Estate Planning Checklist

Many people assume that estate planning is only for the wealthy, inadvertently causing complications for families after their death. But estate planning isn’t just about money or family heirlooms; there is far more at stake, including the welfare of your loved ones. Here are the most important steps you should take:

Prepare a Last Will

The first and most imperative step is to have a last will and testament prepared, specifying the following:
  1. Your heirs
  2. The executor who will implement your instructions
  3. The designated guardian who will act as caregiver of your minor children
  4. The guardian who will manage assets you leave to minor children

Name Your Durable Power of Attorney

A durable power of attorney is the person you choose to oversee your finances should you become temporarily or permanently incapacitated; he or she will manage your bills, bank deposits, medical benefits, and insurance when you are unable to do so.

Establish a Living Will/Healthcare Directive

There is an unfortunate chance of becoming temporarily or permanently unable to make your own medical decisions. A living will defines your medical preferences such as whether you wish to remain on life support. You should also designate a healthcare proxy, who advocates on your behalf to ensure your medical instructions are carried out.

Choose Your Beneficiaries

Be sure to set up or revise the beneficiaries on your savings and checking accounts, life insurance policies, retirement plans, and even stocks, bonds, and brokerage accounts.  Understand that because a named beneficiary on an account will override your will, people can unknowingly disinherit a loved one.

Familiarize Yourself with Estate Tax Laws

Estate taxes levied against your total wealth—which occurs prior to any distributions—could dramatically impact what your loved ones or chosen charities receive. Careful review of your assets along with strategic planning can protect your legacy.

Consider Life Insurance

If you’re married, have minor children, or even a disabled adult child, life insurance is a great way to assure your loved ones will continue to receive financial support in the event of your death. Properly structured, beneficiaries can receive the life insurance proceeds with no income- or estate-tax ramifications.

Think About Funeral and Final Arrangements

Do you plan on donating organs? What type of funeral service do you envision? Why burden family with such difficult decisions when you can plan ahead with a written document specifying instructions for the disposition of your body and funeral service preferences?

Protect Your Business

Owning a business can significantly complicate your estate, as any accrued assets won’t necessarily transfer to spouses or beneficiaries without proper directives. Likewise, if you share a business, make sure you have an arranged buyout agreement, which among several other scenarios, plans for the event of your death.

Set Up a Trust

The larger the value of your estate, the more you should consider setting up a trust. Similar to a last will, a trust allows you to designate financial beneficiaries and even a guardian for minor children, with three important advantages over wills:
  1. Assets retained through a trust are not subject to probate, therefore allowing for faster distributions to loved ones or cherished organizations
  2. Unlike wills, trusts are not considered public documents, providing the added benefit of privacy
  3. You can place special conditions on your legacy, such as when it should be dispersed and how it can be spent, which may be more beneficial for young-adult recipients or irresponsible heirs

Store Your Documents

Make sure your power of attorney or executor has quick and convenient access to your important paperwork: wills and trusts, life insurance policies, bank and retirement account statements, certificates of other assets, mortgage paperwork and real estate deeds, and debts. The last thing you want is for your family to be unable to locate an important document. Our Peace of Mind Checklist categorizes important contacts and life documents so that you can list important professional contacts, the life documents that you do have, and where they are kept.  The Peace of Mind Checklist is available for print on our website’s Knowledge Center.

 

Copyright © 2019 This article is published in its original form from its original publication with Investment Answers and Integrated Concepts, a separate, non-affiliated business entity. The original newsletter publication, Investment Answers Financial Success Fall 2019, is intended to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete, evolving, or personalized analysis of the topics, and should not be construed as personalized investment advice. Qualified financial professionals should be consulted before implementing a personalized financial plan. Please reference the original publication for additional disclaimers. 

 

Welcome to the Investment Answers Podcast

We know that navigating the world of investing and finances can get tricky. The uncertainty is intimidating, and with your career, family and a laundry list of other responsibilities to take care of, it’s tough to find the time—and the motivation—to go from uncertainty to understanding. It’s why we stand guard for our clients as trusted advisors, giving them the level of service we would want for our families. And we want to take that service a step further.

We recommend sitting down with us to help you develop your financial plans and steer you in the right direction. But what if you just want to brush up on your financial knowledge while you’re on the go?

Welcome to the Investment Answers Podcast.

Hosted by founder and CEO of Investment Answers, Travis Terlau, Certified Financial Planner™ and COO of Investment Answers Kelly Terlau, our podcast is designed to bring quality financial guidance to you, wherever you are and whenever you have the time.

Whether you’re just getting started on building the foundation of your financial wellness or are looking for more ways to continue on the path to your ideal future, our episodes cover a wide range of topics that are sure to strengthen your financial education and help you make informed decisions regarding your wealth.

In our first episode, Dirty Little Secret, we dive deep into the importance of developing your children’s financial education early on and the ways to help them be proactive about their own wealth and future.

To get to the heart of all of this and more, check out the podcast in the Knowledge Center at investmentanswers.net or on Apple Podcast, Google Play and Spotify and build your knowledge today.

Investment Answers Fall 2019 News

2019 had been a year of fantastic internal systems and infrastructure upgrades for Investment Answers. We have been working diligently behind the scenes to continually update and evolve as technologies and resources evolve.  A big shout out to our wonderful team members and vendors that we work with for IT, phone systems, web, and our content research and production teams.  We couldn’t do all that we do for you without their support and expertise!

Keep an eye out for changes to our website, coming soon!  We have a slew of new YouTube videos that are in post-production.  We will begin releasing them -and- we will begin promoting our podcast, The Investment Answers Podcast, once the updated website is released.  These are wonderful resources to learn from and we encourage you to SHARE them with those you know who could be of benefit.

Have you attended any of our public or private events? We recently updated many of our popular workshop presentations.  To welcome in the new decade, in 2020 we will be releasing new event topics and venues for you, your loved ones, family and friends to enjoy. We can’t wait to see you there.  If you haven’t met Kristen Wilkins yet, welcome her to the team. She leads our Event Desk and has been with the team since June.

Is it time to update your PEACE of MIND CHECKLIST?  We just published the 2020 revised version of this popular and useful life document with more room for notes and important information. You can find this and other fantastic resources on our Knowledge Center.

Financial Thoughts Summer 2019

Approximately 47% of men who are retirement age or older will need long-term care in the future, compared to 58% of women (Source: U.S. Department of Health and Human Services, 2018). In 1960, 10% of the U.S. population was over age 65. By 2040, 20% of the population will be over age 65 (Source: Time, 2018). In 2017, the average annual cost of a nursing home stay was $82,000 (Source: Kaiser Family Foundation, 2018). Approximately 40 million individuals are caring for older relatives. The typical family caregiver is a 49-year-old female (Source: Journal of Financial Planning, January 2018). The average life expectancy in 1930 when Social Security was designed was 58 years for men and 62 years for women. Today, on average, a man turning 65 can expect to live to 84.3 years, while a woman can expect to live to 86.6 years (Source: Social Security Administration, 2017). About 59% of the Social Security benefits of a 66-year-old couple retiring in 2016 will be required to cover retirement healthcare costs (Source: Wealthmanagement.com, November 2017).

 

Copyright © 2019 This article is published in its original form from its original publication with Investment Answers and Integrated Concepts, a separate, non-affiliated business entity. The original newsletter publication, Investment Answers Financial Success Summer 2019, is intended to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete, evolving, or personalized analysis of the topics, and should not be construed as personalized investment advice. Qualified financial professionals should be consulted before implementing a personalized financial plan. Please reference the original publication for additional disclaimers. 

 

What Kind of Retirement Do You Want?

Retirement is no longer viewed as a time to slow down, but is now considered a new beginning in life.  That means your current living expenses may have very little to do with your retirement expenses.  You need to give serious thought to the type of retirement you want—visualize what retirement will be like. To help you estimate retirement expenses, consider these questions:
  • When do you want to retire?  Will you realistically have the resources to retire at that age?
  • Do you plan to stay in your current home, trade down to a smaller one, or move to a different city?  If you plan to move, is the cost of living there more or less expensive than your present city?
  • Will your mortgage be paid off by retirement?  What about other debts?
  • Will you continue to work after retirement?  If so, will you work part- or full-time?  Where will you work and how much can you expect to earn?
  • Do you have any hobbies or interests that can be turned into paying jobs?  Are you planning to start a business after retirement?
  • How will you spend your free time?  What hobbies will you pursue?  How much and where will you travel?  How much will all these activities cost?
  • How will you pay for medical costs?  Will your employer provide health insurance or will you need to purchase insurance to supplement Medicare coverage?
  • Do you have any medical conditions that are likely to impact your quality of life in retirement?  What would you do if you became physically disabled?  Would your spouse take care of you, would you move in with your children, or would you go to a nursing home?  How will you provide for long-term-care costs?
  • How much of your income will be provided by personal investments including 401(k) investments?  Are you confident you can invest so those investments will last your entire retirement?
  • What would happen financially if your spouse dies?  If you die, would your spouse be able to support himself/herself financially?
Answering these questions should give you a clearer picture of retirement.  We’re here to help you transfer your goals and dreams into an actualized retirement plan.

 

Copyright © 2019 This article is published in its original form or adapted from its original publication with Investment Answers and Integrated Concepts, a separate, non-affiliated business entity. The original newsletter publication, Investment Answers Financial Success Summer 2019, is intended to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete, evolving, or personalized analysis of the topics, and should not be construed as personalized investment advice. Qualified financial professionals should be consulted before implementing a personalized financial plan. Please reference the original publication for additional disclaimers. 

 

Reviewing Legal Documents

Remember—there are very few things you can change after you’re dead, and your estate planning documents are not one of them. If you have assets, liabilities, or loved ones, and you don’t have estate planning documents, get started now. Periodically review your existing major legal documents—after all, life changes, and your life documents should reflect those changes.

Estate-Planning Documents

Absolute bare minimum: Prepare a will and durable power of attorney for assets, so that state laws won’t dictate how your estate is distributed.  For those entering a subsequent marriage or with children, thoroughly review the entirety of your estate-planning documents to help ensure they accurately reflect your wishes.

Asset Ownership

Review how assets are titled for ownership to help ensure they are consistent with your estate-planning goals.

Assets with Beneficiaries

These assets would include life insurance policies, retirement plans, IRAs and annuities.  Predetermined beneficiary designations take precedence over other estate planning documents.

Business Arrangements

Review any agreements dealing with what happens if you die, are injured, or sell your interest.

 

Copyright © 2019 This article is published in its original form from its original publication with Investment Answers and Integrated Concepts, a separate, non-affiliated business entity. The original newsletter publication, Investment Answers Financial Success Summer 2019, is intended to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete, evolving, or personalized analysis of the topics, and should not be construed as personalized investment advice. Qualified financial professionals should be consulted before implementing a personalized financial plan. Please reference the original publication for additional disclaimers. 

 

Get These Decisions Right

The sheer number of financial decisions required to manage our finances can seem overwhelming.  But often we spend an inordinate amount of time on small stuff — getting the bills paid on time, reconciling bank accounts, and calling to have a late charge waived.  While those things need to get done, how do we judge whether we’re headed on the right course?  There are six basic financial decisions that can determine the course of your financial life:

1. How You Earn a Living

We all want to enjoy our work. But why not choose a job that will pay more than another?  Your income is going to drive all your other decisions, so investigate your options:
  • Are you sure you’re being paid a competitive wage with competitive benefits?  Pay attention to what is going on in your field.
  • Do you have an outside interest or hobby that can be turned into a paying job?  This could be a good way to supplement your current salary.
  • Can you get some additional training to help secure a promotion or qualify for another job?

2. How You Spend Your Income

The amount of money left over for saving is a direct result of your lifestyle choices, so learn to live within your means. To control spending, consider these tips:
  • Analyze your spending for a month.  In which categories do you spend more than you expected?  Give serious thought to your purchasing patterns, trying to find ways to reduce spending.
  • One of the most significant spending decisions will be your home.  Purchasing a smaller home will reduce your mortgage payment as well as other associated costs.
  • Prepare a budget to guide your spending.  Few people enjoy setting or sticking to a budget, but inefficient and wasted expenditures can be major impediments to accomplishing your financial goals.

3. How Much You Save

Make a goal to save a minimum of 10% of your gross income. But don’t just rely on that rule of thumb.  Calculate how much you’ll need to meet your financial goals and how much you should be saving on an annual basis.

4. How You Invest

The ultimate size of your portfolio is a function of two factors — how much you save and how much you earn on those savings. Even small differences in returns can significantly impact your investment portfolio.  Typically, investments with potentially higher rates of return have more volatility than those with lower rates of return.  Your portfolio should contain a diversified mix of investment categories based on your return expectations, risk tolerance, and time horizon for investing.

5. How You Manage Debt

Before you take on debt, consider the effect it will have on your long-term goals. To keep your debt in check, consider these tips:
  • Mortgage debt is acceptable as long as you can easily afford the home.
  • Be careful about taking equity out of your home in the form of a home-equity loan.  You might want to set up a home-equity line of credit for emergency use, but make sure it is only used for emergencies.
  • Never purchase items on credit that decrease in value, such as clothing, vacations, food, and entertainment.  If you can’t pay cash, don’t buy them.
  • If you must incur debt, borrow wisely.  Make as large a down payment as you can.  Consider a shorter loan period, even though your payment will be higher.  Since interest rates can vary widely, compare loan terms with several lenders.  Review all your debt periodically to see if less-expensive options are available.

6. How You Prepare for Financial Emergencies

Proactively making arrangements to handle financial emergencies will help prevent them from adversely affecting your financial goals.  Make sure to have:
  • An emergency fund covering several months’ worth of living expenses.  Besides cash, that fund can include readily accessible investments or a line of credit.
  • Insurance to cover catastrophes.  At a minimum, review your coverage for life, medical, homeowners, auto, disability, and personal liability.
  • A power of attorney so someone can step in and take over your finances if you become incapacitated.
Feeling overwhelmed? This is what we love to do. We’re here to help.

 

Copyright © 2019 This article is published in its original form from its original publication with Investment Answers and Integrated Concepts, a separate, non-affiliated business entity. The original newsletter publication, Investment Answers Financial Success Summer 2019, is intended to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete, evolving, or personalized analysis of the topics, and should not be construed as personalized investment advice. Qualified financial professionals should be consulted before implementing a personalized financial plan. Please reference the original publication for additional disclaimers. 

 

Investment Answers Summer 2019 News

It has been wonderful connecting with so many of you recently at some of the new locations we have been trying out for our events. Thanks to all who have come out to try new venues with us.

We have exciting news to share about the Investment Answers Team!  Kristen Wilkins joined the Investment Answers Team this Summer.  Kristen is running our Events Desk and already has several events underway.  Kristen graduated from UK with a degree in Hospitality and she is even a Certified Tourism Ambassador! Keep an eye out for Kristen and introduce yourself.  She’s looking forward to seeing you soon at some of our upcoming client and/or public events this year.

Email RSVPs can now be sent directly to our Events Desk at [email protected].

Website RSVPs are still available at InvestmentAnswers.net/events.

As always, you can RSVP by phone: 502-690-3434.

The Events Desk mobile number is 502-655-1747.

Avoid Credit Card Dependence

The discrepancy between the cost of living and income had led to Americans to rely more of credit cards. Approximately 70% of Americans have at least one credit card, with the average credit card balance over $16,000. With the average credit card interest rate at 18.76%, the average household is paying almost $1,300 in interest each year. (Source: CNBC, 2016).

Ask These Questions to Evaluate Your Credit Card Dependence

  1. Do you rely on credit cards to make it until your next paycheck?
  2. Do you seem to always have to put unexpected expenses on your credit card?
  3. Do you spend more than you would with cash because your card has rewards?
  4. Do the holidays leave you with a mountain of debt?

If You Answered Yes to Any of These Questions, Consider the Following

  • Put your credit cards somewhere for safekeeping to reduce the temptation to use them as your regular form of payment.
  • Become more disciplined with spending by enacting a cash-only policy. Debit cards may allow you to overdraft your account, which may charge a fee for this overdraft privilege.
  • Consolidate your balances to fewer credit cards that have the lowest interest rates. While closing credit cards can have a negative impact on your credit score, it may be better to have that as your temporary credit setback rather than going deeper into debt if you can’t control your spending.
  • Shock yourself by looking at your credit statements to see how much you’re paying in interest annually, how long it will take to pay off the balance, and how much interest you will pay if you only make the minimum payment.

In addition to the issues of becoming dependent on your credit card, it may also enable you to overspend, leading to debt.

Do You Have Too Much Debt?

Various rules of thumb exist to help determine when debt levels are excessive. The problem with rules of thumb, however, is they don’t take into account your unique circumstances. Look for these signs that your debt level may be getting too high:

  • You have no money left over at the end of the month. If you have nothing left to save after paying your bills every month, your debt may be too high.
  • You’ve reached your maximum credit limit. If you’ve maxed out your credit card limits or are considering obtaining new cards for additional credit, your debt may be getting out of hand.
  • You’re only making minimum payments. Minimum payments on credit card debt are so low, it can take decades to pay off the debt.
  • You don’t have an emergency fund. Ideally, you should set aside three to six months’ worth of living expenses in case of emergencies, such as a job loss or major home or car repair.

Raising Financially Responsible Children

Raising children who are financially wise is a skill developed over time. Here are some key strategies to help with these life lessons:

Money Isn’t Free, It Has to be Earned

When children earn money for chores or other tasks they have completed, it teaches them that money can be earned by hard work. This begins the process of teaching them money management. The key here is to be consistent. Learning to wait until they have money saved before they make a purchase is one of life’s important lessons.

Help Them Save When They Receive or Earn Money

Help them to learn that saving a portion of money they are given or money that they earn is common for those who are financially successful, and that it’s more common than they may realize.

Teenagers Need a Hands-On Approach

Teenagers need to see how adult finances actually work, which helps them to understand the cycle of Earning Income > Budgeting > Paying Bills > Saving for the Future > Dreams Realized.

A good place to start is to show them part of your recent goals and budgets so they understand what you’re working towards, along with the money coming in and the money going out. Help them understand by explaining the money that you set aside for short-term and long-term savings. Even simple things we take for granted need to be taught, like paying bills online and how to fill out a check properly.

Understanding debt is equally important to understanding savings. Teens need to understand borrowing money costs money and the timeframe it takes to pay that money back, along with how they will earn the money they will need. These aren’t lessons learned in one day—rather they are learned through experience, over time.