Using Tools

When I was young every child in my neighborhood heard, “Use tools for what they were meant for.”  Essentially that meant that you could not use Dad’s 9-iron as a hammer and you could not use scissors to cut fiberglass.

It is the same with financial tools.  Robin Williams estate is now faced with a long term and costly problem.

Robin had, years earlier, created a trust structure which aimed at avoiding alimony.  When he married Susan three years before his death, he amended it to deal with California law regarding a wife’s entitlement to property at death.

The original trust did not easily include the estate question and now there is a question of what supersedes.  Further some language in the amendments is uncertain and practically incapable of interpretation.

He and his advisors tried to use a workable trust structure aimed at one problem to deal with another.  Using tools, no matter how good, for things they were not intended for is a losing proposition.

Specialized tools solve specialized problems only.  They solve those very well but they solve no other.  Many professional advisors prefer them to general tools that solve several problems and usually solve them neither efficiently nor reliably.  In the accounting business we told clients that their accounting system should process routine transactions routinely and non-routine transactions not at all.

When something outside the design limits of a tool comes along be sure the system rejects it.

Even specialized tools require maintenance.  Circumstances change, people’s purposes change.  Sometimes it is better to blow up an old tool and replace it with something to fit new circumstances.  Sometimes a new specialized tool will work in tandem with the old.

In Robin’s case a significant life insurance policy would likely have provided better cover than the method chosen.

Contact: don@moneyfyi.com  

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

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