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Cincinnati.com’s May 27, 2016 post, “Getting started is the first step in estate planning,” points out that a definition for estate planning is “the creation, preservation, and maximization of assets for the future.” This now includes a lifetime component, known as “financial planning,” and a component that concerns the planning for the orderly preservation of assets after death and their distribution. You may have started to do some estate planning with the purchase of life insurance, which is creating an asset—a death benefit—and planning for its distribution through a beneficiary designation. It’s the same when you name a beneficiary for a qualified retirement plan. But how do you get started in the process of formal estate planning? The first step is to find a qualified estate planning lawyer and meet him or her for an initial interview. You can find a qualified estate planning attorney by asking friends and associates for a recommendation. This is the start of your estate planning team. He or she will consult with your other advisors to create the best possible options for achieving the planning goals that you’ve established with their assistance. Some folks’ estate planning consists of a simple will, but for others, it may include a will, trusts, new life insurance, powers of attorney, a living will, and other legal instruments. Once you have these documents executed, you need to review them periodically with your lawyer because circumstances, affections, and family dynamics change. Your estate planning documents will in many cases need to be changed and updated accordingly. Here are a few other reminders: Your planning should coordinate your insurance policies with the provisions of your will to be sure that your goals are achieved; Designate in your will specifics as to how you want your property distributed and who you want to serve as the guardian of your underage children. Without a will, the state decides these important issues; and finally, Resist the temptation to go online and write your own legal documents. Estate planning attorneys are trained to make certain that no mistakes are made, no laws are ignored, and no invalid provisions are included. Errors or confusion can make for messy, lengthy, and expensive contests of the will in court. Be proactive about your estate planning. To choose for yourself who takes care of your children or who gets your assets after you have passed, you must have a valid will. Reference: Cincinnati.com (May 27, 2016) “Getting started is the first step in estate planning” #Guardianship #EstatePlanningLawyer #LivingWill #PowerofAttorney #Wills #Trusts

Baby boomers are heading toward retirement, and some are already there, as the oldest members of the generation turn 70 this year. This milestone may have you thinking about this next stage of life and asking these questions: When will we stop working? Where will we live in retirement? How will we afford it? NBC’s “The Golden Girls” was groundbreaking in its portrayal of feminism, aging, and other important issues of the day. Its lessons about retirement are still relevant today, says this Kiplinger’s article, “5 Things ‘The Golden Girls‘ Can Teach Boomers About Retirement.” Let’s take a look. Lesson #1: Roommates can help pay the bills and keep you company. On “The Golden Girls,” Blanche (Rue McClanahan), Rose (Betty White), Sophia (Estelle Getty), and Dorothy (Bea Arthur) shared Blanche’s Miami home out of financial necessity. All four women were near, at or above retirement age. Just like many boomers, they didn’t save enough for retirement. Blanche sought some roommates to help offset expenses and ended up with Rose and Dorothy—and Dorothy’s mother, Sophia. These ladies showed future retirees that you can save money by splitting costs and doing things yourself, such as installing a toilet and renovating a garage. Boomers are now aware of the shared-housing model, as over a million households now have unrelated single people ages 46 to 64 living together. That’s about a third more than there were in 2000. Lesson #2: You might need a job after you retire. For boomers who don’t have a pension and didn’t save enough in a retirement fund, a post-retirement job could be necessary. “The Golden Girls” needed to work to make ends meet. For example, Dorothy was a substitute teacher, and Rose—who lost her pension—worked at a TV station. For Boomers in the ’80s who focused more on their kids and careers than retirement, this was a TV-inspired wakeup call. We need to think about saving money for our later years. Like the characters on “The Golden Girls,” staying on the job or starting a side business is a necessity. Lesson #3: You might end up divorced or widowed—and dating. Can you believe that the divorce rate among people 50 and older in the U.S. doubled between 1990 and 2010, which means more older singles. The characters on “The Golden Girls” were no strangers to relationships and love. Blanche, Rose, and Sophia were all widows, and Dorothy was divorced. Their late-life dating made for a lot of laughs and some tears. Remember that divorce and widowhood can have a significant effect on the size of your Social Security checks. For instance, you can claim potentially higher benefits based on your ex-spouse’s earnings as long as you don’t remarry—and you don’t need to tell your ex you’re doing it. Lesson #4: Your purpose doesn’t end with your career. Like in the “The Golden Girls,” retirement doesn’t have to mean checking out. This series never shied away from topics that could make viewers uncomfortable and eschewed stereotypes. It showed us why we should stay connected with the real world in our own Golden Years through, among other things, volunteer work and second careers. Lesson #5: Real life isn’t a sitcom. Life wasn’t always golden for “The Golden Girls.” They complained, fought, and insulted each other. However, they were great friends and resolved their issues. Reference: Kiplinger (April 29, 2016) “5 Things ‘The Golden Girls’ Can Teach Boomers About Retirement” #ElderLaw #PlanningfortheFuture #RetirementPlanning

According to a recent survey, 64% of Americans don’t have a will. Most of them don’t have one because they just haven’t gotten around to making one. Still, others say it’s a lack of urgency and a general unwillingness to talk about their own death. Forbes‘ article, titled “Snoop Dogg Admits He Doesn’t Have A Will: 7 Reasons He (And You) Should Reconsider,” says the rapper, reality TV actor, and musical artist Snoop Dogg is one of the 64%. Snoop says he doesn’t have a will and doesn’t care because he’ll be dead. His exact words were too “colorful” to print. Even so, he’s not completely oblivious to the consequences. Snoop wants to be reincarnated so that he could come back and watch his beneficiaries fight over his money! Snoop is currently married to Shante Taylor (though divorce rumors linger, even though they were previously married to one another, divorced and then remarried). He has three children with Shante and an alleged additional son with a former girlfriend. Plus, last year, he also became a grandfather. Snoop’s net worth is about $143 million, so it’s hard to imagine why he would refuse to draft a will, even if he’s going to be reincarnated. There are a number of important reasons, even if you’re not millionaire, why you should have a will as part of your estate plan. Here are a few to consider: Appoint a guardian for your children. If you pass without a will, the care of your children will be determined by the court rather than according to your own wishes. Appoint a trustee for your children. In some situations, depending on the ages and circumstances (such as a special needs child or significant inheritance), you might want an independent trustee—such as a bank or trust company—to serve as trustee or as co-trustee to make the best financial choices for your kids. Determine who receives your assets. Without a will, you don’t have a say as to who gets what. If you want to make sure those special items aren’t liquidated as part of your estate or don’t end up in the wrong hands, then you’ll want a will to make sure that doesn’t happen. Save money. Not drafting a will is the start of a potentially expensive and time-consuming situation for your beneficiaries. In addition to the cost and stress, this could create fighting and hard feelings among your family members. Give to charity. Without a will, your administrator can’t carry out your charitable intentions. Even smaller patterns of giving, such as to your church or your college, may be impacted if you don’t properly provide for those charitable organizations in your will. Lessen the tax burden for your heirs. Planning can help you anticipate and potentially mitigate estate and inheritance taxes. Even when your estate isn’t subject to estate and inheritance taxes, you can save on income taxes. While nobody likes to talk about dying or wills or what might happen after you’re not around—and even if you plan to be reincarnated—do everyone a favor and get a will for the sake of your family. Reference: Forbes (May 6, 2016) “Snoop Dogg Admits He Doesn’t Have A Will: 7 Reasons He (And You) Should Reconsider” #AssetProtection #Guardianship #EstatePlanningLawyer #ProbateAttorney #Probate #ProbateCourt #Inheritance #Wills #TaxPlanning #Trusts

Unexpected circumstances can happen, so don’t put off writing your will. This is a big job. Here are some of the important steps to take to prepare for the worst. Make certain your documents are in order. This should include life insurance policies, wills, property deeds, car titles, and bank account and investment details. Both spouses should know the location of these and make sure they are up to date. Don’t neglect a will. Yes, you know you need to have one. No, don’t put it off until next month or next year. Here’s a cautionary tale that highlights why it’s important to get a will written immediately. A 30-ish wife with two young boys saw her husband die unexpectedly. He didn’t have a will, and state law said that half of his assets should go to his wife and half to the kids. Okay, that sounds good. However, the kids were young, and the money went into a court-controlled account that she couldn’t get to without going to court for appointment as their guardian. As a result, she had to get permission from the court every time she wanted to use the funds. Organize your passwords. There will be all kinds of headaches if you can’t access a bank account because your spouse had a special password you don’t know. Spouses should make a list of passwords for all online accounts. This includes 401(k)s, investments, bank accounts, and social media. The list should be stored in a location known by both spouses and their adult children. Plan now and eliminate headaches later. It’s much less costly to work things out now rather than waiting until you’re grieving and emotionally drained. The better organized and prepared you are, the more concisely you can communicate your wishes and the faster your estate planning attorney can prepare your documents. Reference: US News (May 6, 2016) “Why You Should Prepare Now for the Death of a Spouse” #AssetProtection #EstatePlanningLawyer #IRAs #401k #ProbateCourt #Inheritance #Wills

Nerd Wallet, in “Avoid This Estate Planning Mistake,” reminds us that many assets have their own beneficiary designations, including retirement plans like 401(k)s, 403(b)s, pensions, IRAs, annuities and life insurance plans. Many folks don’t check them. They think their will or living trust controls their distribution. Classic estate planning mistake. Sometimes it’s a shock to discover that the deceased spouse didn’t update the beneficiary designations. The beneficiary is still the husband’s first wife—whom he had designated 25 years ago when he first established the account. As a result, his surviving spouse receives none of the funds associated with his IRA. The ex-wife gets the money. Under the law, assets like IRAs aren’t subject to probate, but instead are passed using a beneficiary designation. They aren’t controlled by a will. The only situations in which a will controls a non-probate asset are if there’s no designated beneficiary or if the beneficiary is the estate. The Supreme Court has ruled that your beneficiary designations on insurance policies, IRAs, and other retirement accounts will always trump the beneficiaries of your will if case they are different. So make certain that updating beneficiaries is a part of your financial planning checklist. Review the beneficiaries of your non-probate assets every few years; and make sure the beneficiaries of your will and living trust are still the individuals or entities that you want. These documents help heirs avoid probating your estate and allow you to establish beneficiaries for assets that don’t have specific beneficiary designations. You’ve worked hard to create a legacy for your family. Take these actions to avoid a simple but costly mistake that could damage that legacy. Reference: Nerd Wallet (May 6, 2016) “Avoid This Estate Planning Mistake” #AssetProtection #IRAs #ProbateAttorney #Probate #ProbateCourt #Inheritance #401ks #BeneficiaryDesignations #Pensions #Wills #403bs

A couple with four children may want to split their estate four ways when they pass away. However, what do they do if two of their children never grew up and would spend their legacy on extravagances and questionably needy friends? A recent New Jersey 101.5 article, “How to plan for spendthrift children,” recommends the use of a trust. Trusts are used in estate planning to restrict the use of assets by the beneficiaries and/or to protect the inherited assets from the creditors of the beneficiaries. A trust for children can be established in the parent’s will or other testamentary documents—like a revocable trust—which will be effective upon his or her death. Another way to do this is to create a trust in a separate trust document during the parent’s lifetime. This is then funded during his or her lifetime and/or by a direction in the will at death. The parent will have to designate a trustee to administer the trust. This can be an individual or a financial institution or a combination of both. This should be a trusted individual who will make distributions to the child in his or her best interest and in accordance with the terms of the trust. Trustees are typically entitled to be compensated, but that compensation can be waived or set in a separate agreement. For example, the trust can set forth the terms of distribution. This language can be very broad—such as “in my trustee’s discretion”—or more defined—such as “in my trustee’s discretion for the benefit of my child’s health, education and welfare after taking into consideration all other income and assets available to my child.” In addition, the distribution of funds can be directed to be made at specific ages (e.g., 21, 30, or 40) or for specific purposes like education or a first home. A spendthrift provision in the trust, which may not be necessary, shows the parent’s intention that the beneficiary was not to have the voluntary or involuntary right to assign rights or assets in the trust to third parties, especially his or her creditors. Whatever you decide to do, be sure you get it done through a qualified estate planning attorney. Reference: New Jersey 101.5 (May 5, 2016) “How to plan for spendthrift children” #Trustee #AssetProtection #EstatePlanningLawyer #SpendthriftProvision #Inheritance #Trusts #estateplanning

Long-term care planning is something most Americans fail to do for themselves or for their loved ones. This can put adult children in a position of feeling helpless and lost when the time comes to make arrangements for their parents’ care. Statistics show that almost 50% of all Americans don’t have a retirement savings account. Of those who do, the average amount in the account of a person between 50-55 years old is only $124,831. That hardly covers many years in a nursing home. Statistics show that 70% of people over 65 will need some type of long-term care. However, it’s difficult to do something about it because most people don’t want to think about their health deteriorating. Options for elderly people who need constant medical care include nursing homes and assisted living facilities. These can cost several thousand dollars a month. Another option is a home health aide, which costs about $20/hour. That can add up quickly if your loved one needs eight to twelve hours of care every day and there’s no insurance to cover it. In most instances, Medicare will not cover long-term health care costs. While it might cover up to five or six weeks of home health care after a surgery or hospitalization, further costs would have to go under Medicaid. That program has very low income/asset threshold qualifications. The other option is purchasing long-term care insurance. Because of the fact that this is a type of care 70% of people will use, the premiums are high. Life insurance is another way you can help cover the cost. Some insurance companies have a rider to their life insurance contracts for long-term care that allows individuals to use some of the death benefit to help pay for long-term care expenses. There still will be a benefit inside the life insurance contract that could be paid to a beneficiary. But “self-insuring” isn’t the best way to go since it’s risky, and it can end up costing more in the long run. Always a great option: talking to an elder law attorney to learn about protecting your loved ones and assets from the costs associated with long-term care. Reference: WIVB (May 4, 2016) “The cost of caring for aging parents: How to plan for long-term care” #PayingforaNursingHome #MedicaidPlanningLawyer #Medicaid #ElderLawAttorney #Medicare #MedicaidNursingHomePlanning #RetirementPlanning #LongTermCarePlanning

Kiplinger’s recent article, “Rolling over Retirement Savings to a Health Savings Account,” advises that you can make a tax-free rollover into an HSA (health savings account) from an IRA—but not from a 401(k), 457, or other retirement plan. But if you have a 401(k) from a former employer, you may be able to make the move by rolling it over into an IRA first and then making a tax-free direct transfer from the IRA into your HSA. At that point, you can use the money in the HSA tax-free for medical expenses in any year. Here’s the big point to keep in mind: you can make a tax-free rollover from an IRA to an HSA only once in your lifetime. And you must qualify to make new HSA contributions that year. This year you need to have a health insurance policy with a deductible of at least $1,300 for individual coverage or $2,600 for family coverage. The size of the rollover is restricted to the annual HSA contribution limit, minus any money you’ve already contributed for the year. For this year, you’re allowed to contribute up to $3,350 to an HSA if you have individual coverage or $6,750 for family coverage, plus an extra $1,000 if you’re 55 or older anytime during the year. If you have the extra cash, typically you’re better off using the new money for HSA contributions so that you can keep more money growing tax-deferred in your IRA and also take a tax deduction for new HSA contributions. Reference: Kiplinger’s (April 20, 2016) “Rolling over Retirement Savings to a Health Savings Account” #AssetProtection #EstatePlanningLawyer #IRA #401k #HealthSavingsAccount #TaxPlanning #HSA

While some decisions may be put off because they’re too personal, there are decisions that need to be made that are simple and straightforward. These are usually issues that concern getting the affairs of the deceased in order. It may seem daunting and overwhelming, but the right guidance and preparation can be a big help. Consult with an estate planning attorney to help you submit claims for benefits due as the surviving spouse and assess your spouse’s debts and assets. However, in order to do this, you need to collect the following documents: At least 10 original death certificates (from the funeral home or the Vital Statistics office where the death occurred); Estate planning documents, such as the will and trusts; Insurance policies; The most recent credit card and mortgage statements; Investment account statements; The past three years of tax returns; Marriage, birth, and (if applicable) divorce certificates of the spouse and children of the deceased; Checking and savings account statements; Any other loan documents; Car registrations; and Social Security information. With these documents and information at the ready, notify these institutions of the death to close out accounts and submit claims: The spouse’s employer; Social Security; Veterans Affairs (if applicable); S. Postal Service; The Department of Motor Vehicles; Insurance companies; Credit bureaus; Financial institutions; Service providers; and Any charities that automatically withdraw a donation from a checking account. Deal with the black-and-white matters first, which will encourage you to address more difficult decisions. Reference: Huffington Post (April 2, 2016) “The Business of Surviving a Spouse” #DeathofaSpouse #EstatePlanningLawyer

Jointly held property can be held either as joint tenants or as tenants in common. Joint tenancy has what is called the right of survivorship. This means that upon the death of one of the owners, the ownership of the asset – for example, the house that you and your spouse own – passes in equal shares to surviving owner. Tenants in common, by contrast, have their shares of an asset become part of their estate. This results in the asset being distributed after their death based on their will. Owning property jointly may be a bit unclear because joint ownership could mean either joint tenancy or tenancy in common. Most spouses own property as joint tenants. Their share goes directly to their surviving spouse on their death. However, in some scenarios, such as second marriage, tenancy in common may be a better choice so that the asset can be willed to the children of the deceased spouse. This situation can be complicated, so speak with an estate planning attorney. Remember that there are tax issues related to joint ownership. Just adding a spouse’s name to an account doesn’t make the account joint for tax purposes. Adding a spouse as a joint owner on most assets – like bank accounts, investment accounts or real estate – won’t generally create any immediate tax issues, but adding them to other assets – like a private corporation – might. Reference: MoneySense (May 10, 2016) “Joint tenancy vs. tenants in common” #JointTenancy #AssetProtection #EstatePlanningLawyer #TenantsinCommon #ProbateCourt #Inheritance

Once they have their estate planning in place, many baby boomers are creating a “Life After Me” document that lets them say goodbye to their family in a heartfelt letter that discusses the things that may have been too difficult to say in person. Make sure to add these types of pieces of information: A list of people to contact in the event of your death and the location of your contacts info; Burial arrangements, especially if prepaid, including cemetery deeds and detailed funeral arrangements; Proof of loans and debts owed; Receipts; Family history, including the location of your family tree (if you have one); Medical history; Keys or codes to deposit boxes and safes; The location of your personal identification, including birth certificate or proof of citizenship, driver’s license, passport, veteran’s identification; The physical location of the documents that your executor of your will and your loved ones will need, such as a completed authorization to release any medical information, divorce papers, and escrow mortgage accounts; Individual and group retirement accounts, including 401(k) accounts, pension documents, annuity contracts, life insurance policies, marriage license, property deeds, stock certificates, savings bonds, and brokerage information; Vehicle titles; Estate planning documents; and Usernames and websites for your online accounts. Keep a copy on your computer and label it “Open Upon My Death.” You could also have a video file for your loved ones where you can say your goodbye in a video. In addition, place a hard copy in a sealed envelope labeled “Open Upon My Death” with your name on the front, stashed in your bureau or in your desk at home. And remember to tell your loved one(s) that this “Life After Me” document exists and where to find it. Tell them to open it only upon your death. A “Life After Me” document can be a great testament to your family. It shows them how much you care, lets you have one final goodbye, and—most importantly—makes the aftermath of your death less stressful for those you love by ensuring your estate and related details are organized and easy to find. Reference: A Place for Mom (April 28, 2016) “How to Prepare a ‘Life After Me’ Document” #estateplanning #PlanningfortheFuture #Trusts #Wills

A recent article on gobankingrates.com, “15 Mistakes Even Smart People Make in Retirement,” spells out common mistakes people make in retirement and the ways to avoid them. Claiming Your Social Security Benefits Too Early. More than one-third of baby boomers go ahead and claim Social Security benefits early at age 62; however, doing this means a permanent reduction of as much as 25% of your benefit instead of waiting until your full retirement age. You Keep Working After Claiming Social Security. If you start receiving benefits at 62 and continue to work, you’ll lose $1 in benefits for every $2 earned above the annual limit of $15,720. At full retirement age, you’ll lose $1 in benefits for every $3 earned above the annual limit of $41,880 until the month you actually reach full retirement age, when the limit disappears. Carrying Debt into Retirement. This can create financial problems, as it leaves you with less money to cover unexpected expenses. Pay off all debt before you retire. If you can’t, settle on a plan to have it paid off by a certain date in retirement. Being Too Conservative With Investments. Many retirees avoid stocks and are trading off one risk for another, which is failing to have enough growth potential in their portfolio to outpace inflation. Even though stocks can be volatile over short periods, they typically do better than conservative investments over long periods. Retirees should remember that retirement can be 30+ years. They need their portfolio to support them throughout the whole time, so some allocation to stocks is wise. Being Too Aggressive With Investments. Other retirees are too aggressive with their portfolios, but these investors aren’t being rewarded either. Their portfolios have a greater propensity for loss. Don’t stretch for returns. Talk with an advisor to be certain that you’re properly diversified with investments that will help you reach your goals. Overinvesting in a Single Stock or Asset Class. Some folks have a big chunk of their portfolio in their former employer’s stock, which creates risk. A big amount of your retirement income could be riding on the health of that one stock. If it tanks, so does your entire portfolio. Instead, allocate a well-diversified portfolio with exposure to many companies and asset classes. Not Knowing How Much to Withdraw. More than 75% of Americans over 40 don’t know how much of their retirement savings they can safely spend each year without outliving their assets, and about one-third of those surveyed think they can spend 10% a year. However, based on past investment returns, they’d likely run out of money in 11 years or less at that rate. Typically you can withdraw 4% a year from savings to decrease the odds you’ll outlive your money. Your withdrawal rate should be based on expenses and adjusted for the performance of your investments each year. Not Taking Required Minimum Distributions. Some retirees do just the opposite: rather than withdrawing too much, they don’t take out enough. If you have a qualified retirement plan, like a 401k or traditional IRA, you usually must start taking withdrawals by age 70½. However, you can delay your first required minimum distribution (RMD) until April 1st of the following year after turning 70½. If you don’t take an RMD, it’s a hefty 50% excise tax on the amount you were supposed to withdraw. Ignoring Annuities. Annuities get no attention due to their fees and the unscrupulous sales tactics used by some salespeople. But a basic immediate annuity can be a good addition to a retirement portfolio, as it can provide a guaranteed stream of income. Look at taking a lump sum from your retirement account and determine how much money you will need each year in retirement for fixed expenses, and then calculate how much income you will get from Social Security and pensions. If that doesn’t take care of your expenses, think about an annuity to bridge the gap. Failing to Update Your Investment Strategy. The investing strategy that you created before retirement might need adjusting once you enter retirement. Once you retire, review your strategy every few years to make sure your savings reflect your needs, and modify it for market conditions. Overspending in Early Years of Retirement. Don’t try to tackle all of the large expenses that should’ve been done during working years. Making withdrawals from retirement savings to pay for large home repairs like a new driveway, a new addition or a new roof should be finished prior to retirement. Otherwise, these expenses can make a permanent dent in your portfolio. Not Thinking of Home Equity as a Source of Income. A reverse mortgage, which lets you tap your home’s equity, or a home equity line of credit can be useful in retirement as a way to cover expenses when the value of your retirement portfolio drops because of a market downturn. You can draw on your home’s equity rather than cashing in losing stocks, allowing your portfolio time to recover. Neglecting to Plan for Long-Term Care. This can be one of the single biggest threats to your nest egg. At least 70% of adults over 65 will need some form of long-term care, and Medicare and most health insurance plans don’t cover long-term care. Unless you have long-term care insurance, you’ll have to cover these costs on your own or use Medicaid if you have extremely limited resources. Having No Estate Planning Documents. Most Americans don’t have a will or a living will or advance directive that states their healthcare wishes if they are unable to make them on their own. These are essential and need to be in place before something happens. Without them, most states will dictate where your funds will go. Work with an estate planning attorney to create these documents and help your loved ones overcome common legal issues that can arise after you pass or in the event you’re unable to make decisions for yourself. Underestimating How Long You Will Live. The average life expectancy for a man is 76 years and 81 years for a woman; however, many folks live well into their 90s or even past 100. Make sure that your retirement savings will last: plan on living longer than you expect and withdraw from your savings at a rate that improves your prospects for having enough money for many years. Reference: gobankingrates.com (April 24, 2016) “15 Mistakes Even Smart People Make in Retirement” #HealthCareDirective #AssetProtection #IRA #401k #Medicaid #LivingWill #Wills #Annuity #RetirementPlanning #estateplanning #LongTermCarePlanning