I recently was having a conversation with my friend who told me about a time right after he moved to Colorado.  It went something like this:

“I was so blown away at the scene I witnessed while walking out of my church in Lafayette after a snowstorm.  I had just moved to Colorado and was new to the area and checking out new churches.  This church was the largest I had come across so I figured it was due time to check it out.

Walking out of the church felt like a scene out of a movie: at the exact same time, everyone was clearing snow off of their vehicles so they could drive home.  The thing that struck me was that they were all using the same brush with a handle on it to do the job.  Growing up in a small town in Iowa, my family had a car dealership with anywhere from 40-60 vehicles on the lot at a time.  Whenever it snowed it was my job to clear the snow off — vehicles don’t sell very well when the customers can’t see them!  We used this thing called a “snow rake” that had a rubber or foam tip on it, and it allowed us to clear off a heaping amount of snow off an entire vehicle in just a couple of minutes.  You can imagine my surprise when I noticed that no one in Colorado had this tool that I had been using my whole life.  Maybe it was because I grew up working for my family’s car dealership, maybe it was because I grew up in the midwest, whatever the reason I knew I had the right tool for the job and I thought it was odd that others didn’t.”

I grew up in Colorado and have always used a brush with a plastic handle and ice scraper to clear my windows on my car.  I did not know that such a thing as a “snow rake” existed until my friend told me this story.  I knew that his story needed to become a part of my blog posts.  What a perfect analogy for needing the right tool for the job?  Whether removing snow from a car, or setting up an estate plan, you need the right tool for the job.

The right tool isn’t always the same for everyone.  A “snow rake” is great for removing snow from cars, but it may not be great for scraping ice.  A will is great for distributing property at your death, but does not help if you are incapacitated.  My mother, who grew up in Minnesota, taught me how to remove snow from a car, and I grew up in Colorado, so I thought I knew how to remove snow.  Just because I know one way to get snow off a car, doesn’t mean that I knew the only way.  Similarly, just because you know one way to set up an estate plan, doesn’t mean you know all of them, so you would be well-served to work with someone more familiar with different estate planning options.

By using a “snow rake,” my friend could quickly remove snow from his car and be on his way.  Using the right tool in estate planning allows your family to address your assets after you are gone, or perhaps while you are still alive.

 

You Need the Correct Document – A Will May Not Be Enough

I get many calls from people who tell me that they are the executor of their parents will, but they are unable to access their parents’ financial accounts while the parents are alive.  I will then explain that while someone is alive, the proper documents / tool to use to handle the financial affairs of a living parent is a financial power of attorney.

Lots of the people who have called then ask me where they can get a financial power of attorney form, or how they can set that up for their parents.

I am always a bit confused by the financial power of attorney “form” question, as there is not a standard “form” for a financial power of attorney.  The Colorado Statutes have a statutory financial power of attorney written into the statutes, but I am not aware of an outlet that publishes the language from the Colorado Statutes outside of the Colorado Revised Statutes themselves.  I have templates for a power of attorney that I have developed over my years as an attorney, but I don’t just give them away.  I prepare them as part of an estate plan.

I also have a discussion with these people about how a parent who cannot make their own decisions or handle financial affairs on their own is like not able to have the mental capacity to set up a power of attorney.  If someone cannot handle their own financial affairs, they likely lack the mental capacity to set up a power of attorney.  If it is too late to set up a power of attorney, then the children may need to go to court to request a guardianship or conservatorship over a parent who lacks mental capacity.  Such court proceedings are available, but often are more time consuming and expensive than setting up a power of attorney while someone can do so.

You Need the Correct Document – A Power of Attorney Alone May Not Be Enough

I also get calls in the opposite direction; people who call me and let me know that they are the agent under a power of attorney for a parent, but now that the parent has died, the financial institution will no longer recognize the power of attorney.  I agree with the financial institution.  A power of attorney generally ends when the person who created the power of attorney dies.  After the death of an individual, the will dictates who has power to access the deceased person’s accounts, and the named person needs to go through the probate process to get authority to act on behalf of the other person.  Whether a power of attorney while someone is alive, or a will after death, using the right document, the right tool, is important to accomplish what you need to do.

 

Finding the Right Estate Planning Tool May Require Expert Advice

Using the right tool also applies to what type of estate planning documents you use.  You can use a trust, or you can use a will, but not all types of trusts and wills are the same.  I have had people ask me to set up a type of trust that they read about on the Internet, or a type of trust that they heard about once in a seminar.  Often times, such trusts do not apply to the situation of the individual.  I have had people as me about Grantor Retained Annuity Trusts as their estate planning tool.  In one instance, the person asking me about these types of trust had read an article about such trusts and how they have been used by multi-millionaires and multi-billionaires to transfer assets out of their estates and therefore reduce estate taxes.  I have read similar articles.

The person seemed to think that if they did the same thing, they also would become rich.  I recall having told them they probably took this approach because they were rich, not because it caused them to become rich.  The person asking me about this type of trust had a modest home and about $150,000 in IRA money for retirement.  I informed this person that a Grantor Retained Annuity Trust would probably not be the best option for this person.  I also mentioned that my friends who work at firms that provide such trusts often charge $25,000 or more to set up the Grantor Retained Annuity Trust for their clients.

That amount seemed like it would be out of their price range for the assets the person did have.  The person agreed with me.  We talked about how a different type of trust was an option, or how a will might work for their situation.  Just because someone rich used an estate planning technique, that does not mean the same technique will work for you.  You always need to keep in mind, just because you read something on the Internet, that doesn’t mean it’s true. 😱

Choose the Right Estate Planning Option for You

You want to pick the right approach for you and your situation.  A brush with a handle may be the right approach to remove snow from a car in certain situations, but a “snow rake” may be better for others.  You may benefit from having a trust, or you may just be paying for something you don’t need.  Working with an estate planning attorney who will explain your options is always the right way to find the right estate planning tool.  You just need to choose what is correct for you.