Last month we continued our discussion of Transition Planning talking about investments, taxes and insurance. Working with clients during their lifetime, one of my roles is to prepare the family for illness and death of a loved one. While the client is in good health we are focusing on the first six elements of Transition Planning: Having the proper legal documents in place, selecting the proper decision makers, preparing the Fiduciaries for their future role, coordinating the assets and investments, creating the proper tax plans and obtaining and reviewing the appropriate insurance policies. All of these elements are preparing for the final three elements of a Transition Plan.

7. Incapacity Planning: As we live longer there is a good chance that we will face a period of time when we are unable to handle our financial affairs. This is called a period of incapacity. A key part of Transition Planning is to prepare the family for this difficult time and ensure that the individuals or entities such as Trust Divisions named in the legal documents to handle financial affairs during this time are prepared and able to do what is asked of them. For financial affairs we would be utilizing either the Durable Financial Power of Attorney and/or the Revocable Living Trust to give the individual assigned the legal authority to make financial decisions on behalf of the client. In later issues we will talk about the importance of a strong Incapacity Plan and how it can easily fail without proper proactive action by the client. How will your Bank and Investment locations respond when the decision maker named in your legal documents walks into the financial institution's office and requests access to your financial accounts? You might be surprised by the answer.

8. Medical Wishes. There is a chance that you will face a time when medical decisions need to be made on your behalf and you are unable to make those decisions yourself. Having the right medical documents and the right people named in these documents is a core part of Transition Planning. Have you discussed your end of life wishes with the people named in your medical documents? Are they prepared to carry out your wishes? One of my roles is to help families communicate with one another and prepare for an event that can test the strength of any family unit.

9. Estate Settlement. The final element of Transition Planning deals with the final transition: Death. When a client passes away we either see a great deal of stress, confusion and burden placed on the families through a poor or non-existent Transition Plan or we see the planning and hard work pay off as the family executes the plan we have developed, put in place and maintained over the years. An estate settlement should not be a stressful process. If we have the first eight elements of a Transition Plan in place, Estate Settlement should work smoothly. The estate planning documents are in place and updated, the decision makers named in the documents are the right people and they are prepared for their role. The assets and investments are titled properly and the decision makers (Trustees and Personal Representatives) know where all of the pieces are and how they fit into the Estate Planning puzzle. The tax plan ensures that a minimum amount of taxes are owed and the insurance plans kick in to handle any expenses or tax liabilities if needed. Assets are distributed per the client's wishes to the designated beneficiaries and challenging assets such as homes, 2nd homes, land, business interests and personal property are distributed per pre-arranged plans to minimize family conflicts.

Transition Planning is designed to take proactive action with the client during their lifetime to prevent such a breakdown. Next month we will talk in more detail about the first core element, having the appropriate legal documents in place. Please forward this information to anyone who might benefit from it. As always feel free to call me at 301-785-4112, or send an email to pfish@sandyspringinv.com if I can help you in any way.

The material herein represents the opinions of the author and should not be construed to represent the opinions, recommendations or official actions of Sandy Spring Bank.

Trust Services provided by Sandy Spring Bank

*Not FDIC Insured *No Bank Guarantee *Not a Bank Deposit *Not Insured by Any Government Agency *May Lose Value

Securities and insurance products are offered by, and Financial Advisors and Consultants are registered with, Linsco/Private Ledger (LPL) and its affiliates, member NASD/SIPC.  Sandy Spring Investment Services is not a broker/dealer and is not affiliated with LPL.