Potential liability for our assets
My wife and I are retired, and each of us has a will. We have 3 kids, all in their 40’s with their own families and own homes. We have about $2 million in savings and investments. Joint ownership of all except for 401 K and IRA’s; our kids are primary beneficiaries. 401 K and IRA’s, each of us is the primary beneficiary, our kids contingent. We have a house, a vacation condo and rental condo – all in land trusts. No debt. Our concern is if one of us were to be in a liability situation where we could possibly lose our wealth. Our thought was to split our savings/investments savings, etc. so that each of us are sole owners (the other primary beneficiary) on half instead of joint ownership on all (401K/IRA’s excepted). We have a $1 million umbrella policy. Are we overly concerned? Pls. comment.
Terry Says
Your concern is a possibiity — but I have greater concerns!
1. What if one of you is incapacitated -think stroke or Alzheimer’s? If you have joint ownership of everything, the well spouse would have to go to court to declare the other incapacitated. That is not only expensive but time consuming. You would be much better off with a Revocable Living Trust — where you are each other’s successor trustee, with an adult child as trustee if both of you die or are incapacitated. Too long to explain here, but get a copy of the new edition of The Savage Truth on Money on Amazon for an explanation. You are VERY vulnerable the way your “will” is drawn now. A RLT takes the place of a will — with only a small “pourover” will to dispose of assets like your car that are not titled in the name of the trust. Your IRA beneficiaries remain the same, but you MUST rename all jointly owned property in the name of the trust. There is no tax implication since the trust carries your SS number.
2. Unless one of you is doing something illegal or hazardous to others, stop worrying about having a liabiity Just make sure your umbrella policy covers all of your underlying property. It is easy and cheap to buy an extra million of umbrella coverage.
3. BUT — your real financial exposure is something you haven’t even thought about — the postential need for longterm cudstodial care. You need a new combo LTC and Life insurance policy that covers both of you. Read that chapter in my book — and learn how you would be wiped out by a need for care not covered by Medicare or supplements. And to get good advice on these combo polices (if y0u don’t use the care, the beneficiaries get the life insurance) call Brian Gordon at MAGA LTC. You can use my name, or not, as I get nothing out of this advice but the knowledge that you will be given good advice.
