Estate Planning and Retirement Planning

Estate planning and retirement planning are not separate things. If they are done properly, you will do both at the same time.

People often think of retirement planning as saving for their own financial needs, when they are no longer working. They also think of estate planning as something different, simply planning to distribute whatever is left over when they die.

While things can be done that way, it is better to think of the two things at once, so your plans complement each other.

If your estate planning attorney and financial advisor work together, then both your retirement and estate plans will work better for you.

You will have a comprehensive plan, as TD Ameritrade discusses in “Estate Planning: Build Up, Draw Down, Distribute Balance.”

A comprehensive plan helps determine how you are going to build up your account balances to have more than enough money for your retirement. It also makes sure your assets are held in the best possible way for your future estate.

The plan takes into consideration how you will draw your assets down during retirement to make sure you leave something for your heirs, if that is your decision.

Finally, the plan determines the best way for you to pass the remainder on to your heirs.

If you do things properly, then you will have enough for your needs and your heirs will have plenty after you pass away.

If you would like to get a comprehensive estate plan, then talk to an estate planning attorney about how to make sure your retirement plans complement your estate plan.

Reference: TD Ameritrade (July 19, 2017) “Estate Planning: Build Up, Draw Down, Distribute Balance.”

Bad Advice is Common

It is very easy to find bad estate planning advice on the Internet. Make sure that you are listening to experts.

If you start Googling for advice about what to do with your estate, you are likely to find some good sources of information. You are also likely to find a lot of bad information, even from people who put themselves out as trusted sources.

A recent column in the Mercury News, “Money Manners,” is an example of the problem.

A couple wrote in to ask the columnists’ advice about something their attorney suggested they do.

The attorney suggested that they convene a family meeting to discuss the terms of their estate plan. The couple was hesitant, because they knew not everyone would be happy with their plans and they did not want to deal with the fallout.

Unfortunately, the columnists then gave bad advice and suggested that the attorney only gave his advice, so he did not have to be the one to deliver the bad news to the family after the couple passed away.

The problem is that most estate planning attorneys do advise clients to talk to their families about their plans and what they should expect to receive, if not specifically, at least generally.

That advice is not given to make it easy on the attorney.

The reason for the advice is so people are made aware of the plans ahead of time and have a chance to express any discontent. Once informed, people are much less likely to pursue litigation over the estate.

When people learn the reasons behind the decisions they do not like, they have time to digest and accept them without costing the estate a small fortune in litigation costs.

The lawyer, in this case, would stand to earn more money if any of the family members did decide to sue.

Make sure the advice you receive is from experts. Listen to your attorney.

Reference: Mercury News (July 13, 2017) “Money Manners.”

Elder Law Estate Planning

Most of the time, estate planning is not just about a deceased person’s estate. It is also about elder law options.

A long time ago, only wealthy people had estate plans prepared and the early estate planning options evolved to reflect their needs. They needed wills and trusts to pass down their wealth to their heirs.

Eventually, more and more people started getting estate plans and the planning needs of the non-wealthy began to receive more consideration.

One of the things they needed to address was how to pay for nursing home care, when a non-wealthy person needed it.

Elder law grew out of that concern, as the Times Herald-Record pointed out in “Plenty of reasons to do elder law estate planning.”

As a result of that history, when people do estate planning today, they normally take care of many of their expected elder law needs.

Elder law estate planning attorneys help people figure out how to pay for possible nursing home care.

Elder law estate planning attorneys get their clients general durable power of attorneys and health care powers of attorney, so their clients are prepared if they are ever incapacitated.

Elder law estate planning attorneys write living wills for their clients, so their clients can decide whether or not they want to live in a coma with no chance of recovery.

Elder law estate planning attorneys also help their clients avoid the possibility of being the victims of elder financial abuse.

If you are interested in any of those elder law options, and you should be interested in all of them, then visit an elder law estate planning attorney.

Reference: Times Herald-Record (July 5, 2017) “Plenty of reasons to do elder law estate planning.

Beneficiary Planning

Who you make the beneficiaries of your retirement accounts, can have major implications for your estate.

When you first signed up for a retirement account, you might not have thought about all the details that were presented to you. This is especially true, if you were given retirement account forms along with a large stack of other papers by a human resources person when you started a new job.

One of the items you would have filled out on the forms was an account beneficiary. If you were to pass away, this beneficiary would then receive the assets in the account.

At the time, you might not have thought too deeply about who you designated as that beneficiary. However, it is important that you do think about it when you are making your estate plans, as Morningstar pointed out in “Do’s and Don’ts for Beneficiary Designations.”

There are actually many things to consider when naming beneficiaries on retirement accounts.

For example, different beneficiaries are treated differently for tax purposes and in how they can use the account.

Another thing to consider is your designated beneficiary, who will receive the account automatically and has no obligation to share with other people, even if you tell them they should. Therefore, if you have three children and name only one of them as a beneficiary, then you might not want to split the rest of your assets evenly between all three children.

The best thing to do is to talk to your estate planning attorney about your beneficiary
designations and let the attorney help you determine the best options for them, as part of your overall estate plan.

Reference: Morningstar (July 23, 2017) “Do’s and Don’ts for Beneficiary Designations.”

You Need a Power of Attorney

No matter who you are and what you do for a living, if you can read this, then you need a general durable power of attorney.

Think for a moment about everything you routinely do to make sure that all of your finances are in order. You pay many kinds of bills, including cable, phone, utilities, rent or mortgage and many more.

You probably pay these bills every month without much thought, other than a bit of grumbling.

You are used to it. You know how to pay them. You know if there is enough money in your accounts to cover the bills. You can also get that money out of the accounts and get it where it needs to go.

However, what if something were to suddenly happen to you?

You need to consider how difficult it would be for someone else to take care of all those bills, as WMUR 9 ABC points out in “Money Matters: Why you need a durable power of attorney.”
You need to think about what would happen, if you have an accident and could not pay your bills for a few months or even longer.

What would it be like to get out of the hospital and come home to a big stack of unpaid bills? How many of your services would be cut off? Would you be in any shape to pay all of the stacked up bills to quickly get everything back in order?

There is a way to avoid that scenario.

You need to go to an estate planning attorney and get a general durable power of attorney. This will allow someone that you trust to pay your bills, if you are physically or mentally unable to do so.

Reference: WMUR 9 ABC (July 6, 2017) “Money Matters: Why you need a durable power of attorney.”

An Executor Is Powerful, So Choose Wisely

This key position determines if the estate is handled well.

An executor needs to be chosen carefully, according to the Wills, Trusts & Estates Prof Blog in “Selecting an Executor for Your Estate.”

While there are others who will have a hand in determining how the estate administration goes, the executor with handle most of the decisions.

It is the executor who will have to make the biggest decisions and, unless someone complains, there will be little oversight from busy probate courts.

You need an executor who is trustworthy, understands financial matters, has the time to do the job properly, is willing to do the job, is patient and will seek the advice of experts, when necessary.

Finding someone who meets all of those qualifications, can be a challenging task for many people. However, it is necessary, if you want your estate to go smoothly.

Fortunately, if you do not have a friend or family member who fits the bill, there is someone you probably know who can help steer you in the right direction.

An estate planning attorney can guide you in creating an estate plan that fits your unique circumstances. They can also advise you on a good choice for an executor.

Reference: Wills, Trusts & Estates Prof Blog (July 13, 2017) “Selecting an Executor for Your Estate.”

Options Are Important When Inheriting an IRA

Americans hold a lot of wealth in IRAs. However, do you know the tax consequences?

Forbes recently discussed some possibilities for beneficiaries of IRAs, including the good deals and the bad deals in “What To Do If You Inherit an IRA.”

While inheriting an IRA account can be great news for some, it can also turn to bad news, if the beneficiaries make the wrong decisions about what to do with those accounts.

The single most important thing to keep in mind is that an inherited IRA can be the source of lifetime payments or it can be a source of a very large and immediate tax bill.

If you are smart, then you will want it to be the former, unless you absolutely need a large sum of money right away.

The general rule of thumb is that you should never take more out of an inherited IRA than you are absolutely required to take by law. It is recommended that you take no more than the required minimum distribution.

Exactly how much that is, will depend on several factors.

Before you make a decision on an inherited IRA, it would most likely be beneficial to consult an attorney.

Reference: Forbes (July 10, 2017) “What To Do If You Inherit an IRA.”

Parents of High School Graduates

If you are the parent of a recent high school graduate, then you should consider getting your child an estate plan.

When our children are young and growing up, we try to teach them how they should act later in life. Every parent knows that the lessons they give to their growing children, can have a tremendous impact on how their children will behave in the decades to come.

It is a heavy burden that most parents take on.

Parents must teach their children how to behave toward others.

Parents have to teach their children about how they should handle money. Parents also have to teach their children about the value of hard work.

It is tempting for some parents to breathe a sigh of relief and think their work is done when their child graduates from high school and becomes an adult. However, there is at least one last thing parents should do as Iris recently discussed in “Estate Planning for Your High School Graduate: That’s Right, Your Babies are Adults Now!”

Now that your high school graduate is an adult, he or she needs to have an estate plan.

There are many financial reasons for you to help your child get one now. The most significant is that it will teach your child the importance of estate planning and make them more likely to continue to do it as their lives advance.

However, there is a more immediate practical reason for estate planning.

Once your child is an adult, you are no longer automatically able to make decisions for him or her, should there be a medical emergency.

If your child has an accident while away at college and has a medical emergency, doctors do not have to ask your opinion about what kind of treatment your child should receive. To get around that, you need your child to have an estate plan that includes an advanced medical directive giving you that legal authority.

Reference: Iris (June 27, 2017) “Estate Planning for Your High School Graduate: That’s Right, Your Babies are Adults Now!”

Filing a Claim Against an Estate

When a person passes away owing debts, it is important that creditors follow the proper procedures to make their claims against the estate.

Most types of debt do not die with the debtor. If there are any assets in the estate, then the estate is responsible to pay those debts.

The executor of the estate is required to notify any known creditors that the debtor has passed away and then to pay the debt, if possible.

However, no creditor should ever rely on an executor doing so. The debt might not be known or the executor might not know what his responsibilities are.

Creditors who learn that a debtor has passed away, should take affirmative steps to file a claim against the estate, which must be done following proper procedures. Things can get even more complicated, if the deceased put all of his or her assets in a trust, leaving nothing in an estate.

Under such circumstances the creditor needs to file against the trust, as the NWI Times points out in “Filing claims against a trust.”

Filing a claim against a trust, can be even more complicated than filing against an estate, or maybe not.

It depends on the state. Every state has its own laws and procedures that need to be followed for a creditor to properly file a claim to receive the debt of a debtor who has passed away.

For this reason, it is extremely important for creditors to contact a local estate attorney to help them with the process. This is something that must be done without delay, since the statutes of limitations for these claims are often very short, again depending on the state.

Reference: NWI Times (July 2, 2017) “Filing claims against a trust.”

Yes, Estate Planning Is for You

No matter who you are, how much money you have, or any other factor, estate planning is something you should do.

Everyone who has ever worked in an estate planning attorney’s office, has experienced the following scenario at least once. It is likely they have experienced it dozens and even hundreds of times.

The phone rings and the person who works in the estate planning attorney’s office picks it up. The person on the other end of the line immediately launches into a very long story about their life situation. They talk about their family, their job, their bank accounts and perhaps what their retirement plans are.

All of this information the employee dutifully tries to jot down on a notepad. However, the reality is that the employee does not need to do that, because the employee knows the question that is eventually coming and the answer to that question.

The question is “Do I need to have an estate plan?”

The answer, as the Casper Star Tribune recently pointed out in “Estate planning is for everyone,” is “Yes.”

Indeed, the answer to that question is always “Yes.” It’s not just “Yes” because the estate planning attorney’s office is a business that needs people to get estate plans to stay open.

Everyone really does need an estate plan.

It does not matter how much money a person has. It does not matter whether a person has any other family members. It does not matter if the only thing the caller has is the proverbial dime to put in a pay phone to make the call. The answer is “Yes”, because everyone deserves to have a say in how anything they do have, will be distributed to others after they pass away.

The way to do that is by getting an estate plan
Reference: Casper Star Tribune (June 30, 2017) “Estate planning is for everyone.”