Here are a couple of things to keep in mind:

Not Having a Beneficiary Designation on Your IRA
The question that comes up on a regular basis is, “What happens if I die without a beneficiary designation in place?”   “Your estate would be the default beneficiary,” is my usual response.   That would mean your heirs would eventually get the money…..along with a significant tax bill that could have been avoided.

Different Scenarios of Inheritance Require Different Actions
IRAs can be inherited from a spouse or a non-spouse.    These two scenarios are treated differently in the eyes of the IRS and have different options dictating what you can do with each of these.       Inheriting an IRA from a spouse is a little more straight forward while inheriting an IRA from a non-spouse has a few twists and turns.       Regardless of which one applies to you, talk to your tax adviser or CPA to make sure you take the best route and not give Uncle Sam more than he deserves.

Moving an IRA
I was surprised to learn that some custodians/companies holding IRAs forbid the transfer of an IRA to another custodian via a trustee-to-trustee transfer.   So… if you have an IRA with COMPANY A and your beneficiaries would want to transfer it to COMPANY B, you will need to check with the custodian of your current IRA account to ensure that it can be moved by your heirs without triggering an unnecessary tax bill.     This is a hidden surprise that is usually discovered after a death.

Required Minimum Distributions
If your 75 year old mother leaves you her IRA, note that she is under the IRA rule that requires her to take out a minimum distribution every year after she reached 70 1/2 years old.    If she passes away, make sure that the required minimum distribution (RMD) has been taken out BEFORE you transfer or take out any money.    There is a 50% penalty by the IRS if this is not done.      50% of the RMD could be significant.        So note the age of the person leaving you the IRA and take action accordingly.

If you are setting up your Survivorship Plan and it includes IRAs, 401Ks and/or annuities, make sure you let your heirs know that these have tax consequences associated with them and to see their CPA BEFORE they do anything with the money.     If you are on the receiving end as a beneficiary, you will also want to consult with your tax adviser or CPA.   It’s just one of those little “gotchas” that people don’t see coming.

Kevin Underhill’s heart was donated as a gift of life to a man named Ron Murray – a man who had only months to live, was very active and rides a bike!    Can you imagine your life if you were waking up daily knowing you had only a few months to live?   Better yet, can you imagine what his donor would have felt like to know he was able to give the gift of life?     It’s provocative to think through the situations from both sides.       Fortunately, to the credit of the Austin American Statesman and Ron Murray, they put together a short video to give you a look inside someone who is home to a new heart.      Take a quick look at this video now and come on back to this page and read further.   Go ahead, you have a couple of minutes.  
View the video.
Now doesn’t that just make you think, “what should I do if I fall into unfortunate circumstances and have the option to help someone live on and express their gifts?”         Personally speaking, I have always wanted to be an organ/tissue donor.    I signed the card years ago, but started questioning if I am “good to go?”    So a couple of days ago, I confirmed my desire to be a donor.     Here’s how I did it.

1.   I went to  www.organdonor.gov to get updated information.

2.  From there, I went through all the information they had on organ donation.

3.  I clicked over to our local/state Organ Procurement Organization (OPO) and registered with one of the 58 sites they have in TX.   I personally went over to TOSA .

4.  Entered my information in the form.

5.  Last step.   I am waiting on my donor card to get here in the mail.

It’s as easy as that.       Organ donation may not be for everyone, but I believe the majority of the people would be donors if they did a little research and learned more about it.      It’s one of those issues of Survivorship Planning that need to be ironed out way before your family is in the position to make that decision.

I bet if you ask Ron Murray, he might sing you a song if you register to be a donor.     What a sweet song that would be.  Think about it.

As time goes by, it is natural to change your mind on this and decide all-together.  I have had this happen with a couple of different clients.    They bought burial plots and then changed their minds to favor cremation instead of burial.    This is becoming more of a mainstream idea since traditional burials are not a “green, good for the environment” practice.    So what can you do with a burial plot when you are not going to need it?     Can you sell it?      The answer is yes in most cases.        I became curious about his concept so I did a little research.  There are websites built just for this purpose.        I was shocked to see how many websites are the “Craigslist” of burial plots.    Here are a few that I found:

• • • • Grave Solutions
      • The Plot Exchange
      • The Final Arrangements Network
      • Buy and Sell Cemetery Plots
      • Ebay – there were 274 sellers on there looking to sell their burial plots.

These are just a few of the sites I found dealing with the sale and purchase of burial plots and there are an endless stream of these around.    I did a little testing to see what burial plots go for.  First, from my small home town in NM.    There was one for $49.       I went to New Orleans, LA and found some over $100,000.        California boasted a few pricey ones also with a lot of them averaging  $8000 or so.       As for Austin, TX?    I found them anywhere from a $1000 to $9000 for a double occupancy grave.      I found this little cottage industry fascinating!   I had no idea there were so many businesses that help you “list” and “locate” your burial plots!

One of the better resources I stumbled across is the website:    Funeral Planning 101     This is an interesting site with lots of information and of course some “built in advertising.”    None-the-less, it’s a pretty easy to read site of information.

Since most people find this subject hard to discuss and may find themselves holding a valuable piece of property, I thought this would be worth exploring – if only for exposing the issue.

1.  how your accounts are set up.

2. how your family perceives they will have access to that money when you are gone.

As parents age, it is common to add a child or children to the account giving them the ability to write checks on the account to help in managing the money.     It does not mean that they are joint “owners” of the account.     In the financial and legal world, this is known as adding convenience signers to the account.     As part of a comprehensive Survivorship Plan, one looks at how the costs for the funeral are going to be covered as well as funds available to settle unfinished personal business such as pay bills or miscellaneous expenses.        You will be surprised to find out how controversial this can get among siblings trying to decide how a $10,000 funeral is going to be covered or how bills are going to be paid until an estate is settled.     They naturally assume that access to that account will be there to cover these expenses.     Not so says the Texas Probate Code, Section 438A.

d)  On the death of the party, the cosigner shall have no right of survivorship in the account and ownership of the account remains in the party.

This means that the account is part of the estate and will be treated as such by the bank.    Take note to visit with your bank and/or attorney to make sure this assumptions doesn’t trip your plans for your survivors.

I checked into specifics on the options a family has when a loved one dies with an “e-presence” out in cyberspace.               Here is a short list of the most common websites and how they handle accounts of people who have died.

Facebook
Facebook gives you a couple of options.     You can close the account or turn the account into a memorial where friends and family can leave notes or comments about the person.   Privacy is set to friends and family only and the profile become unsearchable, all personal sensitive information is stripped out of the profile and it prevents anyone from ever logging into it again.    To  create a memorial, you have to fill out their online form and submit a proof of death such as an obituary or news article about the person proving that they are, in fact, dead.    The link to the Facebook form to do this.    http://www.facebook.com/help/contact.php?show_form=deceased       or contact them directly to close the account (also submitting the appropriate proof of death.

If you come across a person on Linked-in who is deceased or if you have a family member who is deceased, you will need to notify Customer Service that the Profile still exists and may need to be removed. They request that you provide any important information about the deceased member that will help their Privacy Department in in investigating and acting on the account accordingly. Items to provide in your email would be one or two of the following:

1. An Obituary Link
2. A Death Notice
3. Consular Report of Death
4. Death Certificate

Per Google’s Website, you have to submit via fax or email a list of required documents to get access to the account.     I found information on what to do on their website -
http://mail.google.com/support/bin/answer.py?hl=en&answer=14300 .

I have read where Flickr (a photo sharing website) keeps the sites open but prevents any kind of access to photos marked Private.      They are owned by Yahoo now, and I was unable to find the issue addressed anywhere on their website.    The information was difficult to find, so you would have to contact them directly.

My Space gives you a couple of options also.   You can submit a request along with the required information to remove the profile or you can create a group profile (memorial) and link it to the deceased persons profile.      I found information at this location.     http://faq.myspace.com/app/answers/detail/a_id/369/kw/deceased%20person/r_id/100061

These are just a few of the most common websites where you may hold a membership.   If you have a business or a personal website, you also want to be sure and record who your host is and how to contact them in case of your death.       Online presence can last for years and maybe indefinitely, so this is just one more thing to include in your survivorship plan.   Let your family know where your footprints are in cyberspace to manage your presence responsibly.

THE STORY OF CONFUSION AND MANIPULATION - Befriending a woman for control over her estate.
My friend is the granddaughter of long time, prominent figure in Dallas.    She began to tell me about the most chilling story of her grandmother who was befriended by a cast of characters who eventually manipulated her into giving them complete control over her life and belongings.     Over the course of a few years, two guys in the antique business  befriended her and started convincing her that her daughter and family did not want the best for her and that they would take care of her.     In 2005, after suffering a fall, they went to her hospital bed with an attorney and convinced her to sign a new power of attorney and will giving them complete control over everything.       They even had the gall to video the process for credibility.

Once in the driver’s seat, they began cutting off  access to her.    My friend said that was the last she was ever able to reach her grandmother.   Apparently, they were after this poor woman’s estate home worth about a million dollars.    My friend’s mother (the elderly woman’s daughter) lives out of state and was never able to convince her mother to sell the home and move in with her.    She was determined to stay in Dallas.     Without family members around, the woman was a target for such criminal activity.

To see the complete story written up by ABC news, click here.   Hold on to your seat, you are going to be appalled when you see the video of the 2 men and their attorney filming her signing the legal documents!

ANOTHER STORY 24 HOURS LATER – $40,000 taken by a stranger.
I was relating this story to a group of people over dinner the next night only to find out that this happened to another  friend of mine’s mother who had Alzheimers disease.    She said some random woman befriended her and somehow made off with $40,000.    I asked if she had reported it and she said with her mother’s confusion, they couldn’t begin to track her down.       She worked with her mother’s CPA and they were certain of the unaccounted for funds, but felt there was no way to catch the person responsible.

AND YET ANOTHER STORY – Money being taken by the son.
A few weeks ago, I was talking to another friend of mine who let me know the family thinks one of the sons is taking money from their father’s account while the father is sick in the hospital.     The suspicions have been aroused by money missing from the accounts reported by one of the other siblings.

Three stories, all unrelated, but all with the same theme of elder exploitation – a cancer growing in our society.  I was knocked off my feet by the statistics of this crime as reported by the Adult Protective Services in Texas.  In Fiscal Year 2008, Adult Protective Services completed 68,683 investigations of abuse, neglect, or exploitation involving adults living at home. Of these, 48,380 were confirmed.

If you have a family member who lives out of state and doesn’t have a trusted family member in the same town looking out for them, consider the risk of this rising crime.      No matter how well you have planned for survivorship, there are forces at work to the contrary.    I will be adding links to my site under the LINK AND READ for further resources on this topic.   I felt compelled to get the word out on this problem.

As I work with clients documenting the details of their wishes for their personal items, I come across a lot of things that could easily end up
in a garage sale by mistake “waiting to make someone’s day.”     The generation coming up stands to inherit not only large sums of money, but true works of art or collector’s items.      So what happens when the time comes for the family to transition the items?     How do you split up valuable pieces of art between siblings?   Worse is when the family doesn’t know the value of items in the house and hires someone to just sell it all because they don’t have time to deal with it.    (thus the newsworthy garage sale finds)

I recently had coffee with two of the most interesting ladies who own Whimsey Appraisals to learn more about the value and process of getting an appraisal.     Kristel and Glenda Overfelt are extremely sharp ladies with a skill for appraising anything from antiques to fine art.       I was amazed at what I learned over coffee and thought I would share it with you.

What is an appraisal?
An appraisal is a professional estimate of the value of something.    People usually have items appraised for insurance purposes, tax strategies, estate planning and settlement, etc.     I was surprised to learn that in order for an appraisal to stand up in court, there are specific things that need to be in an appraisal report.     This is the difference between a written statement of value and true appraisal report.

Value of a True Appraisal Report
Many times family members come in to do an inventory for the probate court when a loved one passes away.   They assign what they think things are worth for the sake of the estate settlement.     Glenda told me that it is common they go to appraise someone’s valuables, and the values assigned to the items are not close to what they should be – either over or under an appraisal price.     A lot of times it will alter the course the family takes – either keep the item or sell the item through a channel other than a garage or estate sale.    A good appraiser should be able to help you with information on how to go about selling valuable items and your options for asset disposition.        I am currently working with a client who has many works of fine art and it will be a true challenge for his heirs to split up and dispose of the property in an equitable fashion.     Unfortunately, I think this will have an impact on his heirs after he is gone.

If you have valuables that need to be insured, you will also need a professional appraisal report to stand up to an insurance claim.   If you have a 14th century chair you insured for $5000, then you will have to prove the value of that chair if your home burns down or it is stolen.     Values can be nebulous when it comes to settling an insurance claim.    Better to be safe than sorry later for not being able to defend it.

There are a lot more reasons for getting an appraisal report such as settling a divorce, donating to valuables to a  charity for tax write-off purposes, downsizing your estate or even if you want to purchase an object.  Since I am in the planning business, I am especially interested in the process and value of appraisals in estate and survivorship planning.

It is a true challenge facing the next generation – what to do with all that stuff!    There are emotional obligations being passed down along with the responsibility to dispose of it wisely for the benefit of the heirs.       Addressing the value of your personal belongings now, as well as the disposition of your property, will lessen the load on your family when you are gone.     Your lack of  planning could end up in the news when someone purchases your extremely valuable painting for a few dollars in your family’s garage sale.

HOW ARE PERSONAL POSSESSIONS TO BE DISTRIBUTED
During my friend’s last visit for the memorial service, she and her sister had a couple of “visitors” to the condo.    One was a neighbor who dropped by to tell them that she really needed a vacuum cleaner and a microwave.    The other one was a friend of her Mom’s who promptly went into the kitchen and started opening cupboards saying how she always liked those green dishes and she wanted them (for a price of course).    Talk about the audacity of people swooping in on the goods without a care about what the two daughters were going through.     I was dumbfounded by the craziness.

That brought us to the discussion and difficult question she had,  “What do I do with all of my Mom’s personal things so that I can honor her memory?”   My recommendations were as follows:

Best Case Scenario – designate who gets what before you pass away
The person who owns the things should create a list of special bequests within the will or go ahead and arrange to give away the items while the person is still alive.     This is getting to be more common, if and only if, the people allow themselves the option and clarity of planning in advance.

After The Fact – set up guidelines for distributing the property
When trying to objectively dispose of personal property, lay out some guidelines of priorities to keep yourself from feeling pressured.
For example:

1. Children and direct family get the things that mean something to them and is agreed upon by all family members.
2. Then close friends of the deceased along with distant relatives may be queried for things that they would like to have.
3. For valuable items left over, you may want to think about bequests to museums and art galleries so that many can enjoy the items.    Or, think about locating a consignment shop for selling the item directly.
4. Finally, charity, neighbors and garage sales for all the things left over after meeting the guidelines above.

On a final note:    My friend was still wrestling with honoring her mother through her things.      The first year after a death is a significant emotional transition.     If you feel you have the luxury of time, hold on to the things until you feel you can let them go without regret.     It is natural to see your loved one “in their things” and time will speak to you and soothe you into doing what is right.    After all, things are just things, and memories and the love you have for your family will last forever.    Think about it…….

Here are a few things you can do to keep your family off of the estate battleground:

1.   Note specific bequests in your estate plan.    If you leave all of your personal things to be split between your children equally, disagreements can flare up quickly if more than one of them has their eye on certain items.  (it seems improbable, but it happens frequently)

2.  If you have personal loans between family members, specify the terms in case of death explicitly!  This is a HOT issue in families today.

3.  Communicate your plans to your family directly.   It’s better hearing it from you than a reading of your will.

4.  If your estate plan is confidential, make a brief video explaining your reasoning behind your will.

5.  Do not depend on conversations only to communicate to your family.    Time has a way of fading the true color of your wishes.    Write it down!

Plan it, document it and communicate it!    It’s a simple concept with a HUGE impact.