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Arizona is a state perfect for snowbirds because of the warm weather all year round. Many older adults from cold weather states flock to Arizona for the winter months, and tend to own property (i.e., pay taxes) in both states they reside in. Being an older taxpayer in two states is an especially strong reason to be on top of your estate plan. Read this article explaining everything you need to know on the topic.
BOSTON (CBS) Being a snowbird like my Juncos, six months south and six months north, could be a great life style in retirement but one place will need to be your legal residence. Basically, where are you from? Or even easier, where do you have the right to vote?
And its the laws of that state which will dictate your estate planning. If you have lots of money you will want to decide which state would be advantageous to die in.
The Federal exemption, the amount you can give away without incurring federal estate taxes this year, is $5,450,000. So most individuals dying between now and December need only worry about state estate taxes.
Check the estate tax laws of the state you are considering moving to. Many states do implement an estate tax or an inheritance tax upon the death of their wealthy residents.
Massachusetts changed their estate laws several years ago and the exemption is now $1 million. So if your estate is larger than $1 million you could owe Massachusetts estate taxes.
Florida, always wanting to lure more residents from the north, does not have an estate tax per say. They do, however, have other taxes due upon your death. New Hampshire has no estate tax.
You may own property and pay real estate taxes in both states, have bank accounts in both states, register cars in both states, buy insurance in both states but you really only live in one state and you are visiting the other state.
Owning property in different states may require your heirs to go through the probate process upon your death in more than one state. Setting up a trust and having the trust own the real estate may make the transfer of property easier upon your death.
Snowbirds should also consider executing a Durable Power of Attorney for each state so if they do need legal or financial decisions made by another the documents are in place to help. This is a must do if you have property or bank accounts in both states.
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You can hear Dee Lees expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m., 3:55 p.m., and 7:55 p.m.
Subscribe to Dees Money Matters newsletter here.
Source: http://boston.cbslocal.com/2016/10/14/snowbirds-protecting-your-estate-while-living-in-two-states/
If you are getting remarried there are a few additional things you need to consider since your first marriage. One of those things is changing your estate plan and will. Modifications need to be made noting of changes since your divorce and if you are gaining step-children that you want involved. Check out this informative article highlighting what else you should consider regarding your estate plan.
Revise your power of attorney and health care directives. More documents to update, if you don’t want an ex-spouse as your agent. Already switched? “Make sure the power of attorney lists who they want as guardian,” said Scroggin. Otherwise, he said, a new spouse or other relative may be able to successfully petition a court for guardianship even if he or she is not the listed agent on the power of attorney.
Watch titling. Another case where your will won’t matter: Assets titled as joint tenancy with rights of survivorship, tenancy by the entirety or community property with rights of survivorship pass automatically to the surviving owner. Review existing assets to ensure ties with an ex-spouse are severed, Fosselman said.
If you want certain accounts or property to go to someone other than your spouse, title those accordingly, he said or keep them separate as you merge finances.
Use prenups, postnups and waivers. Such agreements can often be worded to limit the rights automatically afforded to spouses, such as the right to take an elective share in your estate even if they are not mentioned in the will.
Account for personal property. Tangible personal property often ends up with the new spouse. If you want to make sure your family heirlooms or other items of sentimental value go to a specific person, specify that in your will, Scroggin said. But he warned that even with a mention, it can be hard for heirs to prove which property you intended to pass on.
Source: http://www.cnbc.com/2016/10/14/remarrying-update-your-estate-plan.html
If you are getting older in age and think it is time to start laying out your estate, there is never a wrong time. This article discusses five mistakes people make when organizing their estate and ways to avoid those mistakes. For those who are unfamiliar with estate planning in general it might be easier than not to make at least one of these mistakes. Be sure to read the full article to be an estate planning pro!
Here are five of the most common estate-planning mistakes that can jeopardize your potential for leaving bequests in line with your desires:
1. Not having a will. A 2016 survey by Harris Poll for Rocket Lawyer found that 64 percent of American adults don’t have a will. Nearly half of these people either said they didn’t need one or just haven’t gotten around to it.
Depending on what state you live in and your personal situation, failure to have a will can deliver assets to people other than those you intend. Moreover, the special needs of loved ones that you’re concerned about may not be addressed. The point of a will is to document your wishes.
2. Failing to update your will. Among those who have a will, this is extremely common. All too often, people act as though their wills are set-it-and-forget-it documents that never need to be changed even though their lives change. Let’s say that when you make your will, you leave everything to your spouse, confident that he or she will eventually bequeath what’s left of your estate to the children you’ve had together.
Years later you get divorced but neglect to update your will. As a result, depending on the wording in the document and the state you live in, your estate may not go to your children from your first marriage, who by this time may be grown and have children of their own (who might be deserving beneficiaries themselves).
If you remarry and have more children, the estate division gets even more complicated. As your life circumstances change, your will should, too. A good rule of thumb is to review your will every two years. Take it out of the file and read it carefully.
Source: http://www.cnbc.com/2016/09/13/dont-drop-the-ball-when-planning-your-estate.html
The first step for many in planning for retirement is setting up a 401(k). It is never too early to start this portfolio. Whether your attorney or your stock broker is your financial advisor there are things you and your advisor should make note of in protecting your 401(k). Read this great article from Financial Planning for tips.
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Don’t panic! How to protect your 401(k) from the markets
401(k) participants can protect their portfolio from market volatility by understanding investment types and their vulnerability to market movements, according to this article on Fox Business. Investors should also rebalance their portfolio and consider investing in foreign markets. “Don’t worry about inflation and rates skyrocketing. Worry about yield reaching products with credit risk and alternative investments and spending too much time in cash. Avoid trendy ways to minimize risk like low volatility ETFs,” an expert says.Retirees should look beyond their investments for income planning
Retirees should expect their retirement portfolio to change in value over the years, and may opt to adopt a variable spending strategy to income planning, an expert writes on Forbes. While variable spending strategies offer different withdrawal rules, the initial spending rate can increase depending on how much retirees are willing to reduce their spending, the expert says. “The bottom line should be how potential spending reductions from a portfolio will impact the overall lifestyle of the retiree, with all non-portfolio sources of income taken into consideration.”Poverty among seniors has dropped
A report from the U.S. Census Bureau shows that the number of seniors living in poverty decreased to 8.8% in 2015 from 10% in 2014, according to this article on Money. Based on the bureau’s supplemental report that includes factors that are not in its official report, the poverty rate among seniors for 2015 is 13.7%, thanks mostly to the rising out-of-pocket healthcare costs. However, this supplemental poverty rate for seniors last year decreased from 14.4% in 2014.Here’s how much the richest Americans have saved for retirement
A report from the Economic Policy Institute shows a widening retirement gap between rich and poor households, according to this article on CNBC. “Participation in retirement savings plans is highly unequal across income groups,” the report states. “In 2013, nearly nine in 10 families in the top income fifth had retirement account savings, compared with fewer than one in 10 families in the bottom income fifth.” Retirement account savings of the median working-age family amounted to just $5,000, compared with $116,000 saved by the 80th percentile family and $274,000 by the 90th percentile family.How to lower the tax hit on IRA distributions
Retirement investors should find strategies to reduce required minimum distributions from their IRAs and minimize the tax liability, writes a wealth advisor in The Wall Street Journal. One strategy is to treat their retirement portfolio “as a singular total and to focus on the location of the assets they choose to hold in it,” the expert says. This would mean changing the asset allocation in the IRA and brokerage accounts to achieve the overall asset allocation set for the entire portfolio, resulting in lower IRA returns and consequently lower RMDs in the future, the expert explains. “This leads to lower taxable income, especially if these lower RMDs also cause less Social Security benefit to be taxable.”
In the process of estate planning you may assign a few loved ones to be your trustees and beneficiaries. However, if those people ever disagree on anything it might be useful to have a trust protector provision. Your trust protector will be the decision maker in that case. Read more about this role in this article:
Most people know that revocable trusts allow you to plan ahead of time, so upon your death your property may be distributed as you want. This is preferred to using a will that must go through the probate process which is overseen by a judge. However, I often get the question, “If there is no court involvement, who oversees the administration of my trust upon my death?” I respond by reminding them that “Trust” is the key term; hence they need to have total confidence in the individuals they are naming to handle their affairs. However, it is possible that two (or three or four) well meaning, honest individuals can have a different opinion about how to interpret and execute the instructions you leave. For this reason, it is also a good idea to have a trust protector provision in the trust.
The trust protector provision (sometimes referred to as the “special co-trustee provision”) allows you to name someone to interpret the trust in case of disagreements between trustees (managers of the trust) and beneficiaries (those who will receive the benefit of the planning). For example, if you become disabled, the trustee will be in charge of managing your affairs for your benefit. When you die, the trustee will take the role of distributing your assets as you have directed. If a beneficiary disagrees with how your trustee is managing the trust, it is useful to have a neutral person designated to consider the position of the trustee and the beneficiary and determine whose position is consistent with the purpose and intent of the trust.
In other words, a trust protector is someone the trust creator (you) chooses to make decisions regarding the trust, after you are no longer able to make those decisions. In a vast majority of the cases, the trust protector does not need to play any role in the trust. It is only when the intent of the trust needs to be more clearly defined that the trust protector may be called upon to act.
The amount of authority given to the trust protector is up to you. You may limit the trust protector’s powers to only certain areas, such as resolving disputes between trustees and beneficiaries. Or you may broaden them to include the ability to amend the trust in the event there has been a change in the law or your circumstances since the trust was formed that would cause strict observance of the trust to be in contradiction to the intent of the trust.
For example, if your trust was written during a time when the estate taxes were a big issue for individuals with smaller estates, your trust may require that many unnecessary and complicated steps be taken to minimize the tax burden upon your death. A trust protector would have the authority to modify the trust so your objective and having your property distributed with as little fuss as possible could be accomplished.
Look at your trust protector as your own personal bodyguard. He or she is there to make sure that your intentions are not disregarded. It goes without saying that anyone that has the ability to amend your trust should have the knowledge and experience required to only do it when necessary. Choosing a trust protector and the powers granted to them should be done with the assistance of a qualified estate planning attorney.
Shawn Garner is a Yuma attorney with Deason Garner Law Firm. Learn more at the seminar at 9:30 a.m. or 6:30 p.m. Thursday. To RSVP, call 783-4466 or visit their website at www.deasongarnerlaw.com.
If you have not begun to give thought to your will, now might be the time. It is never too soon, and, as this article states, it is one less thing your loved ones have to go through if you suddenly pass away. This article is great at explaining what might happen if you don’t have the right documents in order and what documents you should have in the first place.
As far as taxes go when it comes to estate planning, chances are, you won’t have to worry about the estate tax.
“It’s important to remember that 99 percent of all people don’t need to focus on the tax aspects of estate planning,” said Pete Lang, president of Lang Capital. “For the vast majority of the population, there will be no gift or estate tax.”
For 2016, the Internal Revenue Service will impose taxes on estates whose assets exceed $5.45 million. Roughly 0.02 percent of the population ends up paying the estate tax in any given year.
Estate planning also “helps protect against families fighting, or someone potentially contesting the wishes of the deceased,” Rafal said. “We’ve had new clients come to us who didn’t have proper planning, and their families have been torn apart.”
Rafal said it’s also important to make a list – handwritten or electronic – of all your assets and where they are.
“It makes it so much easier upon death or incapacity so your family isn’t running around wondering what you have or don’t have,” he said.
– By Sarah O’Brien, special to CNBC.com
Source: http://www.cnbc.com/2016/08/09/no-will-or-estate-plan-big-problem-for-you-and-your-heirs.html
Elderly people are some of our most vulnerable citizens as their health is often not very good and they are very trusting of people who remain current on their respective industries. Although elderly people are some of the most wise individuals in our society, they need to be protected from swindlers, especially in the financial planning district.
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The House of Representatives passed a bill on Tuesday aimed at protecting elderly investors, and industry trade groups moved swiftly to urge the Senate to “quickly follow suit.”
The Senior Safe Act would extend civil and administrative liability protection to advisers, broker-dealers and other financial professionals who report suspected abuse to a so-called covered agency, a designation that includes Adult Protective Services, law enforcement authorities and state and federal regulators.
Under the bill, compliance officers and other firm supervisors would be shielded from liability on the condition that those individuals have received training on how to spot signs of elder abuse.
FSI CEO Dale Brown hailed the legislation as “a big step forward in the prevention of elder financial abuse across the country.”
“By providing civil and administrative immunity to financial services firms and advisers, the legislation would allow financial professionals to report potential abuse to government organizations, without violating privacy laws,” Brown says in a statement.
The Insured Retirement Institute offered a similar assessment, calling for Senate consideration of a bill that it says will “help foster better communication between financial professionals, who are often the first to detect an issue, with Adult Protective Services and regulatory agencies.”
Cathy Weatherford, IRI’s CEO, notes that millions of baby boomers are retiring, and “this will only necessitate more concerted efforts to protect the nation’s most vulnerable.”
‘A STEP IN THE RIGHT DIRECTION’
The legislation is a companion bill to the Senate version, authored by Susan Collins (R-Maine), which is awaiting consideration by the Senate Banking Committee.
Carolyn McClanahan, director of financial planning at Life Planning Partners, calls the bill a “step in the right direction,” but notes that she has some reservations about the reporting measures in the legislation.
Specifically, she notes the provision that the shield from liability under privacy laws applies only to situations in which advisers report abuse to covered agencies, when often the most effective route to curbing financial exploitation can be to alert the victim’s family.
“Often, fraud occurs through people outside the family, and all it takes to stop it is to have the family step in,” McClanahan says. “Reporting to these agencies can open up a hornet’s nest for the family. Although I am happy for government oversight, a requirement to involve the government may have unintended consequences. Time will tell.”
A handful of states – Alabama, Indiana and Vermont – have recently enacted laws that would go a step farther and actually require advisers to report suspected abuse, rather than just providing legal cover in the event they opted to do so.
“States are starting to move in this direction,” McClanahan says, though she cautions that she has concerns “about the unintended consequences of required reporting, also.”
Kenneth Corbin is a Financial Planning contributing writer in Washington.
Source: http://www.financial-planning.com/news/advisers-may-get-new-tools-to-combat-elder-financial-abuse
It is common knowledge that it is of the utmost importance to save for retirement early and often. How you save though, is a little bit more of a grey area as there are many different ways to invest and keep your assets. Many employees in this country do not have a 401k or a retirement plan and states are hoping to change that.
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States aim to fill pension gaps with “auto IRAs”
More states are considering “automatic IRAs” to help small business workers with no access to workplace retirement plans save for their golden years, according to this article on CBS Moneywatch. An analyst claims that an employer-sponsored retirement plan is not accessible to about 50% of the workforce or some 55 million employees, and implementing automatic IRAs nationwide would benefit 37.5 million of these workers. “The state plans are pretty modest, but they’re a recognition that we’re facing a huge retirement income crisis in this country. Since Congress is paralyzed and not likely to do anything big or new to address this problem, the states have jumped in,” says an expert with the Pension Rights Center. –CBS MoneywatchDon’t bet your retirement on history repeating itself
Clients will be better off making withdrawal rate decisions based on the current market conditions than on historical averages, writes an expert. While a classic safe withdrawal research shows that “the 4% rule has a 95% chance for success, that only means the 4% rule succeeded in 95% of the rolling historical thirty-year periods,” he explains. “New retirees today should not count on the same 95% chance that the 4% rule will work for them.” –ForbesDo 401(k) providers favor their own funds?
Mutual fund companies that administer 401(k) plans are inclined to favor their own funds, even when these funds are performing poorly, according to a study. The inclusion of these underperforming funds in the plan’s investment menu could cost 401(k) participants, says one of the researchers. “What we find is that for the worst decile of funds-those that performed among the worst 10% over the prior years-they will continue to underperform by about 4 percentage points for the next year if they are kept on the menu.” –The Wall Street JournalShould the Social Security eligibility age be increased to 64?
Social Security should raise the eligibility age from 62 to 64 as full retirement age has been increased to 67 for seniors born in and after 1960, according to this article on MarketWatch. More people will be more prepared for retirement with the increase in Social Security eligibility age. Raising the eligibility age to 64 could also result in bigger retirement and survivor benefits and give seniors more time to boost their retirement savings. –MarketWatchHate your job? Here’s how it might derail your retirement
People who dislike their jobs are likely to retire early, a decision that could affect their retirement security, according to this article on Motley Fool. Clients who opt for an early retirement will have less opportunity to build their nest egg and collect smaller Social Security retirement paycheck. Workers who hate their jobs should not retire and consider reducing their working hours daily. They may also want to look for another job that will give the satisfaction they want and motivation to continue working until they are ready to retire. –Motley Fool
When making your budget it is often easy to factor in different sources of income that may not be necessarily guaranteed. This can cause you to fall short when the bills come in. Budgeting is very difficult especially when you have an investment portfolio. Planning your estate is a key part to this. Call RD Smith for estate planning assistance.
Though year-end bonuses are by no means a given, they’re becoming a
more popular practice across a wide range of industries. According to
Challenger, Gray & Christmas, a Chicago-based global outplacement
company, almost 80% of employers give out annual bonuses, and while most
aren’t the epic payouts you hear about coming out of Wall Street, they
give their lucky recipients a reason to celebrate nonetheless. Still,
while getting a bonus is certainly a good thing, there’s a danger in
relying on that bonus year after year.Don’t count your bonus in your budget
There’s a reason they call that year-end payout a bonus —
much of the time, it’s by no means guaranteed. Though some bonuses are
based on individual performance, many are based on company success (if
your company does well, you do well). There’s also a third category of
bonus that’s a hybrid of both. While the individual performance model
conceivably gives you the greatest control over your financial fate,
most bonuses are precarious by nature.Take the individual performance bonus. You might think
you’re doing a great job, and you may even have some data to back up
that claim. But if another employee outperforms you, you may not get the
number you’re hoping for. Bonuses that are based heavily on company
performance are even more tenuous. All it takes is one bad year or a
better competing product on the market to make your bonus go from
sizable to virtually non-existent. This is why it’s always best to
regard your bonus as extra money you weren’t counting on in the
first place. What this also means is that you shouldn’t factor your
bonus into your monthly budget, but rather plan your expenses based on
your salary alone.
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