"The costliest errors are ones we make ourselves, often without realizing how much damage we're doing."
"Estate planning is intertwined with the financial plan," a newsmax.com article explained, and it’s no secret that many individuals fail to prepare for retirement. When doing an estate plan, the article offers some sound advice:
"If you are looking at Baby Boomers, they are looking at what their cash flow will be in retirement," says Carol Kroch, managing director, wealth and philanthropic planning at Wilmington Trust in Wilmington, Del. "Can they do the things they want to do? Can they retire? Can they keep the house? They are not focused on death."
Failure to consider wills and estate planning is a frequent issue, and not just for Houston Boomers. Seniors usually think that it’s something they can put off and deal with later.
USA Today recently published an article, titled “Big retirement mistake: Boomers with no estate plan,”that offers several tips for people who might be lagging behind in their retirement savings. The article emphasizes that there are three very important things to think about when you start your estate planning (this week!):
Here are a few of the most common mistakes we’ve seen seniors make in regard to their retirement planning.
Sometimes knowing what NOT to do is just as important as knowing what to do. So it is with retirement planning.
Physician’s Money Digest lists some of the most common mistakes that the authors have seen seniors make in a recent article titled “Top Mistakes Seniors Make”:
When Detroit businessman Dick E. Morand died in 1977, he ensured that his estate would continue giving for decades after his death via a charitable remainder trust.
Morand died at the age of 87. He was founder and owner of D.E. Machinery Company and was vice president of Addy-Morand Machinery Company. His wife, Helen, died in 1976 and the couple had no children. Now, five Metro Detroit nonprofits are benefiting from Morand’s trust.
Morand’s trust is really the gift that keeps on giving.
Empire is based on fictitious music company called Empire Enterprises. Lead character Lucious Lyon (played by actor Terrence Howard) is racing to name a successor for his company after learning he has months to live due to an ALS diagnosis. His sons Jamal, Hakeem, and Andre duke it out to see who will become the new head of the company. Meanwhile, Lucious’s ex-wife Cookie (played by actress Taraji P. Henson) fights to keep the brothers from destroying their father’s legacy.
What can we learn from this show? Here are a few financial lessons, as reported in a recent article by The Cheat Sheet titled “Top 4 Financial Lessons to Take from Fox’s ‘Empire’.”
Always take the money. When Jamal rebuffs Lucious’s attempt to offer him money for living expenses, Lucious says: “You’re disobeying the very first rule of music, son. Always take the money.” For those of us not in the record biz, we should take advantage of our employer’s retirement plan match program. The article says that only about 77% of employees contribute enough to receive a match, according to a recent survey. Contribute up to the amount required by your employer in order to receive the match. Once fully vested, all of the matching funds are yours. Always take your money.
Now is the time for small business owners to evaluate their year-end retirement planning while building a retirement budget line item for next year.
A recent article in The (Great Falls MT) Prairie Star, titled “Review estate, tax and retirement planning issues now,” argues that a farm or ranch operation should include retirement savings for the owner and/or employees as a part of annual budgeting. These retirement funds provide tax savings now and may provide liquidity and income when the decisions for retirement and/or farm transition take place.
Small businesses, including self-employed taxpayers, have two choices after the end of the year to establish and contribute to a retirement plan. These two choices are the Simplified Employee Pension (SEP) plan and the individual retirement arrangement (IRA). A taxpayer has until the due date of the business federal tax return (including extensions) to set up and fund a SEP, but IRAs can’t be funded after the due date of the taxpayer’s personal federal income tax return.
Sometimes, a loved one’s estate may include debt. Do you know what to do should if you are the spouse or heir that inherits debt?
If you aren’t sure what to do with a loved one’s debts after they pass – or what to tell others to do with your own debts – you may want to read a recent article in The Huffington Post titled “Debt and the Deceased: How Should Spouses and Heirs Proceed?”
Be honest about your financial situation. It’s not that easy for some family members to discuss debt issues, especially older Americans who hoped for better at the end of their lives. Even so, parents and their adult children or spouses should thoroughly talk about any outstanding debts that could affect the borrower's estate.
Individual investor Ronald Read has made the news because his personal investing strategy relied heavily on paper stock certificates. Today, investment advisors encourage individual investors to convert stock certificates to electronic form and consolidate stocks with a professionals so that heirs will have an accurate record of ownership.
In addition to his paper stock certificates, Ronald Read had stock positions held directly at transfer agents (the official record-keepers for share ownership), as well as in a Wells Fargo brokerage account.
Is this a good idea?
Family caregivers face many details every day and estate planning may not be a top priority amidst the day-to-day caregiving tasks.
However, there are many things caregiving expert Amy Goyer wished she would have asked before her mom and sister passed away.She says that it’s harder for her to feel that she totally lived up to her responsibilities as executor of their estates.
Her recent AARP article, titled “5 Questions I Wish I Had Asked Before They Died,”explains that she is going to ask her other sisters and other loved ones about this type of information now—long before she hopes she’ll ever need it. She has in place the proper advance directives, estate and financial planning, but she says that she’ll also be more thorough with the finer details. To that end, the author recommends asking these questions:
Legendary Coach Dean Smith's estate is making news and not for vast wealth. The North Carolina basketball coach left $200 each to almost 200 players via his revocable trust. Typically, trusts are a private matter but Coach Smith's legion of admiring basketball players shared the news via social media.
Revocable trusts are a very popular estate planning tool used by many to keep the details of an individual’s estate private. Wills, by contrast, are public documents. Coach Smith may not have intended for his gifts to be public knowledge, but his generosity is clearly treasured by his players.
Read the full story in a Bloomberg.com article, titled “Dean Smith's Generosity Got Lots of Press. His Estate Plan Deserves Some Too.”
Houston Estate Planning and Elder Law Attorney Blog