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Retirement, investments, financial planning for every stage of life—learn about it all here at Invested,
a blog from your Wealth Management Advisors at Kirtland Financial Services.

All Posts > Estate Planning

Estate Planning

When you hear the word “estate”, does it conjure up images of Downton Abbey, Wayne Manor or one of J. Paul Getty’s many residences? At first glance, it may seem like estate planning is something quite grand and only for the super-rich. However, it’s really just common terminology encompassing smart financial planning strategies that everyone should consider.
 
Most people don’t spend too much time thinking about end-of-life planning on a daily basis. But you may have loved ones who will soon face these issues. While it’s not pleasant to think about, you may be the one who ends up having to sort out their affairs. And, the reality is, there will come a time when you need to think about yourself and your own family. Knowing the basics can help you feel more prepared when that time comes.
 
Estate planning is the process of designating who will receive your assets and handle your responsibilities after your death or incapacitation. One of the goals is to make sure your beneficiaries receive these things in the most cost-effective way possible.
 
Estate planning can help establish a platform you can fine-tune as your personal and financial situations change. The key question to ask yourself is: how do you want your assets distributed if you die or are incapacitated?
 

Six Things To Know About Estate Planning

When it comes to estate planning, the whole process can seem quite overwhelming and complex. To help keep it simple, here are six essential things you need to know (or consider doing) to help jumpstart your estate planning.
 
1. Be Aware of Probate  
The first step in implementing an estate planning strategy is to understand the role courts play in the process, and how probate impacts even the smallest of estates. Probate is a term used to describe the process the court uses in settling the deceased’s estate. The time it takes to complete the estate distribution and the associated fees will vary by state, but probate expenses may add up, depending on your unique situation and which state you live in. The costs, along with the time and headache associated with settling an estate, means any step that will help navigate the probate process — or better still avoid it altogether — is worth exploring.

2. Create a Will  
A valid will does not avoid the probate process, but it will make things much easier. A will serves as a guide to your final wishes for the courts and the executor (the person chosen to act on your behalf). When it comes to the courts, anything that speeds up the process of physical asset distribution will minimize fees and make things easier for everyone involved. It can also eliminate any potential family disputes over who gets which assets. But a will is only a roadmap. It’s best to make sure that all of your financial assets and valuable possessions (like a home or a car) have beneficiaries named in other documents besides the will.

3. Decide on the Beneficiaries of Your Financial Assets 
Financial assets can have beneficiaries named so that the institution holding them knows who to turn the funds over to in the case of an account holder’s death. If an asset has a named beneficiary, it avoids probate (if probate is applicable in your situation). A retirement plan or life insurance policy are the most common instances, since these all ask the owners to name a beneficiary. To make things even simpler, you should know that in addition to an insurance policy and retirement plan, a lot of everyday assets allow for beneficiaries. Checking, savings and brokerage accounts are a few of the more common examples that are often neglected. 

4. Consider Creating a Revocable Trust 
For assets that don’t typically allow for a named beneficiary – often larger physical assets like a home or car – a revocable trust may be a solution to consider. Most anything placed in a revocable trust (also called a living trust) will avoid the probate process. The set of people involved in a trust — that is, the person or people who set up the trust, and the beneficiaries named in the trust — are called trustees. Revocable trusts allow the trustee(s) to retain control and will help transfer ownership of the asset in question to the living trustees upon the trust owner’s death. The trust itself (think of it as a separate entity) technically owns the assets, so transition of ownership can go more smoothly. 

5. Consider Having a Power of Attorney Drawn Up 
There are two Powers of Attorney (POA) worth exploring to accomplish some basic estate planning objectives. 
 
  • Durable Power Of Attorney 
It’s important to draft a durable power of attorney (POA) so an agent or a person you assign will act on your behalf when you are unable to do so yourself. Absent a power of attorney, a court may be left to decide what happens to your assets if you are found to be mentally incompetent, and the court’s decision may not be what you wanted. This document can give your agent the power to transact real estate, enter into financial transactions, and make other legal decisions as if he or she were you. This type of POA is revocable by the principal at a time of their choosing, typically a time when the principal is deemed to be physically able, or mentally competent, or upon death. In many families, it makes sense for spouses to set up reciprocal powers of attorney. However, in some cases, it might make more sense to have another family member, friend, or a trusted advisor act as the agent. 
 
  • Healthcare Power of Attorney 
A healthcare power of attorney (HCPA) designates another individual (typically a spouse or family member) to make important healthcare decisions on your behalf in the event of incapacity. If you are considering executing such a document, you should pick someone you trust, who shares your views, and who would likely recommend a course of action you would agree with. After all, this person could literally have your life in his or her hands. Finally, a backup agent should also be identified, in case your initial pick is unavailable or unable to act at the time needed.
 

6. Have the Talk 
Obviously, death is a really tough topic. And if you are younger, it may seem like something that can be dealt with much later. However, no one ever knows just when you will need to deal with it and the potential obstacles that may result.
 
Perhaps the most important part of the estate planning process requires no paperwork or expense: discussing your relatives’ wishes (such as aging parents). Nothing will make that conversation easy, but a clear understanding of your family’s wishes can help avoid tough conversations at a time when loved ones need to rely on each other to get through a difficult time.
 
The team at Kirtland Financial Services helps people—in every stage of life—begin to think about and plan for their end-of-life financial matters. Make an appointment today and receive a FREE Life Notes estate planner! Life Notes is a convenient, comprehensive guide to gathering all the information a family will need to take care of end-of-life matters for a loved one. No matter how young or old you are, getting your business affairs and records organized is an essential part of financial planning. However, there can be many accounts, policies, documents, and other information to organize. Just thinking about what you need to put together can quickly become overwhelming. Use Life Notes to start organizing your personal information and important documents into a master file. You’ll feel good about completing the task — and your family
will thank you for it! It’s all in the Life Notes estate planning guide.
 
Come meet the Kirtland Financial Services team and get yours today.

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This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

Investments Retirement Estate Planning

Where are all your important documents? Are they centralized and organized so you (or your family) could easily find needed information. Now is the time to get it together!

Before retirement begins, gather what you need. Put as much documentation as you can in one place, for you and those you love. It could be a password-protected online vault; it could be a file cabinet; it could be a file folder. Regardless of your method, by centralizing the location of important papers you are saving yourself from disorganization and headaches in the future.
 
What should go in the vault, cabinet or folder(s)? Crucial financial information and more. You will want to include:

  • Those quarterly/annual statements. Recent performance paperwork for IRAs, 401(k)s, funds, brokerage accounts and so forth. Include the statements from the latest quarter and the statements from the end of the previous calendar year (that is, the last Q4 statement you received). You no longer get paper statements? Print out the equivalent, or if you really want to minimize clutter, just print out the links to the online statements. (Someone is going to need your passwords, of course.) These documents can also become handy in figuring out a retirement income distribution strategy.

  • Healthcare benefit info. Are you enrolled in Medicare or a Medicare Advantage plan? Are you in a group health plan? Do you pay for your own health coverage? Own a long-term care policy? Gather the policies together in your new retirement command center and include related literature so you can study their benefit summaries, coverage options, and rules and regulations. Contact info for insurers, HMOs, your doctor(s) and the insurance agent who sold you a particular policy should also go in here.

  • Life insurance info. Do you have a straight term insurance policy with no potential for cash value whatsoever? Keep a record of when the level premiums end. If you have a whole life policy, you need paperwork communicating the death benefit, the present cash value in the policy and the required monthly premiums.

  • Beneficiary designation forms. Few pre-retirees realize that beneficiary designations often take priority over requests made in a will when it comes to 401(k)s, 403(b)s and IRAs. Hopefully, you have retained copies of these forms. If not, you can request them from the account custodians and review the choices you have made. Are they choices you would still make today? By reviewing them in the company of a retirement planner or an attorney, you can gauge the tax efficiency of the eventual transfer of assets.1

  • Social Security basics. If you have not claimed benefits yet, put your Social Security card, your W-2 form from last year, certified copies of your birth certificate, marriage license or divorce papers in one place, and military discharge paperwork and a copy of your W-2 form for last year (or Schedule SE and Schedule C plus 1040 form, if you work for yourself), and military discharge papers or proof of citizenship, if applicable. Take a look at your Social Security statement that tracks your accrued benefits (online or hard copy) and make a screengrab of it or print it out.2

  • Pension matters. Will you receive a bona fide pension in retirement? If so, you want to collect any special letters or bulletins from your employer. You want your Individual Benefit Statement telling you about the benefits you have earned and for which you may become eligible; you also want the Summary Plan Description and contact info for someone at the employee benefits department where you worked.

  • Real estate documents. Gather up your deed, mortgage docs, property tax statements and homeowner insurance policy. Also, make a list of the contents of your home and their estimated value – you may be away from your home more in retirement, so those items may be more vulnerable as a consequence.

  • Estate planning paperwork. Put copies of your estate plan and any trust paperwork within the collection, and of course a will. In case of a crisis of mind or body, your loved ones may need to find a durable power of attorney or health care directive, so include those documents if you have them and let them know where to find them.

  • Tax returns. Should you only keep your 1040 and state return from the previous year? How about those for the past seven years? Or have you kept every one since 1982 or 1974? At the very least, you should have a copy of returns from the prior year in this collection.

  • A list of your digital assets. We all have them now, and they are far from trivial—the contents of a cloud, a photo library, or a Facebook page may be vital to your image or your business. Passwords must be compiled too, of course. 

This will take a little work, but you will be glad you did it someday. Consider this a Saturday morning or weekend project. It may lead to some discoveries and possibly prompt some alterations to your financial picture as you prepare for retirement.

Come talk to the Wealth Management Advisors at Kirtland Financial Services for a retirement check-up and make sure you’re on track!


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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations:
1 - fpanet.org/ToolsResources/ArticlesBooksChecklists/Articles/Retirement/10EssentialDocumentsforRetirement/ [9/12/11]
2 - cbsnews.com/news/planning-for-retirement-take-inventory/ [3/18/13] )

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