Senior Financial Mistakes
Last Update: 6/22/2016
Seniors May Need HelpWhether you were invited or just happened by, the information published on this site is meant to be motivational. It is meant to be shared and discussed by senior estate owners and their families. We know at your your age, you may be a little "stubborn" and need great motivation to realize that you have made some senior financial mistakes that could still be easily corrected while you are alive and well.

As a long term financial consulting firm, now nationally known and quoted often in national publications -- we don't want you to make the same Senior Financial Mistakes our firm has seen so many other client families make. Family survivors had to hire us after the death of their beloved parent or other estate owner to fix problems that would have been much easier and greatly reduced in cost if discovered and corrected prior to death.

The problem with an aging brain could lower your ability to determine risk properly and/or avoid financial predators. The theory states older people may pay more attention to people around them that make them feel content and comfortable with. If that person is a predator - WATCH OUT!  They even have a name for this condition: socio-emotional selectivity. Please take a few minutes to read up on the reality this situation by reading a few articles on the subject, then be sure to come back to read true stories from our own case files where senior clients died and left a horrible mess for their surviving heirs and families.
Real Families - Real Troubles
In order to convince you that you too may have made some common mistakes, we have opened up our own company CASE FILES so you can see the mistakes others made that caused us to be hired to help fix them, over the last 24 years of our professional practice here in Arizona.

Kick the BucketBefore you kick the bucket, you can choose to ignore senior financial mistakes you may have made or you can choose to take another look to discover and fix them. The odds are vey high you probably need an update anyway in some aspect of your finances. By trusting others to get things set up for you but not understanding what they did, or not updating those original financial plans because you are trying to save money -- may be setting your heirs up for a failure somewhere after you die.

It may be a large IRA account that does not have enough "depth" in the beneficiary form to allow for flexible disclaimer actions up to 9 months after a death. Or, a living
trust that still contains A/B "split" language that is all but obsolete for most Americans now. (That is a huge problem we find right now) Perhaps this isn't your first marriage and your life insurance policy still pays your divorced spouse. She may be the mother of your children and that is what you want. Or, she is the last person on earth you want to receive the death benefit payout, but she will get it if you haven't carefully reviewed all beneficiary products you now own!

Being a "senior" automatically grants you wisdom from learning from past mistakes. Maybe you will need to read about the mistakes of other seniors and their families to understand what might need attention in your own financial and estate planning. By reading more about the most common errors other estate owners make you will easily discover how some of these mistakes may have also been made by you and/or your own advisers.

Unfortunately -- many estate owners ignore them and die before they get corrected. Most don't even get the opportunity to discover them. And that means your kids may be hiring a firm like ours instead to try to fix these common mistakes post mortem. Cost factors multiply greatly when estates are caught with problems that should have been fixed prior to death. At the very least, getting a second opinion is encouraged with financial plans and documents just like it is with medical decisions. And a free second opinion is offered by our firm if you would like one.

To fix any mistakes you may have made in your estate planning, insurance policies, retirement accounts, real estate holdings and other investment accounts while you still can, you first will need to find them. We invite you to read the letters below from "beyond the grave" for that purpose. Then be sure to contact our office for a free 1/2 hour sit down session. (no cost or obligation)

Those pesky hidden financial mistakes that trip so many up can be corrected easily and possibly save your kids a fortune in fees and expenses. Taking the extra time now to "inspect" what you "expect" from your estate and investment plans will reduce stress and financial burdens for your surviving heirs and estate administrators. And, help you sleep better as well knowing you have done all you can to hold costs down while passing on your inheritance to those you love. And at the least amount of trouble and expense.

Note: Though the letters themselves are fictitious, the real life content and facts from "closed" consulting client cases of our firm is very real and provided for  education purposes so you may discover senior mistakes you have made and correct them before it's too late.

Barrier Bar

Letter #1

Letter Beyond the Grave

The Rest of the Story:
The client was a daughter and beneficiary of a trust and the probate estate when the trust failed to be properly funded. The mother was a retired doctor caught suddenly with a sepsis infection that took her life quickly. Our client was a retired dentist and her two sisters were an active lawyer and doctor respectively. The name brand law firm from the Midwest that created the original living trust provided a long, detailed and adequate trust that just needed updating. Instead it was replaced with a thin 9 page trust document that was poorly written by a southern state lawyer. That lawyer (we later called her the "lawyer from hell") also convinced the mother to replace her former Midwest CPA since she lived about 6 months a year in each of two properties she owned in the different states.

What Were the Senior Financial Mistakes?

Danger Ahead

All humans start failing mentally around age 50. After that age, your mental capacity including the ability to make good decisions, is lowered little by little each year and by the time you reach 80, this capacity reduction can cause you to make more mistakes, including financial mistakes - then you would have when you were younger.
But, today's advisers can flash credentials and brag on how many years of service they have provided while secretly, they could be fighting alcohol or drug addictions, state bar or accountancy boards and other regulatory agencies for making their own mistakes on client files. Virtually every consulting case our firm takes soon discovers multiple levels of prior adviser malpractice in them.

So, the primary problem in this case was the replacement of long term trusted advisers with inadequate replacements that were not qualified to even advice the client to fully fund her living trust so that assets exceeding the state limit would not go through probate.

The secondary problem is that just one of three sisters held all the cards for making financial decisions after the mother's death. Normally, this works out well but in this case, the mother knew the one sister (our client) was more precise and accurate in general and would demand accuracy in accounting and estate asset reporting. So, in this case, it might have been better to have appointed the sisters to serve together, so each would have to "sign off" for estate/trust actions before proceeding with them. 

Or, because assets greatly exceeded minimum requirements for commercial trustee services (who must adhere to tight fiduciary responsibilities), just appointing a commercial trustee as Successor Trustee would have stopped most of the problems the surviving sisters had to go through.  Probate could have been avoided had the last lawyer and CPA actually asked the client prior to her sudden death - if all of her main assets were funded inside the trust. Sadly, the children didn't ask that question and neither did any of her professional advisers prior to her death.

Barrier Bar

Letter #2
Letter Beyond the Grave

The Rest of the Story:
The client was the named Successor Trustee and oldest of two sons. Trust terms had to be reviewed by a probate judge because they were not clearly stated by the drafting west coast lawyer. That review was positive and allowed for a stretch IRA to be set up. It was clear when trust documents were reviewed that none of the IRS required rules were stated in the document, as last amended, but were found with joint work by two Inherited IRA firms working together to convince J.P. Morgan brokerage to release the large IRA account into the more "IRA friendly" hands of custodian, Fidelity Investments. The trust had the typical "pay my bills and end me" legal language which meant the long term prospects of keeping the IRA inside the trust were not possible without violating the terms of the trust. The client chose to do the "see through" procedure to identify the trust beneficiaries with our firm as well as the "drop down" procedure which allows removal of inherited funds into individual and separate inherited IRA accounts in the name of the two sons listed as trust beneficiaries. Unfortunately, the one was in big trouble with federal regulators and could only solve his problem by having his brother cash in a huge junk of IRA money so he could pay his negotiated settlement and avoid jail time and/or additional fines.

 What Were the Senior Financial Mistakes?

The father was very successful in life to amass over 2.3 million dollars into a retirement account prior to death. Unfortunately, that was pretty well his total estate since all other assets had been consumed by the time of his death. And, a major motorhome purchase that fell in value like a rock haunted the estate with a tremendous liability still due. Along with all other estate settlement costs and bills due, only the IRA account was available to cash in and get money to pay for other expenses. Along with the need to give hundreds of thousands of dollars to one of the father's sons -- the IRA was cut down to less than 1/2 of value when it was all over.

The first mistake was to keep such a large IRA account with a brokerage firm that could not handle the complexities of a trust being named as the primary beneficiary. Of course, the father didn't realize that the custodian would demand a private letter ruling from the IRS to be able to pay the death claim to the trust. There was no mistake paying the trust as primary beneficiary in itself, but having an updated and fairly current living trust for such a large IRA was the second mistake since a stand alone IRA trust should have been used instead. Since that was not done, at least the living trust that had to take the death benefit should have been reviewed with an inherited IRA consulting firm (such as our firm) prior to death so certain trust restrictions could have been modified and the trust could have had enough "legs" for it to receive and manage the big retirement payout.

Since the one son had a financial handicap, the trust language made a mistake by not drafting loving, but strict principal and interest payout rules (financial handicap language) that could have placed greater restrictions on his share and how he could obtain it. Yet in the end, to stay out of jail -- having full access to his share turned out to be a good thing as far as he was concerned. But, he may not have learned his lesson by using his full inheritance to pay off the government agencies hounding him for what seems to have been some false advertising he had done.

Our firm performed the IRA "rescue" procedures from a bad custodian, a bad trust, and a bad situation with a family lawyer that may have been just a little too old to handle the complexities of the IRA and know how it could have been set up to avoid mistakes and problems at death.

Lastly, the father probably should have considered the great cost of buying a 500k+ motorhome and how much it would drop in value before his death. Perhaps he might have reconsidered the purchase had the family or other financial advisers been involved prior to it's purchase. It was eventually repossessed and the high outstanding debt remained after the death. This caused additional IRA funds to have to be cashed in so the Successor Trustee son could pay "all just debts and loans" per the terms of the trust.

More letters are coming...stay tuned!
MD Anderson, AZCLDP, RealtorWell, I hope you can't relate to any of these letters from the grave. But if you do, or have some areas you would like to discuss with me, please give me a call right now so we can discuss them.

Or schedule a free 1/2 hour sit down appointment to review your situation more thoroughly. Guaranteed NO obligation and NO fee!

Call M.D. For Free:

Disclaimer: The content of this website is for illustration purposes of common senior financial mistakes. All commentary is the "opinion" of nationally published and quoted retirement and estate consultant M.D. Anderson, President of Financial Strategies, Inc. Specific FSI cases are generalized and names are fictitious to protect the privacy of any FSI client case profiled in the "letters" quoted. M.D. practices as a an inherited IRA consultant and professional accountant and tax preparer. He is also a licensed Arizona Documents Preparer (AZCLDP), a Realtor with Realty One Group/Tempe and an insurance consultant/sale adviser. He also is a coin and bullion "metals" representative with Royal Metals Group.

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