Complete Estate Planning

March 9, 2015

“Get your affairs in order” is a euphemism for estate planning. Some tasks do involve traditional notions of estate planning. They include making sure your will, trust, or both, are in good order, assets are titled in the trust if you have one, and health care and general powers of attorney are current.

Two or three years ago I had a case in which “affairs in order” meant much more. A couple had wills from many years earlier. Unexamined for decades, seemingly, and not reflective of their intentions. Those matters certainly affected certain people; still, that issue is not my concern here. Instead, I want to discuss how the couple owned their many assets.

The assets were several: a home, stocks, bonds, savings bonds, insurance policies, some Individual Retirement Accounts, and checking and savings accounts. A not so very out of the ordinary collection of assets!

Now, if the couple had signed and had recorded with the County Recorder a beneficiary deed, telling the world who gets the house when they’re both gone, a death certificate and a recording fee would have transferred title. Easy … and cheap!

As for the securities, the couple held them through transfer agents for the issuing companies. So, for example, the IBM transfer agent held the IBM stock in a virtual account. These accounts allow for reinvesting dividends, sales without commissions, etc. Unfortunately, nothing is free, and holding shares in these accounts makes the probate administration process very difficult.

After a death the transfer agent requires evidence of the Personal Representative’s authority to act. No problem there. An official copy of the death certificate and a certified copy of the Letters of Personal Representative do the trick. Then, alas, we get to the medallion guarantee.

I call the medallion guarantee a supercharged notary process. With a Notary Public the entity which relies on the validity of a signature can look to the Notary and his or her bond for a recovery where a signature has been forged. The same goes for a medallion guarantee. So what’s the problem? Well, banks are part of the medallion guarantee program and, in my recent experience, there’s nothing easy about getting a document signed through the program.

At Bank No. 1, where I have been a customer for many years, the bank was willing to help me out, but it needed approval from someone at a regional office, out of state. Bank No. 2 stepped up, so long as I became a signatory on my law firm’s bank accounts. Lots of time and effect, and the signing process for about ten securities took about 45 minutes, only after my legal assistant spent hours getting all of the paperwork in order.

Was there a solution? Sure. Hold the securities in a brokerage account and Identify “payees on death,” the people who the couple intended to receive the assets. A few minutes and the job would have been done! (I know there are advantages to the internal process, as opposed to a brokerage; however, I suspect the savings may not be as great as the cost of administration.)

Bank accounts? Same thing. POD accounts are easy to set up, and ownership transfers with a death certificate.

IRAs? Here, the bank associated with the Individual Retirement Account would not give me a check for the IRA value. Instead, it required me to open an account at the bank. “OK,” I said, “knock yourself out setting up the account I’ll close as soon as it’s funded.” Oh my oh my, did I underestimate the bank.  Three visits and four phone calls before I was able to get the money.

How you hold your assets matters. And, in fact, it can often matter more than having an up-to date will. I’m not suggesting wills and trusts are unnecessary, for they are important documents, especially where your circumstances vary from “to the spouse, then to the three children in equal shares.” Too often, however, people get professional assistance with the wills and trusts, and nothing else happens. That’s not estate planning in its most complete form!

Note: Check out Estate Planning for Smart People, written more recently, for some thoughts about documenting your intentions.


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