Having “THE TALK”

Like many people, I occasionally suffer from a mild case of insomnia. When that occurs, I flip on the television and try to find some light comedy to watch. Nothing too engrossing, so I don’t have to concentrate very hard.

The other night I was watching “Summer School” with Mark Harmon. He plays a dumb jock gym teacher who gets forced into teaching remedial reading to a group of miscreants. Neither he nor his students want to be there, so they have to come up with a way to motivate each other. The students agree to put forth the effort to study in return for the teacher granting them favors, like driving them to school or teaching them to parallel park. During the movie, they all learn important lessons. The students learn that they are smarter than they thought they were, and the teacher realizes that he can really teach.

As I wrap up my estate planning cases, I find myself suggesting to my clients that they have a heart-to-heart talk with their chosen appointees. For instance, when a married man writes a will, he usually selects his wife to be his executor, and then he might choose one or more of his children. And while he and his wife may have a very clear understanding of their goals and objectives after one or the other dies, there is usually a significant drop-off of knowledge when it comes to the next generation. That is why I always find myself suggesting that the couple take a few minutes and have a discussion with the child that they have chosen to handle their affairs.

There are many jobs created by the incapacity or death of a person. I will try to detail them for you. With a power of attorney or a living will, you are appointing an “agent.” The agent is being selected to handle financial matters, and this appointee should have a good understanding of your specific situation. The best way to gain that understanding is for you to invest a few minutes and share your thoughts. For example, if you have a life insurance policy in force, your agent should be able to find the policy, know when the premiums are due, and who the insurance agent is. Also, if you have an investment portfolio, your agent should be aware of the broker you use, as well as your general investment philosophy.

The agent under your living will has completely different responsibilities, all related to your health care. For instance, does your agent know your philosophy about a ventilator? If not, you should tell him what you think. If you have ever been the agent under a living will, you must make very difficult decisions at a time when there are many other pressures on you. Family, friends and physicians are all looking for answers, and you often cannot think of the proper questions. By having a chat with your intended agent, you can lift a lot of pressure and guilt from their shoulders and steer them in the right direction.

When you prepare your will, you are asked for your selection of executor. This is a very important job that carries the entire weight of your estate. I have seen people make this selection based not on talent but on geography. They will select the child who lives nearby rather than the trustworthy and talented child who lives out-of-state. This is a very risky proposition, since the stakes are extremely high. Your executor should be capable of stepping into your shoes and handling everything that you own within a few days. If they have not been told what you have and where to find it, they will be at a large disadvantage. And by the time they find out what is going on, some deadlines may have been missed or an aura of distrust may have been created within the family due to the lack of communication with the other heirs.

The trustee of any trust you might create is charged with the responsibility of handling your money for many years. This appointment should not be made lightly, as your loved ones may be partly dependent upon the decisions and actions of this person. Again, you should share your wishes with this individual well in advance of making the appointment. For instance, you would not select your stockbroker out of the phone book without interviewing him first, so why would you arbitrarily select your brother-in-law to handle your children’s money for ten years without at least sounding him out on the subject. And the last but by no means least significant choice that parents make when preparing their wills is the guardian of their children. You are asking this person to take your children into their home and raise them. If you were to drop your kids off for a weekend, you would share some time giving basic instructions for their care, so it stands to reason that if you are going to ask someone to raise them for several years, you would do the same.

Many people come to this situation and find themselves very uncomfortable talking about it. In those cases I recommend that they write a letter to be given to the guardians when the will is probated. This way there is at least something to go on. I recently had the “talk” with two of my selections, and it went much easier than I had expected. And I only had to teach one of them to parallel park.