as a trustee. What happens at the passing of the trustees is that the trust immediately becomes locked and unchangeable, but while you are still living you can put in and take out what you’d like. Probate never gets to see and change it.” A pour over will is an accompanying document, he adds, that says, “Look, whatever I didn’t put in the trust, I intended to put in.” Everything that hadn’t already been put in then goes into the trust, and it’s closed and locked until the heirs get together with the attorney or the person responsible for the trust assets to divvy things up.

The cost to create a trust varies, but Brueckner estimates that a typical figure might be around $2,200. Considering that a will in probate court is charged 2 percent of the value of the estate (for example, if you have a $100,000 certificate of deposit and a $400,000 house that is paid off, it would cost $10,000 to settle this estate in probate), this one-and-done figure for a trust might be the more cost-effective option. A revocable trust is also preventive, adds Brueckner, meaning you can change it anytime you want. “In order to change your mind in a will, you have to change the entire document, have it re-notorized and witnessed, etc.”

The Giving Tree

Maybe you don’t have a family, or your family is financially set and you would rather see the charity of your choice benefit from your philanthropy. Whichever means you choose, there are a number of different ways to pass on your prosperity.

Nearly three years ago, when Ellen Kennelly of Dublin was too old to continue living alone on her property, she moved to an assisted living facility. The older cabin she owned with 50 acres around Mt. Monadnock had striking views that she didn’t want to see lost, so she decided to conserve the property by conservation easement through the Society for the Protection of New Hampshire Forests’ Assets to Acres program, donating the house on the condition that it would be sold and the money would be used toward stewardship of the easement on the remaining land.

According to Joyce El Kouarti, communications director, “The Assets to Acres program is a good vehicle for people who have property (land or home or vacation camp) that has been in the family for decades or generations, but that might not be wanted by the sons or daughters who are going to inherit it,” she says. “What’s treasured by Grandma is not necessarily valued the same way by the kids, who are just as likely to sell the property and apply the money to college tuition or some other expense.”

For example, El Kouarti adds, let’s say Grandma has a vacation camp in the mountains and wills it to the children, who only went there to make her happy, but cannot afford to maintain the property, update the plumbing or bring the building up to code. By gifting the property to a 501c3 organization like the Forest Society, Grandma gets a charitable deduction and her heirs don’t have to pay capital gains taxes, reducing the size of the gross taxable estate. “All of the property insurance costs, the brokers’ fees to sell it, etc., all of those things go away,” says El Kouarti. When the Forest Society resells the property, the money that is made by the sale basically goes to one of two things: the stewardship endowment to help maintain Forest Society lands, or to the Land Action Fund, which allows the nonprofit to respond quickly and buy a conservation-rich piece of property and then replenish the fund.

“You can structure it any way you want,” she says, “it can be a life estate where you can continue living in the property, and only when you die does it then become part of the Forest Society. People can specify how they’d like their gifts to be used. For example, we would never sell the property without that person’s permission and knowledge.”

Steve Fritch of Charter Trust says that communicating your wishes to your children — whether they stand to inherit your possessions or a charity does — makes a difficult situation more manageable. “You should let your family members understand what your wishes are and what you own. Don’t keep it a secret,” he says. It may be hard to have the conversation, but, he adds, “having surprises when someone dies, which is a difficult time, can make people angry.” (Your family might also not know that you have a stash of rainy day funds in the guest room mattress.)

It’s an ongoing process, as well; what you might want to do today may be different than what you do tomorrow, Fritch adds. “Circumstances may change, your relationships with people may change and your financial situation may change. It’s better if you have regular family meetings. It’s an art, not a science, to weave your way through. Every family is different.” NH

Word to the WiseYou and your spouse or significant other should take an inventory and record of the location of all important documents that will be needed to settle an estate. These documents may include financial statements and important identification papers, such as birth and marriage certificates, deeds to property, vehicle registrations, military records, Social Security and naturalization cards and insurance policies. Of course, copies of any existing estate planning documents, such as your wills, irrevocable trusts and business agreements, should be included as well.