By Michael Dubes
Marci Cortez’s husband, Raymond, passed away in December of 2005 after 52 years of marriage.
Raymond was a retired aeronautic engineer, and had made adequate provisions for Marci’s later years. He had life insurance, although a heart condition prevented him from increasing the amount; he also had a pension, half of which Marci continues to receive. In addition, Marci also receives Social Security from her career as a software engineer at IBM after her children were grown.
The couple’s estate plan included an A/B Living Trust, established in 1998. They attended a seminar in 2005 on “Common Mistakes Made by Trustees” where they met Steve Foster, the financial planner who presented the seminar. They planned to update their Trust, but Raymond decided to wait until the New Year to make any changes. Sadly, he passed away unexpectedly before the New Year arrived.
Advice That Didn’t Make Sense
After Raymond’s death Marci met with an attorney to review the couple’s estate plan that had been drawn up almost a decade earlier. But she wasn’t comfortable with some of his recommendations. “Having learned about how easily errors can be made in setting up and maintaining trusts, I did not accept the estate attorney’s advice at face value,” she recalls. “He was suggesting things that didn’t coincide with what I had learned. It just didn’t make sense because I knew better.”
Despite the attorney’s credentials and the fact that her husband thought he was competent, Marci suspected she was not getting the best advice. She asked Steve Foster for help finding some alternative strategies within the terms of the trust.
Marci is someone who dislikes being uninformed, and has always tried to stay abreast of financial matters. She notes, “I don’t like being completely reliant on what other people tell me, even if they are presumed to be experts; I like to be educated as much as possible so I can better understand the terms they use and whether what they are telling me to do is appropriate.”
She wasn’t bashful about seeking information from other resources either. Marci spoke with several friends and neighbors, married women who worked and had their own IRAs, inquiring about their experiences with estate planning and trusts. Although her irrevocable trust could no longer be updated since her husband had passed, Marci was convinced the trust provisions could be interpreted differently to better serve her interests.
She and Steve discussed the various issues and concluded there indeed was some flexibility available. Marci thought this approach was more comprehensive. She also decided to engage an estate attorney Steve recommended to help implement the new strategy.
Marci stresses how beneficial getting accurate information proved to be. “It helped me recognize that financial advice can be narrow in scope and lack creative problem solving when it is based on a strictly literal interpretation. It can also result in unnecessary tax liabilities when property is liquidated.”
Find the Right Strategy and the Right Financial Team
Marci says it’s funny that when you first hear about financial matters, you have no idea which details are important and which will stick in your mind. “One day, the little bells go off when you are discussing things with an advisor. It really pays to be educated and not be at the mercy of someone who may not understand all the important nuances involved.
It’s also important to have a team of trusted advisors — your accountant, estate attorney and your financial advisor — to discuss strategies together. You also want a financial advisor who will regularly review your investments to help make sure they are allocated properly. Between my accountant, financial advisor, Steve, and our estate attorney, I think I have a pretty good team now.”
The More You Know, the Better Off You’ll Be
Marci advises women to attend a seminar, whether their spouse is alive or has passed away recently, noting that widows have just nine months to act on many issues that can have important tax ramifications. She also suggests using the internet to do research on financial issues, adding, “The more you know now, the better off you will be later.”
Marci is busy packing. She is moving from the Sacramento residence where she has lived for the past 37 years into a home previously purchased near her daughter in Laguna Beach, CA. “My daughter is expecting her second child soon and wants me to be there,” laughs Marci.
Marci has advised many of her friends to attend one of Steve’s seminars on avoiding trustee mistakes. “It opens your eyes and gives you ideas, whether you already have a trust or not. You have to do all you can to try to find competent professional help and make sure things are done correctly.”