According to Schwab’s 2017 Modern Wealth Survey, plenty of people are simply uncomfortable talking about their finances with their family and friends. However, if any of these people play an important role such as personal representative, executor, trustee or beneficiary in your own estate plan, it could be a big mistake to skip out on these important topics.
According to the study, nearly 60% of Americans would rather discuss politics with their friends and family than finances. Starting the conversation about money with your entire family could help to lay the ground work in the event that any of them play a role in your financial future.
Many children report wishing after their parents have passed away that they would have known more about their parents’ intended estate plans so that they could effectively honor the loved one’s wishes or understand the decision process that got their family member to that point.
But many people skip over the process of talking about financial matters, keeping beneficiaries and other key stakeholders in the dark. As retirement planning and estate planning become more immediate financial concerns as you get older, it could be beneficial to discuss your estate planning options and plans with your loved ones, family and friends. Talking with your estate planning attorney can help to get this conversation going and assist you with understanding some of the best ways to approach this topic.
Research shows that people who have average health and moderate levels of wealth will be better off deferring their Social Security benefits until age 70, when they can. However, approximately 90% of those who are eligible to get those benefits, claim them before the full benefit age of 67.
Of course there are many different reasons why you might choose to take Social Security early, including limited financial resources, considerations having to do with a spouse, poor health or even concern about the possibility of social security’s general survival. However, many people are not fully optimizing this decision and setting themselves up for success with their financial future in retirement. Academic research suggests that psychology could be behind why so many people are electing their Social Security benefits early.
This involves the human preference to take an immediate reward over a future one. Deciding what other aspects you could use or tap into as you get older could be an important component of deciding when it makes sense to take Social Security. Sitting down and calculating out the various resources to pull from in your older years could help you make an informed decision about what is truly best for you.
Many people are under the impression that if they do not have significant assets that meet the estate tax laws in their country that they do not have an estate. But no person is exempt from having a complicated, large or even messy estate. Even people who assume that they have very little still have a home, digital accounts, possessions, a car, bank accounts and important sentimental items. Unfortunately, with a busy day to day life, it can easily seem like estate planning is not a top priority but you still must make one to make things easier for your heirs.
Some of the most important things you can do to begin the estate
planning process are to review the people who you’ve already named to carry out
specific duties and to review the names of those people who will receive
benefits if something were to happen to you. Any key decisions you’ve made in
the past regarding your estate planning could even include listing
beneficiaries on retirement plan accounts or life insurance policies. These
have significant potential consequences for the future.
Your estate plan can also benefit from regular and routine maintenance
accomplished by sitting down with a knowledgeable estate planning lawyer to
discuss whether or not changes in your life should prompt you to update
materials and documents that are no longer in line with your family situation
or your goals.
In the digital stage, estate administration requires going one step further and ensuring that you have an appropriate strategy to share the passwords to your email and online accounts as well as your computer. Things can get complicated for your personal representative, estate executor or family members if you haven’t thought this process through.
Many people today receive financial statements electronically. Increasingly, plenty of people have dozens of online accounts as well and many of these have different passwords in order to decrease the chances of identity theft or being hacked. Having online access to investments and other financial details is a convenience of living in the modern age.
However, many of these sites now require complex and comprehensive passwords to access these online details. This can create unintended consequences and difficulties for an executor who must be able to gain access to each individual account in order to distribute those assets to trustees or heirs based on the language listed in the decedent’s will.
This even played out recently in a news story when the CEO of a Canadian cryptocurrency exchange passed away suddenly without having ever shared the password to the cold storage locker for that exchange. This meant that the nearly $200 million in crypto currency assets were completely inaccessible and investors might never be able to see those funds again. Sharing your passwords and documenting them in a safe and secure manner is an important component of the estate planning process.
Too many baby boomers have looked ahead to plan for their retirement but have neglected how long term care expenses could influence their ability to have a comfortable life after their working years.
A recent Banker’s Life study found that 74% of baby boomers felt confident in their ability to handle future health care costs, and yet the government estimates that the average cost of long-term care for a retiree in total is $138,000. Up to 80% of respondents in that same Banker’s Life study said they had no money set aside for the retirement health care needs.
For those who did have long term care savings earmarked, the median amount was just $40,000. While most people are familiar with the person who has needed long term care in retirement, and many know that they cannot count on family members or friends for around the clock care, this raises the question of whether or not baby boomers are overconfident.
The misplaced confidence that baby boomers have about their health care costs has led to many of them investing more in estate planning rather than long term care planning. Just one-third of survey respondents had less than a $1000 set aside for emergencies and half of the respondents had less than $5000 in their emergency fund.
The overwhelming confidence that baby boomers have in their ability to plan for the future could be misplaced and could expose them to serious risks in the future. Schedule a consultation with an estate planning and long term care planning lawyer to learn more about how strategies and tools can help to protect you.
The themes of making a last minute change to your will or changing a gift on your death bed might seem interesting or a great storyline for a movie, but these can cause many more families to end up in a state litigation which could potentially decimate the value of your overall estate you intended to pass on to heirs.
Incorporating plans at the last minute might be a necessity because your circumstances could have changed significantly in that period of time. However, if you fail to properly explain or carry out these estate planning changes, your loved ones could end up in court, battling over the validity of your will.
These problems won’t be ones that you’ll be around to deal with, but extended litigation could mean that your estate administrator ends up probating and dealing with many of challenges of these problems, while draining the value of your overall estate.
It’s a much better idea to schedule regular consultations with your estate planning attorney in which you can discuss potential issues and decide what is most appropriate for your individual situation. On an annual basis or as regular changes in your life occur, you can sit down with your estate planning lawyer and walk through what to anticipate and how to approach this process by making updates that will reduce the chances of estate planning litigation.
A major concern for parents of minor children is who will be appointed in the will to take care of the child if the parents pass away. If both of the parents play a relatively equal role in raising the child together, whether it is through the participation of both, or in the case of divorce or separation, individual time with each parent for the child. Your will is the best way to plan ahead for this potential situation.
The primary concern for both active parents is what happens if both of them were to pass away. In situations in which only one parent is active, it is equally important to ensure that an individual is named in the will so that the child is well cared for.
Major issues associated with who will raise the child and who is responsible for supervising property left to the child come up in the estate planning conversation and process you discuss with an attorney.
Make sure you think about the person who is the best choice to serve in this role, someone who is comfortable serving in the job, and whether or not there are any potential conflicts that could emerge in this or other situations.
Estate planning is often complicated and can heighten emotions and increase the potential for conflict if you have not chosen the person who is comfortable serving in this role because he or she does not understand all of the true implications of what is being asked of them.
If you recently moved to a new location from a different state, you need to make sure that your estate planning documents have been updated to show law controls in your new location.
An attorney can assist you with putting together an amendment to your living and revocable trust that applies to your new state’s law. Furthermore, your will might need to be updated to reflect applicable requirements in your new state. Since you already need to schedule a consultation with an experienced estate planning attorney to update your existing materials, consider putting together a power of attorney for financial matters and a power of attorney for medical matters that are in compliance with the new state’s law. Taking these simple steps is something that you shouldn’t avoid or put off after you’ve moved to a new state. Making these changes can avoid a lot of trouble, time or confusion in the future. Your documents should also be evaluated at this point in time to see whether or not they reflect your goals and desires. If you need to make any updates to executors or trustees because of your new location, consider speaking with your attorney about these options. Whoever is selected to serve in the role as an executor or a trustee should be familiar with the responsibilities required. Leaving behind an additional letter of instructions for anyone who will be serving in this role can give you some peace of mind that your individual instructions will be followed carefully. Schedule a time now to sit down with an estate planning lawyer to talk about necessary updates.
The cost of nursing home care can be catastrophic for someone who has saved ahead for their retirement. A long term care insurance policy could be one important component of saving ahead for the potential of long term care expenses. Being diagnosed with a physical or cognitive issue might mean that a family member or even you requires assistance from someone outside of the family.
Nobody wants to envision spending their golden years in a nursing home
and yet more than 50% of Americans between the ages of 57 and 61 will be inside
a nursing home at least once in their lifetime. That’s according to a 2017
study completed by the Rand Corporation. The cost of living in a nursing home,
however, could decimate your retirement savings. For example, the median cost
of a semi private room inside a nursing was over $7,400 per month in 2018. Long
term care expenses could add up quickly, particularly in the event of a sudden
emergency or severe problem with a loved one’s health. Scheduling a
consultation with an estate planning attorney can help open your eyes to the
various tools and strategies available to you in the process of planning for
your retirement and your future.
Do you have a plan to protect yourself from the costly expenses of long term care? Far too many people avoid making a goal of protecting their assets from being decimated by long term care.
Most people might assume that long term care expenses only arise in a nursing home situation but a recent study found that nearly one-quarter of private long term care insurance claims started in assisted living in 2018 and nearly 27% ended there, according to the American Association for Long Term Care Insurance.
This reflects some of the most common trends for private people using long term care insurance. Many people start care in a specific setting, such as in their home, and these claims can end to an exhaustion of policy benefits for recovery or death.
In 2018, just over 72% of all long term care insurance claims ended in assisted living due to death, whereas 13.5% of claims ended due to benefits exhaustion and another 14% ended due to recovery. Many people have misconceptions about long term care insurance and might not be clear about how to plan ahead by incorporating this into their estate and retirement plan. Schedule a time to sit down with your experienced estate planning attorney to learn more.
There are both practical and legal responsibilities linked to a trustee when the grantor passes away.
Locating and reviewing all of the important papers of the deceased. These items should be found as soon as possible.
Change the locks and take any steps necessary to close out and protect the house.
Notify insurance carriers that the house will remain vacant.
Verify that property insurance and auto-insurance policies are active such that various trust assets are insured against liability or loss.
Get the certified copies of the death certificate from the village clerk, town clerk, or funeral director.
Make a list of all the household goods that are included in the house to be distributed to beneficiaries. Photographing personal property can make this process easier.
Create an exhaustive list of all of the assets and establish a baseline value for these assets.
Pay any outstanding debts, bills or taxes.
If the trust will generate more than $600 in total income from the date of the person passing away until all of the assets inside the trust are distributed, the trustee needs to obtain a tax identification number for the trust.
File any claims for IRAs, life insurance and other assets that require individual forms.
Create an accounting of all expenses paid and all assets at the date of the death.
Keep beneficiaries notified about the status of the case.
If you are curious about how to serve in this role as a trustee, schedule a consultation with an experienced attorney.
New Jersey may soon join small list of states, including Vermont and Oregon, that enable employees to take their retirement plans with them if they change jobs. These are known as portable IRAs.
Those employees who work for businesses that have 25 or more employees would automatically be enrolled in a retirement plan managed by a professional unless they chose to opt out if a proposed bill is accepted. In New Jersey this bill is S-2891, which would effectively create the secure choice for retirement program.
This would enable those workers who did not have an employer sponsored retirement plan to be able to save on their own for retirement. According to AARP research, over 1.7 million people living in New Jersey have no vehicle to save for retirement at their jobs.
Planning ahead for retirement is also important because you must consider the possibility of the cost of long term care. Health care costs for the elderly can be significant particularly if the person develops a disabling or incapacitating condition. Schedule a consultation with an estate planning attorney to learn more about how your retirement plan and your estate plan can work together.
It may have been in the best of intentions that you decided to leave an IRA behind to a loved one but this can generate unintended tax problems for the beneficiary. Naming a trust as a beneficiary of your IRA instead can help to protect heirs who are disabled, vulnerable to creditors or who are minors.
Failing to appropriately structure your trust, however, could accelerate IRA liquidation, which could cause significant problems for taxable distribution. Trusts only need to have $12,750 in 2019 to be subject to the top tax rate of the 37%.
When it comes to naming a beneficiary for your retirement account, it’s well worth scheduling a consultation with an estate planning lawyer. By using a trust as your IRA beneficiary, this still enables you as the owner to have some element of control. However, not every IRA custodian will enable you to list the trust on your beneficiary form. Furthermore, this can be complicated by the tax code. There are specific conditions for trusts that are serving as beneficiaries for retirement accounts. Failure to follow through on these rules properly could lead to an accelerated distribution of the IRA assets and significant taxes.
This is why it is recommended that you partner directly with an experienced estate planning lawyer who is very familiar with establishing a trust as the beneficiary of an IRA to avoid consequences to protect your underlying goal of passing on assets to your loved ones.