"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:
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.
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?
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.”
Once you're divorced you should immediately create a new estate plan — a will or revocable living trust, a healthcare power of attorney, and a living will ("pull the plug") designee. Read on for more estate planning must-do’s regarding divorce.
A recent article in the The Huffington Post, titled “Divorce and Money,”says that you should always listen to your attorney about the applicable laws in your state regarding divorce and your estate. In addition, the article says that you should also look at the following issues.
The division of property in a divorce is typically not taxable to either party. However, if instead of dividing marital property, one spouse agrees to monthly maintenance (alimony), this will be taxed as ordinary income. And it’s deductible to the paying spouse. The original article also notes that the spouse receiving the maintenance checks must make a quarterly estimated federal and state tax payment, so you need to plan accordingly.
Frank Underwood is not a real person. He’s the crooked politician portrayed by Kevin Spacey in the Netflix series “House of Cards” who claws his way into the White House by manipulating the press and ruthlessly crushing anyone that might get in his way. But sadly, with one line, he delivered more honesty than I have seen from any president, senator or House representative, from either party, in my lifetime: “We’ve been crippled by Social Security. By Medicare. Medicaid. Welfare. And entitlements. And that is the root of the problem. Entitlements. Let me be clear: You are entitled to nothing.”
Frank Underwood, Kevin Spacey’s character on House of Cards, gives us the cold, hard truth about retirement. Social Security and Medicare are not “rights” in any legal sense. Congress decides on the payout, and Congress can change it—or eliminate it—at any time. You really are not “entitled” to anything and certainly nothing is guaranteed, according to a recent Forbes article titled “Life Lessons From House Of Cards: "You Are Entitled To Nothing".
You are entitled to nothing. It’s not fun to hear, but it’s important to remember when you’re planning your retirement. You should plan under the assumption that your benefits in retirement will be lower than currently promised. With that in mind, here are three specific recommendations from the article’s author on how to approach your planning:
The sad truth is that most of us — some 70% of adult Americans — have neglected to write a will. Some think their assets are just too puny to worry about, others worry that the costs of writing a “last will and testament” are too high. But wills aren’t just vehicles for the wealthy or the morbid. If you’ve got a family and a home — not to mention a savings account — you should definitely have one. Cost is no excuse.
A recent MarketWatch article, titled “Why wills aren’t just for the wealthy,” sheds light on this important life-planning topic.
Like many people in the U.S., you may not think about estate planning until you have kids. A will is critical when you have children, because people think about what would happen if both spouses die at the same time. Without a will, a probate court judge will be tasked with selecting the individual who will care for your minor children as a guardian. That could be just about anyone, including a person you would never ever pick to take care of your kids! Why not name someone yourself right now? You also should name an alternate guardian in the document in the event your first choice is unable to serve.
In the book The Charles Schwab Guide to Finances After 50, author Carrie Schwab-Pomerantz poses the following scenario: “I’m confused about how to divide my estate between my children, who have different needs and financial resources. Is it best to divide it into equal parts?”
This question is directed at people who have children at different levels of personal and financial success, according to a recent Millionaire Corner’s article titled “Dividing the Estate: Treat Your Children Well.”It suggests that the parent in this scenario may want to do more for the struggling child than for the successful one as far as designating heirs for their estate assets.
The original explains that it makes sense for parents to treat their children equally. While one may think about providing extra assistance to a child with fewer resources, or for a child with special needs, you need to do so cautiously. The article also reminds us that the status of the children can change over time, making a strong argument for equal distribution.
Houston Estate Planning and Elder Law Attorney Blog