Recently I have been relating some lessons from a vacation my wife and I took this summer. We spent a couple weeks in the mountains of Colorado.
While there, we had a rotation of visitors. They included friends and family members.
I enjoy hiking. I have an old backpack that I keep packed for hikes. It includes a water bottle, water filtration system, compass, map, matches, and other survival items. During our stay in Colorado, one of my sons led a hike of some friends into the mountains. He “borrowed” my backpack, which was fine.
Several days later I decided to go up a mountain trail. As I was about to start my hike, I put on my backpack, but it seemed strangely light. I discovered that the water filtration system, my jacket, and map were missing. Later, I had a talk with my son.
After our vacation to Colorado I met with a family. In 2012, they set up an estate plan. When I met with them in November of 2018, their “estate plan” included a Tupperware container of documents.
What did I discover? Land and other assets were not in their trust (which would end up requiring a probate). They had children that helped them invest some of their money, but did not consider their estate plan in that process. As a result, the money in the investments was not properly titled in a trust, nor were the funds going where the family intended on their death. As I asked questions I kept getting blank looks from my clients and their family.
Keep in mind that in 2012 their plan was in order. Now they did not even know what they had. Part of the problem was things had been taken out; and other things were put in or intended to be put in.
And now, mom was sick; dad was burned out; they were trying to stay at home; and they wondered what to do next and whether they had what all they needed.
It was kind of like my backpack – originally it contained all the tools they needed to travel safely, or in the event of an emergency. But now my clients were lost; they looked in their “backpack” and did not know what was there, what should be there, and whether they had what they needed for their journey.
This is what happens many times: people set up a plan for a given trip. Then they deal with their family, accountant or investment person, creating changes. Or something happens that is a significant event (death, marriage, illness, etc.).
But those changes do not make it back into their plan or their plan is not adjusted as a result of those changes.
The result is their backpack is not ready for their journey.
What do you do? First, realize certain events may require changes to what is in your backpack; or may even require a brand new backpack.
Second, be careful with people that may modify what is in your backpack, without actually knowing what was in your backpack and what was intended to stay in your backpack. It could have a significant effect.
Third, review your backpack often (every year). Be sure it has in there what you think it has, and that it will take you on your journey.
I do not make these comments lightly. I know I have to look in my own “backpack” every so often. When do I do it? I usually do it at tax time. In addition, every couple years I ask my law partner to look over what is in my backpack to be sure I am not missing anything.
My law partner asks me some good questions: “Are there any family dynamics?” “Have you opened any new accounts?” “Can I look at your tax return to see what accounts you have?” You would be surprised how often she finds something that I need to fix. Usually it is a little thing, but it is something that by fixing it now makes it a lot cheaper later on.
Have someone look through your backpack with you. And do not let people take stuff out of your backpack without your knowledge and without your understanding the implications.