Greasing the Skids for Your Inheritance

That old idiom derives from a time when heavy equipment had to be transported on giant skids and using grease made it easier to transport. It also applies to preparing for what happens after you’re gone and the details of your inheritance decisions are executed. People sometimes forget that they won’t be around to clarify intentions, sooth hurt feelings and misunderstandings, or to provide advice on how best to use money bequeathed.

I once had a client who died unexpectedly in his late 50s. He was a good investor, frugal, divorced and only had one child. That child, a son, led a rather simple life. He and his wife were hourly workers. They were raising their two teenagers at the time of the death. The son instantly became a millionaire, without any knowledge of how to invest or how to prioritize spending and saving. The next time I saw the son about a year later, he “retired,” bought a new bigger home, was driving a nice big pickup and was catering events at his house for extended family and friends. Something tells me that deceased father would have liked to prepare his son a bit better for handling a seven-figure inheritance. Maybe he would have told the son to be frugal and make sure the money lasts. However, I could also envision him saying “life is short – sometimes surprisingly short, so enjoy it while you can!” All I know for sure is that he didn’t grease the skids for his son’s very heavy responsibility of managing a large investment portfolio.

Don’t let that happen to you. Here are some factors to consider so as to make things “move” easier after you are gone:

1. Make sure your financial and medical decision makers know where the estate planning documents are kept. Don’t give them copies because that creates its own set of issues if you later change the plan. Giving them the exact location of the documents, along with any code or lock combination is enough.
2. If things are not going evenly to a group of people of equal relation (e.g. kids or grandkids) let them know up front. Whether you give them a justification is up to you, (I mean, it’s your money and you really can do what you want with it), but letting them know things aren’t going to be equal helps minimize tensions and challenges later on.
3. Letting kids know how much you have is a unique issue. It’s definitely a good idea if you begin to have trouble keeping track of it and managing it. But while you are still competent, giving details of your net worth can be good or bad. My experience is that children inevitably estimate what their parents are worth, if for no other reason than to plan how to take care of them if they need nursing care. If you think they are way off, you might want to at least give some hints so they have a better perspective.
4. Letting your kids know who will be in charge as the trustee or executor is helpful. Again, hurt feelings for silly things can come out of nowhere. Your medical decision maker should also know your feelings about end-of-life care.
5. If what you leave a child or grandchild will completely change their financial status, it might be best to start coaching them a bit now about how to handle investments and the types of help they can and should get from professionals. Money can overwhelm people, and many older children might not realize that Jed Clampett and his family weren’t just millionaires, they were more like decamillionaires in today’s dollars. A million dollars is not what it used to be.

Of course, you can eliminate all of these issues if you do what I used to tell my estate planning seminar attendees decades ago: Time things carefully so that the check to the undertaker bounces! Good luck with that!

 

Fun Fact: I was in Southwest Florida for Thanksgiving visiting family (and golfing, of course) and we visited the Thomas Edison museum. Edison and Henry Ford had winter homes in Ft. Myers. An inventor as prolific as Thomas Edison had to be an optimist. Among his 1,093 patents was the lightbulb, and it was a bumpy road to discovery. Ever the optimist, Edison used to describe his initial lightbulb failures as “discovering thousands of ways it did not work.”

Your Brain Needs Numbers

Like many, I’m hopelessly dependent on my iPhone, and one of my most-used apps is the Hewlett Packard 10bii Financial Calculator. You have to really know that calculator to pass the Certified Financial Planner exams, and for good reason: It allows you to calculate cashflow and present/future value projections. The nerd in me really has a lot of fun using it, which got me thinking of the importance of numbers, and math formulas in particular, to keep our cognitive functions sharp.

Basic math can be helpful for those dealing with dementia as well. Puzzles like Sudoku encourage the brain to work through logic and memory issues. Sudoku is a number puzzle and the gameboard can be designed for all levels of difficulty; from very easy for those with some cognitive issues, to very difficult for those ready for the challenge. A math puzzle like Sudoku is like a bench press for the brain.

Not long ago I started setting my calculator down and attempting to write out some basic math formulas just to get back in the swing. It is both amazing and embarrassing as to how much I forgot. Here are a few math tricks to motivate you to set down the calculator occasionally:

1. When multiplying a 2-digit number by 11, place the sum of the 2 digits between those digits to get the answer. 45 x 11 (4+5 = 9), so 495 is the answer.  It works with any 2-digit number multiplied by 11.  If the sum of the numbers is 10 or more, it still works, but you add the first digits, place the second digit of the answer in the middle… and remember to carry the 1; 56 x 11 (5+6 = 11, carry the 1, 5+1 = 6), so 616 is the answer.
2. When trying to figure out a percentage of a number, try reversing the percentage number.  What’s 18% of 50? Reverse to 50% of 18. 1/2 of 18 is 9. 18% of 50 = 9.  4% of 75 is the same as 75% of 4 which is 3/4 of 4 = 3.  4% of 75 = 3.
3. Here’s a party trick: Pick any number between 1 and 9. Now multiply that number by 9. Now add the digits together. The answer will always be…9!
4. Finally, here’s a practical trick that helps with your finances. It’s the Rule of 72. If you want to know how many years it will take to double your money at any fixed interest rate, just divide 72 by your interest rate number. (10% interest rate – 72 divided by 10 = 7.2 years.  3% interest rate – 72 divided by 3 = 24 years).

Playing around with numbers is fun and good for your brain, even if you aren’t as mentally quick as you used to be. Have some fun with numbers and your brain will thank you.

Fun fact: The longest mathematical equation is the solution to the Boolean Pythagorean Triples problem (you know the one 😊). The proof is 200 terabytes in size, and it took a supercomputer to generate. A single terabyte is “one million million.”

You Need to Have a Word With Your Family

Here’s a true story: Several years ago, my mother was sitting in her home (probably watching one of her favorite suspense shows) when her cell phone rang. On the other end of the line was an attorney who needed my mother’s help. He was representing one of her grandchildren who was incarcerated on a drunk driving charge and was too embarrassed to tell his parents what happened. He needed $5,000 immediately to get out of jail and have legal representation. At the time my mother could narrow down the possible grandchildren based upon who was old enough to drive and which one didn’t have a lawyer for a father, and sure enough the lawyer confirmed that the first grandchild’s name she threw out was in fact the one in trouble.

My late mother adored her grandchildren and would do anything for them, including pay to get them out of a jam. So, she went back and forth through a few phone calls with the attorney to make sure she know how to write the check and where to overnight it. She was all set and on her way to the post office when her husband, my stepfather, asked her to run this situation by me (the lawyer 😊). She did, and I immediately knew the whole thing was a scam. No troubled grandchild, no real attorney, and no need for $5,000. Just a sophisticated plot to scam grandparents out of money based on trust and emotion. I even called the predator once I got involved and trust me, I had no effect on him. He just hung up, and I’m sure began working on another unsuspecting grandparent.

The story above happened several years ago, and now with AI, predators can be even more sophisticated. For example, they could review an online video of a person, say someone’s grandchild giving a presentation, and use it to mimic the exact voice of the grandchild to the unsuspecting relative. These types of AI scams are already happening, and they will just get worse.

One very effective solution to consider is a family “code word.” Everyone in your immediate family should memorize just one word and then, if grandma receives a call from someone claiming to be her grandson, she can ask for the code word. If it can’t be produced, then she should hang up. Simple but effective. An article in the Wall Street Journal last week gave some good suggestions on how to pick a code word. Here they are:

1. Make it simple but strong. Don’t use your dog’s name or even your wife’s maiden name because lots of personal family information is accessible by criminals on the internet. Perhaps you could use something based on a family joke or even a phrase that family members always laugh at.
2. Keep it safe. If you are worried you will forget it, write it down or store it on a password manager. If you write it down, put it in a safe place so a visitor can’t easily see it.
3. Keep the circle small. The more family members who know the code word, the more chance that it gets stolen. Parents, kids and grandchildren is a good group.
4. Think outside the box. The code could also be a question, like what was the name of our neighbor who lived across from us growing up.

My mother dodged a bullet, but many people don’t realize they are being scammed until it’s too late. Make sure you and your family take the time to protect yourselves.

Fun Fact: The bloodhound is known to have the best sense of smell among canines. Originally bred to hunt deer and wild boar, they are now used by police and rescue teams. Bloodhounds have been known to follow a scent for over 130 miles, providing not only a strong nose, but a tenacious character as well. The most famous bloodhound was named Nick Carter, a canine detective credited with solving over 600 cases in the early 1900s. He once followed the scent of a missing 6-year-old girl for over 5 miles through fields and streams and led authorities straight to her.