Allan J Gold

SENIOR LIVING, RETIREMENT PLANNING, MAKING A WILL, SENIORS AND MONEY: Afraid of running out of money? Ever thought about your money, going …going… gone, once you’ve passed? If so, maybe you should!*

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Arranging your affairs before death? Getting your estate in order? Preparing a will? Want to protect principal or preserve capital? If so, you might want to know that there’s another kind of principal protection and capital preservation. (Blog #5 of this series)

Vol. 12, #16.5 – Jan. 27, 2020– ALLAN GOLD’S BLOG

By Allan Gold, lawyer, lecturer and author.

1. OPENING

As you know, my current subject is money. More precisely, it’s on “capital preservation.” This is defined as “a strategy for protecting the money you have available to invest by choosing insured accounts or fixed-income investments that promise return of principal.” (Source: https://financial-dictionary.thefreedictionary.com/Capital+preservation). However, I’m using this notion differently – not from the perspective of the investor, but rather, from that of the will-maker (known as a Testator, if male or Testatrix, if female); and this, with a view, following decease, to preserving some or all of the principal arising from his/her estate. (Of course, such raises the primordial question as to whether or not one should now try to do that. But I shall let each of my readers to answer that very good question for himself (or herself.))

Now that I have introduced my topic, given you my thesis and made my argument, providing numerous examples, here’s my point. Things can go wrong for someone after getting a whole lot of money all at once. And these mini case studies of unfortunate lottery winners illustrate how bad that it can get. So if a will maker, there’s a lesson to be learnt from this. Simply put, it’s the fact that not everyone is well-equipped, (having the right mindset), to handle a large sum of money, suddenly thrust into their hands.

So I now ask you,

• “Do you worry about a son/daughter, who isn’t, at present, exhibiting, in your view, a sense of responsibility and financial discipline?”
• “Do you worry that your hard-earned money may slip through his/her fingers?”
• “Do you feel that you must protect this future heir and act in his or her best interest?”
• “Do you think that this adult child might benefit from some extra time to mature and gain knowledge, develop skill sets and become a better money manager?”

If you answered “Yes” to any of the above queries, maybe this means that you could have a problem here and perhaps, it would be worthwhile to continue reading the rest of this blog. You see, the next step for me is the big ‘reveal,’ that is to say, what you can do about such a problem.

THESIS & ARGUMENT.

B.5 COMMENTARY:

If you’re thinking about making or remaking a will and have concerns, worrying about the loss of capital after your death, it’s probably expedient to consider taking a few precautions. If you desire principal protection, extending post death, I have a 3-fold approach.

Strategy #1 Teach the Children

One proactive strategy is to “Teach the children.” Indeed, it’s never too late for an adult child to learn more about money and personal finance – thence, being more knowledgeable, your future heir can better protect the principal arising from your estate. More precisely, you should:

• TALK to your adult children/prospective heirs and
  • • TELL them that holding onto one’s money is important; and it’s expedient to embrace such as a worthy goal! (And if they do so, there’s a far greater chance that they’ll have the right mindset ‘when you go.’)
    • ENCOURAGE them to become savers. And offer up, at the same time, the quote often attributed to Benjamin Franklin, “A penny saved is a penny earned.”
    • REMIND them repeatedly that what one wants is not what one needs! Of course, before your body is cold, you don’t want your future heirs, giving into a whim, dreaming “I can make you mine,” running to executive house builders, high-end auto dealers, jewelers to the stars, etc., embarking on a ‘no-holds barred,’ spending money in an unrestrained, feckless, and frivolous manner. Furthermore, after you’re gone, you don’t want him or her to start ‘spending money like a drunken sailor,’ making a mad dash through the aisles of this store or the next, looking at this or that, impulsively buying everything in sight.
    • WARN them that some people are so uncontrolled in their desires and need for immediate gratification that they go through the money soon after they receive it and some sink deep into the abyss quickly thereafter.
• RAISE the topic of wealth management. While it’s likely that they’ve often heard the phrase, “Money doesn’t grow on trees,” you could also say, “You’re going to have to do more than plant dollars in the garden with the hope that you’ll end up with an orchard flush with cash.” I suggest that you add, “That’s why you should aspire to become a savvy investor in your own right.” To this end,
  • • STATE that it takes acumen to properly manage a portfolio.
    • TEACH them about investments: value investing (relative to high yields), long-term strategies, diversification, dividend paying stocks, preferred shares, etc.
    • INSIST that they take some courses to increase their knowledge and ability relative to money. Indeed, there are mine fields to avoid by retail investors.
    • START a game of ‘fantasy’ investment. It could be either informal or one can register with an online game provider. It’s where a player picks an investment vehicle (from amongst, equities (stocks), bonds, funds, etc.), chooses the money makers from amongst the offerings, determines the maximum dollar amounts for each and then follows the chart/news of these ‘make believe’ positions, The aim is to make money and the player who makes the most is the winner. While it’s for fun as the investments aren’t real, it’s still a trial run to see if your future heir did make ‘dollars and sense.’ And of course, each time he/she plays, he/she learns!
    • STATE that it’s in the interest of your future heir to preserve capital (after you’re gone) by building a long-term portfolio with low-risk bonds, blue chip stocks, etc.
    • CAUTION them when going ‘out on a limb’ and making a riskier investment, urging them to be aware of the ‘investment gridlock’ trap where one assumes a ‘do-nothing’ stance, acquiesces to inertia, fails to monitor the holding and/or neglects to act when needed.
• RECOMMEND that it’s always better to be cautious when choosing the firm where they’ll deposit their savings or through whom, they’ll make investments. In this regard,
  • • STATE, “You can’t get something for nothing.” And DRILL into them the proverb, “If it’s too good to be true, then it probably is!”
    • CAUTION them about betting the house (and every last dollar) on any one investment – the risk is that it could turn out to be a lousy bet and your bottom dollar long gone!
    • BE on guard, always suspicious of firms or situations, offering a large return/benefit, which is highly unusual for the then current market.
    • DECLARE that there are no short cuts! ALERT them of the risk of dumping your savings all in one place and hoping for the best. While it may be easy, it could prove to be plain stupid
    • WARN them about blindly signing over your cash to anyone, especially a glitzy company touting terrific returns. ALERT them of the risk of chasing a dream. If they do, chances are that they will never again see these funds and end up as a horse’s ass sitting with a dunce’s cap on a stool amid all the cow poop strewn about.
    • CUT through the noise and STICK with a large, long-established bank, financial institution and/or investment firm. But REMEMBER that each investor has the responsibility of staying on top of his/her money reading reports and checking status/returns.
• TELL them to be smart and engage an excellent financial person, (e.g., a stock broker, insurance agent or financial planner, etc.) to assist when it comes to finances. In this regard,
  • • RECOGNIZE that when you have some money, there are a thousand and one financial counselors, who want to manage it. REMEMBER that a mouth behind the wicket might now tell you what you want to hear, not what you need to hear. ASK yourself why he or she is so interested in your measly dollars? NOTE that while someone might look like a smart investment type and tell you he/she has a safe, ‘no risk’ bet for your money, such a person might prove to be incompetent, negligent or worse and the investment may turn out, not as advertised, but instead, one that’s highly risky. Of course, you never want to say, after the fact, “He/she has been a busy little beaver with my money and now has made it his/her own!”
    • INSTRUCT them, when making a selection, to always be wary, trying to read people and consider only someone, who is credentialed, experienced and highly recommended. And before doing the hire, check him/her out thoroughly, seeking testimonials from current customers.
• RAISE the possibility that once your adult children get their money, there may be relatives and past acquaintances, appearing from their long gone past, apparently down on their luck, telling them a sob story and asking for this amount or that. While it’s going to be hard, these heirs should steel themselves against these pressures. They need to know that if they give the money, it’s probable that this individual will be back soon enough, trying to wheedle even more. Indeed, there may even be people whom they don’t know, who will do the exact same thing. As a general rule, it’s probably best to refer the people asking to their financial point person and this, for the purpose of reviewing ALL monetary “asks.” If put off, obliged to submit paperwork and face close scrutiny, it’s likely that most will then withdraw. However, if this hubbub becomes too much, your heirs should also consider delisting their phone numbers. In any event, they should secure a new ‘top of the line’ lock plus a security system for their houses.

C. CLOSING.

Interested in senior living, retirement planning, making a will, seniors and money? I remind you of my questions at the beginning, which bear repeating: Afraid of running out of money? Ever thought about your money, going …going… gone, once you’ve passed?

Arranging your affairs before death? Getting your estate in order? Preparing a will? Want to protect principal or preserve capital?” If so, you surely don’t want to make a mess out of it. Indeed, there’s no room for error. This is because there’s no do-over!

Here’s today’s take-a-way. If a parent of adult children, preparing an estate worth thousands and thousands of dollars, I empathize because you’re in the hot seat, trying to safeguard the money and also do right for your family. For me, you need to get the message out to your future heirs that when it comes to personal finances, job #1 is to hold onto their money. To this end, when it comes to wealth management, it’s best that each one of them become a knowledgeable/experienced investor and a fiscal conservative, seeking winning investments, but always focusing on the security of funds. Otherwise, the danger is that he/she will go from a person of substance, with money to a ‘have-not.’

D. PREVIEW OF NEXT IN THE ELDER LAW BLOG SERIES.

I believe that with this blog series, I may have started you along the way to being more aware of elder law. I will continue on with the subject of retirement planning, more particularly, estate planning and even more precisely, principal protection and/or capital preservation after you’ve passed on. While teaching your adult children is good, it’s not the full answer. Come back next time- I will relate the remaining two strategies. Interested? Want to get more information about the current topic, retirement planning, or other areas of elder law written by an “avocat,” one of the family law lawyers, family lawyers Montreal, practicing in the elder law field? See you next time. It won’t take too much time. Remember my byline – it’s “Gold’s Legal Minute*GLM*!” And please don’t forget to join my professional community by entering your e-mail at the prompt.*

E. NOTICE – CAUTION –DISCLAIMER.

The material provided herein is of a general nature, strictly for informational purposes. The interpretation and analysis is not to be misapplied to a personal situation with a particular set of facts. Under no circumstances, are the herein suggestions and tips, intended to bring a reader to the point of acting or not acting, but instead, the hope is that they are to be a cause for pause and reflection. It is specifically declared that this content is not to be a replacement of, or a substitution for, legal or any other appropriate advice. To the contrary, for more information on these presents, related subjects or any other questions, it is the express recommendation of the author that everyone seek out and consult a qualified professional or competent adviser.

* ©/TM 2020, 2019, 2015-2018, Allan Gold, Practitioners’ Press Inc. – ALL RIGHTS RESERVED

** ©/TM 2006, 2008, 2018 Allan Gold, Practitioners’ Press Inc. – ALL RIGHTS RESERVED