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Recent Blog Posts
A Brief Guide to Special Needs Trusts
Anyone with special needs or disabled relatives wants to do everything they can to ensure the most comfortable and opportunistic future. Setting up a trust is one way to accomplish this. A trust is an agreement in which a third party, known as the trustee, holds assets for the beneficiary.
Setting up a trust for beneficiaries with disabilities can be challenging. While it is true that creating a special needs trust can be more involved than setting up a traditional one, these trusts can help provide for the needs of loved ones. The first step in deciding if a setting up a trust is a smart option is to understand how special needs trusts operate.
The laws that relate to special needs trusts are complex and often confusing. As the World Institute on Disability reports, disabled people cannot legally have a trust for themselves. However, this does not mean they will be excluded from an inheritance.
Reviewing Estate Plans on an Annual Basis
The arrival of the New Year often leads people to examine their decisions and lifestyle choices, as they look back at the year gone by and reflect. Many will make choices to go on diets, begin exercise programs, or make other changes to help ensure a longer, healthier life. The New Year is also a perfect time to look back and examine any events which may have occurred and will affect one's future financial plans.
Various life events may cause a person to make changes to any estate plans he or she has in place. Hence, financial advisors recommend reviewing these plans on an annual basis—the beginning of the New Year is a great time to review these plans.
Understanding the Four Main Types of Life Insurance
For obvious reasons, purchasing life insurance is an emotionally charged decision. Still, it is an important move that could save loved ones from financial hardship. This is especially true if you are the main income earner within your family.
It is a smart idea to consult a legal professional to discuss any concerns you have related to life insurance, wills, and estate planning. An experienced estate lawyer can provide feedback and advice based on your particular circumstances.
One of the most common challenges that come with purchasing life insurance is knowing the difference between the various policy types. Below is a basic breakdown of the most common insurance plans.
Term Life Insurance
Protecting Your Assets When You Are Gone
For many, working hard and saving for the future is essential. And by the time retirement is reached and a sizable nest egg has been built up, a sense of confidence is formed that upon passing, one's adult children and their families will be well cared for. But, what happens to that sizable inheritance if an inheriting adult child and his or her spouse divorce? How much of those funds can an ex-spouse walk away with? Or, what if the one receiving the inheritance is known to be financially irresponsible?
When Your Adult Child Divorces
In most situations, when an adult child receives inherited funds and then combines them with those of his or her spouse—such as purchasing a home—the funds become part of the marital estate. Therefore, should the couple split, the other spouse would be entitled to half of the worth.
Rethinking Trusts and Estate Planning
Too often, people think that estate planning and trusts are not applicable to their lives. They may feel they are not old enough to begin to plan, and therefore mistakenly believe that only senior citizens make estate plans and set up trusts. Additionally, they may think that only people who are rich set up trust funds. Again, this is not true.
Although many wealthy individuals do set up trusts to ensure their loved ones are taken care of and their estate is not eaten up by taxes, trusts can be set up by people who have a limited means.
A trust is useful in several ways. Whether the person setting it up is rich or has a limited income, it ensures that a person to whom the trust is being left, such as a young adult, will not spend all the money at once. Quite often, a trusted family member or friend is named as trustee to cut down on expenses of administrating a trust.
Are You Financially Prepared for a 25 Year Retirement?
Retirement and estate planning are very different now compared to past generations. Today, people live longer. The age of retirement has increased and many of us work far beyond the age of 65. In the nineties, the average age of retirement was 57 years old. Today, that number has jumped to 62. Therefore, if you do not have a solid financial retirement plan in place, you may have to continue working—at least part-time—much longer than originally anticipated.
When you do retire, chances are you will live longer than your ancestors. The average life expectancy for a man is 84 years old. Women live even longer and have an average life expectancy of 86 years. Hence, you will need enough money to live for an additional 25 to 30 years post retirement.
3 Common Questions and Concerns about Estate Planning
Estate planning can be a highly involved process; however, it is an incredibly important financial step. While most people do not want to face the concept of securing assets before they die, estate planning helps ensure that family members do not suffer stress when it comes to dividing inheritance. If you are considering estate planning, you probably have several questions or concerns.
Is Estate Planning for Me?
One of the most common concerns for those interested in estate planning or writing a will is whether or not such preparations necessarily apply to them. Many believe, erroneously, that proper estate planning is only pertinent to the wealthy.
Estate planning is for everyone. It does not matter whether or not a person is wealthy. Anyone who has a desire to see their assets—extensive or not—go into the right hands after death should write a will and make all necessary legal arrangements.
Is a Living Will Right for You?
When making decisions about the future, one document that should be addressed by all adults is a living will. The Mayo Clinic defines a living will as "a written, legal document that spells out medical treatments you would and would not want to be used to keep you alive."
With so many medical advances made over the last few decades, it is quite possible for a person to be kept alive for an extended period of time with the use of life-sustaining equipment, such as a ventilator for a person who is not able to breathe on his or her own.
Many people, however, often say they would not want to be kept alive under these circumstances because they feel their quality of life would be greatly compromised. Yet despite a person verbalizing these feelings at one time or another, if he or she does not have any advance directives in place, such as a living will, then these decisions would have to be made by family members.
Seventy Percent of Families Fight over Inheritance
According to projected statistics, more than $30 trillion will be passed from the baby boom generation (those born between the years 1946 to 1964) to their children and other heirs. How those baby boomers handle their estate planning could make a big difference in how much of their assets go to their heirs and how much is eaten up in legal battles.
A study that spanned over twenty years revealed that almost 70 percent of families lose a portion of their inheritance due to some kind of fight over the estate in which they are inheriting. And as some legal advisors point out, the battles are not always about money. Often, items such as a piece of jewelry or other heirloom can be in the middle of a contested battle between heirs.
Planning Your Estate: It Does Not Have to be Difficult
Many people do not like to think about estate planning because of the subject matter—facing one's mortality. They put off making plans or they just never actually sit down with an attorney to formulate what needs to be done. This inaction can often have negative consequences for the family that is left behind. However, estate planning does not have to be a difficult process. In fact, most planning can be done relatively simply, and once done, it can leave everyone involved with peace of mind.
To begin, first prepare what is called a "master document." This document should include information regarding all of your assets and debts. Additionally, include any pertinent information such as account numbers and passwords, as these accounts will need to be closed out. The master document should also contain information regarding any electronic accounts you may have, such as a digital music library or social media accounts. Include instructions regarding how assets are to be handled, as well as copies of a living trust, will, and additional estate documents.
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