Taking Control of Your Assets

Taking Control of Your Assets

By Richard Deam, Deamoak’s Planning Services


Whenever they think of risk, most individuals immediately think of the risk that happens by investing in the stock and bond markets.  But there are other financial risks besides these market risks.  We have identified several risks that can affect your assets, and would like to provide you with a brief review of them.

Power of Attorney

In the event that you are incapacitated or have reached a stage in life when it is difficult for you to make decisions, your Power of Attorney (POA) has the legal authority to represent you.  Your POA can sell and buy investments, purchase or sell real estate.  They cannot make changes on any of your legal documents such as a will or trust.

Your POA has a tremendous amount of responsibility so you should choose someone that you trust and someone who has knowledge of your life values and who can respect your thoughts and attitude.  If you fail to name a POA the court will appoint one for you.  This can become quite expensive, and all of your assets will be publicized in the local newspaper.  This is probably done to alert your creditors that you are no longer physically able to pay your bills but you still have the assets to do so.

You can imagine that without a POA, it could create a nightmare for you and your loved ones.

Titling of Assets

This is a very, very important area in financial management.  Remember that the person named as beneficiary on your insurance contract receives the contract’s proceeds even if another person is named as beneficiary in your will.  Insurance contracts are governed by the law of contracts, not by the law of wills.  A will may take several months or even years to be settled.  The beneficiary of an insurance contract is usually paid within 30 days.  This is because insurance contracts are non-probated assets.

IRA’s, 401k’s, Roth IRA’s and Joint Tenancy with Rights of Survivorship (JTWROS) are all non-probated assets  A common mistake with JTWROS is that by adding a child’s name to the account, the parents forget that all the proceeds will go to that child and, if there are other children, they will be disinherited.  Also, if your children are named as JTWROS, their creditors can make a claim on the assets.


An executor is responsible for managing your estate at your death.  This person usually works with your attorney and provides the necessary information that is needed to probate your estate.

Your executor, like your durable power of attorney, needs to be an individual who has knowledge of your personal affairs.  Among some of the tasks that your executor needs to perform are:

  1. Locating your will and contacting your beneficiaries.
  2. Revealing your assets and their worth.
  3. Paying debts.
  4. Filing the necessary taxes.
  5. Notifying social security and your insurance companies.
  6. Informing members of the family on the progress of the will.

Long Term Care Insurance

As we mature in life, we eventually realize that at some point in time we may need assistance with some of our basic physical tasks such as walking, eating, bathing etc.  When we reach this particular stage it will be reassuring to know that we can financially afford to hire trained individuals to care for us.

Individuals may think they can easily afford this type of special care.  For instance, if a person owns three homes, they may assume they can easily afford to pay the expenses incurred with nursing care.  However, if they were to be asked, which house would you want to sell to pay for your home care or nursing home expenses, they may reconsider their decision.

In considering the purchase of a long term care program, some very basic facts should be remembered.  For instance, many individuals over 85 will develop some form of neurological problem such as Alzheimer’s disease.  Also, several individuals in their 70’s will someday need homecare or nursing homecare.  Long term care insurance provides the means to pay someone to help care for you so you can stay in your own home as long as possible.  If you need nursing homecare that is also provided by long term care insurance.

Charitable Remainder Trust

Have you ever thought of creating a trust that will permit you to be its trustee?  If so, you will control the trust and be able to receive income from it for the remainder of your life.  Upon your death the Church or any other non-profit organization you designate will receive any remaining money in the trust.  This type of trust is referred to as a Charitable Remainder Trust.

How does a Charitable Remainder trust work?  It may be a beneficial strategy if you have a stock that has appreciated substantially.  But let us say, this very highly appreciated stock pays a minimum dividend and now you need additional income, but capital gains are prohibiting you from selling the stock.

A stock that fits this description is IBM.  If you sold your IBM stocks you would undoubtedly incur a large capital gain.  To avoid paying capital gain taxes you can establish a Charitable Remainder Trust.  After you have established the trust, you place the stock in the trust, the trust now owns the stock, and you as the trustee sell the stock.  You have avoided the tax because the trust is now the owner of the stock and Charitable Remainder Trusts do not have to pay capital gains.  Even better, you will receive income from the trust, and you will get a tax credit for contributing to the trust.

Please contact us for additional information.

Such trusts are used to develop a vehicle for donations to a favorite charity, which also allows for the reduction of income taxes through a charitable deduction and favorable tax treatment at the date of the gift by non-recognition of built-in capital gains. The use of trusts involves a complex web of tax rules and regulations.