My dad's perfectly crafted estate plan
My father gave me a good financial education. But the most unexpected financial lesson he taught me came after he passed away.
My dad died recently. He was a good man and a great father. Just three months after he retired (after spending more than 40 years as a salesman for an oil company) he was diagnosed with stage 4 colon cancer.
Throughout my life, my father tried to give my brothers and me a good financial education.
- We were solidly middle class, but I always thought we were sort of poor. Often, there wasn't money for this or that. But Dad taught me to be comfortable living below my means.
- If I needed money, Dad told me to get a job. My brothers and I all had jobs since we were about 12. I packed rice into takeout containers at a Chinese restaurant when I was in seventh and eighth grade.
- He taught me that charity matters. We sponsored kids our age in poor countries as a way to give back and underscore how fortunate we were.
But the most unexpected financial lesson my father taught me came after he passed away. I am the executor of his estate. My dad was always a planner, but the things he did to make this processes easier are amazing. I feel compelled to share them with just about everyone I know.
Building a team
My dad lived on a beautiful lake in Missouri, which is about five hours from where I live. Every time I'd go and visit him, he would set up a meeting with his "key people." I'd argue against it. "Dad, I don't really need to meet your tax guy," I'd say. He insisted.
I met his insurance representative. We took his attorney to lunch. Just about every time I came to visit, he had to "stop at the bank for a minute." I'm on a first-name basis with his bankers. When his "Fidelity lady" called, he'd say, "Just a minute. I want you to talk to my daughter." I would roll my eyes and be embarrassed for both of us as he handed me the phone.
This is all years ago, when it looked like chemo was working and he would beat cancer.
Today, these connections have been invaluable. When my dad's insurance representative heard that he had passed away, he called me and had already dropped the forms in the mail. His banker has made everything so easy. "Don't worry about that. You can sign it next time you're here." His "Fidelity lady" also contacted me and filled out half the paperwork for us.
I can't count how many times I've said, "Thanks, Dad, for looking out for me." I knew who to call. I've met them. I have their business cards. Post continues below.
That lunch with the attorney who wrote his will was so helpful that I'm still in awe. When the dust settled, I called her and said, "What now?" She knew exactly what to do and had all the information to do it. But, get this: Dad negotiated the estate fees as well. He told her, "If my daughter decides to use you to settle the estate (knowing he had already stacked the deck in her favor) let's negotiate a not-to-exceed amount that you would charge." He then put that amount in a targeted bank account.
I was thinking that the cost for the legal fees would be about $7,000 or $8,000. I had no frame of reference. This was just a number in my head. The fees were $20,000. I was blown away. When I did some research and called some lawyer friends, I learned that lawyers typically charge between 3% and 5% of the total value of the estate. My dad had negotiated 2% and put the money in an account I had immediate access to. Again, thanks, Dad!
Several years ago when he was still healthy, he added me to his bank accounts. My name was on his checks. I argued against it because I thought it was unnecessary and I was always taught that money and account balances are private information. He wanted me to do it anyway. (His credit was always spotless, so I knew there was no risk for me.)
When his health started to fail and then when he passed away, it was absolutely seamless for me to pay his bills. I could sign the checks. (He even made me "try it out" years ago by writing a $10 check to my brother.) I could pay bills online. He made sure there was enough money in that account to pay the bills in case his house doesn't sell for almost two years.
Preparing for the worst
My father prepaid his funeral expenses and left extra money in that checking account for miscellaneous expenses. Again, my dad was a planner. He had a master binder. He had wanted to review his funeral arrangements with me, but that was more than I could handle. He told me that when I needed the plans, I just had to flip to "F" for funeral in his binder.
Everything was there: the places he had made arrangements with and copies of canceled checks with business cards attached to them. There were five copies of a photograph he had taken when he was still relatively healthy for us to use in the obituary. Attached to that was his obituary. He had written it himself.
Even as organized as he was, there were unforeseen costs of about $3,500. It was a rainy, windy day and we needed a large tent and chairs at the graveside. Obituaries cost about $100 a day. I had no idea newspapers charged for obituaries. My grandma wanted the obituary in several other papers along with the ones my dad specified, which was fine, but I was shocked to see that it cost $500 more. That checking account I already had access to was key. Luckily, his funeral didn't become a financial burden on anyone.
When Dad updated his will several years ago, he asked if I would be his executor. Of course I said yes. He told me that I was entitled to compensation for doing this. He recommended I take a 2% or 3% commission. I said no way. It felt like I would be charging him.
After he passed away and I realized all that it entailed, I found myself thinking that maybe I should have taken him up on that offer. Being the executor of an estate -- even a very well-planned estate -- took about 10 to 15 hours a week for months. It's a big job. I found myself resenting my brothers since I was doing it all.
When we went to Fidelity to split up his IRA, he had stipulated that I receive 1% more then my brothers for my job as executor. He paid me anyway. He knew the job should come with some compensation and he preserved my relationship with my brothers. See what I mean? My dad was amazing, and this is just a small peek into his wonderful life.
A gift from the grave
I honestly consider my father's financial planning to be a selfless act of love. Despite his generosity, I would trade every last cent for 10 more minutes with him. When someone you love dies, it's brutal, emotionally and physically. Trust me, you really are in no state to make these types of financial or legal decisions on your own (unless maybe you are an expert).
As J.D. Roth says, don't let the perfect be the enemy of good. Not having any plans is a giant mistake. Do what my dad did. Do a little at a time and refine your plan along the way as you become more knowledgeable.
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When I administered my mother's estate (Dad had died 20 years before) I took no fee for my work. Yes, it is stressful and time consuming, but over the years, all my siblings had pitched in to help Mom in one way or another. Nobody kept time sheets.
When my spouse's sister administered their mother's estate, she sent a letter complaining about how much time she'd spent, to justify taking a substantial fee off the top. I have been bitter ever since.
In this situation, when you put transactions with your siblings on a business basis, you change the relationship forever.
Thank You. This was the kick I needed to get my things in order for my son. I've been resisting and putting it off because I did'nt want to be reminded of my own aging.
Thanks for a great article. My wife and I are both healthy and active 76 years olds. After seeing what some of our friends had to go through we established a Living Trust to assist our 2 children once we are both gone. We also have made it our New Year's resolution to review the trust documents each January. I am always open to new ideas on how to improve things for my daughter, who will administer the estate. I will be using one of your Dad's idea's, increasing my daughter's share of our IRA funds, because otherwise, like you, she would not take a fee.
The January edition of Kiplinger's Personal Finance has a great article "How to Die Right" that provides a lot of great information.
Great article and obviously a great man. I lost my Dad at a young age so I've always watched other great people for advice on how I want to live my life. This goes in my book, and with a new baby just arrived it hits closer to home than ever.
Very sorry for your loss. However reading you article it made me think about how much your father loved you all. In my book this is the definition of a LOVING and CARING father.
My parents passed away within 4 months of each other making for a very difficult winter. Dad had a 6th grade education, yet he was one of the smartest men I knew. He, also, had left this world with his finances in order. Funerals were paid for, caskets selected, headstone purchased, etc. In fact, he had purchased cemetery plots in 1957! My brother, who lived in the same town, had been signatory on their checks for some time.
As a working-class man, he had been careful with his money and left a small inheritance for his five children when they passed away at the age of 95 and 89!! What an example!
@Mickey Gato - If you're all sharing certain responsibilities, that's fine, but there's only one executor. I've never done that job, but if the author was spending time, missing out on life's events while her brothers weren't bothered with the responsibilities and getting the same split from the estate, then maybe some sort of compensation is a wise and justifiable thing.
I think if you do the work of the executor, you should get a specified fee. Most likely the one appointed executor was the responsible one and had helped out for years, while the other family members did what they wanted and only helped out when it was convenient. I know since I'm the responsible one and am the one to get the phone call when things are needed. I help out even when it isn't convenient because to me, that's what a child should do. Others in my family don't feel that way. They even say it "sucks to be the dependable one". I don't do it for future gains, but on the other hand, if they don't want to help out with the work, they need to realize that if a stranger was hired to be executor, they would be paid. The one appointed executor should be paid at the same rate a stranger should be paid to do the job. In most cases, the reason someone was appointed executor was because they were RESPONSIBLE long before the person passed away and were given the job because the parent felt they were the best able to handle it. If you didn't want to help out, don't complain when someone else got paid for their time.
Thank you for a story about a wonderful and amazing man, father and one who taught his children about being responsible. This was not only a excellent story about financial planning, but also about your wonderful family. I am deeply sorry for your loss and may he rest in peace. I wish I would have had a father like that. Take Care and God bless you and your siblings this holiday season.
My father passed away 2 years ago. I always said my father was the smartest man I ever knew but I think your dad was a step ahead of mine! I knew my father's banker and his investment banker. I knew the tax man, the doctors, the pool guy, and the gardener. My father put all of his assets into a trust which proved an invaluable blessing to us later as we avoided the time and expense of Probate.
What I didn't know is that my father wouldn't die of a heart attack even after 2 of them, the first at age 55. Clearly, my dad was destined to die of heart disease, or so we thought. Every male in his family had died before the age of 40 going back to his original ancestor who stepped off the Mayflower. But my dad was too ornery to die and lived 28 more years...the last 12 suffering from Alzheimer's.
Part of my father's trust included his will and medical directives. When my father became unable to live on his own and required monitored care, I had to petition the court to have me named as conservator over his person and estate. It was very easy distributing his estate after his death. The more complicated and time consuming duties occurred during those years I had to take care of his estate. I had to meet with the attorney regularly, stay in contact with his care givers daily and maintain excrutiatingly detailed records to satisfy the Court's annual audits of his financial status. The attorney stated I was entitled to a small amount annually...$2500 each for the trust and conservatorship accounts. I didn't take the money as it just seemed selfish to take it. My father would never have begrudged it to me, however, if he'd known how much work it was every month and neither would my brothers. I just didn't want to do it.
My dad might have added more details to his list of what he wanted for his estate and how he wanted to live out his life but Alzheimer's took that away from him. I'm glad he was able to as much as he did though, as it made what I had to do for him bearable. I hope people read your story and make similar plans for their own families
Your dad sounds like a wonderful, practical, and thoughtful dad. I'm sorry for your loss.
WOW - If you don't spend time dotting "i"'s and cross checking "t"'s - Make's me wonder ... I know I LOVE facing folks for all transactions - Brick/Mortar/breathing - So I know who I was working with - Guess I need to bring along one of my kids - just to insure the smooth transition.... Sorry for the loss - but thanks for the lesson.
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