Family Money: Using Wills, Trusts, Life Insurance and Other Financial Planning Tools to Leave the Things You Own to the People Your Love

315 Pages·2001·3.224 MB·English

by  The Silver Lake

Family
Money
Using Wills, Trusts,
Life Insurance and Other
Financial Planning Tools to
Leave the Things You Own
to the People You Love
SILVER LAKE PUBLISHING
LOS ANGELES, CA (cid:138) ABERDEEN, WA
Family Money
Using Wills, Trusts and Other Financial
Planning Tools to Leave the Things You
Own to the People You Love
First edition, second printing 2004
Copyright © 2004 by Silver Lake
Publishing
Silver Lake Publishing
101 West Tenth Street
Aberdeen, WA 98520
For a list of other publications or for more
information from Silver Lake Publishing,
please call 1.360.532.5758. Find our
Web site at www.silverlakepub.com.
All rights reserved. No part of this book
may be reproduced, stored in a retrieval
system or transcribed in any form or by
any means (electronic, mechanical, pho-
tocopy, recording or otherwise) without
the prior written permission of Silver Lake
Publishing.
The Silver Lake Editors
Family Money
Includes index.
Pages: 308
ISBN: 1-56343-744-9
Printed in the United States of America.
ACKNOWLEDGMENTS
The Silver Lake Editors who have contributed to
this book are Kristin Loberg, Christina Schlank,
Megan Thorpe and James Walsh.
This is the ninth title in Silver Lake Publishing’s
series of books dealing with risk and insurance is-
sues that face people living in the United States
and other developed countries. Throughout this
book, we refer to insurance policy forms and legal
decisions from the United States—but the spirit of
the discussion about risk and insurance can apply
beyond the jurisdiction of the courts cited.
Some of the insurance policy language referenced
in this book has been developed by the New York-
based Insurance Services Office (ISO). ISO policy
terms are updated and modified regularly. Our ref-
erences to the terms are intended solely to illustrate
common issues and disputes. You may need to con-
sult with a professional advisor before making deci-
sions or investments related to a particular estate.
This book is intended to make the concepts and
theories of estate planning understandable to con-
sumers. The Silver Lake Editors welcome any feed-
back. Please call us at 1.360.532.5758 during regu-
lar business hours, Pacific time. Or, if you prefer,
you can fax us at 1.360.532.5728. Finally, you can
e-mail us at [email protected].
James Walsh, Publisher
Los Angeles, California

CONTENTS
CHAPTER 1
Who Is Family?
And What Does That Mean? 1
CHAPTER 2
Attitudes and Aptitudes 37
CHAPTER 3
The Vehicles for Transferring
Family Money 73
CHAPTER 4
Types of Investments 117
CHAPTER 5
Legal and Administrative Fees 149
CHAPTER 6
What Happens When
Somebody Dies 177
CHAPTER 7
Taxes 211
CHAPTER 8
Problems and 251
Problem People
TABLE OF CONTENTS
CHAPTER 9 277
Inheriting Money
INDEX 303
CHAPTER 1
1
R
E
T
P
A
H
C WHO IS FAMILY?
AND WHAT DOES
THAT MEAN?
This book is about accumulating and protecting
intergenerational wealth. Family money. The
means of comfort, education and freedom—not just
for yourself, but for numerous people who’ll come
after you.
You may think only rich people—the Kennedys
and the Rockefellers—need to think about family
money. That’s not so. Middle-class people can and
sometimes do leave enough money to children and
grandchildren to make their lives better. The trick
is to start thinking strategically early.
In North America, at the beginning of the 21st
Century, we live in a consumer culture that argues
against building family money. Media and market-
ers encourage you to spend what money you have—
and some that you don’t. The government conspires
with this effort in two ways. First, it promises to
take care of you in your old age if you’re broke when
you get there; second, it discourages family wealth
by taxing any money you have left to leave others
when you die.
1
WHO IS FAMILY? AND WHAT DOES THAT MEAN?
There are ways to get around these problems. And,
despite Hollywood’s versions, most lawyers and ac-
countants deal—at least in some capacity—with this
getting around.
One big reason lawyers are often obscure about what
they do for a living isn’t that they’re afraid of lawyer
jokes; it’s that they don’t want to spend a whole
cocktail party answering arcane questions about wills
and probate court. This book will deal with that
hard stuff: technical matters about wills, living
trusts, tax issues and powers of attorney.
But, before we get into the details of whether you’re
better off putting shares of the family business into
a generation-skipping or charitable remainder trust,
you need to ask yourself some more basic questions.
These questions will get to the core of what con-
stitutes your family—by blood, law or spirit. If it
works right, this process leads you to an understand-
ing of yourself and the people closest to you. And
this understanding helps you make the appropri-
ate decisions for handling the financial assets you
accumulate—by inheritance, luck or hard work.
Of course, there are complexities in every family.
Some families bring their own problems—mem-
bers who make bad decisions, members who don’t
get along. Other families have external problems—
weak or non-existent standing under the law...out-
right conflicts with social convention. And, more
complex still, the size and shape of families change
over time. Children are born, people die, relation-
ships break apart. So, any definition of “family” has
to be a multivariable proposition.
2
CHAPTER 1
To start this book, we’ll consider the fundamental
questions of what constitutes family and how that
influences the money decisions.
CONTROL AND INFLUENCE
Leaving abstract existential musings to French phi-
losopher and 20th Century author Albert Camus,
we agree with the psychologists who argue that life
is best thought of as a series of concentric circles.
You are the center circle; immediate family—the
people closest to you—make up the ring immedi-
ately outside of you. Extended family and close
friends are the next ring. Casual friends and re-
spected acquaintances are next. The Interior Minis-
ter of Turkmenistan is on a ring somewhere farther
out.
3