Direction-Memo-The-Ebook.Pdf

Outskirts Press, Inc. Denver, Colorado The opinions expressed in this manuscript are solely the opinions of the author and do not represent the opinions or thoughts of the publisher. The author has represented and warranted full ownership and/or legal right to publish all the materials in this book. Direction Memo™ How to Write a Letter of Instructions for Your Estate Plan All Rights Reserved. Copyright © 2011 Paul M. Caspersen v3.0 Cover Photo © 2011 JupiterImages Corporation. All rights reserved - used with permission. This book may not be reproduced, transmitted, or stored in whole or in part by any means, including graphic, electronic, or mechanical without the express written consent of the publisher except in the case of brief quotations embodied in critical articles and reviews. The author of this book is not engaged in rendering legal, tax, accounting, insurance, financial and investment planning, or similar professional services in the pages of this book. If expert advice is required, obtain the services of a licensed practitioner. Outskirts Press, Inc. http://www.outskirtspress.com ISBN: 978-1-4327-8072-2 Outskirts Press and the “OP” logo are trademarks belonging to Outskirts Press, Inc. PRINTED IN THE UNITED STATES OF AMERICA Contents Section I: Informational Introduction 1 Chapter 1: The Importance of a Direction Memo™ in Your Estate Plan 7 Chapter 2: General & Biographical Information 15 Chapter 3: Estate Planning Primer Part I- Estate Documents 25 Chapter 4: Estate Planning Primer, Part II – Ownership and Transfer of Property 39 Section II: Financial Chapter 5: Personal Risk Management and Insurance 57 Chapter 6: Debts - People You Owe and Who Owe You 71 Chapter 7: Real Estate 79 Chapter 8: Nonqualified Savings & Investments 89 Chapter 9: Retirement Plan Assets 103 Chapter 10: Personal Property, Business Interests, and Miscellaneous 121 Section III: Personal Chapter 11: Philanthropy-Planned Giving Instructions 135 Chapter 12: Legacy Planning 153 Chapter 13: Final Arrangements 161 Chapter 14: Putting It All Together 173 Section IV: The Direction Memo™ Workbook SECTION I Informational Introduction “Only put off until tomorrow what you are willing to die having left undone. “ -Pablo Picasso One Hundred Pieces, One Allen Wrench, and No Instructions One SatUrday morning my wife Dana and I purchased a new desk for our home office. We loaded the big box in our car and quickly drove home to put it together. When we opened the box and viewed the contents, we discovered that we didn’t buy a desk. We bought one hundred pieces of something, and an Allen wrench. The box didn’t even include assembly instructions! We agonized the entire weekend and finally finished putting the desk together Sunday evening after many trials and lots of errors. Not only did we have to start over several times, we also were left with extra pieces that seemingly had no purpose. It seems that gone are the days when you can buy a piece of office furniture that comes fully assembled and ready for use. It seems there are more pieces and that the instructions are actually more confusing than helpful. Sometimes there aren’t any instructions at all. When you see a beautiful piece of furniture on display in the store you tend not to think about the time, energy, and raw emotion involved in the assembly process. Your Estate- Some Assembly Required! The story above is similar in many ways to what I’ve observed when family members are left to organize a loved one’s estate, but the anguish is multiplied by 1000 times. When you die or become incapacitated, the steps your important people will go through are similar to assembling a new piece of office furniture. They are: • Searching for the pieces (locating your property) • with limited tools (legal documents) • and no instructions (what specifically needs to be done) If you think the stress level is high while assembling office furniture, visualize the emotions when your family is trying to organize your affairs after your death or incapacity. As a Certified Financial Planning Practitioner™, I have observed a wide range of emotions experienced by children, widows, executors, trustees, and other important people. Many of them spend dozens of hours searching for answers that could have been easily provided. The average individual works 40 years to accumulate wealth, spends the next 20 years conserving what they earned, and invests less than 2 hours planning for what happens when they are gone. You could be thinking that since you met with an attorney and signed traditional estate planning • • • 1 • • • • Direction MeMo™ • documents, your estate plan is invincible. Traditional estate planning documents (e.g., wills, powers of attorney, and living trusts) are “tools” used to assemble your estate. Ironically, many attorneys even refer to their documents as “tools” from their “toolbox.” While the tools are critical, the instructions are a vital prerequisite for the proper “assembly” of your estate. So, what can you do beyond drafting legal documents to help your family and other important people “assemble” your estate? Create an instruction manual! Your important people need both reliable tools and clear instructions to understand how all the pieces fit together. As you continue to read, you will understand that there is a big difference between “tools” and “instructions” when it comes to your estate plan. The problem becomes clear when you meet with your Executor after drafting your estate planning documents. It is almost impossible to explain what their responsibilities will be with your estate, by simply providing them a copy of the will. If it does nothing else, the Direction Memo™ makes it easier to sit down with your Executor to explain each of your goals. Your Executor should have a copy of your will, of course, but don’t give him or her “a tool and a bunch of pieces,” without also providing the instructions. My Observations and Inspiration Overcoming the fear of talking about mortality is the most important step in the estate planning process. I know that planning for your incapacitation or death probably doesn’t take top priority in your thoughts. It is often easier for people to think privately about mortality rather than talk to others about these topics. Family discussions about these matters can be difficult and stressful. Sometimes the older generation is secretive about their finances, and may even be suspicious of the younger generation for asking about their planning. Then, when you finally summon the courage to confront these issues, your family members may not be comfortable enough to listen. Although verbal discussions about these topics are important, written directions are better. Therefore this book will help you complete your directions and thereby make it easier to discuss these issues with your loved ones. If that conversation with your loved ones never happens for some reason, your thoughts and wishes will be present in your Direction Memo™. While estate planning requires you to think about the end of life, it can also help you discover meaning, joy, peace of mind, and gratitude. My inspiration to encourage everyone to write a Direction Memo™ comes from communicating with widows and children upon the death or incapacity of their husbands and fathers. I see widows making financial decisions, perhaps for the first time in their lives, while simultaneously dealing with the loss of their spouse. The opposite is also true if a husband loses a wife who was the primary financial manager for the family. The absence of a letter of instruction is one of the leading causes of stress at the death or incapacity of a family member. When I was younger, I remember watching Willard Scott on The Today Show and it was rare when someone reached 100 years of age. Today Willard is acknowledging people who are turning 110, and living to 100 is no longer a rare occurrence! Medical advancements that allow us to live longer haven’t yet solved the problem of preserving our mental capacity. This means that your “tools” and “directions” • • • 2 • • • • IntroductIon • are important not only for death but also for a period of incapacity during life. You should establish a “tool” referred to as a Durable Power of Attorney for financial affairs. You will learn more about this document throughout the book, and how your Direction Memo™ will help the person you name as agent in that legal document. Finally, my inspiration for creating a simple way to write your Direction Memo™ comes from more than 15 years of experience working with people who wish they had received a set of directions from their loved ones before it was too late. And it’s not always because the surviving spouse is ill-equipped to make financial decisions. Sometimes they just wonder if their late spouse would have agreed with their financial decisions. A typical question from a surviving spouse is, “What would Bob have done in this situation?” Sometimes a surviving spouse doesn’t have the mental or emotional energy to make any financial decisions at all. My Hopes for You My first hope is that you finish this book and complete your Direction Memo™. This is the set of instructions for the “assembly” of your estate. The first chapter explains how a Direction Memo™ differs from your traditional legal documents, and why both are important. I will warn you that as you get towards the end of the book it gets more emotionally difficult. I hope this book provides you a “safe harbor” to create your directions at your own pace. Regardless of your age, planning your estate is an important and selfless act. After all, it’s not for your benefit, but rather for the benefit of your loved ones and other people and causes that are important to you.

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