Seniors using digital tablet

3 Deadly Sins of Retirement Planning

December 4, 2018

Retirement planning is one of life’s most important financial goals. Indeed, funding retirement is one of the primary reasons many people put money aside in the first place. Yet many of us put more effort into planning for our vacations than we do to prepare for a time when we may no longer earn an income. Whether you’ve put off planning for retirement altogether or failed to create a truly comprehensive plan, you’re putting yourself at risk for a future of poverty, penny pinching, and dependence. The stakes could hardly be higher. When preparing for your final years, it’s not enough to simply hope for the best. You should treat retirement planning as if your life depended on it—because it does. To this end, even well thought-out plans can contain fatal flaws you might not be aware of until it’s too late. Have you committed any of the following three deadly sins of retirement planning? 1. Not having an actual plan Even if you’ve been diligent about saving for retirement, without a detailed, goal-oriented plan, you’ll have no clear idea whether your savings strategies are working adequately or not. And such plans aren’t just about calculating a retirement savings number, funding your 401(k), and then setting things on auto-pilot. Once you know how much you’ll need for retirement, you have to plan for exactly how you’ll accumulate that money and monitor your success. The plan should include clear-cut methods for increasing income, reducing spending, maximizing tax savings, and managing investments when and where needed. What’s more, you should regularly review and update your asset allocation, investment performance, and savings goals to ensure you’re still on track to hit your target figure. With each new decade of your life (at least), you should adjust your savings strategies to match the specific needs of your new income level and age. The plan should also take into consideration unforeseen contingencies, such as downturns in the economy, health emergencies, layoffs, and inflation. Failing to plan, as they say, is planning to fail. 2. Not maximizing the use of tax-saving retirement accounts One way or another, the money you put aside for retirement is going to be taxed. However, by investing in tax-saving retirement accounts, you can significantly reduce the amount of taxes you’ll pay. Depending on your employment and financial situation, there are numerous different plans available. From traditional IRAs and 401(k)s to Roth IRAs and SEP Plans, you should consider using one or more of these investment vehicles to ensure you achieve the most tax savings possible. What’s more, many employers will match your contributions to these accounts, which is basically free money. If your employer offers matching funds, you should not only use these accounts, but contribute the maximum amount allowed—and do so as early as possible. Since figuring out which of these plans will offer the most tax savings can be tricky—and because tax laws are constantly changing—you should consult with us and a professional financial advisor to find the one(s) best suited for your particular situation. Paying taxes is unavoidable, but there’s no reason you should pay any more than […]

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When Something is NOT Better Than Nothing — Part 2

November 27, 2018

Last week, we shared the first part of this series discussing the hidden dangers of do-it-yourself estate planning. In part two, we cover one of the greatest risks posed by DIY documents. You might think you can save time and money by using do-it-yourself estate planning documents you find online. You’re probably anxious to check estate planning off your life’s to-do list, and these forms offer a seemingly quick and inexpensive way to handle this important task. You may even realize such generic plans aren’t as high quality as those drafted with an attorney’s help, but with your hectic schedule, a DIY will is just way more convenient. Besides, having “something” in place is better than having nothing, right? Unfortunately, this is one case in which SOMETHING is not better than nothing. Indeed, the false sense of security offered by DIY wills can lead you to believe you have things covered and no longer have to worry about estate planning. The reality, however, is that such generic forms could end up costing the loved ones you leave behind more money and heartache than if you’d never gotten around to doing anything at all. In this way, DIY wills and other legal documents are among the most dangerous choices you can make for the people you love. In part one, we discussed the many ways DIY plans can fail to keep your family out of court and out of conflict, and here we’ll explain how these generic documents can leave the people you love most of all—your children—at risk. The people you love most It’s probably distressing to think that by using a DIY will you could force your loved ones into court or conflict in the event of your incapacity or death. And if you’re like most parents, it’s probably downright unimaginable to contemplate your children’s care falling into the wrong hands. Yet that’s exactly what could happen if you rely on free or low-cost fill-in-the-blank wills found online, or even if you hire a lawyer who isn’t equipped or trained to plan for the needs of parents with minor children. Naming and legally documenting guardians entails a number of complexities that most people aren’t aware of. Even lawyers with decades of experience frequently make at least one of six common errors when naming long-term legal guardians. If wills drafted with the help of a professional are likely to leave your children at risk, the chances that you’ll get things right on your own are pretty much zero. What could go wrong? If your DIY will names legal guardians for your kids in the event of your death, that’s great. But does it include back-ups? And if you named a couple to serve, how is that handled? Do you still want one of them if the other is unavailable due to illness, injury, death, or divorce? And what happens if you become incapacitated and are unable to care for your children? You might assume the guardians named in the DIY will would automatically get custody, but your will isn’t even operative in the event of your incapacity. Or perhaps the […]

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When Something is NOT Better Than Nothing—Part 1

November 20, 2018

Go online, and you’ll find tons of websites offering do-it-yourself estate planning documents. Such forms are typically quite inexpensive. Simple wills, for example, are often priced under $50, and you can complete and print them out in a matter of minutes. In our uber-busy lives and DIY culture, it’s no surprise that this kind of thing might seem like a good deal. You know estate planning is important, and even though you may not be getting the highest quality plan, such documents can make you feel better for having checked this item off your life’s lengthy to-do list. But this is one case in which SOMETHING is not better than nothing, and here’s why: A false sense of security Creating a DIY will online can lead you to believe that you no longer have to worry about estate planning. You got it done, right? Except that you didn’t. In fact, you thought you “got it done” because you went online, printed a form, and had it notarized, but you didn’t bother to investigate what would actually happen with that document in place in the event of your incapacity or when you die. In the end, what seemed like a bargain could end up costing your family more money and heartache than if you’d never gotten around to doing anything at all. Creating a DIY will can lead you to believe that you no longer have to worry about estate planning. In the back of your mind, you might even promise that one day you’ll revisit and update your plan with something better, but chances are, having done “something” will lead you to put this off until it’s too late. By doing nothing, on the other hand, at least you won’t be lulled into a false sense of security, and estate planning will still be at the top of your life’s to-do list, as it should be until you handle it properly. Not just about filling out forms Unfortunately, because many people don’t understand that estate planning entails much more than just filling out legal documents, they end up making serious mistakes with DIY plans. Worst of all, these mistakes are only discovered when you become incapacitated or die, and it’s too late. The people left to deal with your mistakes are often the very ones you were trying to do right by. The primary purpose of wills and other estate planning tools is to keep your family out of court and out of conflict in the event of your death or incapacity. With the growing popularity of DIY wills, tens of thousands of families (and millions more to come) have learned the hard way that trying to handle estate planning alone can not only fail to fulfill this purpose, it can make the court cases and conflicts far worse and more expensive. The hidden dangers of DIY wills From the specific state you live in and the wording of the document to the required formalities for how it must be signed and witnessed, there are numerous potential dangers involved with DIY wills and other estate planning documents. Estate planning is […]

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To Live a Happier life, Start Thinking About Death Now

November 6, 2018

Want to know a proven way to live a more fulfilling life? All you have to do is fully accept the fact that one day you’re going to die. “I am of the nature to die. There is no way to escape death.” -Upajjhatthana Sutta

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Who Should Khloé Kardashian Choose as Legal Guardian For Her Child—One Instance Where ‘Keeping Up With the Kardashians’ Might Be A Good Idea

October 30, 2018

You might not be a big fan of their typical life choices, but the Kardashians recently demonstrated impressive wisdom in protecting their minor children using estate planning. During a recent episode of Keeping Up With The Kardashians, Khloé Kardashian was preparing to give birth to her first child, daughter True. Khloé was second-guessing her initial choice to name her sister Kourtney as the child’s legal guardian in the event something happened to her or the baby’s father, Tristan Thompson.

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Questions and Answers About Personal Liability Umbrella Insurance

October 23, 2018

It’s no secret that we live in a litigious society. And though our right to a fair trial is one of the hallmarks of American democracy, it has also led to a lawsuit-crazy culture. In this atmosphere, you’re at near-constant risk for costly lawsuits, many times even when you’ve done nothing wrong. This is especially true if you have substantial wealth, but even those with relatively few assets can find themselves in court.

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What Happens to Your Facebook Account When You Die?

October 16, 2018

If you’re active on social media, Facebook probably plays a prominent role in your life. And now the social media titan can even play a role in your afterlife. Today, estate planning encompasses not only your tangible assets—bank accounts and real estate—but your digital assets as well, such as cryptocurrency, websites, and social media accounts. Though social media may seem trivial compared to the rest of your personal property, a Facebook account functions as a virtual diary of your daily life, making it a key part of your legacy—and one you’ll likely want to protect.

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Don’t Transfer Ownership of Your House to Your Kids Before You Read This

October 9, 2018

With the cost of long-term care (LTC) skyrocketing, you may be concerned about your (or your elderly parents’) ability to pay for lengthy stays in assisted living and/or a nursing home. Such care can be massively expensive, with the potential to overwhelm even the well-off. Because neither traditional health insurance nor Medicare will pay for LTC, some people are looking to Medicaid to help cover this cost. To become eligible for Medicaid, however, you must first exhaust nearly every penny of your savings.

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Aretha Franklin Dies Without a Will and Leaves Her Family to Deal With Court and Conflict

October 2, 2018

Aretha Franklin, heralded as the “Queen of Soul,” died from pancreatic cancer at age 76 on August 16th at her home in Detroit. Like Prince, who died in 2016, Franklin was one of the greatest musicians of our time. Also like Prince, however, she died without a will or trust to pass on her multimillion-dollar estate. Franklin’s lack of estate planning was a huge mistake that will undoubtedly lead to lengthy court battles and major expenses for her family. What’s especially unfortunate is that all of this trouble could have been easily prevented. A common mistake Such lack of estate planning is common. A 2017 poll by the senior-care referral service, Caring.com, revealed that more than 60 percent of U.S. adults currently do not have a will or trust in place. The most common excuse given for not creating these documents was simply “not getting around to it.” Whether or not Franklin’s case involved similar procrastination is unclear, but what is clear is that her estimated $80-million estate will now have to go through the often lengthy court process known as probate, her assets will be made public, and there could be a big battle brewing for her family. Probate problems Because Franklin was unmarried and died without a will, Michigan law stipulates that her assets are to be equally divided among her four adult children, one of whom has special needs and will need financial support for the rest of his life. It’s likely that caregivers for her son will need to decide whether to accept the inheritance coming to him and lose all governmental support he may’ve been able to receive, or they may have to disclaim all of the inheritance from his mother’s estate. It’s also possible that probate proceedings could last for years due to the size of her estate. And all court proceedings will be public, including any disputes that arise along the way. Such contentious court disputes are common with famous musicians. In Prince’s case, his estate has been subject to numerous family disputes since he died two years ago, and that even led to the revocation of a multimillion-dollar music contract. The same thing could happen to Franklin’s estate, as high-profile performers often have complex assets, like music rights. Because these court battles will be public, not only will the contents of Franklin’s estate be available for everyone to see, but her family’s potential squabbles will likely be the subject of news headlines. All of these things could’ve been prevented with a well-drafted and counseled estate plan. Learn from Franklin’s mistakes Although Franklin’s situation is unfortunate, you can learn from her mistakes by beginning the estate planning process now. It would’ve been ideal if Franklin had a will, but even with a will, her estate would still be subject to probate and open to the public. To keep everything private and out of court altogether, Franklin could’ve created a will and a trust. And, within a trust, she could have created a Special Needs Trust for her child who has special needs, thereby giving him full access to governmental support, plus supplemental support […]

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Serious couple with son in a deep conversation with family lawyer.

How to Talk to a Loved One About Estate Planning

September 25, 2018

Estate planning rarely comes up in the course of regular conversation and if it does, it is usually involves what has happened to a celebrity’s fortune after his or her death.  The distance is safe, so the conversation can take place. But what if you need to discuss estate planning with a loved one – either your own estate plan or the one they have (or should have)?  Because no one likes to talk about the death of someone close to them, we rarely have this critical conversation.  But we all should. So how do you talk to a loved one about estate planning?  A this article provides some good tips: Pick the right time.  If it is too difficult to schedule a time for this conversation, have it when you’re doing something else, like taking a walk. Start with a story.  Use a story as an opener to the conversation, like the death of a celebrity and the havoc that failure to plan is wreaking on his or her estate or how you created your own estate plan. Talk separately.  It may be easier for parents with more than one child to have separate conversations with each child rather than talking to a group. Use a team approach.  If you are having difficulty getting your spouse to focus on estate planning issues, communicate your concerns as a couple.  Talk about how aging means making mature decisions and how you need to protect children with estate planning. Ask for feedback.  After discussing your estate plan with your children, ask them individually how they feel about what you have explained.  It may not change what you are doing, but it will let them feel they have a voice. Explain why.  Explain to your children the principles that guided your decision about how your estate is being divided.  This lessens the chance of conflict among siblings. If you’d like to learn more about estate planning strategies for your family, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session™, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

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