Who Shops For The Shoes?

This is a question I never considered until I became a professional fiduciary. Put yourself in these "shoes" for a moment.

Imagine you cannot drive; get a little disoriented; your feet hurt but you do not want new shoes because you like your routine; and, wearing sandals in freezing winter is easier than going shopping for shoes. Online doesn’t work because you don’t own a computer. Also, you don’t know your current size or what will feel right. Who will do this for you?

My client is a dream - she is wonderfully wise and witty - but she suffers from mild cognitive impairment. She also needs a walker to help her maneuver after a recent fall and broken bones. She wants very few personal trappings and demands nothing. To make sure she is getting the type of care she needs, I sometimes have to imagine what she needs and then try it out with her to see if she’ll like it.
　
Money Well-Spent
Scanning the selection, I picked out a variety including some that were larger than her "size" - her feet have swollen a bit since she last bought shoes. Seven pairs came back with me. I removed the size tags and we played a little game. I played the part of a Nordstrom shoe sales person, she the picky customer. That pair was not cute enough. Those were too small (her size). Ah, these were just right. Almost. She said they were "ugly as sin but comfortable". She accepted only one pair because she knew her doctor wanted her to have them. Remember, she does not like to spend money on anything frivolous. Except for cigarettes and cookies.

She now wears these shoes daily and it always makes me smile to see them on her feet. After some delicate negotiating to determine her desires; obtain her needs; and finally, to handle tasks she can no longer handle for herself or is not even aware she needs, she now has a new routine which provides her with warmth and comfort.

Even with this "dream client" - it took over 90 hours at the beginning of my work during a six week period to travel to her location (I do not charge for this time); chase down income checks lost in the mail after her move; secure the home; provide the necessary paperwork to various agencies so I could do my job as her Power of Attorney; work out a monthly budget; pay her bills timely; secure and check her mail with her - sorting her personal mail, from junk, from necessary.

Oh, and find her some new shoes.
　
Good Judgment is Valuable
What are those 90+ hours worth to the person who is being served? They can mean the difference between hearing and not hearing; or the difference of a less stressful life due to less worry about how to handle the overwhelming details. Or even more crucially, persistent follow-up and attention paid on behalf of an ill or elderly person insures a better standard of care from everyone involved. Not everyone has family who can do this for them.

What are the alternatives? If these tasks were to be handled by the family attorney or a CPA, the hourly charge for these services would be unpardonable at the normal going rate for these professionals. On the other hand, the multitude and variety of tasks required do not fit into the job description or malpractice insurance of a bookkeeper. Many times the most cost-effective and safest solution is a professional, licensed fiduciary.
　
Angels Among Us
A professional fiduciary uses his or her best judgement to find the most cost effective way to serve a client - kind of like the CEO of a small company. Even routine tasks like bill paying need someone to make sure they are being done properly. If there are changes in the situation (as there will be) or conflict between adult children or a lack of communication from health care providers these require the professional fiduciary to use good judgement, re-evaluate and find new solutions that will serve the client.

So, if you hear negative stories or comments about fiduciaries, consider the source - a disgruntled, disinherited adult child perhaps? And think about the shoes. Imagine having to go out in the blustery cold on a shuttle bus in your sandals while using your walker; without your hearing aid (lost back at the skilled nursing facility). You already know you’ll be tired before you even find the right store. Maybe a few fiduciaries have erred in judgment, but most of us are a necessary and even sometimes wonderful source of protection - like guardian angels we are unseen protectors. 

Merry Christmas to all and to all a good night!

Boo! Don’t Get Caught Short October 31

When A Trust Is An IRA Beneficiary 

We recently posted a question to our fiduciary, attorney, tax advisors and others who recieve our informative emails.  Below is the question and some helpful responses.

Caveat: This poll is not statistically significant and neither the results nor opinions expressed by participants represent legal advice, tax advice, investment advice or any other type of advice. Instead, dear reader, we encourage you to research, consider and seek appropriate counsel for your particular situation.

 

Normally attorneys do not recommend designating your trust as the beneficiary of your IRA for a number of good reasons.  Occasionally a settlor may choose to designate the trust as the beneficiary on an IRA account to avoid giving it outright to spendthrift heirs or to provide for children from a previous marriage. For whatever reason, if you are handling an estate in which the named beneficiary of an IRA is a trust, it pays to know how to handle this. Since IRA accounts can be a sizeable asset in an estate, handling this in the wrong manner can have a significant impact.
 

Question

A fiduciary steps into the role of Trustee upon Sally's death. Assume Sally died on April 1, 2012. Her husband died prior and left an IRA that she rolled into her own IRA account (note: not always the best choice). She then completes the beneficiary designation form and names her trust as the death beneficiary. If you are the new Trustee, what do you do?

A - Trustee must accept IRA assets into the Trust for Sally's beneficiaries. 

B - Trustee may decide Sally made a mistake and distribute to heirs directly.

C - Other.

 

Crucial To Know Now

If you are Sally’s trustee in the example above, you must provide a copy of the trust to the IRA custodian by October 31. 

To make sure the IRA distributions can be stretched out for longer than the maximum of 5 years allowed by the IRS, the trustee must provide a copy of a valid trust instrument; which is irrevocable; and, which has identifiable beneficiaries to the IRA custodian by October 31 of the year immediately following the year the IRA owner dies.

Poll Results

Most of our respondents chose answer “A” - Accept IRA assets as designated on the beneficary form into the trust. Since people sometimes do choose to use a trust to control the final distribution of assets held in a retirement or IRA type of account, the successor trustee would be required to follow these wishes.  BUT, there is more to the answer when you receive an IRA account to be administered in a trust: determining beneficiaries and action dates.

 

This poll resulted is some very thoughtful answers such as this one from Dave Sylvester, an investment advisor - “First determine if Sally died before or after her required beginning date (April 1 after she reached 70 ½). Second determine if the trust is considered a look-through or non-qualified trust. These two will determine the trustee’s options. When the trust is a look-through trust the trustee could pull the IRA out of the trust and set up new inherited IRA accounts for each of the name beneficiaries.”

Or, this one from Robert Telles, a Walnut Creek attorney,  “It is what it is, and those instructions should be followed. I have a client who just set up an IRA doing that very thing. The money is to be available for his second wife, but following her death it will revert to his existing children. I'm not sure there is a better way to ensure this.”

Tax Advisor Feedback

“It's important for the trustee to pay attention to key dates (all of the following fall in the year following the year of death):  September 30^th – date to determine “designated beneficiaries”, which is an individual or a trust that meets certain IRA requirements; October 31^st – deadline to provide IRA custodian with trust documents, and December 31^st – deadline for beneficiary required minimum distributions (RMD) to begin and to create separate IRA accounts if there are multiple designated beneficiaries.

 

Even when there is a mix of designated and non-designated beneficiaries in the trust, e.g. a child and a charity, with proper planning and timing it may be possible to maintain the life expectancy option for the designated benefiary. If the dates are missed, the child may be forced to take the distribution at a faster rate than desired."  -  Tim Hintzoglou, EA, CFP with Walnut Creek based Tax & Financial Services.

Attorney Feedback

“We commonly have clients name the trust as a beneficiary of the IRA(s), after the non-employee spouse, and in the case of younger children (dole-out sub trusts created under the Trust).

 

We have found that the only disadvantages are (1) the stretch IRA benefit is based upon the actuarial life expectancy of the eldest of the beneficiares; and (2) the trust wil have to remain open pending the full distribution of the IRA assets." - Peter Sproul, Walnut Creek Attorney, Mullen & Sproul, LLP

Conclusion

The trustee is responsible for determining the life expectancy of the oldest living identifiable beneficiary as this will control the length of term on distribution. In addition, if the trust language mentions at least one unidentifiable beneficiary, for example the term “child’s issue” or one that does not have a life expectancy, such as a charity, then the trustee may need to take another step to stretch the IRA distribution past five years and more closely follow the settlor’s wishes. The successor trustee might need to seek a court order to “set” the beneficiaries for the IRA based upon the currently living children and grandchildren.

Tax issues are always a factor to take into consideration when handling a trust. A fiduciary must have a basic grasp of a wide array of areas; including tax, legal, and investment management, along with heath care matters.  In all areas, licensed professional fiduciaries are encouraged to know when to seek qualified professionals for specific advice. Licensed, professional fiduciaries make it their business to know reliable professionals.  Feel free to contact us to let us know more about your professional services or how we might serve you.

 

Cashing In The Chips

The email below from my dad, with the subject line: "Cashing In The Chips" arrived in my inbox after I had learned that he had suffered a major heart attack and died on Sunday, September 23, 2012.  He was only 76 years old and a kind-hearted, creative, one of a kind guy.  When someone you love passes away, there are scenes that replay in your mind you wish you could do again or share with the person who is gone.  You also want to tell people about them.  I want to use his last email as a way to warn you. Please read-on.

My dad was unusual during the “Leave It To Beaver” days of stay-at-home moms.  He was the “at-home” parent while my mom worked as I grew up.  He would often make me lunch of ham & cheese sandwich with Miracle Whip and Campbell’s Tomato Soup (now Miracle Whip never darkens my refrigerator door, but as a kid I liked it).

He always encouraged me to go outside to get some Vitamin D when I was sick.  He seemed to like unconventional cures over medicine. He thought he needed to encourage balance in my life so he told me he only wanted me to get “A” grades in Physical Education. All other subjects I did well, but I think he wanted me to remember to enjoy being alive.

I could share more (and no doubt will at his memorial service later this week).  For now, I want to share his last email to me.  I think his cholesterol was high for a number of years but he had lost weight and thought he had a clean bill of health just a few months prior.  This is how he felt the day before he died.  He had no other warnings or heart problems prior.  My dad was gone before the ambulance reached the hospital. 

IF YOU EXPERIENCE THESE TYPES OF SYMPTOMS – GO TO THE EMERGENCY ROOM IMMEDIATELY AND TELL THEM YOU THINK IT IS A HEART ATTACK!!!!

 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Date: Sunday, September 23, 2012, 8:23 am

From: Bill Rogers

Subject Line: Cashing In The Chips

HI,

God REALLY ANSWERED OUR PRAYER LAST NIGHT...Saturday, 9/22. This kid almost cashed in his “chips”. How? It had been happening for about two days. I have/had high blood pressure. But I lost 22 lbs, and the blood pressure went down to normal. So, all was well and good. Then, I went to the grocery store, Friday, and some guy came up behind me in line talking about shooting birds, and his cat eating one a day.  I was feeling very angry at him and in myself. But, I said nothing to the guy.  I simply thought someone had wrapped my chest and arms in a very tight cloth.

 Then, yesterday, Saturday I started to get the same feeling in my chest. I took some aspirin, and a couple other pills, and it got worse. I went to bed but tossed and turned. Donna is SUCH a great helper. She knows exactly what to do. We tested my blood pressure and it was 195/ (something). WAAAAAY to high. I could not go to sleep. My chest and body kept aching. So, about 4 AM I got up and Donna found some blood-pressure pills that I had forgotten about. I took one and then did go to sleep. I awoke TIRED, but the blood pressure reading is now 130/87/96. I will rest today. We have to find out what caused it to zoom up. WHEW...DO NOT WANT THAT FEELING AGAIN!!!!

Talk with you later.

Love and hugs,

Why I Walk To The End

I am a finisher. I love to check things off my "To Do" list. Here's a secret. Sometimes, just for the fun of checking it off, I’ll put something on my list that I am just about to complete. A little "yeah, me!" It works to motivate me to keep up the effort. 

The idea that we can uncover a way to prevent or even reverse the symptoms of Alzheimer’s is so tantalizing, but not yet close enough to check off our list. For a finisher like me, advances in understanding or developing a cure for this disease makes me jump for joy.  Join our team to donate or walk together on October 6, 2012.

Why It's Personal

From my grandfather I learned to stash my candy hoard and to look for treasures in unlikely places. My grandfather must have started showing signs of early Alzheimer’s when I was a young child. He was in his early 60's and seemed to veer off into his own world a little bit more each time I would see him. I remember him to be a little bit grouchy. Sometimes he would tease me but mostly he kept to himself. As a child, I was intrigued when I learned he hid a stash of peanut brittle in his office of piled up books and papers. Of course, I had to sneak in to look for his stash. I only found it once and never again!

Both of my grandparents were professors at a small, Christian college in Texas: Abilene Christian University. When they retired, my grandmother taught in Puerto Rico while my grandfather sent letters and resumes for a job he would not find. Later, my grandmother was honored by the American Association of University Women. She gave a speech and the picture of her proud and happy smile is still with me. Later that same evening, my grandfather wandered off into downtown San Diego. Was he looking for his own past glory days? By that time, it was clear he could not be trusted to care for himself.

My grandmother cared for him while Parkinson’s and osteoporosis weighed her down with the effects of these disease. She put up with her husband’s outbursts, wanderings and "games" with little jokes and smoothing over his deficiencies. Her mind was sharp until the end. She loved him and did not want to live apart from him, even when their church asked her not to bring him as "he disturbed other people".

Watching him decline and the toll it took on my grandmother, my uncle, and our family, I wondered how someone with so much mental ability could not remember his own address. Now, as I work with clients who have lost brain function, I have a better understanding. We all have a primal need to both care for ourselves and to be cared for, even as mental capacity slowly slips away.

Living A Legacy

My grandfather lived inside a world of his own making but he had a supportive family around him, even if he did not remember who they were. When there is no suitable family nearby, wisdom says, search out someone trust worthy to handle what you cannot do for yourself any longer, while you still have the choice. This is one way to care for ourselves and protect the legacy we will leave behind.

Someday, there will be a cure or a way to halt the effects of Alzheimer’s Disease. We seem so close. Until then I will continue to Walk To The End. This is one way I am living my legacy; today for a future I may not see, but which I hope will be. 

Join our team. Let’s walk together in body or in spirit on October 6, 2012.

Joy Invites Practice: Practice Makes Perfect - (10)

Ok, I know they don’t use the simple 1through 10 score cards in the Olympics anymore, but it’s so much easier than the current system to convey a really great performance. What fun to watch the women’s USA gymnastics team do so well together and individually. Or, to watch the tenacious women’s USA beach volleyball team of Walsh & May-Treanor. Two mommies who would eat sand to secure a win. The joy of playing a sport often calls athletes to a higher level because they enjoy the practice!

Professional fiduciaries don’t have anything like Olympic events. We take on cases where there is no suitable family or friends or when someone plans a large gift to a charitable cause. Often the situations presented provide the barest details. We must weigh the risks and choose whether to take the plunge. Sometimes these situations include those like one a professional fiduciary described recently - if there was a Fiduciary Olympics, this would rate in the highest difficulty.

Fiduciary Olympics - Highest Difficulty Rating
The public guardian needed a professional fiduciary to step in when an elderly woman’s drug addicted son was accused of elder financial abuse and her bi-polar daughter lived far away. The professional fiduciary agreed to step in so the woman could be moved to an assisted living facility; the son moved out; and, the home cleaned and sold to care for the woman. The fiduciary described entering the home with goggles, breathing mask, gloves and removable booties to avoid infection from rat feces and old food found in the place.

The elderly woman needed help that neither the state nor her children could give her. Not all of our cases are so difficult, but when we are presented with a situation, it is our duty to ourselves and to the people we serve to determine if we can "go the distance". Do we have the same perseverance that the Olympic athletes have? Do we have adequate training, appropriate experience and the intestinal fortitude to do the work? Do fiduciaries receive extensive training, preparation and refining like athletes who train for a "Big Event".

Athletes don’t just learn about their game: they practice; they do warm-up drills; they watch other great athletes; they learn from each other; they have coaches that encourage or guide them; and they practice a lot.

Fiduciary Training
The State of California requires individuals seeking a license as a Professional Fiduciary to have a certain level of education and experience. The course of required education covers the laws, ethics, practical considerations, reporting & accounting requirements; and, asset management among many other topics. The purpose of these courses is to promote the level of knowledge required to evaluate and handle the many possible situations that arise when serving as a fiduciary.

In addition, professional fiduciaries are required to have a certain number of hours of continuing education each and every year. There are few better ways to receive this education than by joining the Professional Fiduciaries Association of California and attending the annual and regional education offered by this organization. This is much more education than a family member, friend or even a non-licensed CPA will have about closing out an estate. It’s probably more education than most people would ever dream is required by the situations we encounter.

Still, it seems like we can always use more training and preparation. Like the warm-up drills or the team practices of athletes, we can seek ways to regularly sharpen our skills. A professional fiduciary is brought in to evaluate, make decisions and take action. To do this we must exercise good judgement, informed by experts in their field of practice. We bring together many different professionals to get a job done right.

Since our "stock & trade" is making good decisions about difficult situations and properly communicating with the parties involved, it is helpful to regularly "try on" how we would handle a sticky situation before we are faced with the choice. This can be gleaned from informal conversations with professionals, such as attorneys or other experienced fiduciaries. While helpful, this method is a little bit like sitting in the passenger seat on the way to a destination, then being asked to drive back on the way home. Our attention is so much more acute when we are in the driver’s seat, isn’t it?

Warm-Up Drills
Another way to sharpen our decision-making abilities is to use quick mental warm-ups to stimulate our thinking. The ACE Fiduciary Group posts an occasional poll question to fiduciaries and other professionals engaged in this work. The poll question is like some of the on-line games that offer "increased mental acuity". The questions are designed to be simple, but the answers are rarely simplistic. We do this to sharpen our thinking about areas we commonly encounter but which have no obvious correct answer.

You can participate by clicking here. The current poll will close on August 16, 2012, although this link will always bring you to our current poll topic. If you are interested in the results and some feedback about this topic, sign-up for our emails as we will post the results to those who receive our occasional, informative email blasts.

Remember, fiduciaries cannot and do not give legal advice. We are doers rather than advisors.

Valuing "The Stuff"

          Your Uncle Harry loved classic cars. He even had a few in his garage.  Or maybe your Aunt Sadie collected Hummel figures or carousel horses.  Most of us have something we like to collect. Occasionally these collections actually increase in value over time. Many times our collections are not easy to value except by other collectors. You can bet that someone in the family will think those Hummel figures are worth a lot more than they will bring in an estate sale, but at how much more work to you to sell? Once you have your inventory list, pictures and information about the items to be sold, you’ll want to call in some experts to provide you with a value.  The method of valuation depends on whether the estate is facing litigation or is large enough to file a special type of tax return, the Gift & Estate Tax return.
 
            When conflict is brewing over an estate or if the estate will require a Gift & Estate Tax return (IRS form 706) you’ll want to obtain written values from qualified appraisers.  When there is no conflict between beneficiaries or estate values do not need to be “proven” to a court or the IRS, you can often save some expense by obtaining more informal valuations.  Caution: Do not assume you can use the more informal approach to valuations. Check with your attorney and tax advisor to determine what type of valuation will be required for your situation. 

You’ll find a chart of typical items held in an estate and the manner of valuation you’ll need to use to document the estate asset values on our website click here. Some types of items are more difficult to value.  For example that 1963 Split Window Red Corvette classic car or “Trailer Queen” in Uncle Harry’s garage will need an enthusiast to provide an estimated value.

The initial valuation is crucial when preparing reports to the court or to beneficiaries. Look for an announcement of our upcoming workshop “How to Close An Estate and Not Be the Turkey at the Family Thanksgiving Dinner.”  This workshop style class helps non-professionals named as an Executor or Trustee to wade through the requirements and steps to handling an estate. We’ll cover typical steps required, red flags, and an overview of the required reporting; all designed to help keep you out of the hot water. If you are interested in attending this workshop, let me know so we can send you the future details. For now, take a look at the valuation chart on our website to get an idea of how to get started obtaining proper valuations.

By the way, if you want to see some cool classic cars, look for us at the Hot Summer Nights, Danville Car Show on August 16th, 2012.  We don’t have a refurbished 1963 Split Window Red Corvette to show off but I know my husband will be drooling over any he sees at the show.  Shh! Don't tell me about the one you have to sell from Uncle Harry's garage. 

Dividing The “Stuff” - Honoring The Memories

          Grammy's old dresser brings back memories for her children and grandchildren. She had a habit of keeping toys and special gifts in it for her five grandchildren.  Little surprises.  Now that she is gone, they each want the dresser as a way of keeping her memory alive.  They also want to pass on something of her fun spirit to their own children.  While the family sorts through her personal items, the memories come alive. This family talks about their memories and finds a way to honor Grammy while passing on her “joie de vivre”. They see this as an opportunity to remember her life while having some fun.

            In another family, a rocking chair has been passed down in the family since the 1750's. Traditionally, the family with the first child to have a baby got the rocking chair, and then on to the next generation.  The last uncle in the line passed away with no children. Somehow he had kept this valuable antique family heirloom. Now, the nieces and nephews are fighting over the Uncle's estate and the rocking chair is a proxy for years of resentments within the family.  The fight starts over the rocking chair, but if they don't find a way to agree on how to divide all the personal assets, they will face high legal fees as the conflicts grow and boil over.

            If you are handling an estate, tread carefully with how you approach dividing assets.  This job usually lands on the Executor of the Will or the Trustee of the Trust.  Many times the dollar value is not as much of an issue as the emotional value.  Here are a few suggestions on ways to manage passing personal property on to heirs. Each family has its own special personality so think about the particular culture of the family when deciding how to approach this area early in handling an estate.

KISS:   A simple method which is best for low conflict families. Coordinate a date for the family to gather and give notice to everyone.  When they arrive, give each person a stack of post-it notes -   each person with a different color.  As each person wanders through the house, each person “stakes a claim” for the items they want to take home.  If more than one person wants an item, the process decided in advance rules.  The group can decide how to handle the items that are wanted by more than one person.  For instance, one family decided to share a prized necklace between the two girls, with each sister switching off having the necklace every other year. In other families, the tie goes to a coin toss.  In others, a more formal bidding, based on estimated values works.  Keeping it simple.

FAMILY MOVIE NIGHT:   Remember when we used take the whole family to the video story to pick out a movie? Everyone chose some, then everyone had 10 votes (10 fingers). The movie with the most overall votes got to come home for the weekend.  This method is a little bit like that.  It is not perfect, but it can help sort through the stuff rather quickly. 

Items are labeled with an A - F for six rounds.  The first round “A” includes the most valuable items.  Each beneficiary can bid up to 10 votes per round (poker chips work). The items that have more than one person with ten votes goes into the overtime round.  Mark each item won with a color coded label for the person who will be taking it home.  As you move to the next round, it will soon become obvious what items people would like to keep and what items will be sold or donated later.  Get agreement in advance that any items left over can be donated or sold as the Executor or Trustee wishes.

MONOPOLY BIDDING:  This method works best for a family that can handle the division of assets with a bit of light-hearted, fun competition.  It does not work if there are underlying, unresolved tensions. Give an equal amount of Monopoly money to each heir based upon the percentage of inheritance.  For example, if there are four adults with an equal share, each gets an equal amount of Monopoly money.  Give everyone a sheet listing items with estimated values.  Give them a week or so to come to the house and determine what items they would like to take home.  Then select a date for an all family get together.  Hold a silent or audible auction for items.  Decide in advance if the person taking the item will pay for shipping or the cost of shipping will be paid by the estate.  If a family member cannot attend the bidding date, the bids can be accepted in advance.

This process also works if the primary heirs have their own children.  The Monopoly money can be provided to children and grandchildren who are old enough to understand money concepts and won’t be upset if they don’t get something they wanted due to competition.  This can allow everyone in the family to share in the fun.  If children are involved, it might be best to only have the adults participate to avoid the tension that can occur if children become upset.

YOU LIKE IT, YOU BUY IT:  This method works best when all or most family members are not very emotionally tied to family heirlooms, but prefer to get the most value from the estate.  The Executor or Trustee can put all items up for sale,  through an estate auction house or through EBAY.  Any items that a family member would like to keep, can be 'purchased” at some agreed upon discount.  They can either pay for it at the time or use a portion of their inheritance to “pay” the rest of the family for the item. 

This method takes more time to prepare and follow-up.  Before bringing the family in to select items, prepare a detailed list and obtain estimated values for each item.  Take pictures of all items which will be placed on EBAY.  You can send the pictures to family members or post on a family website to find out if there is an interest from family members for any items. You can then obtain appraisals (for larger value items) or estimated values for these items only.  At time of final distribution, the value of the assets distributed to each beneficiary will reduce the amount of cash.  If this method is chosen, be prepared for some bickering over the agreed upon values.  Provide notice for all items that will be distributed by agreed upon values. 

LIQUIDATION  HOUSES:  Some families prefer to use estate liquidators or auction houses to provide a bid on the entire set of household items.  The advantage is that some will remove all the household items from the home.  Some liquidators will only remove some items.  It pays to call and find out how they work and whether it is a consignment or auction method. The liquidators know they will find many items that have little or no value.  If they are willing to provide an “all-in” bid usually it is because they know they can sell some of the items at a significant mark-up.  Many liquidators are actually consignment houses and if the items do not sell, someone must take possession of them. Liquidators consigment rates ususally are lowest (10%) for high value items and highest (39% or more) for lower value items.  Liqudators or auctions houses can provide the assurance that you have gotten a current market value for the items without the hassle of having to market and deliver the items yourself.  CAUTION: If the estate has known collectibles, make sure to get an appraisal on these and consider selling them to collectors or auction houses that specialize in collectibles.

CHARITABLE DONATIONS:  When families' personal assets have little monetary value, a nominal estimated value can be given to the items which are donated. Many charities will pick-up items.  Normally, donations are only a tax write-off when claimed on the final decedent's 1040 tax return, not on any 1041's filed for the estate. Always check with your tax advisor for specific tax advice. 

If this or the sale option is chosen, always make sure to give sufficient and proper notice to all heirs to avoid prolonged conflict after the assets have been donated or sold.

               Finally, since this task is often a pre-cursor to selling or transferring the home, it is important to handle with diplomacy but as quickly as possible. Grief hits people in varying ways and at varying times.  For many people, the personal items are a strong trigger.  Be sensitive and try to find a method that allows the family to process the loss in a  way that fits the family best.

The Stuff - Part 1

         George Carlin once did a very funny bit on “Stuff” on Comic Relief in 1986, a benefit for the homeless.  You can watch part of this famous comedy monologue at George Carlin, "Stuff" Be prepared for some bad language, but it’s still a really funny commentary on how we deal with our stuff.  His main point was: we all have ‘stuff” we don’t really need but other people want, so we want it more.  I have been amazed at the number of times a conflict flares in families, functional as well as dysfunctional, over “the stuff”.  Most stuff remaining after someone has lived well and long has had the value rubbed off or into it, like the Velveteen Rabbit.  Occasionally, items gain monetary or sentimental value over time, but many things just do not improve with use.

            Working as a paralegal in a probate, estates and trusts law firm for over ten years and now as a private, professional fiduciary, I have observed different ways families grapple with the question of what to do with Aunt May’s rocking chair or Grandma’s dresser or Uncle Charley’s guns.  Some families seemed to be able to just go through the house and pick out what they want to keep without much fuss. Maybe Grandma had told them all she wanted this person to have the Pinkie Girl picture and another to have the Blue Boy picture….and they actually wanted it. Usually, this is the fairy tale version. 

More often, families are more concerned with how much cash they can raise or how to get rid of the stuff.  Sometimes, the conflict over stuff becomes an epic battle over small items that mean something to one person, but not to another. One attorney recently told me the story of “Fluffball” in which a beneficiary demanded long lost pictures of a long dead family cat before being willing to move on and close out the estate.  Fluffball has become a symbol to me of all the ways families can stymie closing an estate. Sometimes this is just because it is really hard to say goodbye.  In the end this type of conflict eats up estate resources and can leave hard feelings to linger between family members.

You may have your own version of a “Fluffball” story.  Feel free to send us an email, keeping all real names out of the story to maintain confidentiality. We’ll use the stories in teaching our clients and each other how to get around some of these landmines.

The conflict over stuff usually starts soon and goes hard until people work it out or get tired of fighting over it.  Still, there are many people who sit in a law firm after an estate was closed venting about unfair treatment.  This is especially true if there was not competent legal counsel or a neutral, professional fiduciary assisting the family. One of the regular complaints is that they did not have a chance to keep some special memento of a loved one.  Since memories cannot be priced or purchased, it is important to attempt to give those close to the departed soul a way to keep that special reminder.  It will help bring closure to all involved.

For professionals as well as family fiduciaries, personal property can be some of the most difficult to handle. There is usually no direction provided in the Trust or Will for all the personal items.  Therefore, this must be handled using the fiduciary’s best judgment.  First steps to be taken within the first few days or weeks after the settlor’s passing are as follows:

1)  Who’s Property Is It Anyway?  Determine who is responsible for the personal property.  Who owns it after someone passes away?  This is not always obvious or handled in a legal manner.  The short answer is this, unless you are an only child, don’t assume you own your parent’s personal property.  This could be regarded as a job for the Trustee of a trust, if the trust mentions personal property.  It could also be considered the job for an Executor, if the estate is valued over $150,000. See our website for guidance on small estates. The person who is named as the legal representative of the personal property is the “owner” in order to marshal and distribute the assets. This is where seeking legal counsel early can help you sort out some of these questions. 

2)   Secure the Property. If you are responsible or maybe you just have access to the personal property:  the next job is to secure the home and any personal property located elsewhere. Valuable items have a way of leaving the home if many people have access.  It is always best to change locks and possibly install a security system for the short time the personal property is located in the home.  If you secure the property before you know who is responsible, you should be prepared to act as a fiduciary for all beneficiaries’ interests until the proper person is identified and then pass off all inventory lists and keys to them immediately.  So read on, even if you have not been named as a Trustee or Executor.

3)   Take Inventory. Take pictures of all rooms before doing anything else. Take inventory and sort items, with a witness present. This requires cleaning out the home. Help can be brought in, but take pictures and begin an inventory list of obviously valuable items before any clean-up or organizing is started.  

4)   Value Personal Property. Obtain values for items by looking at Kelly Blue Book for cars; looking at E-Bay or Craigslist for other types of personal property.  You can check with estate liquidators or appraisers if you suspect something might have a market as a collectible. See the site http://finesf.com/surprisingly-valuable/FineLiquidators for examples of collectors’ items. Be very careful of discarding or donating any items which may have value.  I once worked with a family to help close an estate. Their parents had travelled the world and collected stamps. They also saved numerous envelopes with stamps on them, as well as letters from faraway places.  It wasn’t until we took the bags of these items to a stamp collector that we realized the stamps on the envelope with a post date or those from a place no longer in existence were more valuable than the carefully organized multiple sets of international stamps. 

5)   Provide Notice. Provide adequate and equal notice to all beneficiaries and heirs as to when they can review or claim personal assets.  Be as fair to all beneficiaries, included those that are not in the area. Speak with your attorney about how to handle disinherited heirs and how to provide notice in a way that protects you. Trust generally require 45 days notice while court probates have a shorter notice period. Equal communication to all beneficiaries early in the process can help avoid some of the potential litigation that would be caused by not allowing all beneficiaries and family members time to remember the loved one and choose items. 

6)   Get Agreement to Stated Value.  As seen above, even some items that have no monetary value can cause the estate representative to defend against emotional claims by family and beneficiaries.  Avoid this by taking the steps above before distributing anything. Much of the “stuff” we accumulate is often sold at garage sale values when we are no longer using it.  One way to avoid some of the time consuming steps outlined above is to obtain written agreement to a nominal stated value for all personal assets from all beneficiaries. Even if this is done, make sure that everyone has an opportunity to remove mementos by agreement.  

Are you exhausted yet?  Notice, there are quite a few steps to take before distributing or dividing assets.  Don’t start handing stuff out until you sort through the steps above.  Also, take note, cleaning out the home and taking inventory is one of the most time consuming tasks confronting a Trustee or Executor.  It is much harder when you have an emotional need to hang on to the person’s memories.  If you are a family member fiduciary and there is no pressure by other parties, take your time going through the stuff.  You’ll appreciate the memories you uncover.  Eventually, you’ll be ready to let go and move on. 

Once you have started to take inventory, look for our upcoming blog on “The Stuff” Part 2 - Dividing The Stuff to find out how some families divide personal assets. Later, we’ll give you some insights into handling difficult to value assets. For now, remember an appraisal is an estimate of expected sale value. In some situations a formal appraisal by a licensed appraiser is required. In others, an informal appraisal will suffice. Appraisers like to say, only an arm’s length transaction between a willing seller and willing buyer can approach the true value of a particular item at a particular time. 

How To Prevent Medication Errors in the Elderly

Written by Linda Garvin, RN, MSN - Affiliate of The ACE Fiduciary Group

Every year there are countless deaths and hospitalizations resulting from the mismanagement of medication usage. These deaths occur from multiple factors including administration of the incorrect medication, taking drugs improperly and the wrong dose to name a few. We can help reduce these medications accidents and deaths, by implementing some safety precautions. Follow these steps to help your elders...


1. List all the medications prescription medications, over-the-counter drugs and any vitamin and herbal supplements they take.

2. Educate the elderly person about their medications including the desired effects and be familiar with the instructions on how and when to take the medication, possible side effects and drug interactions.

3. Develop a medication usage sheet. Below is one example of how you can list all the medications. A medication list should include the following:

• Name of the medication, color and shape.

• Dosage and frequency

• Reason they are taking the medication

• The date they started taking the medication

• The prescribing physician's name and contact information

• Any special instructions and/or side effects about the medication

4. It is important to have all the medications filled at only one pharmacy. It can be very helpful to develop a relationship with one of the pharmacist' s where the elder picks up their medications. Pharmacists are well trained and can answer your questions about possible drug interactions, side effects and contraindications that your health care provider may not tell you.

5. Keep a list of all the medications the elderly are taking on the refrigerator or by the main telephone they use in a brightly colored folder clearly marked.

6. Ensure that the medications are stored properly [away from the heat or in the refrigerator] and discard any drugs that have expired or have no labels.

7. Instruct the elderly to put on a light when taking medications and never take their drugs in the dark.

8. If the elderly person utilizes a pill box, always have them keep at least one pill in the original medication container for identification purposes.

9. Never have the elderly mix more than one medication in a pill container, especially when traveling.

10. Always have the elderly bring a list of all of the medications they are currently taking when going to a physician appointment.

Linda Winkler Garvin, R.N., M.S.N., of Alameda, California, is a Health Advocate/Consultant & Educator in the Bay Area. You can learn more about her on our website www.acefiduciary.com or at www.LindaGarvin.com.

Life, Love, Law & The Practice of All

A dialog between a fiduciary and attorney about spouses working together, co-written by Loren & Frank Acuña. Published in the Contra Costa Lawyer - Online Magazine, February 2012

“A long marriage is two people trying to dance a duet and two solos at the same time”. ~ Anne Taylor Fleming

We started working together after Loren obtained her M.B.A. from U.S.C. and left investment banking.  Frank’s estate planning practice was growing and he needed help with probate cases and business systems planning.  We both thought it would only be for a short time.  The office was near Las Lomas High School where our kids would eventually land. Working together seemed like a good way for both of us to balance careers and parenting.
Combining the excitement of a start-up and the anxiety of what it might mean to work together, we sketched out a plan for Loren to have her own role in the law firm, using her skills and background to best use.   

Loren:  I started out trying to bring the “Big Business” ideas I had studied in business school to Frank’s boutique, personal-service firm.  Wrong approach.  Eventually, I learned to embrace the joy in helping individuals with the wide variety of issues that surround planning for the transition of wealth to the next generation.   After learning the craft, I was better able to build processes that worked in that firm’s culture.

Frank: As the business changed and grew, so did Loren’s role.  At first, she worked on discrete projects and probate cases; then she took on the role of senior paralegal for probate, conservatorship, and trust administration practice.  Then, as growth exploded, her role expanded to include managing cash flow and system improvements needed for a growing law firm.

Loren: Frank is a wonderful strategic thinker and he loves marketing (I used to tell him that discussing marketing was like having dessert; it was always added as the last item on any firm meeting agenda).  When meeting with clients, he can quickly analyze legal situations and explain concepts so his clients can easily grasp them. Because Frank spends many hours speaking to various professional groups, we developed a system that enabled him to supervise, delegate, and keep doing what he enjoys most.

Frank: Loren’s skills are more focused on digging into a subject until she  understands it completely and thoroughly.  I tease her about being like “a raccoon with a rock”, researching and examining a problem from all sides until she can develop a series of steps; a spreadsheet; a database; or, other tools to make the work more effective. I loved it because it gave me time to work on cases and to look for new opportunities. 

Loren: Frank helped me develop an expertise in estates and trust by encouraging me to research and by allowing me to build an approach to this practice area.  I helped him build his business by setting up systems that could be transferred to new staff and reduce costs. Together, we developed a set of values to build our business upon:  Empathy, Expertise, and Effectiveness.  Our entire team dedicated themselves to making sure that our clients would experience these values on every matter we touched.  This legacy continues in his law practice and in my professional fiduciary firm.

Frank: As our children graduated from high school, Loren had a dream of starting her own business.  She obtained her license as a professional fiduciary and now serves clients directly and with a team of professionals.   I continue to practice as an estate planning, probate, and trust specialist with Acuña, Regli & Klein, LLP.

Loren: The children have moved on to college and careers and we are in a new season together.  I am excited about the opportunity to explore my own directions; spread my wings and to use my education, financial background, and my years of experience working in my husband's law firm. When we worked together in the same office, we would occasionally feel a little too close for comfort.  However, we now miss the closeness and camaraderie we shared every day for ten years. 

Frank: There is nothing like the level of trust you have in working with someone whose life, love and future are so intimately tied with your own. 

Final Thoughts: We respect each other’s skills and abilities in a way that would not be possible if we had not worked together.  We continue to support and encourage each other, but we also respect conflict of interest rules as well as a fiduciary’s duty of independent oversight as to professionals hired. Therefore, we each have our own office and find few, if any, opportunities to work together these days.

Loren R. Acuña, is a private fiduciary with The ACE Fiduciary Group.  You can obtain more information about her skills and background at www.ACEfidcuiary.com or by contacting her at (925) 906-1882, or by email at Loren@ACEfiduciary.com.
         
Frank R. Acuña, a partner with Acuña, Regli & Klein, LLP, is a State Bar of California certified specialist in Estate Planning, Probate and Trust Administration.  He can be contacted at www.AcunaRegliKlein.com (925) 906-1880 or ohc@AcunaRegliKlein.com.

Love or Comfort?

              My daughter packed her bags and drove off yesterday.  As she left to return to college, I flashed back on my mom, waving to me as I would drive off from her house.  Then a moment later, I remembered the tears on my mom and dad's faces as we would drive home after visiting my grandparents for Christmas; fried chicken and pecans packed to eat on the long drive home. 

           At the time, I didn't really understand the tears.  I mean, I had a good time and all, but I was kind of happy to be going back to my own home.   Back to where I didn't have to be quite so quiet, or quite so polite, or follow some new set of rules; back to my comfortable routine.

            As my daughters and all the family & friends left yesterday, I experienced the oddest contrast in emotions. On the one hand, there is the misty eyed, missing them already kind of love.  On the other hand, there is a sense of relief.  Now, I can go back to my routine and clean house.  Did I just say that?

 

            After the family left, the routines started up again.  Oh, those comforting routines. But wait, it's so quiet here today.  I'm kind of restless, looking for my mom to walk with or my daughter to talk with or my friends to play with.  Hey, where did everybody go??  Did my grandparents or mom experience that dual sense of gratitude for family and for the comfort in the daily routine?

            There is comfort in knowing that you have offered your best and highest love to others. Families offer many opportunities to experience and give love, joy, loyalty, and a sense of belonging as well as so many other positives.  But, you have to admit, families also bring in their stuff, their wishes and their drama or chaos. Just being with family can push us out of our comfort zones. Sometimes love feels more like fighting a wave to swim to the other side.

            Remember those “Love Is ….” cartoons?  Love involves small gifts of self: pushing back the irritations; finding something the other person likes to eat; spending time listening; offering advice only when asked; playing a game the other person wants to play; turning up the heat, even when you don't want to; and, every so often in a glittering moment we get to share from our hearts and connect with someone else.  There are numerous ways to offer love and most of us try our best to do so during the season of remembering Christ's birth.

            Now Christmas is over.  Routines set in.  Most of what we remember about others often boils down to “How did we start?” or the little habits we notice or leave-takings.  What goes on the middle is sometimes a mixture of love and discomfort.  And you always wonder . . . .  did they hear your love or your discomfort more? 

            Some of us are taking leave of our families heading off into our own lives and homes – like my daughters, others are returning home after a visit and settling into known comforts; and, some are preparing to leave this world due to an illness: they are wondering what is really beyond - not wanting to leave behind the comfort of the known.  How we finish our lives and take our leave is often most remembered.  Today, I prefer the chaos and discomfort of love. I hope, in the end, that Love wins out.  Imagine, Christmas everyday and no diets!

 

            Click here to read an excerpt of a book coming soon, Afterword, by Loren R. Acuna. The book is inspired by C.S. Lewis and George Macdonald's allegorical, imaginative fiction.