Do-it-yourself approach doesn't work with law

Dear Bruce: I am a longtime listener to your broadcast and have come to respect your opinions. My husband and I paid $2,000 for a 2-inch-thick packet of papers from an advisory firm consisting of instructions for executing our living trust and accompanying estate-planning documents. It includes information and instructions on living trust, schedule of gifts, declaration of intent, certification and verification of trust, durable financial power of attorney, durable power of attorney for health-care decisions, directive to physicians, final instructions, community-property agreement, funding instructions and forms, and trust termination. Witnesses and notarization are required for many forms. Does this seem legitimate? Shady? Should we stick with forms prepared by our local attorney? Do you need further information? Thanks for your input. – C.S., Wisconsin

Dear C.S.: Do-it-yourself law is right there with do-it-yourself medicine – not very smart, in my opinion. I don’t believe the firm is shady, and I wouldn’t question their legitimacy, other than that they expect you to do an awful lot of the running around, as well as the understanding of the difference between a durable power of attorney and a general power of attorney, etc. Do I think you should do things with a local attorney? Certainly. I don’t know exactly what you could have accomplished for $2,000. I don’t know the breadth of your needs. I do know these are some of the most important decisions you will make in your life. Trying to do it yourself through the mail is a tragedy waiting to happen.

Trust fund protects children’s interests

Dear Bruce: I would like to make some gifts to my grandchildren to help with their college education. They range in age from a college freshman to infants. I am entering my 70s, and I’m widowed. None of us know what our life holds for us, but I would like to be certain this money is used for the grandkids – if not for college, maybe for a business venture. Should I give them a lump sum now or give it to their parents to invest for them? I want to be assured the money goes to them and is not used by their parents. – D.P., via e-mail

Dear D.P.: If you have a number of grandchildren at such varying ages, why not consider setting up a trust fund? The trustees would invest the money and determine who gets what and when. This way, the kids have no rights for the money, so you know it would only be spent in an appropriate manner. Hopefully, you can trust your kids to do the right thing by their children. If you are afraid of that, you might want to use a trust officer or a law firm.

Consider taxation issues carefully

Dear Bruce: Should I move an individual retirement account out of an annuity that I’ve had for 14 years? It’s only getting 3 percent fixed. Could I do better? It was my late husband’s 401(k). I am a retired teacher. – Mountain Girl, Charleston, W.Va.

Dear Mountain Girl: By all means, check with an accountant. I believe if you take the money out as opposed to rolling it into another plan in some way, you will have some taxes due on the distribution because the IRA money was pre-tax dollars. As to the 3 percent, it would seem to me that you could do better elsewhere, and since you’ve held this annuity for so long, there will be no penalties for cashing out. Be certain to find out what the tax consequences will be and whether there are ways to postpone or altogether eliminate them. That is a question for your accountant.

Get power of attorney to aid in research

Dear Bruce: In 1999, my daughter had her 401(k) plan amount sent to her, payable to her new place of employment. The check was for about $20,000, with a payable date of July 29, 1999. Due to personal situations, the check was stored, forgotten about and just recently found again. We still have the check, but I have been told it is not negotiable. I have been asked to get the required information. My daughter resides in Arizona and is a single mother with 6-year-old twins. I would have to forward all information to her, since I do not have power of attorney. How do we get her 401(k) funds transferred back to her current plan? Would the amount still be in the original company or elsewhere? – H.K., Camarillo, Cali.

Dear H.K.: If you plan to do the research, you would be well-served by having your daughter execute a power of attorney. This would give you the right to make the inquiries. In the absence of this, I don’t think you’ll find much information to forward to her. You’re going to have to go backwards into this and find out from the people who issued the check where those funds are and work forward. First, get the power of attorney; second, write to the issuer of the check and explain it was not negotiated seven years ago. Further, there are some tax implications here from the money not being rolled over in the appropriate time. Proceed with your inquiries and see where they lead, and then you may have to get some information with regard to taxes from a competent accountant.

Bruce Williams is a national radio talk show host and syndicated columnist. He can be reached at bruce@brucewilliams.com.