Planning Potpourri

Competency: For a complex estate plan to be respected you have to be competent when you sign all those legal documents.  Importantly, competency is a legal matter, not a medical decision. When assessing competency some use the Folstein Mini Mental exam. That might not really be optimal for more highly educated consumers. Instead the St. Louis University Mental Status Exam (SLOMS) which evaluates cognitive decline in individuals with a higher education, may be better barometer to test cognitive status.

When trusts are too costly: Trusts are the default answer for how to structure any gift or inheritance. But sometimes, trusts are just too costly or cumbersome for the amounts involved or objectives. For younger donees/heirs transfers can be made to what are referred to as custodian accounts. These include a Uniform Gifts to Minors Act (UGMA) its kid sister, a Uniform Transfers to Minors Act (UTMA) account. While limited in scope and far from perfect there is no cost and they permit assets to be held at least until the age of majority. In some instances, a bequest might mandate that the executor purchase an immediate non-cancellable annuity. This can be structured to provide a beneficiary with a consistent cash flow for life and achieve other goals without the administrative costs and burdens of a trust. This is practical for dollar bequests (or gifts) that are too small to interest an institutional trustee, or too small to justify the costs of even a family trustee, or if no one is willing to serve as trustee (e.g. when the beneficiary is particularly difficult).

Safer Checks: If Junior needs a raise in his allowance can rub the dollar amount on his allowance check it with a nickel then use Scotch brand tape to take off the numbers. Neato Presto he can then type in the allowance figure he needs to afford Justin Bieber's Under The Mistletoe Ultimate Gift Box. Need a cool stocking stuffer? New checks are available that have valuable security features, like a treasury approved bond paper with fibers (similar to paper money), multi-prismatic ink (which cannot be copied), and more absorbent (no, they’re not printed on Bounty). The ink absorbs into the paper and cannot be easily removed. The combination of paper, ink and other features makes it tough for the bad guys to alter checks. See Intuit (Quicken) website:

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