estate planning http://www.wisebread.com/taxonomy/term/8328/all en-US 12 Money Moves to Make the Moment You Decide to Retire http://www.wisebread.com/12-money-moves-to-make-the-moment-you-decide-to-retire <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/12-money-moves-to-make-the-moment-you-decide-to-retire" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/retired_couple_happy_86773289.jpg" alt="Couple making money moves the moment they retire" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You deserve a big pat on the back, a rousing rendition of <em>He's a Jolly Good Fellow</em>, and a fat slice of cake when you decide to retire. You should enjoy it, too, because it's not necessarily all perfect bliss from that day forward. Rather, you have to devise a plan to keep yourself fed, clothed, housed, and healthy until the day you die, and that prospect is perhaps more daunting than the 45 years of solid work you put in.</p> <p>To help you along the way without having to breathe into a brown paper bag for the rest of your life, here are a few suggestions on what to do with your money when you set a date to punch your final card.</p> <h2>1. Establish Your Income Goals and Needs</h2> <p>Money matters rarely work without a plan in place, and that's exactly what you'll need when you retire. In anticipation of this major life milestone and transition, you'll need to take a hard and honest look at your finances to see where you're at currently, and figure out where you want and need to be. That might mean cutting the proverbial fat from your current budget, or it might mean contributing to your savings at a higher, more rapid rate. Whatever the case, changes will need to be made to set yourself on the right track. Financial expert Steve Anzuoni, of Fairway Financial, details a few practical steps to achieve this.</p> <p>&quot;First establish your income goals and needs, and then list all your expenses and liabilities; then you need to make sure that your monthly recurring expenses are covered by guaranteed income, not potential income,&quot; he says. &quot;Once that is taken care of, it's then a matter of allocating monies to different 'buckets' to account for inflation, future income needs, emergencies, and fun/vacation money.&quot;</p> <p>That last piece of the puzzle is important. Retirees often plan based on their current needs in the current economy. To stay ahead of the curve, it's a good idea to think ahead and plan for those what-if scenarios that pop up from time to time and can, in a worst-case situation, decimate your finances. Inflation and emergencies in particular can bleed you dry if you're not prepared, and now's the time for that consideration.</p> <h2>2. Eliminate Your Consumer Debt</h2> <p>You want to be as financially prepared as possible when retiring, and that means freeing yourself from the grips of consumer debt. The last thing you want to worry about when you settle into retirement are credit card payments, so concentrate now on eliminating them altogether. If you have the extra cash on hand, pay them off. If not, look into ways to reduce the required monthly payments to make them more manageable with the goal of being payment-free by the time you say so long to your coworkers and colleagues. We cover a million and one ways to help <a href="http://www.wisebread.com/the-fastest-method-to-eliminate-credit-card-debt?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=article">pay off your debt</a> here at Wise Bread.</p> <h2>3. Manipulate Your Mortgage</h2> <p>Along with your consumer debt, you should try to pay off your mortgage &mdash; if you can swing it. This feat may not be feasible if you've recently purchased a home, but if you've lived at the same residence for the past 20 years or more, you might be able to meet this goal. Otherwise, find ways to reduce the mortgage to make it fit better into your new, tighter budget.</p> <p>&quot;Owning your home not only means a lot less money going out every month, it means a lot less worry should things get tight,&quot; says financial adviser Scott Hanson of Hanson McClain Advisors. &quot;Conversely, if you are unable to pay off your mortgage before you retire &mdash; even if you have as little as five to seven years remaining on the note &mdash; you might consider working with your lender to lower your interest rate and extend your loan out 15, 20, or even 30 years. Simply put, not only is cash-flow king, but why spend what are likely to be the healthiest years (of your retirement) struggling to pay down a mortgage at the expense of maintaining your pre-retirement standard of living? Money not going out is the same as money coming in.&quot;</p> <h2>4. Downsize Your Living Situation to Cut Costs</h2> <p>If you have more space than you realistically need, it's time to downsize. You can (hopefully) take the money from the sale of your home and purchase a new place that better suits your lifestyle, perhaps even in cash if you've tended well to your existing mortgage over the years and you're savvy about your new purchase.</p> <p>Financial planner Charlie Reading, author of the book <em>The Dream Retirement: How to Secure Your Money and Retire Happy</em>, agrees.</p> <p>&quot;If you have a house where the mortgage is paid off, an easy way to boost your retirement income is to move to a smaller or a cheaper house,&quot; he says. &quot;Releasing this equity and moving into a smaller home can provide you with valuable funds that you can use to generate an income. You also have the option of equity release here, however financially downsizing is likely to be a more astute choice if that is practical.&quot;</p> <h2>5. Relocate to a More Affordable Area</h2> <p>Along with downsizing your home, take some time to think about where you want to live and the associated cost of living in that area. If you live in an expensive area now, maybe it's a more sensible to move someplace where you'll get more bang for your limited bucks. Of course, you'll need to be happy wherever you move, so along with the financial factors you'll also want to consider your quality of life. Are there things to do to keep you occupied and social? Is transportation nearby? Is it relatively easy for family and friends to visit? Will you get fast and easy medical attention when you need it? These are all important questions to answer when contemplating a move to a new area.</p> <h2>6. Invest in a Rental Property to Earn Additional Income</h2> <p>I'm an investor in rental properties, and I wholly plan to use those properties to bring in additional income for savings and retirement for as long as the properties make money &mdash; and sense. If going this route is a legitimate option for you, I highly recommend it. Just beware of the hidden costs. If you manage the property yourself, like I do, all the income is yours (but don't forget to set aside a decent stash for taxes). If you require assistance, however, like from a management company, you could be looking at fees between 30% and 50% of your net income. There are more affordable options, like through the Evolve Vacation Rental Network, which charges the lowest fees in the industry at just 10%.</p> <p>Consider this anecdote: Jim and Laurel Whillock <a href="http://evolvevacationrental.hs-sites.com/case-study-kona?__hstc=235270366.eb7f97e450deb1291f24fe4d5e0ac9ed.1460397740307.1466114738612.1466171762596.19&amp;__hssc=235270366.1.1466171762596&amp;__hsfp=877489778">invested in a vacation property</a> on the Big Island of Hawaii as a way to earn income in retirement. They purchased a one-bedroom condo on the beach and hired a property manager, who charged a 43% fee, to help with the logistics and operation. During the first six months, the condo was occupied 35% of the time, earning the couple only $6,500. After switching to Evolve, in a 12-month period, the couple booked 260 nights generating rental income of $48,199, an increase of 242%.</p> <p>In any case, what I'm saying is, do your research before thrusting yourself into the rental-income market; there are other management options out there. The goal is to make money, not lose it &mdash; especially when finances are tighter during retirement.</p> <h2>7. Phase Your Retirement Over an Extended Period</h2> <p>Not ready to go all in for retirement? That's perfectly okay. There's no &quot;right&quot; way to retire, and if you need more time to ease into the transition, by all means take it.</p> <p>&quot;Go down to three days a week and enjoy the benefit of not taking your pension as early, and the growth that comes with it,&quot; Reading suggests. &quot;This doesn't have to be your current job &mdash; why not start working in a role you have a passion for, even if it doesn't pay you quite as much as your current one does? Who knows, maybe this will become your new purpose, and you won't ever want to stop.&quot;</p> <h2>8. Develop a Strategy for Medical Insurance</h2> <p>We're starting to enter into territory that nobody likes talking about, especially those nearing or at retirement age. But ensuring that you have proper medical coverage while also getting all your other end-of-life ducks in a row isn't something you can put aside or overlook. This is reality, however harsh it seems, and these items must be addressed &mdash; the earlier, the better.</p> <p>&quot;Because medical insurance can be very expensive, it may actually prevent you from being able to retire,&quot; Hanson warns. I strongly suggest you check into your options before retiring. If you can't afford to purchase medical insurance, you may be forced to find another job until you can apply for Medicare at age 65.&quot;</p> <h2>9. Re-evaluate Your Other Insurances for Optimal Protection</h2> <p>While you're assessing your medical insurance situation, it's a good idea to check in with your other insurance plans to make sure you have the kind of coverage you need at this stage, but also to see where you may be able to cut costs &mdash; though the latter should never affect your quality of life. Don't reduce coverage you'll need down the road just to save a few bucks in early retirement. To make the right decisions, you may want to enlist the help of an insurance adviser.</p> <p>&quot;[Insurance advisers] can advise on ways to adjust your insurance profile &mdash; around both your home and auto policies,&quot; says insurance expert Angi Orbann. &quot;They may be able to find cost savings and they will help you ensure that you are adequately protected as you move into the next phase of your life. An insurance adviser may not be the first person you think of when it comes to your money and retirement, so it's an important tip to remember.&quot;</p> <h2>10. Create a Last Will and Testament</h2> <p>Fact: 41% of Boomer Americans don't have a will, according to USA Today &mdash; and if you're among them, it can spell big trouble for your estate when you pass.</p> <p>Licensed funeral director Kelli Hoodman explains.</p> <p>&quot;Creating a will tells loved ones how one's property should be distributed after one passes away,&quot; she says. &quot;Depending on how complex one's estate is, one may want to contact an attorney or simply create a will online. Without a will, one's finances and property are distributed by the state, and they may not land in the hands the deceased would've wanted them to be in.&quot;</p> <p>Don't overlook the funeral planning, either. Your last will and testament isn't just about who gets what. It's also as much about where you'll go when you pass. You should have the final say in that while you're alive and kickin'.</p> <p>&quot;Expressing final wishes for funeral planning in a will is important, but it should not be the only place they are documented,&quot; Hoodman adds. &quot;Funeral planning is best done with a local funeral home or cremation society. Otherwise it may take time for a will to be found, and one's final wishes might not adhered to.&quot;</p> <h2>11. Preplan Your Funeral Services</h2> <p>It probably won't be your best day ever, but preplanning your funeral is not only therapeutic, says Hoodman, but it's also fiscally intelligent.</p> <p>Funeral costs rise each year, and a traditional funeral and burial today can cost over $10,000. Cremation, which has recently become America's preferred method of disposition, is far less expensive at only a couple thousand dollars, depending on which services are selected.</p> <p>&quot;No matter which choice one makes, inflation and other factors raise the price of cremation, burials, and funerals over time,&quot; Hoodman says. &quot;Companies like Neptune Society offer preplanning services that allow retirees to create a legal document that states one's wishes for memorials, cremation, and other matters concerning death care planning. Over the many decades a retiree may live, preplanning now could save them hundreds or thousands of dollars.&quot;</p> <h2>12. Designate a Power of Attorney</h2> <p>Lastly, if you want to be in control of your life &mdash; and afterlife &mdash; choose someone close to you whom you trust implicitly as your Power of Attorney.</p> <p>A Power of Attorney (POA or attorney-in-fact) makes decisions for a person when that person can no longer make decisions for themselves. For example, if a senior is diagnosed with Alzheimer's, an attorney-in-fact would be legally permitted to make financial and medical decisions in that senior's stead.</p> <p>&quot;Choosing someone trustworthy is crucial for this role,&quot; says Hoodman. &quot;A retiree should ensure that their POA knows their preferences on medical dilemmas, like whether or not to use life support, and their financial information to ensure their money is spent properly.&quot;</p> <p>You don't like being taken advantage of while you're alive, so it's important to ensure that you won't be taken advantage of in death, either.</p> <p><em>Have you made any money moves to prepare for retirement?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/12-money-moves-to-make-the-moment-you-decide-to-retire">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-11"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-personal-finance-calculators-everyone-should-use">15 Personal Finance Calculators Everyone Should Use</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-occasions-when-you-should-definitely-hire-a-financial-advisor">7 Occasions When You Should Definitely Hire a Financial Advisor</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-strengthen-your-finances-before-retirement">5 Ways to Strengthen Your Finances Before Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-let-poor-health-kill-your-retirement-fund">Don&#039;t Let Poor Health Kill Your Retirement Fund</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-money-moves-to-make-before-the-leaves-change">10 Money Moves to Make Before the Leaves Change</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement aging debt downsizing estate planning goals investing medical care money moves mortgages relocating rental properties Tue, 09 Aug 2016 10:00:14 +0000 Mikey Rox 1768664 at http://www.wisebread.com What Happens to Your Debt After You Die? http://www.wisebread.com/what-happens-to-your-debt-after-you-die <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-happens-to-your-debt-after-you-die" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/hands_drawing_cash_32706966.jpg" alt="Finding out what happens to debt after you die" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>&quot;In this world nothing can be said to be certain, except death and taxes,&quot; wrote Benjamin Franklin back in 1789. However, more and more Americans are including &quot;debt&quot; in that famous quote. In 2015, one poll found that 21% of Americans believed that they would be in debt forever, up from 9% in 2013 and 18% in 2014. But what happens to that debt when you die? The answers may surprise you.</p> <h2>First &mdash; What Is an Estate?</h2> <p>Your estate includes all of your assets, including real estate, investments, insurance, and any other assets or entitlements. Since your debts and liabilities are also part of your estate, qualifying assets are liquidated upon your death to cover your debts before your beneficiaries can see any funds.</p> <p>Establishing a clear will is key to ensuring your estate is managed as you wish. Even when a will is available, executing an estate and administering a will is serious business. So, it's best to hire a legal professional to cross all t's and dot all i's. (See also: <a href="http://www.wisebread.com/dont-get-screwed-3-surprising-times-when-you-need-a-lawyer?ref=seealso">Don't Get Screwed: 3 Surprising Times When You Need a Lawyer</a>)</p> <p>So, what happens to the debts in your estate?</p> <h2>Credit Card Debt</h2> <p>Recent estimates put average American household credit card debt at $15,762, for those households with credit card debt. But unless your family or friends co-signed a credit card with you, they're all off the hook in the event that you pass away and your estate is too small to cover it. Even when your spouse is an authorized user on your credit card account, they won't be responsible for paying if they didn't cosign at the time of application.</p> <p>However, your survivors shouldn't be surprised if debt collectors <em>still </em>try to get a spouse or child to pay for the debt. The federal <a href="https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text">Fair Debt Collection Practices Act</a> (FDCPA) prohibits debt collectors from using abusive, unfair, or deceptive practices to try to collect a debt. Let your spouse, children, and beneficiaries know that they can <a href="https://www.ftccomplaintassistant.gov/#&amp;panel1-1">file a complaint</a> against abusive debt collectors with the Federal Trade Commission (FTC). (See also: <a href="http://www.wisebread.com/4-annoying-things-bill-collectors-cant-do-and-how-to-stop-them?ref=seealso">4 Annoying Things Bill Collectors Can't Do &mdash; And How to Stop Them</a>)</p> <p>Of course, you and your family still need to refrain from tricky tactics, such as taking a $20,000 cash advance days before a death, or continuing to use the authorized credit card after the primary cardholder has died, that could provide a credit card company recourse to legally pass on the debt to the surviving relatives.</p> <h2>Mortgage</h2> <p>There are three main scenarios to consider with a mortgage.</p> <p>In the first, you were either required by the company issuing your mortgage or decided that it was a good idea to buy life insurance for the remaining balance of the mortgage. In this scenario, your death benefit clears the mortgage and the property goes to the beneficiary listed on the will or to the surviving property owner.</p> <p>In the second, there is no life insurance, and you and your spouse were &quot;tenants in common,&quot; meaning that each of you owned a stated share of the property. To be eligible to receive their share of the property, your spouse would need to first check that there is enough money in your estate to clear your debts and thus no need to sell the property to cover them. If there is enough money in your estate, your spouse would receive your share and take over the mortgage, if applicable.</p> <p>Finally, there are scenarios in which there was no life insurance and you and your spouse were &quot;joint tenants,&quot; meaning that both of you owned the entire property. In this scenario, upon your death the whole property passes automatically to your spouse. But again, the estate must clear any property-related debt first.</p> <h2>Student Loans</h2> <p>Besides credit card debt, student loans are another type of liability that is rapidly increasing among Americans. According to one estimate, the <a href="http://www.cbsnews.com/news/congrats-class-of-2016-youre-the-most-indebted-yet/">average student loan</a> for a Class of 2016 graduate is $37,173!</p> <p>In the event of your death, your federal student loans, including direct loans, Federal Family Education Loan (FFEL) Program Loans, and Perkins Loans, <a href="https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation#death-discharge">will be discharged</a>. Additionally, Direct PLUS loans are discharged in the event that the parent or student on whose behalf the loan was obtained passes away.</p> <p>But private loans are another matter, and your estate may be responsible for covering any balance. And if anybody co-signed a private loan with you, they'd be on the hook for payment.</p> <p>To learn more about what would happen to your liabilities upon your death, consult a lawyer.</p> <p><em>Have you ever take on debts from somebody that passed away? Share your experience in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/prioritize-these-5-bills-when-youre-short-on-cash">Prioritize These 5 Bills When You&#039;re Short on Cash</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-personal-finance-calculators-everyone-should-use">15 Personal Finance Calculators Everyone Should Use</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-it-ever-okay-to-cosign-a-loan">Is It Ever Okay to Cosign a Loan?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-paying-off-student-loans-early-can-boost-your-finances">7 Ways Paying Off Student Loans Early Can Boost Your Finances</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-ignore-these-4-things-before-refinancing-your-student-loans">Don&#039;t Ignore These 4 Things Before Refinancing Your Student Loans</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management beneficiaries death estate planning federal trade commission loans mortgages spouses student loans survivors Thu, 28 Jul 2016 10:30:09 +0000 Damian Davila 1760584 at http://www.wisebread.com When Should Single People Get Life Insurance? http://www.wisebread.com/when-should-single-people-get-life-insurance <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/when-should-single-people-get-life-insurance" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_looking_up_29810428.jpg" alt="Woman wondering if single people should get life insurance" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You know the typical market for life insurance: People with families to protect. When these people die, their life insurance policies make payments to their beneficiaries, whether that be their children or their spouse.</p> <p>But what if you're single without children? Is buying a life insurance policy ever a smart move?</p> <p>In most cases, no, you won't need life insurance if you don't have a spouse or any children who count on your income to pay for their daily living expenses. But as with most financial matters, there are exceptions.</p> <p>Here are some of the most common reasons why a single adult without children might consider buying life insurance:</p> <h2>Policies Are Cheaper When You're Younger and Healthier</h2> <p>If you are a healthy and a nonsmoker, you'll pay less for life insurance when you are 24 than you will when you are 30, 35, or older. That's because you're at more of a risk to die.</p> <p>According to Trusted Choice, an independent insurance agent, a 20-year-old male nonsmoker at a healthy weight would pay about $32.53 a month for a $500,000, 20-year term life insurance policy. That cost rises to $35.69 a month for that same healthy male at 35-years-old. And it soars to $111.38 a month when this same male reaches 50.</p> <p>So, it might make financial sense to buy a life insurance policy when you are in your 20s. Then, when you do get married and have kids, you can change the beneficiaries on your policy to your spouse and children.</p> <h2>You Owe Money With Someone Else</h2> <p>Have your parents co-signed on an auto loan with you? Maybe they've co-signed for that mortgage loan that you are paying off each month. What happens to that debt if you should suddenly die? Your parents will be responsible for paying it off.</p> <p>However, if you have a life insurance policy with your parents named as the beneficiary, they could use the payout from the policy to pay off the debt that they owed with you. Taking out life insurance in this case would serve as a form of protection for whoever was generous enough to take on the risk of co-signing a loan with you.</p> <h2>You're Providing Financial Support to Others</h2> <p>Just because you're not married and you don't have children, doesn't mean that you are not providing financial support to someone. Maybe an elderly parent lives with you and counts on your financial support each month. If you should unexpectedly die, what would happen to that parent? By naming that parent as a beneficiary, you can make sure that they are financially protected.</p> <p>You might even be providing financial support to siblings, nieces, or nephews. The right life insurance policy can make sure that this support continues even after your death.</p> <h2>You Want to Leave a Gift</h2> <p>Maybe you simply want to leave a financial gift to someone who holds a special place in your life, even if this person doesn't really need your financial support. By naming that special person as a beneficiary &mdash; it could be a niece, nephew, partner, or friend &mdash; you'll be leaving behind something of great value should you die.</p> <h2>Term or Whole Life?</h2> <p>Once you've decided that you do want a life insurance policy, it's time to determine what kind of policy you want and how large of a policy you need. There are two main <a href="http://www.wisebread.com/5-reasons-why-life-insurance-isnt-just-for-old-people" target="_blank">types of life insurance policies</a>: the cheaper term life, and the more expensive whole life.</p> <p>Term life insurance provides coverage for just a set period of time &mdash; usually 20 years &mdash; but can be bought for as little as one year, or as many as 30. Your premium will usually remain the same during the entire term. Whole life insurance instead lasts, as the name suggests, until you die. Whole life premiums also include an investment component, what is known as the policy's cash value. The cash value will grow during the life of your policy.</p> <p>It's best to meet with a financial planner to determine which type of policy makes the most sense for you. A planner can provide recommendations, too, on how much insurance you should take out to meet your financial goals and how best to structure your policy so that you can provide the most financial protection to your beneficiaries if you should die.</p> <p><em>Do you have life insurance?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/when-should-single-people-get-life-insurance">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/financial-iq-test-how-healthy-is-your-life-insurance-plan">Financial IQ Test: How Healthy is Your Life Insurance Plan?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die">What Happens to Your Debt After You Die?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-you-need-to-know-about-disability-insurance">4 Things You Need to Know About Disability Insurance</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-long-term-care-insurance-worth-it">Is Long Term Care Insurance Worth It?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-why-life-insurance-isnt-just-for-old-people">5 Reasons Why Life Insurance Isn&#039;t Just for Old People</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Insurance beneficiaries dependents estate planning Health life insurance policies single unmarried Tue, 05 Jul 2016 10:00:09 +0000 Dan Rafter 1741536 at http://www.wisebread.com What Is Power of Attorney? http://www.wisebread.com/what-is-power-of-attorney <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-is-power-of-attorney" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/father_daughter_happy_91770401.jpg" alt="Woman learning what power of attorney is" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Struggling with money issues or big medical decisions can happen to all of us. Aging, illness, or other factors can contribute to the difficulty. You can get help, though, through a legal document known as a <em>power of attorney</em>.</p> <p>In a power of attorney, you sign a document stating that another person whom you trust, known as the <em>agent </em>or <em>attorney-in-fact</em>, has the power to act on your behalf to make certain decisions. Your power of attorney could limit this person to making only financial decisions on your behalf. But you can make the document broader, giving your agent the power to make a wide variety of decisions, including choices about medical care, or decisions regarding where you live, and when it's time to sell your home.</p> <h2>When You Need One</h2> <p>In most cases, it is elderly people in their retirement years who choose to enact a power of attorney. This is especially true for elderly people who are struggling with memory issues or other illnesses that make it more difficult for them to keep track of their finances.</p> <p>You might not think you need a power of attorney if you are married. After all, even if you can no longer handle the tasks of paying your bills on time, your spouse can withdraw funds from your joint bank accounts to make sure that your mortgage company, auto-financing company, or utility company are paid on time each month.</p> <p>But there are other financial decisions that can be complicated even for married couples. For instance, it might make sense to sell your home. But in many states, both spouses must agree to a home sale. If one spouse is incapacitated and unable to make this decision, the other spouse might not be able to put the home on the market.</p> <p>Also, your spouse will have no legal authority to make decisions regarding accounts or property owned solely by you. A power of attorney, though, can guarantee that important financial or property matters are handled by someone whom you trust.</p> <h2>Different Types of Contracts</h2> <p>There are several different types of power of authority contracts. What is known as a <em>durable power of attorney</em> might be the most powerful. This type of power of attorney remains in effect for your entire lifetime. This gives the agent free reign to manage your accounts on your behalf for as long as you are alive.</p> <p>Because a durable power of attorney lasts the rest of your life, though, you need to be clear about what you want it to say. If you want your agent, for instance, to only be able to make decisions regarding your home and its sale, spell that out in the power of attorney document. If you want your agent to have broader control over both your finances and your medical decisions, spell that out, too.</p> <p>A conventional power of attorney goes into effect when the document is signed and ends when that person becomes incapacitated.</p> <p>You can also create a <em>springing power of attorney</em>. This type goes into effect when a specific event takes place. In most cases, a springing power of attorney will become effective when you become mentally unfit to handle financial, medical, or property decisions.</p> <p>The challenge often lies in determining when this specific event has actually taken place.</p> <h2>Be Wary</h2> <p>Creating a power of attorney is a big decision, and one that you should only make after <a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies" target="_blank">meeting with loved ones and legal professionals</a>. Remember, you are signing over your right to make your own financial, property, or medical decisions.</p> <p>Keep in mind your spouse, too. Your spouse can continue to make decisions on your behalf even after you have signed a power of attorney. But once your spouse becomes incapacitated, the agent you named in your power of attorney will take over.</p> <p>Deciding who will serve as your agent is the big decision here. You can choose a family member, your spouse, a friend, or another loved one. The key is to find someone you both trust and who is willing and able to take on this responsibility.</p> <p><em>Have you considered granting power of attorney? Has someone given you this responsibility? </em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/what-is-power-of-attorney">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-money-moves-to-make-the-moment-you-decide-to-retire">12 Money Moves to Make the Moment You Decide to Retire</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/post-divorce-finances-7-steps-to-rebuilding-your-financial-house">Post Divorce Finances: 7 Steps to Rebuilding Your Financial House</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-you-need-to-know-about-writing-a-will">What You Need to Know About Writing a Will</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-common-estate-planning-myths">Debunking Common Estate Planning Myths</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance aging attorney-in-fact estate planning illness legal decisions legal documents power of attorney Mon, 20 Jun 2016 09:30:26 +0000 Dan Rafter 1732052 at http://www.wisebread.com What You Need to Know About Writing a Will http://www.wisebread.com/what-you-need-to-know-about-writing-a-will <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-you-need-to-know-about-writing-a-will" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/family_piggy_bank_000035216904.jpg" alt="Learning what you need to know about writing a will" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As many as 40% of Americans over the age of 45 <a href="http://www.aarp.org/money/estate-planning/info-09-2010/ten_things_you_should_know_about_writing_a_will.html">don't have a will</a>. Don't fall into this statistic. It's imperative that you have a will to ensure that your wishes are carried out and your heirs avoid unnecessary hassles and costs after you're gone. Here's what you need to know before you get started.</p> <h2>What Is a Will?</h2> <p>A will is a legal document that declares how your estate will be divided after you pass away. It can also provide you and your family with the peace of mind in knowing that your property will go into the right hands. Writing a will may seem like a complicated, daunting process, but it may be easier and more affordable than you think. (See also:&nbsp;<a href="http://www.wisebread.com/6-things-i-learned-about-money-from-famous-peoples-wills?ref=seealso" target="_blank">6 Things I Learned About Money From Famous People's Wills</a>)</p> <h3>What Happens If You Don't Have a Will?</h3> <p>If you don't have a will, your estate will be settled based on your state's laws. A judge will appoint an administrator to make decisions on your estate based on your state's probate laws. Their decisions may not be in line with what you would have wanted, which is why a valid will is so important.</p> <h2>Name an Executor of Estate</h2> <p>First, you will need to name an executor, who is the person who will manage your estate and execute your wishes. They will also deal with any outstanding debts and file your tax returns. Make sure to clearly specify in your will that your executor has the power to deal with any debts and related issues that are outlined in your will.</p> <p>In most cases, the executor is a spouse, child, relative, close friend, attorney, or bank. You can also name joint executors, and may want to consider naming your attorney as one of the executors. Administering an estate is a complicated process, so you'll want to select an organized, trustworthy person for the position.</p> <p>An attorney will charge to serve as your executor, which is usually 2%&ndash;4% of your estate's assets. If you are designating a friend or family member as executor, you want to be clear about whether they'll be receiving compensation. Serving as executor can be a long, daunting process, so it may be a good idea to compensate the executor. You will want to state very clearly in the will what type of compensation they can expect to receive.</p> <h2>Choose Beneficiaries and Guardians</h2> <p>It's imperative that you know what your assets are, so that you can assign them to the right people. Take note of all your assets, including bank accounts, investments, retirement accounts, property, jewelry, and anything else in your possession.</p> <p>Your will specifies the beneficiaries for your assets, so you will need to decide who gets what. Very clearly state who will receive your assets, and make sure to also specify if someone in your family will receive nothing. If you do not mention that they are getting nothing, your will may be contested in court. You can also specify conditional gifts, which will be distributed if the beneficiary meets certain conditions.</p> <p>Your will also names guardians for any minor children and dependents. While you don't need to get permission to name someone as a guardian for your children, you definitely will want to ask. When the time comes, they don't have to accept the responsibility, so make sure they are okay with it. It can be difficult to choose a guardian for your children, but you should carefully make this decision now because if you don't, a judge will make the choice later.</p> <p>It's also a good idea to specify how your pets should be cared for. You may also want to leave money to whomever you designate as the new caretaker so that your pets can be well taken care of.</p> <h2>Review Beneficiary Designations</h2> <p>Certain accounts, such as retirement accounts, life insurance, and annuities won't pass through probate, so they don't need to be specified on the will. For these types of accounts, you will specify the beneficiaries on a document called a beneficiary designation.</p> <h2>Write a Letter of Instruction</h2> <p>A letter of instruction will be kept with your will and is a more informal write-up of which properties should be assigned to which beneficiary. It can also include instructions on paying any outstanding debts, account numbers, passwords, and other information that will help your executor settle your estate. You can also include instructions regarding your death and burial.</p> <h2>Choose a Witness</h2> <p>You will need to have at least one witness present when signing the will (some states require two or three witnesses). It is advised that you do not select a beneficiary or your attorney as your witness(es) as this can potentially create a conflict of interest. Some states also require that the will be notarized.</p> <h2>Choose a Safe Spot for Your Will</h2> <p>You should keep your will in a secure place, such as a fireproof safe in your home. Many people also have their attorney hold onto it for safekeeping. Make sure you let someone you trust know where the will is. You can also give signed copies to your attorney, executor, or a family member that you trust. However, the original signed will is usually required in order to avoid any unnecessary issues.</p> <h2>Updating Your Will</h2> <p>You can update your will whenever necessary. In most cases, a will is adjusted after major life events, such as marriage, divorce, the death of a beneficiary, or the addition of a new dependent. It's a good idea to revisit your will at least every five years to ensure nothing has changed. If there have been significant changes, or you have moved to another state, you may want to write a new will instead of simply updating the old one.</p> <h2>Do You Need a Lawyer?</h2> <p>Having an attorney to walk you through creating a will and testament can be invaluable. Writing a will is already a stressful, unusual process, and having a skilled professional on your side will ensure you have no questions at the end and that all of your assets are appropriately accounted for. They can also review your will, help prevent simple mistakes (like signing something in the wrong place, which can invalidate the will), and provide you with witnesses.</p> <p>Every state also has different requirements, which can be difficult to keep up with on your own. Most websites that offer DIY wills aren't state-specific. An attorney will ensure that you meet the requirements of your state and that you don't make any unintended mistakes. Keep in mind that your will is determining where 100% of your assets will go, so it may not be something you want to deal with on your own.</p> <h3>Writing a Will On Your Own</h3> <p>On the other hand, if you have a very simple, straightforward financial situation, you may not need a lawyer. Many people choose to prepare their own will, which is why do-it-yourself will kits are so popular. Some online service providers, like LegalZoom, can walk you through the will and testament process, with complete customer support, all at an affordable price. You can also choose estate planning software, like the Quicken WillMaker, which will provide the legal documents you need to plan for your future.</p> <h3>How Much Does It Cost?</h3> <p>Drafting a will is not expensive, especially when you consider how important this document is. In most cases, it costs around $40&ndash;$100 to file a will on your own, and approximately $200&ndash;$2,000 to hire an attorney to do it for you (depending on the complexity of your finances).</p> <p><em>Do you have other tips for writing a will? Please share your thoughts in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/andrea-cannon">Andrea Cannon</a> of <a href="http://www.wisebread.com/what-you-need-to-know-about-writing-a-will">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-set-up-a-trust-for-your-child">Should You Set Up a Trust for Your Child?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die">What Happens to Your Debt After You Die?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-7-most-important-financial-moments-of-your-life">The 7 Most Important Financial Moments of Your Life</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-should-single-people-get-life-insurance">When Should Single People Get Life Insurance?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance assets beneficiaries estate planning family lawyers will and testament writing a will Wed, 20 Apr 2016 09:00:10 +0000 Andrea Cannon 1690614 at http://www.wisebread.com Should You Set Up a Trust for Your Child? http://www.wisebread.com/should-you-set-up-a-trust-for-your-child <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/should-you-set-up-a-trust-for-your-child" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/mother_daughter_hugging_000076004239.jpg" alt="Woman wondering if she should set up a trust for her child" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When you think of trust funds, what comes to mind? Spoiled rich kids, living off the money set aside for them by their uber-wealthy parents? If so, you may be surprised to learn that you don't need to be a gazillionaire to benefit from a trust.</p> <p>Read on to see if a trust might be right for your kids.</p> <h2>Estate Planning</h2> <p>Estate planning runs the gamut, from the basic to the complex, depending on your wealth and the complexity of your life. To put various estate planning documents, such as wills and trusts, into context &mdash; and to determine which ones you may need &mdash; consider the following three levels of estate planning.</p> <h2>Titles and Beneficiary Designations</h2> <p>For some of your assets, making sure they end up where you'd like them to requires very little effort on your part. You just need to make sure they are titled correctly or that you've designated the right beneficiaries. A will is generally not required. Even if you have a will, <a href="https://www.soundmindinvesting.com/articles/view/are-you-sure-your-beneficiaries-will-benefit-as-you-intend">titles and beneficiary designations</a> take precedence.</p> <p>If you're married and want property to go to the surviving spouse should the other spouse die, simply titling the property in both of your names &quot;with rights of survivorship&quot; will accomplish that. This includes your home and car. For other assets, all it takes to transfer ownership as you'd like upon your death is to name the right people as beneficiaries. This includes life insurance, individual retirement accounts (IRAs), 401K accounts, and bank accounts. These are relatively simple steps with important implications, so make sure you've made the right choices on titles and beneficiary forms.</p> <h2>A Will</h2> <p>For everything not specifically earmarked via title or beneficiary designation &mdash; property titled in your name only, and everything that doesn't come with a beneficiary designation form (jewelry, art, a baseball card collection, your prized parakeet) &mdash; <a href="http://www.wisebread.com/6-things-i-learned-about-money-from-famous-peoples-wills">you'll need a will</a> to get it where you want it to go. Otherwise your state's &quot;intestate&quot; laws will dictate who gets what. (Trust me, your state probably isn't interested in finding the best home for your bird.)</p> <p>It is all the more important to have wills once you have children. This is the document in which you name a legal guardian for your kids in the event that you and your spouse both die, and you specify who will manage money for your children until they turn 18 (or 21 in some states).</p> <h2>Why Try a Trust?</h2> <p>For many people, a will is enough, especially if they don't own a lot of assets and don't have a very complicated financial life. For others, a will isn't enough; they also need a trust.</p> <p>Once you accumulate more wealth, or if your life becomes more complicated (you have kids from a prior marriage, have property in another state, own a business), a trust may be in order. A trust does not replace a will; it is used in addition to a will. Here are some of its main benefits.</p> <h3>It Gives You More Control</h3> <p>Leaving a lot of money to an adult child can do more harm than good. With a trust, you can create a distribution schedule, perhaps giving them a quarter of the balance starting at age 25, and then another quarter every five years until it is all distributed. You can also name someone to manage the money while it is still owned by the trust and approve any early distribution decisions (perhaps you'd allow money to be accessed early for education or other purposes).</p> <h3>It Keeps Your Estate Out of Probate</h3> <p>Probate is a court-supervised process of validating your will, inventorying your assets, having property appraised, making sure assets are distributed according to the terms of the will, paying the bills of the deceased, and more. It is required if you have a will only, can take a year or longer, and can end up costing 2%&ndash;8% of the total value of the estate once you're done paying attorney's fees and court costs. A trust enables your heirs to bypass probate, freeing the trustee to wind down the estate without court supervision.&nbsp;</p> <h3>It Keeps Information Private</h3> <p>Your will becomes public record upon your death. By contrast, the terms of a trust are not required to be made public.</p> <h3>It Helps Customize Estate Distribution</h3> <p>Depending on the complexity of your situation, a trust may help you customize the distribution of your estate more easily than a will. For example, you may want to leave more to an adult child in a low-income profession than another who works in a high-income profession. Or, you may want to keep a tight rein on how inherited money is used by a beneficiary known for his or her free-spending ways.</p> <p>There are many types of trusts, but the most common type is a revocable living trust, which simply means you can make alterations if your circumstances change. Creating a trust requires the help of an attorney and could cost up to $3,000 to set up versus less than $1,000 for a will. However, the money-saving benefits of avoiding probate, and the added controls available for complex situations, may ultimately make a trust less expensive.</p> <p>There are many variables involved in determining whether you need a trust. If, after reading this article, you suspect you may, talk with an experienced estate-planning attorney to further weigh the pros and cons.&nbsp;</p> <p><em>Have you considered a trust for your heirs?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/should-you-set-up-a-trust-for-your-child">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/wills-the-basics">Wills: The Basics</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-common-estate-planning-myths">Debunking Common Estate Planning Myths</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/post-divorce-finances-7-steps-to-rebuilding-your-financial-house">Post Divorce Finances: 7 Steps to Rebuilding Your Financial House</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-you-need-to-know-about-writing-a-will">What You Need to Know About Writing a Will</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance beneficiaries estate planning heirs inheritance probate trusts wills Thu, 25 Feb 2016 11:00:09 +0000 Matt Bell 1660232 at http://www.wisebread.com 12 Financial Moves to Make When a Loved One Dies http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/12-financial-moves-to-make-when-a-loved-one-dies" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_holding_hands_000067142067.jpg" alt="Couple making financial moves after loved one dies" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>There are few things more challenging than a loved one's passing. In addition to being emotionally difficult, there is an enormous amount of work required to handle the person's estate.</p> <p>No one likes to discuss the finances of your departed loved ones, but there are many key things that should be done shortly after their passing. These 12 items are the most common financial priorities during a difficult time.</p> <h2>1. Do as Little as You Need To (At First)</h2> <p>Losing a loved one is a stressful, tiring, and emotional experience. That's why it's wise to avoid making any key financial decisions immediately. Decisions about money and property should be made with a clear head, psychologists say. It's important to begin collecting some documentation and making funeral plans, but many key decisions can wait a while.</p> <h2>2. Find the Will &mdash; and Its Executor</h2> <p>If your loved one planned properly, he or she outlined their wishes in a will and tasked a trustworthy person to carry things out. This is known as probating the estate. Things can get complicated if there is no will, or if the executor has passed away or is otherwise unavailable. But start by finding out if your loved one's wishes were written down. If you are the executor, you will need <em>letters testamentary</em> that prove you have the right to handle the affairs of the deceased.</p> <h2>3. Collect as Many Documents as You Can</h2> <p>Hopefully, your loved one had some sort of filing system for bills, tax receipts, and other financial information. Collect as much of this paperwork as you can, including anything associated with his or her estate planning, plus credit card statements, bank statements, life insurance policies, car titles, and any similar things you can think of.</p> <h2>4. Determine If the Funeral Was Prepaid</h2> <p>You may find that your loved one had already made plans with a funeral home to have arrangements paid for. But if not, you'll need to determine if there is money available from the deceased to pay for the funeral. This may require opening a special checking account for the estate.</p> <h2>5. Get Copies of the Death Certificate</h2> <p>As you work through the complicated financial matters after a loved one dies, people and institutions will request copies of the death certificate as evidence of the person's passing. Obtain dozens of copies from the state, as many organizations will require an original document. Always have a copy handy any time you deal with a bank or brokerage house.</p> <h2>6. Get in Touch With Financial Institutions</h2> <p>This is often a challenge, because most people have multiple bank accounts, plus various investment accounts, pension providers, loans, credit cards, and insurance companies. Start with the the life insurance company, as the policy may mean that there will be a payout that can be used toward final expenses. Then check with banks to stop any automatic payments, such as regular contributions to charity. Brokerage companies may freeze accounts once notified of a death, so plan in advance if you think this may pose a problem.</p> <h2>7. Call Utility Companies</h2> <p>If a loved one lived alone, it will be important to call the electric company, water provider, cable provider, and phone company to stop service and avoid any additional charges. (Make sure you clean out the fridge before cutting off the electricity.)</p> <h2>8. Contact Government Agencies</h2> <p>You need to contact the Social Security Administration to stop payments, and see if you are eligible for any death benefits. If your relative served in the Armed Forces, call the Veterans Administration. There are many state and local agencies that may also need to be notified, in order to stop payments from things like pensions or legal settlements.</p> <h2>9. Get the Credit Report of the Deceased</h2> <p>It will be important to contact credit bureaus to protect against a case of identity theft. But it's also helpful to review your loved one's credit report to see if there were any major errors or cases of fraud.</p> <h2>10. Hire an Accountant</h2> <p>Dealing with taxes can be very challenging following the death of a loved one. There may be inheritance taxes, and if they worked in the year of their death, they may owe taxes or at least have required tax forms you'll need access to. Let an accountant do a lot of the heavy lifting here. (See also: <a href="http://www.wisebread.com/14-reasons-why-an-accountant-is-worth-the-money">14 Reasons Why an Accountant Is Worth the Money</a>)</p> <h2>11. Change Online Passwords</h2> <p>If you have access to the online accounts of the deceased, you may want to consider changing the passwords for access. This will guard against anyone looking to steal your loved one's identity, and prevent others from gaining access to account information they should not have.</p> <h2>12. Roll Over Their IRA</h2> <p>If your wife or husband passed away, you are the beneficiary of his or her retirement account and can roll it into yours. Or you can tap the money immediately and you won't have to pay a penalty for early withdrawals. If your spouse was over 70 &frac12;, you may have to take a required minimum distribution.</p> <p><em>What steps have you taken to prepare for the loss of a loved one?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-set-up-a-trust-for-your-child">Should You Set Up a Trust for Your Child?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-you-need-an-estate-plan">Do You Need an Estate Plan?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/post-divorce-finances-7-steps-to-rebuilding-your-financial-house">Post Divorce Finances: 7 Steps to Rebuilding Your Financial House</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-i-learned-about-money-from-famous-peoples-wills">6 Things I Learned About Money From Famous People&#039;s Wills</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/estate-planning-why-me">Estate Planning: Why Me?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Family death estate planning inheritance probate taxes wills Wed, 03 Feb 2016 18:19:01 +0000 Tim Lemke 1649195 at http://www.wisebread.com 6 Things I Learned About Money From Famous People's Wills http://www.wisebread.com/6-things-i-learned-about-money-from-famous-peoples-wills <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-things-i-learned-about-money-from-famous-peoples-wills" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/william_shakespeare_000049023568.jpg" alt="Learning about money and finance from William Shakespeare&#039;s will" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I've always been fascinated by William Shakespeare's will. Specifically, by the way he left his wife his &quot;second-best bed,&quot; especially since historians are at odds over what he meant by it. Was this an insult to a spouse he didn't get along with, or a tender gesture? After all, since everything was handmade, furniture was much more valuable back in the 1600s than it is today.</p> <p>Thinking about Shakespeare's seemingly odd bequests made me realize that what people list in their wills says a lot about what they value.</p> <p>So when Ancestry made a searchable database of 170 million will and probate documents available to its subscribers, I eagerly dove in. Of course, most Ancestry members use this information to learn more about their family members; the site touts these records' value in particular for African Americans searching for family history, since wills from the slavery era may <a href="http://blogs.ancestry.com/ancestry/2015/10/12/finding-a-name-why-probate-records-are-a-gold-mine-for-african-americans/">name their ancestors as property</a>.</p> <p>In fact, when I started searching well-known names, the first one I found was a slave owner: George Washington, whose will calls for the freeing of his slaves after Martha's death. (He also called for one, named William Lee, to be freed as soon as he died, which makes sense because Lee was Washington's personal valet.)</p> <p>What can we learn from the wills of notable dead people? Here's what famous people's taught me about money and finances.</p> <h2>1. Furniture Was Really Valuable</h2> <p>Like Shakespeare, Paul Revere made specific plans for his household furniture after his death; he left it all to his only unmarried daughter &mdash; but only if she was still single by the time he died. Revere no doubt figured that if his daughter had already established her own household, she'd have no room for dad's tables, chairs, and beds, second best or otherwise.</p> <h2>2. Families Held Onto Silver No Matter What</h2> <p>Louisa May Alcott's family often went hungry in her childhood; in fact, poverty drove Alcott to start writing. Yet, they never became desperate enough to sell the &quot;family silver&quot; &mdash; Alcott left her share to a niece in her will.</p> <p>Alcott's will also made me wonder if the famous author, who never married, had a love affair or some other skeleton in her closet to cover up, because she called for all her letters and manuscripts to be burned upon her death.</p> <h2>3. Intellectual Property Has Been Valuable for Hundreds of Years</h2> <p>Shakespeare's will makes no mention of his plays, because with no copyright law, intellectual property was not a thing yet. Shakespeare might not have even had copies of his own works.</p> <p>Not so for Nathaniel Hawthorne, who died intestate in 1864. An inventory of his estate includes copyrights estimated at a $2,500 value &mdash; much more than his $200 book collection, his $800 worth of household goods, or any of his investments, which included 10 shares in Boston National Bank ($1,020) and two shares of Jamaica Plain Gas Company ($200).</p> <h2>4. The Price of Property in Florida Has Gone Way Up</h2> <p>Harriet Beecher Stowe was an early snowbird, <a href="http://www.wisebread.com/buying-your-first-home-what-to-do-and-when-to-do-it">buying property</a> in Mandarin, Florida, where she enjoyed wintering with her husband. An inventory of her estate at her death in 1896 values a six-acre orange grove in Mandarin at $0.</p> <p>Nowadays, according to Zillow, a lot of similar size in the area is <a href="http://www.zillow.com/homes/for_sale/Mandarin-Jacksonville-FL/pmf,pf_pt/land_type/2118327479_zpid/125198_rid/lot_sort/30.204784,-81.572714,30.111424,-81.729956_rect/12_zm/?3col=true">listed for $799,000</a>.</p> <p>By the way, Stowe, whose book <em>Uncle Tom's Cabin</em> was a record-breaking bestseller, also had nearly $2,000 cash on hand when she died &mdash; more than $50,000 in today's dollars.</p> <h2>5. Parents Love Their Kids Equally &mdash; Except for Their Favorite</h2> <p>Booker T. Washington left his three children the future royalties from his books to &quot;share and share alike.&quot; But he also left his gold watch and chain to his namesake, Booker T. Jr., while failing to bequeath any personal effects to the other two.</p> <h2>6. Ernest Hemingway Wrote a Tight Will</h2> <p>In life, Papa was known for short and meaty sentences, and his books are no longer than they need to be. So I guess we shouldn't be surprised that Hemingway's will, written from Finca Vigia, his house in Cuba, six years before he took his own life, is only one page long and contains a minimum of legalese.</p> <p>Hemingway left everything to his spouse, designating nothing for his children, merely saying, &quot;I repose complete confidence in my beloved wife Mary to provide for them according to written instructions I have given her.&quot;</p> <p><em>What does your will say about you?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/6-things-i-learned-about-money-from-famous-peoples-wills">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-use-new-toys-to-teach-kids-about-money">How to Use New Toys to Teach Kids About Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-surprising-way-birth-order-decides-your-money-habits">The Surprising Way Birth Order Decides Your Money Habits</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tricks-for-budgeting-as-parent">Budgeting Tricks for Parents</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/leave-marley-in-the-movies-why-buying-a-trendy-pet-makes-no-sense">Leave Marley in the Movies: Why Buying a Trendy Pet Makes No Sense</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Family budgeting estate planning inheritance money will Wed, 04 Nov 2015 16:15:36 +0000 Carrie Kirby 1605685 at http://www.wisebread.com What Happens to Your Online Stuff After You Die? http://www.wisebread.com/what-happens-to-your-online-stuff-after-you-die <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-happens-to-your-online-stuff-after-you-die" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/laptop-178793917.jpg" alt="laptop" title="laptop" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Many people write wills for their physical property, but few even think about creating a plan for their <em>digital</em> estates. Without such a plan, your loved ones might be unable to access your digital files or the accounts could be deleted before they see them.</p> <p>A digital estate plan can help ensure that every online account will be accessed or transferred to the right person. And for those with networks of online-only friends and work colleagues, a digital estate plan can help inform those virtual friends of one's actual demise.</p> <p>Let's start with a look at the nature of the problem, and then we'll look at some solutions.</p> <h2>Terms of Service Agreements</h2> <p>Remember those &quot;I agree&quot; boxes you checked next to Terms of Service Agreements without so much as glancing at the fine print? They typically restrict &quot;non-authorized users&quot; (in other words, your survivors) from accessing your accounts.</p> <p>Plus, they often say accounts are nontransferable. While people violate service agreements all the time without repercussions, the agreements are legal contracts and <a href="http://computer.howstuffworks.com/internet/basics/web-site-terms-of-service.htm">violating them is a crime</a>, although a misdemeanor. Social media companies often say they allow heirs to <em>delete</em> the deceased's account and not much else. Photos, comments and stories, everything else (good and bad) is lost.</p> <p>A digital estate plan will help your executor access and manage your online possessions. While they do not guarantee access (because of those service agreements), they often persuade a service provider to approve login access, especially since the contracts can change.</p> <h2>Creating Your Digital Estate Plan</h2> <p>Experts recommend following these steps.</p> <h3>1. Create an Inventory</h3> <p>Make a list of your online accounts with their usernames and passwords. Include social media sites, online bank accounts and credit cards, and utilities paid online. Remember to update them when changing accounts and passwords or at least once a year.</p> <h3>2. Save It</h3> <p>Store them in a secure location like a safe deposit box, CD, flash drive, or encrypted computer file. Password managers such as <a href="https://lastpass.com/">LastPass</a> or <a href="https://agilebits.com/onepassword">1Password</a> make it easy to encrypt and securely store such data. Another popular password manager &mdash; PasswordBox &mdash; includes a feature called &quot;<a href="https://help.passwordbox.com/customer/portal/topics/319767-legacy-locker/articles">Legacy Locker</a>&quot; that stores logins and passwords and shares them with designated people upon your death.</p> <p>Don't include your logins and passwords in your actual will, which becomes part of probate court's public records.</p> <h3>3. Name a Digital Executor</h3> <p>Your digital executor can be different from your regular executor. The digital executor should be digitally adept and, like your traditional executor, be impartial and trustworthy. Be specific and name accounts the executor will be able to control, delete, and maintain.</p> <h3>4. Say What You Wish to Happen</h3> <p>Define what you wish to happen to your accounts. Do you want your Facebook account deleted or memorialized? Let your executor know if you're using <a href="https://support.google.com/accounts/answer/3036546?hl=en">Google's Inactive Account Manager</a>. Your executor is obligated to follow your instructions.</p> <h2>What Google, Facebook and Others Will Do</h2> <p>Google recently introduced its Inactive Account Manager. You can use the tool to name a &quot;trusted contact&quot; to be contacted if a Google account, such as Gmail, YouTube, or Blogger, becomes inactive for any reason. If your account is inactive for a period of time, which you choose, Google sends you a text or email. If you don't respond, Google can &mdash; based on your instructions &mdash; delete the accounts or allow trusted contacts &quot;to receive data&quot; from the accounts.</p> <h3>Facebook</h3> <p>Facebook won't release login information but will delete or &quot;<a href="https://www.facebook.com/help/www/150486848354038">memorialize</a>&quot; an account on the request of heirs. Memorialized accounts are essentially frozen in time. No one can login or add or change photos or anything else. Depending on the privacy settings of the deceased person's account, friends can share memories on the memorialized Timeline.</p> <h3>LinkedIn</h3> <p><a href="http://help.linkedin.com/app/answers/detail/a_id/2842/~/deceased-linkedin-member---removing-profile">LinkedIn</a> says it will shut down profiles of deceased members on request. It asks heirs to complete and electronically sign a form via DocuSign. If heirs have login information, they may want to download the deceased's contacts, although it's legally unclear if the contact lists belong to the LinkedIn members or their company.</p> <h3>Twitter</h3> <p>Twitter will shut down accounts of deceased users on request. According to <a href="https://support.twitter.com/articles/87894-how-to-contact-twitter-about-a-deceased-user">Twitter's policy</a>, heirs have to mail or fax a signed statement, a copy of the death certificate, and a copy of a government-issued ID like a driver's license.</p> <h3>Digital Media</h3> <p>When consumers purchase digital music and e-books, they technically only buy licenses to view or hear them. For instance, the iTunes terms of service agreement says accounts are nontransferable and will end if users don't meet the terms. But if agreements allow multiple computers per account, heirs could use that loophole to claim the purchased media.</p> <h2>Missing Login Information?</h2> <p>If a relative passes away without leaving login information, heirs <em>might</em> be able to obtain access with the proper documentation and patience.</p> <p>Google says it might provide <a href="https://support.google.com/mail/answer/14300?hl=en#1">Gmail access</a> if heirs send a copy of the heir's government-issued ID and the death certificate. But it makes no promises and warns the wait can be long.</p> <p><a href="https://support.google.com/youtube/answer/3306113?hl=en">YouTube</a> says it might grant access &quot;only after a careful review&quot; if heirs provide a copy of the death certificate and power of attorney document.</p> <p>Because the concept of digital wills is relatively new, it's unclear how the issue will evolve. Internet firms could change policies after more requests from grieving families. Few states have laws on digital estates but more may address the topic in coming years. Despite the uncertainty &mdash; or maybe because of it &mdash; creating a digital estate plan can help your family access your virtual self before it, too, expires.</p> <p><em>Have you considered what will happen to your digital self &mdash; and your digital property &mdash; after you pass? What steps have you taken? Please share in comments (which are forever, unless something happens to the server, or an heir asks that they be removed).</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/michael-kling">Michael Kling</a> of <a href="http://www.wisebread.com/what-happens-to-your-online-stuff-after-you-die">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/post-divorce-finances-7-steps-to-rebuilding-your-financial-house">Post Divorce Finances: 7 Steps to Rebuilding Your Financial House</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-set-up-a-trust-for-your-child">Should You Set Up a Trust for Your Child?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-common-estate-planning-myths">Debunking Common Estate Planning Myths</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/estate-planning-why-me">Estate Planning: Why Me?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance digital will estate planning online property wills Tue, 20 May 2014 08:12:16 +0000 Michael Kling 1139916 at http://www.wisebread.com Life and Death: The Related Taxes, and How It Affects Your Family http://www.wisebread.com/small-business/life-and-death-the-related-taxes-and-how-it-affects-your-family <div class="field field-type-link field-field-url"> <div class="field-label">Link:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <a href="http://www.openforum.com/idea-hub/topics/money/article/life-and-death-the-related-taxes-and-how-it-affects-your-family-tom-harnish" target="_blank">http://www.openforum.com/idea-hub/topics/money/article/life-and-death-the-relate...</a> </div> </div> </div> <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/small-business/life-and-death-the-related-taxes-and-how-it-affects-your-family" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000006796696XSmall.jpg" alt="Mother and baby" title="Mother and baby" class="imagecache imagecache-250w" width="250" height="165" /></a> </div> </div> </div> <p>Death and taxes, Ben Franklin wrote, are the only things that are certain in this world. Margaret Mitchell indirectly added babies to the list when she wrote in&nbsp;<em>Gone With The Wind</em> that&nbsp;there's never a convenient time for death, taxes, or childbirth. But even if taxes are inconvenient and death is certain (or the other way around), there is much we can do to make them easier on our family.</p> <h3>Kids and Taxes</h3> <p>If your business isn&rsquo;t incorporated, hiring your kids can produce substantial tax savings. You can deduct what you pay them, and you won't pay Social Security or Medicare tax, and you usually won't have to pay state unemployment or disability taxes on the money, either. Together, your family will send less to Uncle Sam.</p> <p>Your children&rsquo;s income is taxed at the same rate as yours until they are 19 (or 24 if they're full-time students). You can help reduce the tax bite by encouraging them to put the money in tax-free municipal bonds or growth stocks they won't sell until they&rsquo;re 19 (or 24), when their tax rate probably will be much lower than yours.</p> <p>If your estate pays enough taxes to take a disproportionate hunk out of your kids' income (as discussed above), you might want to gift some of your money to them. You can give a gift to whomever you like, and as many people as you like, and you won&rsquo;t pay gift tax if the amount is less than $13,000 per recipient per year. This isn&rsquo;t to avoid inheritance tax, by the way &mdash; in 2010 there wasn&rsquo;t any thanks to President Bush&rsquo;s tax legacy &mdash; but in 2011 there will be a 35% tax on estates over $5 million as part of&nbsp;<a href="http://www.wisebread.com/how-will-the-obama-tax-cut-deal-affect-you">Obama&rsquo;s &ldquo;tax cuts.&rdquo;</a>&nbsp;Most people won&rsquo;t have to worry about that; but if you do, gifts today can avoid taxes tomorrow.</p> <p>Be careful if you loan your adult children (or anyone else) money. If they want to borrow more than $10,000, you have to charge them interest. If you don&rsquo;t, you have to report a certain amount anyway, just as if you&rsquo;d received it from them. Paying taxes on money you didn&rsquo;t receive doesn&rsquo;t seem fair, but that&rsquo;s the way the tax code works.</p> <p>Another way to help your kids is to help them earn the retirement savings credit. The retirement savings credit can be up to 50% of the first $2,000 they pay into an IRA or company retirement plan, but paradoxically it's only available to low-income taxpayers &mdash; the very people who are least able to afford to make the contribution. But you can help, if you have an adult child who's not a full-time student, by giving him or her the money to fund such a retirement contribution.&nbsp;</p> <h3>Death and Taxes</h3> <p>Now onto sadder topics: If you're terminally ill and want to keep your home in the family, think about selling it to your kids now. It won't help your taxes, but it could save them some after you're gone.</p> <p>If you have investments that have been losing money on paper, consider selling them, too, before you die. Their value will be &quot;stepped down,&quot; as it's called, on the date of your death, and your heirs won't be able to claim the loss, so you might as well do it now.</p> <p>If, happily, you aren't terminally ill but thinking about living a very long time, keep in mind that a portion of long term care insurance costs are deductible.</p> <h3>Business and Taxes</h3> <p>If you are a self-employed business owner, you have a number of options when it comes to income and expenses. If, for example, 110% of your income is over $150,000 you don't need to make estimated tax payments this year. And you can also push some income into 2012 if you wait to send out bills until December 31st. You can can also chose pay some business expenses before the end of the year to be sure you get the deduction this year.</p> <p>And now that we're thinking about shifting money, consider shifting some of your own compensation from salary to dividend. Your salary is taxed on the basis of your tax bracket, which is probably 25-35%, but dividends are taxed at a maximum of 15%.</p> <p>The tax bite on some expenses, like compensation, varies too. If you buy a new company car your first year write off is about $12,000. But Congress has provided a tax incentive for gas guzzling SUVs and pickups, believe it or not. They told the IRS to let you write off $25,000 of the big vehicles expenses the first year, and depreciate the balance over the next six.</p> <p>Keep track of medical bills carefully. If you have to make modifications to your home for medical necessities, such as wheelchair ramps or hand controls for your cars, for example, you can include those costs in your medical deductions.</p> <p>Travel expenses related to medical care can be deducted too &mdash; and not just car mileage. You can deduct $50 a night per person for lodging if you have to go somewhere for treatment.</p> <p>Finally, keep in mind that what you do and don't deduct from you taxes, and what income you do or don't report is a serious issue. The tax tips offered here are simply thought-starters. Be sure get advice from a tax accountant or tax attorney to know you're doing it right. Besides, if your taxes are prepared by a professional you are <a href="http://www.openforum.com/idea-hub/topics/money/article/8-invitations-to-an-irs-audit-kate-lister"><span>less likely to be audited</span></a>.&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tom-harnish">Tom Harnish</a> of <a href="http://www.wisebread.com/small-business/life-and-death-the-related-taxes-and-how-it-affects-your-family">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/250-tips-for-small-business-owners">250+ Tips for Small Business Owners</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/save-money-with-a-dependent-care-tax-credit-and-fsa">Save Money with a Dependent Care Tax Credit and FSA</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/business-succession-planning-part-2-how-life-insurance-will-insure-the-life-of-your-business">Business Succession Planning Part 2: How Life Insurance will insure the Life of Your Business</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-for-small-businesses">The 5 Best Credit Cards for Small Businesses</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-to-your-debt-after-you-die">What Happens to Your Debt After You Die?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Small Business Resource Center Taxes business taxes estate planning family finances small business Thu, 20 Jan 2011 01:22:57 +0000 Tom Harnish 455894 at http://www.wisebread.com Financial IQ Test: How Healthy is Your Life Insurance Plan? http://www.wisebread.com/financial-iq-test-how-healthy-is-your-life-insurance-plan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/financial-iq-test-how-healthy-is-your-life-insurance-plan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/IMGP0234_1.JPG" alt="life insurance" title="life insurance" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>What kind of life insurance policy do you have (if you have one at all)? Do you understand the terms? Are you getting the most bang for your insurance buck? How did you select the amount of insurance you have? How did you choose your insurance company and structure the policy? And how often do you review your life insurance needs?</p> <p>Following is a Financial IQ Test to help you determine how healthy your life insurance plan is. <strong>Simply look at each statement, and answer it with a YES, NO, or NOT SURE.</strong> Keep track of your answers, and we'll see how you score at the end. Then, check out the resource articles below to increase your knowledge base.</p> <h2>Financial IQ Test: How Healthy is Your Life Insurance Plan?</h2> <h3>Policy and insurance company selection</h3> <p>I check on the financial stability and overall reputation of the insurance company.</p> <p>I buy only from companies with an &quot;A&quot; rating or higher.</p> <p>I look at the monthly, quarterly, and annual premiums and select the least expensive option.</p> <p>I shop across a few different insurance companies, or use a broker to help me.</p> <p>I have asked about discounts for my spouse and I both having policies with the same insurer.</p> <p>I decline coverage offered by <a href="http://www.wisebread.com/stop-calling-me-how-to-avoid-telemarketers">telemarketers</a> from my credit card company.</p> <h3>Policy Structure</h3> <p>I have enough life insurance to cover lost income, funeral expenses, pay off debts, and address any future needs (like a child's education).</p> <p>I've selected both a beneficiary as well as a contingent beneficiary on the policy application.</p> <p>I've indexed future needs (like a child's education or retirement savings for my non-working spouse) to inflation.</p> <p>I've reviewed all the riders on the policy and only have the ones that I need.</p> <p>I have reduced my insurance analysis needs by existing coverage provided through my employer or association membership.</p> <h3>Policy Maintenance</h3> <p>When I review my life insurance plan, I also review my premiums and compare them to current market rates.</p> <p>When something major happens in my life, I reevaluate my life insurance needs right away.</p> <p>I review my life insurance needs (if nothing has changed) every three years.</p> <p>I discuss my insurance needs and options with my <a href="http://www.wisebread.com/9-signs-you-need-to-fire-your-financial-planner">financial planner</a>.</p> <p>The insurance company always has my most current address on file.</p> <h3>General Knowledge and Maximizing Value</h3> <p>Smoking almost doubles my life insurance rates, but if I quit for a year and submit a form, my rates will drop.</p> <p>I know the difference between temporary (Term) and permanent insurance, and have selected the most appropriate kind for my needs.</p> <p>I know I'll have insurance needs in the future, so I got life insurance at a young age to guarantee my insurability.</p> <p>I understand the benefits of a convertible (Term) policy.</p> <p>I know what a cash value is on a permanent insurance policy, and what I can do with it.</p> <p>I know how to access the cash value of my permanent policy tax-free.</p> <h2>Scoring</h2> <p>Did you keep track of how many times you answered YES, NO, and NOT SURE? Great! Give yourself the following points for each answer:</p> <p>YES = 4 points</p> <p>NO = 0 points</p> <p>NOT SURE = 2 points</p> <h2>Analysis</h2> <h3>Score 0-30: Do you have life insurance at all?</h3> <p>This is not a criticism; some people don't need life insurance at certain points in their lives. But have you taken the time to do an analysis and educate yourself as to your options? Do you know if your employer has provided life insurance and do you know what to do with it or if it's enough? Best not to bury your head in the sand with the excuse that you'll be dead and don't care about your <a href="http://www.wisebread.com/estate-planning-why-me">estate plan</a>. Check out some of the resources below, and talk to your financial planner about your needs.</p> <h3>Score 31-60: Not maximizing value</h3> <p>A little bit of knowledge is a dangerous thing. Although you have probably taken some time to educate yourself about life insurance, I would argue that you don't know what you don't know. You might be over-paying for your insurance, are insured for the wrong amount, or have an inappropriate type of policy for your needs. Make sure you review your needs regularly and are maximizing value wherever you can.</p> <h3>Score 61-88: You have a plan</h3> <p>If you scored in this range, then congratulations &mdash; you most likely have a life insurance plan of sorts in place. The industry is constantly changing, so make sure you reevaluate your needs, what you're paying, and the policies you have. Make sure your financial planner is on board with the plan, and check out the Wise Bread resources below to get some fodder for your next conversation with them.</p> <h2>Life Insurance Resources on Wise Bread</h2> <p><a href="http://www.wisebread.com/credit-card-insurance-no-thanks">Credit Card Insurance? No Thanks</a></p> <p><a href="http://www.wisebread.com/choosing-life-insurance-term-or-permanent">Choosing Life Insurance: Term or Permanent</a></p> <p><a href="http://www.wisebread.com/universal-life-insurance-and-whole-life-insurance-a-comparison">Universal Life Insurance and Whole Life Insurance: A Comparison</a></p> <p><a href="http://www.wisebread.com/how-and-why-to-buy-life-insurance">How and Why to Buy Life Insurance</a></p> <p><a href="http://www.wisebread.com/is-getting-life-insurance-for-your-children-prudent-or-prudish">Is Getting Life Insurance for Your Children Prudent or Prudish?</a></p> <p><a href="http://www.wisebread.com/do-i-need-life-insurance-for-little-ones">Do I Need Life Insurance for the Little Ones?</a></p> <p><a href="http://www.wisebread.com/insured-annuities-for-wise-bloggers">Insured Annuities for Wise Bloggers</a></p> <p><a href="http://www.wisebread.com/why-you-don-t-need-mortgage-life-insurance">Why You Don't Need Mortgage Life Insurance</a></p> <p><a href="http://www.wisebread.com/ad-d-insurance-no-good-no-bad-just-ugly">AD&amp;D Insurance: No Good, No Bad, Just Ugly</a></p> <p><a href="http://www.wisebread.com/did-your-parents-give-you-a-whole-life-insurance-policy-heres-what-to-do-with-it">Did Your Parents Give you a Whole Life Insurance Policy? Here's What to Do With It</a></p> <h2>Other FINANCIAL IQ Tests on Wise Bread</h2> <p><a href="http://www.wisebread.com/financial-iq-test-how-healthy-is-your-debt-management">How Healthy is your Debt Management?</a></p> <p><a href="http://www.wisebread.com/financial-iq-test-how-healthy-are-your-bank-accounts">How Healthy are your Bank Accounts?</a></p> <p><a href="http://www.wisebread.com/financial-iq-test-how-healthy-is-your-budget">How Healthy is your Budget?</a></p> <p><a href="http://www.wisebread.com/financial-iq-test-how-healthy-is-your-health-care-plan">How Healthy is your Health Care Plan?</a></p> <p><a href="http://www.wisebread.com/financial-iq-test-how-healthy-is-your-disability-insurance">How Healthy is your Disability Insurance?</a></p> <p><a href="http://www.wisebread.com/financial-iq-test-do-you-have-the-best-auto-insurance-coverage-for-your-needs">Do you Have the Best Auto Insurance Coverage for Your Needs?</a></p> <p><a href="http://www.wisebread.com/financial-iq-test-how-healthy-is-your-financial-plan">How Healthy is Your Financial Plan?</a></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nora-dunn">Nora Dunn</a> of <a href="http://www.wisebread.com/financial-iq-test-how-healthy-is-your-life-insurance-plan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-should-single-people-get-life-insurance">When Should Single People Get Life Insurance?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-why-life-insurance-isnt-just-for-old-people">5 Reasons Why Life Insurance Isn&#039;t Just for Old People</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-times-its-okay-to-borrow-from-your-life-insurance-policy">4 Times It&#039;s Okay to Borrow From Your Life Insurance Policy</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-long-does-it-take-to-get-life-insurance">How Long Does It Take to Get Life Insurance?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-women-need-life-insurance-and-what-to-do-about-it">Why Women Need Life Insurance — and What to Do About It</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Insurance estate planning financial IQ Test life insurance Mon, 09 Aug 2010 13:00:06 +0000 Nora Dunn 199842 at http://www.wisebread.com Do You Need an Estate Plan? http://www.wisebread.com/do-you-need-an-estate-plan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/do-you-need-an-estate-plan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/420816_99422477 (1).jpg" alt="All My Riches" title="All My Riches" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>Say the words &quot;estate planning&quot; and what typically comes to mind are extravagant estates worth millions of dollars. Estate planning is for celebrities and the very wealthy, right? I &nbsp;mean, the average working guy or gal can make do with a standard do-it-yourself Will.</p> <p>Well, not necessarily.</p> <p>One of the benefits of being a freelance writer is that I get to work with a variety of different clients on a variety of different topics. And in the process, I learn quite a bit about subjects I had never explored before, estate planning being the latest.</p> <p>What I found is that estate planning is much more than just divvying up your coin collection and jewelry. Quite the contrary, there are a number of issues that a good estate plan can address.</p> <p>A living trust for example, can provide you with a way to offer incentives to your heirs for personal accomplishments. Want to ensure your son or daughter goes to college? Make that a condition of receiving their distributions. Want to teach your children the importance of carving out their own place in the world instead of just relying on their inheritance? A trust allows you to do that as well.</p> <p>You can also use a trust to provide for disabled dependents without affecting their eligibility for government assistance programs, and depending on how you structure your trust, you can ensure that your assets stay in the family, even in the face of taxes or a divorce.</p> <p>Heck, there's even a specialized trust to protect your pets after you're gone.</p> <p>A financial Power of Attorney allows you to designate someone to speak on your behalf if you become disabled or incapacitated and are unable to handle your own affairs. A Healthcare Directive provides the same protection in regard to your healthcare and medical decisions.&nbsp;</p> <p>But estate planning doesn't stop there and this is what really won me over.</p> <p>A good estate plan also encompasses all the non-financial aspects of your life, like the old photo album in the top of your closet, grandma's quilt that lies at the foot of your bed, the tapes you made of Great Aunt Ethel's family stories and all the memories and knowledge that up until now, you've been carrying around in your head.</p> <p>In short, creating an estate plan is about leaving a legacy...not just a few bucks and the deed to the house.</p> <p>That's all well and good you say, but I don't have enough of an estate to worry about.&nbsp;</p> <p>Are you sure?</p> <p>The problem with not having an estate plan is that you're still going to pass on someday. And when you do, the courts will step in and make all these decisions for you. That means that if property needs to be sold to pay creditors or taxes, you won't have a say over which property is used to cover those expenses. And someone must oversee the distribution of all your belongings, a process known as &quot;probate.&quot; If you haven't designated that person yourself, then the court will make the designation for you and there's no guarantee you'll agree with their choice or the way your belongings are divided among your heirs.</p> <p>Of course, by then, it would be too late to do anything about it.</p> <p>Now, I know that no one likes to think about a time when they're no longer around but the truth is, it will happen whether we're ready or not. And I've realized that when that day comes for me, my kids will need to know where the important documents are. They'll need to know that I have life insurance and savings accounts as well as journals I've created for them over the years and keepsakes that are stored in my great-grandmother's hope chest. Personally, I kind of like the idea of taking care of things before I go...after all, that's what Moms do, isn't it?</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kate-luther">Kate Luther</a> of <a href="http://www.wisebread.com/do-you-need-an-estate-plan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-top-money-lessons-to-learn-from-ruth-soukups-unstuffed">4 Top Money Lessons to Learn From Ruth Soukup&#039;s &quot;Unstuffed&quot;</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-put-your-spouse-on-a-budget-without-ruining-your-marriage">How to Put Your Spouse on a Budget Without Ruining Your Marriage</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-support-your-broke-parents">How to Support Your Broke Parents</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-i-learned-about-money-after-getting-married">8 Things I Learned About Money After Getting Married</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Family estate planning life planning taxes Tue, 15 Jun 2010 13:51:40 +0000 Kate Luther 126252 at http://www.wisebread.com Post Divorce Finances: 7 Steps to Rebuilding Your Financial House http://www.wisebread.com/post-divorce-finances-7-steps-to-rebuilding-your-financial-house <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/post-divorce-finances-7-steps-to-rebuilding-your-financial-house" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/post divorce finances.jpg" alt="new horizons" title="new horizons" class="imagecache imagecache-250w" width="250" height="333" /></a> </div> </div> </div> <p class="MsoPlainText">My, how life changes when you close one chapter of your life and open a new one. Severing a conjoined life and combined finances as a result of divorce is painful through and through. The jump to a single income lifestyle paves the way to feeling the cash crunch, and if children are involved it is even more pronounced. Even if the breakup is liberating, there is still some mopping up to do after the storm. </p> <p class="MsoPlainText">Here are seven things you can do to set your new life up on the right foot:</p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>Joint Banking Be Gone</strong></h3> <p class="MsoPlainText">Close all <a href="/separate-bank-accounts-till-death-or-banking-do-we-part" target="_blank">joint bank accounts</a>, joint non-registered investment accounts, and <a href="/sexually-transmitted-debt-eewww" target="_blank">credit cards</a>. Not only is this a tangible form of evidence to demonstrate a date of separation (in locales where you need to be separated for a time prior to applying for divorce), but it also protects each party from destructive actions the other may take in anger or apathy. </p> <p>   <br /> <br /> <h3 class="MsoPlainText"><strong>Remove all Beneficiary Designations</strong></h3> <p class="MsoPlainText">Here is a list of items you may need to look at in terms of removing joint or beneficiary designations:</p> <ul> <li>life insurance policies</li> <li>retirement funds</li> <li>auto insurance</li> <li><a href="/credit-card-insurance-no-thanks" target="_blank">credit card insurance</a></li> <li>pension funds through work</li> <li>health care plans through work</li> </ul> <p class="MsoPlainText">If you are required to designate a new beneficiary and are not sure who to choose just yet, simply choose your estate for now, or until you hear otherwise from your lawyer/accountant/financial planner. Although an estate designation may not be the most tax-efficient option, it will keep things simpler until all the divorce paperwork is properly nailed down and you get on your feet again. </p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>Create a New Budget</strong></h3> <p class="MsoPlainText">Flying solo means creating a whole new budget – a crucial step of the process. You may or may not have been actively involved in the finances while married, so creating a new budget could be an exercise in learning how much things cost, or simply reallocating income streams accordingly. </p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>Update Your Will</strong></h3> <p class="MsoPlainText">Updating a <a href="/wills-the-basics" target="_blank">will</a> doesn’t have to be a laborious process. If it is simply a matter of changing beneficiaries, a codicil (a one page addendum that attaches to the will) can suffice. </p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>Review Your Estate Plan</strong></h3> <p class="MsoPlainText">Although you will have covered most of the bases with reassigning beneficiaries and updating your will, your <a href="/estate-planning-why-me" target="_blank">estate plan</a> may incorporate some larger issues or opportunities given the new financial structure of your life. </p> <p class="MsoPlainText">For example, your previous estate plan may have been mindful of your ex-partner’s <a href="/is-it-time-to-talk-with-your-parents" target="_blank">parents</a> who are – or will become – financially or physically dependant. Or maybe children from a first marriage have been incorporated into the estate plan and now the structure of trusts or income streams needs to change. </p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>Don’t Blow the Financial Settlement!</strong></h3> <p class="MsoPlainText">Just in case you had eyes for a new stereo system or a bigger house, you may want to seek counsel before spending any financial settlement that arises as a result of your divorce. From tax efficiency, to your overall financial plan, there could be ways to greatly help or detrimentally cripple your finances by virtue of what you do with the settlement. </p> <p class="MsoPlainText">If you are the one doling out the settlement, then refer to the following point to help you sort through the noise:</p> <p class="MsoPlainText">&nbsp;</p> <h3 class="MsoPlainText"><strong>See a Financial Planner</strong></h3> <p class="MsoPlainText">Your <a href="/how-to-choose-a-financial-planner-yes-you" target="_blank">financial planner </a> will be instrumental in helping you with many of the above chores. Many financial planners can help with the transition and separation of accounts, but if you are uncomfortable meeting with the same planner you used as a couple, then ask around for a referral to a new planner who you can trust and establish a new relationship with. </p> <p class="MsoPlainText">You face lifestyle changes (in some cases drastic ones), income differentials, emotional transitions, tax plan modifications, and investment time frame readjustments. Your <a href="/asset-allocation-for-all-markets" target="_blank">asset allocation</a> plan may change, either because your investment personality is different from your ex-partner’s, or because you plan to utilize your investments differently (ie: your time horizon is longer, or you need to draw down on some investments now). </p> <p class="MsoPlainText">&nbsp;</p> <p> <span style="font-size: 10pt; font-family: 'Courier New'">As crushing and stressful the trauma of severing your life from a loved one can be, you must try to maintain a level head throughout the process. By covering off the bases above, and keeping your eyes on the road ahead, you can survive the ordeal and move forward without falling into so many of the traps that lurk along the way. Life will go on, and in some cases, may even improve. </span></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nora-dunn">Nora Dunn</a> of <a href="http://www.wisebread.com/post-divorce-finances-7-steps-to-rebuilding-your-financial-house">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-set-up-a-trust-for-your-child">Should You Set Up a Trust for Your Child?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-common-estate-planning-myths">Debunking Common Estate Planning Myths</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/estate-planning-why-me">Estate Planning: Why Me?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/wills-the-basics">Wills: The Basics</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance beneficiary designations divorce and money estate planning joint accounts post divorce finances wills Tue, 28 Oct 2008 04:06:55 +0000 Nora Dunn 2548 at http://www.wisebread.com Business Succession Planning Part 2: How Life Insurance will insure the Life of Your Business http://www.wisebread.com/business-succession-planning-part-2-how-life-insurance-will-insure-the-life-of-your-business <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/business-succession-planning-part-2-how-life-insurance-will-insure-the-life-of-your-business" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/business succession planning part 2.JPG" alt="key man" title="key man" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p class="MsoPlainText"><span>As a follow up to my first article on <a target="_blank" href="/business-succession-planning-part-1-what-a-shareholders-agreement-means-to-you">Business Succession Planning</a>, there are a number of ways that Life Insurance can be fit into the life of a successful business owner. </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>There are <strong>two basic ways</strong> in which a business owner will want to look at Life Insurance for the life of their business:</span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>Buy-Sell Agreement Funding</span></h2> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>As referenced in my <a target="_blank" href="/business-succession-planning-part-1-what-a-shareholders-agreement-means-to-you">previous article</a>, if an owner dies in a situation where there are multiple partners (or even as few as two) who own the company, the shareholder's agreement likely has provisions for the deceased owner's shares to be bought by the other owners. </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>Here's the rub: depending on how the shares are valued and depending on how large the company is, the other owners probably don't have the cash kicking around to buy out the deceased's shares at the drop of a hat. Nor does the company have that kind of dough in the bank.</span></p> <p class="MsoPlainText"><span>In fact, many a company has gone bankrupt or into unshakable financial duress due to improperly funded buy-sell agreements and the consequent inability to carry the terms through. </span></p> <p class="MsoPlainText"><span> </span></p> <h3><strong><span>Structuring Life Insurance for Buy-Sell Agreement Funding</span></strong></h3> <p class="MsoPlainText"><span>The way around this mess is to purchase Life Insurance on the lives of each of the owners. The beneficiaries are the surviving company owners. That way if Bob dies, a life insurance policy on his life will give the other owners the cash to purchase Bob's share of the company. The company remains solvent, and Bob's estate (family) receives the money from Bob's share of the business. </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>The good news is that depending on how the policy is structured and the type of business, the <strong>life insurance premiums are often tax-deductible</strong>, and the <strong>insurance proceeds are also tax-free</strong>. It's a great way to process a relatively small tax-deductible expense with the promise of receiving a relatively large tax-free lump sum of money just when it is needed. </span></p> <p class="MsoPlainText"><span> </span></p> <p><span> </span></p> <h2><span>Key Man Insurance (Key Person Insurance)</span></h2> <p class="MsoPlainText"><span> <br /> Business owners are quick to insure the company against the loss or damage of its <em>property</em> on the basis that office equipment and inventory are valuable assets. Such assets, however, may not be as valuable as key employees.</span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>Consider a top salesperson who is unsurpassed at bringing in new accounts, or a manager who handles the day to day operation of the business. Key employees like these are a firm&rsquo;s most valuable resource. </span></p> <p class="MsoPlainText"><span>If a key-person died suddenly, profits could be impacted and there might be considerable costs incurred in recruiting, hiring and training a suitable replacement.</span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>So why insure the life of a key employee? Although it won't replace the work that the key employee did, the extra cash will provide a cushion to: </span></p> <ul> <li><span>Keep the business running </span></li> <li><span>Offset expected reductions in sales revenue </span></li> <li><span>Find and train a new person to assume the deceased&rsquo;s role </span></li> </ul> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>Believe it or not, <strong>when applying for substantial business loans, some banks will actually look for key man insurance</strong> depending on the structure of the firm to ensure that an unexpected death won't be the end of the company (and an end of the loan payments).</span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>Examples of key employees would be anybody whose special skills contribute significantly to the bottom line, like:</span></p> <ul> <li><span>Active business owners</span></li> <li><span>Employees who have strong relationships with major customers</span></li> <li><span>Employees with specialized knowledge that is hard to replace</span></li> </ul> <p class="MsoPlainText"><span> </span></p> <h3><strong><span>Structuring a Key Man Policy</span></strong></h3> <p class="MsoPlainText"><span>The company purchases a life insurance policy on the employee. Both the owner and the beneficiary of the policy is the company. So if the employee dies, the money goes to the company (tax-free). </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>Obviously the amount of insurance needed is dependent on the level of value the employee has on the company's operations. Things to consider include:</span></p> <ul> <li><span>How much would it cost to replace the employee? (including recruitment fees, etc)</span></li> <li><span>How much net profit does the employee's work result in?</span></li> <li><span>How much would it cost the company if the employee died today?</span></li> <li><span>How much can the business afford (or how much is the business willing to afford) for this insurance?</span></li> </ul> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span>The need and desire for Life Insurance (either Key Man or Buy-Sell funding) will vary from company to company and person to person. It is an intricate situation that incorporates the <strong>nature of the business, the needs of the owner(s), as well as their respective family situations</strong>. <em>No one piece of the pie can be examined in isolation from the others</em>. </span></p> <p class="MsoPlainText"><span>And with so many things, life will continue to change, so periodic re-evaluation of needs (along with a &quot;gut check&quot;) is always prudent. </span></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nora-dunn">Nora Dunn</a> of <a href="http://www.wisebread.com/business-succession-planning-part-2-how-life-insurance-will-insure-the-life-of-your-business">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-for-small-businesses">The 5 Best Credit Cards for Small Businesses</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-should-single-people-get-life-insurance">When Should Single People Get Life Insurance?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-inspiring-stories-of-normal-people-building-a-thriving-online-store">4 Inspiring Stories of Normal People Building a Thriving Online Store</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/business-succession-planning-part-3-using-disability-insurance-to-protect-your-business-interest">Business Succession Planning Part 3: Using Disability Insurance to Protect your Business Interest</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/business-succession-planning-part-1-what-a-shareholders-agreement-means-to-you">Business Succession Planning Part 1: What a Shareholder&#039;s Agreement Means to You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Entrepreneurship business succession planning buy-sell agreement estate planning key man insurance life insurance shareholders agreement small business Sat, 09 Feb 2008 02:13:37 +0000 Nora Dunn 1768 at http://www.wisebread.com Wills: The Basics http://www.wisebread.com/wills-the-basics <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/wills-the-basics" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/wills.JPG" alt="mourning" title="mourning" class="imagecache imagecache-250w" width="250" height="180" /></a> </div> </div> </div> <p class="MsoPlainText"><span>As indicated in a <a href="/estate-planning-why-me" target="_blank">previous article</a>, planning for the future (even if the future means you&#39;re dead) is a necessary evil. Here are some of the basics of a will and what you need to know. </span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>BASIC TERMINOLOGY</span></h2> <h3><u><strong><span>Will</span></strong></u></h3> <p class="MsoPlainText"><span>This is a legal document which outlines how your assets and belongings are to be distributed when you die. </span></p> <p class="MsoPlainText"><span> </span></p> <h3><strong><u><span>Executor</span></u></strong></h3> <p class="MsoPlainText"><span>Your executor (also known as &quot;administrator&quot;) is the person you designate in your will to carry out your wishes. </span></p> <p class="MsoPlainText"><span>Since they have to follow your will to the letter, it is best to meet with your chosen executor, gain their approval for such a responsibility (it&#39;s a big one), and then describe your wishes to them as outlined in the will. They should also ideally know where to find the will and other key documents if and when they need to. </span></p> <p class="MsoPlainText"><span> </span></p> <h3><strong><u><span>Beneficiary</span></u></strong></h3> <p class="MsoPlainText"><span>Beneficiaries are the people who receive your assets when you die. You designate them as you see fit in your will, and you can have as many beneficiaries as you wish. Beneficiaries can also include companies, charities, and other organizations. (If you designate an organization or charity as your beneficiary, it is best to consult with them first to determine how specifically to do so). </span></p> <p class="MsoPlainText"><span> </span></p> <h3><strong><u><span>Intestate</span></u></strong></h3> <p class="MsoPlainText"><span>If you die without a will, you are considered to be intestate. This is when the government steps in, and over a tiresome period will attempt to contact anybody who might be a family member with a right to receive any of your assets. They first need to find the most appropriate executor, since nobody will be allowed to touch anything you owned until one is appointed. All accounts without designated beneficiaries (and even some that are) will be frozen and assets locked up.</span></p> <p class="MsoPlainText"><span>If there are competing interests for who should be the executor, then intestate succession can become ugly, costly, and chaotic. </span></p> <p class="MsoPlainText"><span>And if somebody dies intestate, even joint accounts can be frozen (not always, but in some cases), so spouses who think their estate situations are simple and not in need of wills can sometimes be in for a nasty surprise. </span></p> <p class="MsoPlainText"><span> </span></p> <h2><span>BASIC BENEFITS</span></h2> <h3><strong><u><span>Guardian for Children</span></u></strong></h3> <p class="MsoPlainText"><span>In your will, you designate a guardian for your minor children. You can also specify certain elements of how they are to be raised, and arrange how they will be financially cared for. </span></p> <p class="MsoPlainText"><span>If no guardian is selected, your kids don&#39;t get to pick, and sometimes the most logical guardian (for example a close friend who has been involved with the family since the beginning and would love to care for the kids) won&#39;t be respected - it goes by the book (worse case scenario: think &quot;wicked Aunt who hates kids and never went to a family picnic if you paid her&quot;). </span></p> <p> <span> </span></p> <h3><strong><u><span>Income Tax Savings</span></u></strong></h3> <p class="MsoPlainText"><span>Depending on where you live, there is usually a tax-friendly provision for the rollover of assets between spouses on death if it is properly specified in the will. Otherwise, there is a &quot;deemed disposition&quot; of assets often resulting in a tax bite before the spouse gains access to these funds. (General financial prudence dictates that you put off paying taxes until the last possible minute, in order to achieve greater overall gains using compound growth). </span></p> <p> <span> </span></p> <h3><strong><u><span>Trusts for Children</span></u></strong></h3> <p class="MsoPlainText"><span>If you die and your kids are the age of majority, they will have full access to the assets you bequest to them. Not to challenge your parenting skills in raising a responsible child, but really - what 18 year old (or 21 year old for that matter) is going to responsibly accept a financial windfall? Heck - many seasoned <em>adults</em> can&#39;t handle financial windfalls; young adults won&#39;t fare any better. Your hard-earned estate that you hoped would provide financial security for your kids could end up being spent in record time with very little to show for it. </span></p> <p class="MsoPlainText"><span>So in your will, consider setting up a trust. There are a few types of trusts (which go beyond the scope of this article), but basically you can set the terms as you wish. You can specify when and how your kids receive the money, and even how it is to be used or invested. Beware of setting too many restrictions: resentment can become a factor if the kids feel they have been unrightfully challenged, but most will eventually respect a decision to hold off divesting the funds until a later age. </span></p> <p class="MsoPlainText"><span> </span></p> <h3><strong><u><span>Family Law Protection</span></u></strong></h3> <p class="MsoPlainText"><span>Once again we trust our kids to make all the right choices in life, including their choice of spouse. However life happens, and sometimes marriages break down. If your hard-earned estate is left to your child and their partner (be they a husband or wife, or just a common-law partner), half of it could well disappear along with that marriage when it breaks down. </span></p> <p class="MsoPlainText"><span>In your will, you can insert clauses and terms to prevent this from happening. </span></p> <p> <span> </span></p> <h3><strong><u><span>Common Disaster Clause</span></u></strong></h3> <p class="MsoPlainText"><span>The best way to demonstrate the effectiveness of a Common Disaster Clause is by example: </span></p> <p class="MsoPlainText"><span>John &amp; Jane are married, with no children. They are both in a serious car accident, hospitalized in critical care. John passes away first, but Jane hangs on. However two weeks later, Jane too dies. </span></p> <p class="MsoPlainText"><span>Without a common disaster clause, John&#39;s assets would go to Jane, the surviving spouse. When Jane dies, her entire estate (which includes everything John brought to the marriage) would go to her side of the family (or whoever her contingent beneficiaries are if she had a will). John&#39;s entire family would be denied any inheritance (including heirlooms or other prized family items - it&#39;s not all about money). </span></p> <p class="MsoPlainText"><span>A common disaster clause diverts this problem by stating that if both spouses die within a certain amount of time (eg: a 30-day period) as a result of a common disaster, then their estates are split in half and distributed to their respective families accordingly. </span></p> <p> <span> </span></p> <h3><strong><u><span>Liability Clause</span></u></strong></h3> <p class="MsoPlainText"><span>This is inserted to protect the executor from being sued, for example in the case of an investment loss. This is particularly important if they are managing trust accounts. </span></p> <p> <span> </span></p> <h3><strong><u><span>Expert Clause</span></u></strong></h3> <p class="MsoPlainText"><span>This allows your executor to retain the services of an accountant or lawyer with regards to processing the estate or receiving estate-specific advice, and the estate can pay for it. Otherwise, the fees could come directly out of the executor&#39;s pocket. And although they may be a great brother or good friend, nobody appreciates a legal bill - much less an unexpected one!</span></p> <p class="MsoPlainText"><span> </span></p> <p class="MsoPlainText"><span> </span></p> <p> <span>As I said earlier, it’s not all about money and cash grabs when you plan your will and estate. You are looking out for the best interests of yourself, your loved ones, and their loved ones too. Nobody likes to plan for the future in this respect, but once it&#39;s done it can be put to bed, and everybody can rest easily knowing that the future is taken care of. </span></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/nora-dunn">Nora Dunn</a> of <a href="http://www.wisebread.com/wills-the-basics">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-set-up-a-trust-for-your-child">Should You Set Up a Trust for Your Child?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/debunking-common-estate-planning-myths">Debunking Common Estate Planning Myths</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/post-divorce-finances-7-steps-to-rebuilding-your-financial-house">Post Divorce Finances: 7 Steps to Rebuilding Your Financial House</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/estate-planning-why-me">Estate Planning: Why Me?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance beneficiary estate planning executor family law intestate trusts wills Tue, 22 Jan 2008 08:45:49 +0000 Nora Dunn 1659 at http://www.wisebread.com