Table of Contents
- A Fascinating Life
- Warning: New Driver! How to Protect Your Family with a Joint Trust Even after You’re Gone
- Sudoku Puzzle
- Recipe: Cocoa-Almond Smoothie
- Fraud Alert: The IRS Will Not Call You to Threaten ANYTHING!
I hate to admit it, but this Pittsburgh Steeler fan learned a valuable lesson from a Cleveland Brown fan in a workshop held in Cleveland. Fortunately, it wasn’t about football. It was about what drives people to keep working even after they have reached the pinnacle of their career.
Top performers are fascinated by what they do.
It seems obvious, but that particular word struck a chord. It invokes a sense of curiosity as well as passion.
I have sometimes wondered why certain people who could obviously afford to retire continue to work at an incredible pace and performance level. Why would Warren Buffet at age 86 continue to work so hard? He certainly doesn’t need the money. He is worth over $60 billion and lives in a modest house. He is leaving virtually all of his money to charity at his death (with directions that it be invested in low-cost index funds, something he thinks most investors should do). Why shouldn’t he do what he enjoys more than anything? Actually, he does.
He finds finding, buying and selling companies and running Berkshire Hathaway fascinating. For a while, he cut back and played a lot of bridge. But ultimately, he was drawn back to work. I could also afford to cut back, and I play a lot of chess and bridge. They are challenging games that require strategy and skill, but they don’t fascinate me as much as my work does. I guess the same could be said of Buffett.
I have roughly 600 college professors as clients and the most accomplished of them will work into their seventies and eighties, and some into their nineties. For most of them, it isn’t about the money. Many have officially “retired,” but they continue to collaborate with colleagues, conduct research, and attend conferences and some continue to go to their office every day. They do it because they find their work fascinating, and they are still contributing at a very high level.
Many of my other “retired” clients become consultants. Not because they need the money, but because their curiosity and passion need an outlet, and they still find their work fascinating—more fascinating than what might be considered conventional retirement pleasures.
As an employer, a great take-away from this insight is to hire people who are fascinated by their chosen career path. I have been very lucky on that score. For instance, we have two CPAs in our office who “run the numbers,” quantifying Roth IRA conversion strategies, optimizing Social Security strategies, and calculating safe withdrawal rates. Their passion for number crunching benefits all of our clients, but they are rewarded too; they both find “running the numbers” fascinating and they are very good at it, as good as anyone I know. Neither of them would find bookkeeping fascinating, but our bookkeeper does—thank goodness! I think the same can be said for our estate attorneys and our marketing team.
I continue to be fascinated by the challenges each new client presents. Turning the financial chaos that usually comes in the door into a coordinated retirement and estate plan where everybody benefits (except the IRS) motivates me because I find it intriguing. Solutions are frequently unique to the individual.
Though it is also challenging work, I love the process of writing, so I will keep articulating my thoughts and ideas with articles, books and newsletters, breaking new ground with innovative ideas as they come.
Do I like to hike, bike, kayak, listen to music, play chess and bridge, read great books and even watch movies and TV? Of course! But those things only hold my attention for so long, and then I am back to confronting the challenges that stimulate my curiosity and keep me interested.
I am fortunate. I hope you find what fascinates you and that you spend a lot of time doing just that.
Recently, I have been helping to train our family’s new driver, Rebecca (yes, it is hard to believe that she is 16). She was a good student, eager to learn this new skill. But I think most parents understand the stress of those first few times you get into the passenger’s seat with your child at the wheel. Giving up control and trusting their instincts is one of the hardest things a parent has to do. Luckily, our training was successful! Unable to give up total control though, we got her a bumper sticker that says “Please be patient, New Driver.” It’s our way of protecting her when we are not around.
Similarly, we are seeing more parents in our practice looking for ways to protect their children when they are no longer around to lend support. A planning tool that we often suggest is a Joint Revocable Trust, or a Family Trust, which helps families avoid probate at the first and second death if properly funded. I cannot stress enough the importance of appropriately funding the Trusts to make them effective. We often incorporate into the Joint Revocable Trust our firm’s signature estate plan, commonly referred to as Lange’s Cascading Beneficiary Plan. This estate plan gives our clients the ultimate flexible solution– putting your beneficiaries in the best possible positions after your death.
The true benefit of these Trusts is the ability for the surviving spouse to leave the Trust assets as they are after the spouse’s death (other than perhaps a change of Social Security number) and for the successor Trustee to transfer the assets to the children (or other beneficiaries) at the second death. These plans work best for families that own their non-retirement assets jointly. Individually owned assets can be directed into a Joint Revocable Trust after the first death by beneficiary designation, but doing so while the owner is still alive could be a big income tax mistake if the assets are highly appreciated.
One of the few benefits of death (there aren’t many!) is that the surviving beneficiaries can sell the deceased’s assets without paying capital gains on pre-death appreciation. For example: suppose your spouse bought $5,000 of Apple stock in 1994 (worth over $700,000 today) and passed away this year. The $695,000 of pre-death capital gain goes away with your spouse’s death. Therefore, you do not want to transfer highly appreciated assets to a Joint Trust while you are both alive and give up the opportunity to eliminate the pre-death capital gain.
Although these Trusts have many benefits, they can be somewhat hard to understand. My colleague, Karen Mathias, has developed a nice flow chart to help explain the document along with a comprehensive letter. However, even with these tools, it is hard to follow a Trust that in essence contains the estate plan for both spouses depending on who passes away first. Nevertheless, many of our clients are intrigued by the possibility of having their own “bumper sticker” to protect their family after they die by making the administration process easier for their beneficiaries.
As for my own beneficiaries, while we have been helping Rebecca learn to drive, my wife, Beth, has been adjusting to her new job as a geriatric care manager at Optimal Aging Advisors, LLC and has really enjoyed helping families work through crisis management situations with their elderly family members. Even my youngest daughter, Anna, isn’t immune to all of the changes going on. She just graduated the 8th grade, has a full summer planned, and is excited and nervous about starting high school in the fall.
My point is: Life is wonderful, but chaotic, and it doesn’t stop just because we do. And for many parents, the instinct to protect your family doesn’t go away simply because you won’t be around anymore. Please reach out to our legal team at 412-521-2732 if you are interested in further exploring these Joint Trusts. We look forward to hearing from you.
And please be patient when you see a “New Driver” bumper sticker on a car. It could be my daughter, Rebecca!
Matt Schwartz has been practicing estate planning and administration for 20 years and has been the lead estate attorney with the Lange Legal Group, LLC for 14 years. He lives in the South Hills with his wife of 20 years, Beth, and their two daughters, Rebecca, 16 and Anna, 14.
Prep. Time: 5 minutes
When selecting cocoa products, try to find raw cacao powder in your local market or order online. Raw cacao is less processed than cocoa and yields higher amounts of minerals, vitamins, healthy fats and fiber.
- 2 or 3 large ice cubes
- 1 ¼ cups of unsweetened almond milk
- 2 tablespoons unsalted almond butter
- 1 tablespoon chia seeds
- 2 teaspoons unsweetened cocoa powder
- 1 tablespoon coconut oil
Preheat the broiler. Line a rimmed baking sheet with foil.
Combine all ingredients in a blender and blend on high speed until smooth, 1 to 2 minutes. If the smoothie is too thick, add a little water and blend again until it reaches the desired consistency. Drink immediately.
We’ve written about this before, but a surge of new fraudulent IRS phone calls has us anxious to remind our clients and friends that the IRS will never call you or leave a message threatening you with law suits or arrests.
Please remember that the IRS always communicates by first-class mail. They will not call and threaten you over missed payments, lawsuits or fraudulent claims—they most definitely will not leave a threatening message on your answering machine. If do you get such a call, do not reveal any personal information and hang up immediately. If you are concerned that you may have an issue with the agency, call the IRS directly or speak with your CPA.
For more information about this scam and others go to www.irs.gov/help-resources. They have an extensive Fraud, Identity Theft and Phishing section with resources on how to recognize and report fraud.
P.S. Another scam you should be aware of is people calling claiming they are from “tech support” and there are issues with your computer. There is no overarching universal organization offering “tech support.” Never share passwords or give remote control of your computer to anyone who contacts you. If you are concerned about security issues on your computer, contact your security software company directly.