Estate Planning

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Common Estate Planning Pitfalls

Typical goals in creating an estate plan are to establish a legacy and create a straightforward guide for your heirs. Depending on how long ago you created your estate plan, it’s possible your wishes or priorities may have shifted. Your vision of your legacy and your directives may no longer be clear. That ambiguity can create additional stress and expenses for your loved ones and beneficiaries during an already difficult time. It’s wise to review your plan every three to five years. That way you can address and avoid common estate planning pitfalls in the transfer of your assets. In a recent article, Rande Spiegelman, vice president of financial planning at the Schwab Center for Financial Research, shared some potential obstacles.

Outdated Information

Review your accounts and beneficiary designations anytime there is a major change in your life, such as a birth, death or marriage in the family. Your heirs may not get the assets you intended when this information is incorrect. It may even override the wording of your will or trust in some cases.

Costly Probate

“A revocable living trust is one way to avoid the unwieldy and costly probate process, because your assets technically belong to the trust—even while you’re still alive,” Spiegelman noted. You should create what he calls a “pour-over will” after creating and funding the trust (by changing the title of your accounts and other assets into the name of the trust), he suggested. This states that assets not otherwise devised by your will should be transferred to the trust upon your death. Finally, be sure to name a successor trustee (in case you or another original trustee cannot fulfill the duties).

Misunderstandings

Dscussing your estate plan can be uncomfortable. Still, it’s wise to communicate as much as you can to your spouse, children or other heirs while you’re still living. Your openness about your intentions can help them manage their expectations and may reduce any confusion, conflicts or legal battles down the road.

By |September 25th, 2017|Estate Planning|

Two Small Financial Planning Steps

The New Year has begun and many resolutions have already been abandoned. When we decide to make changes, it’s easy to think big, look 10 steps ahead and become overwhelmed. Sometimes this causes us to give up and make no changes at all. Start small. Two small, yet often overlooked or neglected, financial planning steps everyone can and should make is to start saving and address estate planning.

Save Today

My biggest suggestion for the New Year is to put your savings on autopilot. Set up automatic savings from either your payroll or your checking account (401k contributions, straight to IRA, or emergency account).

Taking that first step is important. In 2015, the median household income was $55,775 or about $28 per hour, according to the U.S. Census Bureau. Just $5 a day is equivalent to about 11 minutes per day toward your personal savings. Investing 10 to 30 minutes of your work per day for yourself is a worthwhile investment. After a few months you’ll adjust to the smaller amount deposited in your checking accounts and hardly miss what you are saving.

Plan for Tomorrow

The next important step you should take is to address your estate planning. This is an uncomfortable subject for many, I know. However, after having recent family experiences with Alzheimer’s disease and cancer, and now caring for a parent with ALS, I have a great appreciation for the importance of estate planning.

An easy first step is to simply review the beneficiaries listed on your IRA, 401k and life insurance policies. You can do this today in just a few minutes (check your files or look online). Are the people listed still appropriate? If not, make a change. A year ago, I found one small IRA that still listed my sisters as beneficiaries instead of my wife and children.

Always list a primary beneficiary and a contingent beneficiary. If you don’t, then your state’s intestacy laws could supersede your wishes. Next, talk with your advisor and make plans to have your will, power of attorney and possibly trust documents created or updated. Take the time to create your estate plan this year, and communicate it to others. Your loved ones will appreciate your diligence, and it can greatly simplify an already difficult time in their lives.

By |January 23rd, 2017|Estate Planning, Financial Planning|

Having “The Talk” with Your Kids

generationsLife is full of awkward, yet necessary, conversations with our kids. We talk to our young ones about chores, drugs, dating, peer pressure, homework and more. Yet many of us avoid talking to our adult children about important topics like retirement preparedness, eldercare and estate planning.

Parents approaching retirement might be pleasantly surprised to know their kids expect to help out with finances, caregiving and estate execution, according to the latest Fidelity Family & Finance Study.  In fact, the research reveals adult children often have their parents’ backs. For example, although 93 percent of parents feel it would be unacceptable to become financially dependent on their children, only 30 percent of children feel the same.

In too many cases, however, children are not aware of their parents’ wishes. Although 92 percent of parents expect one of their children will assume the role of executor of the estate, when asked, 27 percent of the kids identified as filling this role didn’t know this. While 72 percent of parents expect one of their children will assume long-term caregiver responsibilities if need be, 40 percent of the kids identified as filling this role were unaware of it. And though 69 percent of parents expect one of their children will help manage their investments and retirement finances, 36 percent of the kids identified as filling this role didn’t know.

Having “The Talk” with your kids… about retirement preparedness, eldercare and estate planning.

Why aren’t these conversations taking place? The study suggests it may be a matter of timing. About one-third of those surveyed believe frank conversations should occur after retirement and when health and finances have become an issue. At that point, however, it may be too late. These conversations should begin taking place before retirement, and certainly well before any challenges arise.

Are you ready to have “the talk” with your children or parents? If you would like help initiating the conversation, talk with your financial planner for suggestions.

 

By |November 3rd, 2016|Estate Planning, Retirement|

Estate Planning and Your Digital Afterlife

McCann-WEBSerious concerns about our “digital afterlife” have emerged thanks to the rapid rise of social media. When the time comes to settle a deceased person’s estate, digital property is a relatively new and growing problem. This type of “asset” simply did not exist 20 years ago. Estate planning and your digital afterlife now go hand in hand.

Digital property is any digital record you own or control – including financial accounts, email, social media, blogs and digital files like music, movies, books and photos. Access to these is limited by the “terms of service” you agreed to when creating an account or buying a product online. Because of privacy laws, many services don’t allow you to pass account control to others upon your death — even if you include it in your will — creating significant legal and emotional challenges for your family.

On the plus side, some companies and services are understanding of the challenges and taking steps to help ease the problem.

In 2013, Google became one of the first major internet companies to put control of data after death directly into the hands of its users. You can now specify what you’d like to happen to your data after you pass away. You can choose to delete data after a certain time period, or to pass the data (from accounts such as Gmail, cloud storage, YouTube, etc.) to a designated person(s). It’s important to note, however, Google doesn’t allow you to pass control of accounts – just the data.

Last year, Facebook (FB) introduced a new feature that lets you choose a “legacy contact” – someone who can manage the memorialized account after your death. You may choose to give that person permission to download an archive of the photos, posts and profile information shared on FB. The legacy contact will not be able to log in as you or see your private messages. Alternatively, you can request that FB permanently delete your account after death.

Until more service providers follow FB’s and Google’s lead, there are steps you can take to protect digital assets.

  • Find out if your service providers have a way of naming a person who can access digital assets in the event of your death.
  • Back up important items from the cloud into some “tangible” form that can be given to your heir(s).
  • Explain to loved ones today what you would like to happen to your digital accounts upon death.
  • Create a comprehensive record of accounts/passwords. Store it in a safe place, and tell your personal representative how to find it.
  • If you don’t want anyone to have access to your online accounts after your death, do not provide them with access. Make account names/passwords difficult to guess, and inform service providers of your wish to have accounts deleted when you pass away.
By |September 26th, 2016|Current Affairs, Estate Planning|