by Keith Dorney
The Bus List — Essential Estate Planning
Including Wills, Trusts, Durable Powers, Beneficiary Deeds, TODs and PODs, Estate Taxes, Plus Organizing and Securing Your Records
Keith Dorney
www.KeithDorney.com
Copyright Keith Dorney Books 2016-2020
All Rights Reserved
Disclaimer:
The information contained within this book is not and should not be construed as legal advice. Consult an attorney licensed in your state of residence for legal advice. The information in this book should be considered of a general educational nature. I publish e-books and print-on-demand books for a reason: I update all my financial planning-related books every year, including this one. I take pride in providing only the most up-to-date information in easy to understand language. This book will educate you with what is hoped to be correct and up-to-date information, but no warranty or promise is made that everything is 100% accurate.
To Katherine, My love, tireless editor, and inspiration for this book
Acknowledgements
Thanks to Dennis Crandall, Graham Rutherford, Lyndsay Mills, and Darcy McLarty for my teaching opportunities. To the creative Johnny Good: Thanks for lending an ear and the spot-on book title.
A special thanks to Coach Bill Muir.
Table of Contents
Why You Need a Bus List
Part I - Writing Your Bus List
Body
Your Last Arrangements
Organ and Tissue Donation
Picking Up the Tab
Recording Your Decisions
Body – Next Steps
Brains
Person Who Retrieves Your Bus List
Guardian for Minor Children
Executor
Durable Power of Attorneys
Brains – Next Steps
Bling
Avoiding Probate
Example 1: High Probate Costs
Beneficiary Designations
Example 2: Will vs. Beneficiary Statement
TODs and PODs
Beneficiary Deeds
Rights of Survivorship and Accounts
Rights of Survivorship and Real Estate
Example 3: JTWRS (Favorable)
Example 4: JTWRS (Unfavorable)
Gifts and Cost Basis
Example 5: Gifting Highly Appreciated Assets
Living Trusts
A Legal Trick
Name Your Successor Trustee
Example 6: Personal Residence and Living Trust
Living Trust Maintenance Costs
Example 7: Using a Will and Then a Trust
Bling – Next Steps
Part II — More Estate Planning
Location of Your Bus List
Estate Liquidity
Federal Estate and Gift Taxes
What’s Your Exemption?
Example 8: Calculating Your Exemption
Exemption Portability
Example 9: Exemption Portability Between Spouses
Indexed for Inflation
State Estate, Gift, and Inheritance Tax
States With an Estate and Gift Tax
States With an Inheritance Tax
Limited State Exemption Portability
Community Property vs Common Law States
Common Law States
Community Property States
Community Property with Rights of Survivorship
Should I Hire an Attorney?
Glossary
A-G
H-R
S-Z
About Keith Dorney
Why You Need a Bus List
Hopefully you’ll live a long, healthy life and have plenty of time for planning your final arrangements, transferring assets, and fulfilling any last wishes. But what if you get hit by a bus? Even if you don’t get hit by a bus, your time will eventually come. It’s the one common denominator among all living things.
That’s why you need a Bus List. Your Bus List makes it easier on your loved ones during a time of great sorrow and grieving. Compiling your Bus List is one of the kindest, most thoughtful gifts you can bestow on your surviving loved ones. Be sure and make it your last, best gift.
Through the years, I’ve learned many folks avoid doing any meaningful estate planning because of brain cramps. That’s the term an old coach of mine coined for being so overwhelmed by information you do nothing.
In football, a brain cramp resulted in you standing there looking stupid as the play unfolded around you. With estate planning, a brain cramp could result in consequences much more serious. Money may be needlessly wasted. Assets could go where you don’t want them to go. Your last wishes may not be fulfilled.
The subject of estate planning is broad and at times complicated. The fact that every state has their own set of rules makes things even more confusing. Then there are those confounded legal terms you have to slog through. It’s enough to give anyone a brain cramp.
As I guide you through the process of writing your own Bus List, I’ll introduce you to the options available. Some solutions are easy to set up and execute, others are more complicated and costly.
Choose the options that work best for you now. You can always change to a more elaborate plan later.
These decisions and actions on your part ultimately will be wasted if there is poor communication between you and your beneficiaries. Upon your passing, they need look no further than your Bus List. All the needed information is right there in one place.
To help you decide which actions to choose, you’ll find a list of “Next Steps” after each section. Complete each applicable next step, execute any necessary documents, and move on to the next section. There are only three sections. You’ll have your Bus List written in no time!
After completing all three sections of Part I — Body, Brains, and Bling — you can rest assured you’ve got the “big stuff” covered.
Section 1 - Body - Detail any last requests, including arrangements.
Section 2 - Brains - Appoint individuals to represent you.
Section 3 - Bling - Assure your most valued assets pass seamlessly and inexpensively to your beneficiaries.
Part II covers other important estate planning topics:
- Location of Your Bus List
- Estate Liquidity
- Federal Estate and Gift Tax
- State Estate, Gift, and Inheritance Tax
- Community Property vs Common Law States
- Should I Hire an Attorney?
As far as confusing legal terms go, I apologize in advance for using some of them, but there is no getting around it. To help, I’ve compiled a comprehensive Glossary of those nasty words, where you’ll find easy-to-understand and at times humorous definitions that will add to your breadth of understanding. You’ll find it way more useful than your reading device’s dictionary.
Estate planning is best done when there is no urgency. If you wait until it is urgent, you’ve waited too long. Get started on your Bus List now. Don’t procrastinate any longer. You can complete the “Body” section in the next few minutes and be one third of the way through!
Part I: Writing Your Bus List
Body
The first item on your Bus List can be a bit difficult to think about, but we’ve got to have some empathy here. You’ve just passed unexpectedly. The people who love you are going to be distraught and heartbroken. Plus, they’re stuck with you, which of course isn’t you anymore.
They’ve got to decide how to, you know, take care of the body. If you’re a Klingon (It is only an empty shell now. Please treat it as such.), you can skip this section.
Your Last Arrangements
Do you want to be buried, cremated, dissected, or disassembled? Shall there be a formal f
uneral and viewing or a more muted affair? What about any religious considerations?
Putting instructions in a will or trust stand the chance of going unread until after it’s too late. That’s why your last arrangements go at the top of your Bus List.
If you want to be buried, put down here what you have in mind. Fancy a nice plot by the park and the old oak trees, or do you want to be laid to rest back home next to your pre-deceased kin? What about the casket? Do you want a simple pine board model or a fancier one?
If you want to be cremated, note the urn you desire as a receptacle, as well as any other details. Personally, I’m insisting my remains be placed in a Folgers® coffee can. Don’t make your loved ones guess what you may have wanted, or make them steal an idea from one of their own favorite movies. (Rest in peace, Donny.)
There’s a reason this is the first item on your Bus List. In the “Brains” section, you’ll appoint a special someone to retrieve your Bus List in the hours after your passing. What they’ll need to know right away will be the first thing they read.
Organ and Tissue Donation
Like I’m sure our Klingon friend believed, if someone can use a spare part or two, why not? If you’ve already signed up, make sure you record your state’s registry information or other special instructions in your Bus List.
Besides recording donation information in your Bus List, be sure and talk to your loved ones about it. My mom signed up to be a tissue donor but didn’t tell anyone. After she died, we didn’t find out about it until it was too late and felt terrible we weren’t able to fulfill her last wishes.
I’ve heard dozens of similar stories over the years. If you’re serious about your donation, make sure to start your Bus List now and record your donation information along with your instructions regarding last arrangements. You need to do this even if you’re officially registered with your state of residence or other entity.
Most states have forms that make it easy to be an organ/tissue donor. The National Hospice and Palliative Care Association maintain a database of information on your state’s programs at CaringInfo.org. Click on your state of residence to find out what services they offer.
I’ve personally taken quite a few shots to the head over the years, which is why I’ve pledged my brain and spinal cord to the Brain Donation Registry at Boston University’s CTE Center. Their research on concussions and links to chronic traumatic encephalopathy will hopefully help my fellow ballers stricken with the disease.
The folks there assured me if I wanted an open casket viewing, that won’t be a problem. Apparently they pop the top, remove the brain and selected spinal tissue, and put you back together pronto. Quite surprising!
I’m officially registered with them as a donor. Just as important, my wife and kids know how much my donation means to me, and I of course have all the details in the Body section of my own Bus List.
Anything you may want to communicate posthumously goes in the Body section as well. If you’ve made a video or other media production, make sure you reference its location.
If you skip this part of your Bus List, your last wishes may not be fulfilled. You can leave these decisions to someone else, but those closest to you will be grateful you took care of things now.
Picking Up the Tab
During your lifetime, it probably seems you’re footing the bill for almost everything. It’s no different when you’re dead.
That’s why it’s best to be realistic with those last arrangements. Remember, we’re trying to be empathetic. You order up a gold plated casket, live band, and a party for three hundred, those closest to you might just be grieved enough to go for it and then be saddled with credit card debt for the next ten years.
If you and/or your loved ones have the money of Midas, go for it; otherwise, if something grand is planned, make sure your estate has the means to pay for it. This goes not just your funeral expenses, but for the other expenses your estate will incur when you die. (See Estate Liquidity for more information on estate expenses.)
Recording Your Decisions
If you’ve gotten this far but haven’t physically started your Bus List yet, strike while the iron is hot! Remember, deciding on a course of action does no good unless it’s communicated posthumously.
Before moving on to the next section, where you’ll pick “brains” to carry out specific duties on your behalf, choose the form your Bus List will take (if you haven’t already).
Here are a few suggestions:
- Handwritten on a piece of paper
- In a notebook stored in your fire proof safe
- On a password protected/encrypted file on your hard drive
- At a secure website in the cloud
Protect your Bus List from identity thieves by taking the appropriate security measures. Get in the habit of storing your Bus List in its chosen location as you write it. Once it’s completed, you’ll need to update it occasionally so make sure it’s convenient yet secure.
See Location of Your Bus List in Part II for more security tips.
Body — Next Steps
- Record details of your last arrangements in your Bus List.
- Discuss those last arrangements with the appropriate individuals.
- Record any organ and/or tissue donor information in your Bus List.
- File the appropriate state or agency-specific paperwork necessary for your organ/tissue donation.
- Dedicate appropriate assets to pay for your last arrangements as well as other estate-related expenses.
Brains
Next, it’s time to decide who will carry out some very important duties on your behalf. No matter what your situation, age, or level of wealth, you’ve got to appoint folks to fulfill the following duties:
- Person who retrieves your Bus List
- Guardians for minor children (if applicable)
- Executor
- Durable power of attorneys for health care and financial management
Person Who Retrieves Your Bus List
The person who retrieves your Bus List must be someone you trust implicitly. In the wrong hands, the information in your Bus List could be used to do you some serious financial damage. Logical choices for this job are one’s spouse, trusted offspring, sibling or best friend.
If you are ever declared mentally incompetent, this appointee needs to find and read your Bus List. They’ll be in charge of retrieving documents and delivering them to the appointments you’ll make later in this section.
Hopefully you won’t be declared mentally incompetent during your lifetime (knock on wood). If not, this appointed brain will first read your Bus List upon your passing, and fulfilling your wishes outlined in the Body section would be their first task.
Besides making sure those last arrangements happen, this brain is the keeper of the location of all your assets, including usernames and passwords to your financial accounts, which you’ll detail later in the third and final “Bling” section.
That makes where you store your Bus List an important decision. If you haven’t started your Bus List yet, and you’re still wondering where you’re going to store it, I suggest reading Location of Your Bus List in Part II before going any farther.
Otherwise, it’s on to naming more brains. Your Bus List retriever may fill some of your other “Brain” roles, but not necessarily. It’s up to you to decide.
Guardian for Minor Children
Skip this section if you don’t have kids under the age of 18. If you do, you need a will to name the guardian or guardians for your kids if you get hit by a bus. This is really important. Otherwise, some judge makes the call.
Formalize your decision by drawing a legal will and naming that guardian(s). If for whatever reason your first choice falls out of favor, update your will with an amendment indicating the change. Until your youngest reaches the age of 18, be diligent about monitoring this most important of designations.
Both parents should have the exact same guardian designations in
their individual wills to avoid confusion. You might consider naming a successor guardian in case for whatever reason your first choice is incapable of accepting guardianship.
As the Bus List implies, we’re talking worst case scenario here: simultaneous death of both parents or death of a surviving parent before a child reaches the age of 18. Nothing is more important than insuring the wellbeing of your kids, so make sure you decide on your guardian pronto and make it legal by indicating your choice in a will.
Brain Cramp Warning: Couples often have trouble agreeing on who is best for the job. Come up with a choice and run with it! If you can’t agree, one extreme compromise is awarding guardianship to your choice if you both get hit by a bus in an even year, and your partner’s choice if you get hit by a bus in an odd year. Hopefully it won’t come to that.
If you’ve been taking my advice to heart and you’re ready to run off and execute a will to protect your minor kids, be sure and read the next chapter first. You’ll want to name your executor or executrix via a will as well.
Executor
Your choice of executor (or executrix if appointee is female) is also named through a will. Although a will can do other things, like bequeathing assets, you need a will if for no other reason than to name your executor (and your guardians for minor kids, if applicable).
Your executor is going to be in charge of things in the months after you die. Duties include:
- Inventorying and appraising assets
- Locating, securing and managing probated property
- filing final tax returns
- communicating with the probate judge and beneficiaries
Your executor may need to hire professionals to properly fulfill their duties. If your named executor isn’t local, traveling to and from your county of residence will be necessary.
