Month: September 2016

Don’t Be Shy: Talk to Parents About the Future

The challenge of helping aging parents is a most common issue. For example, a man’s father, who recently was diagnosed with dementia, couldn’t remember where his money or financial records were kept. That makes for a gut-wrenching situation, trying to locate important documents while caring for an ailing father.

Have that tough conversation now and concentrate on the top areas of your parents’ well-being. It will help alleviate the administrative and emotional burden of caring for them. Parents should to be reassured that you’re not trying to take control of their lives or take advantage of them. Begin the conversation early—that’s best for the long-term interests of the whole family. 9-29-2016

With that in mind, NASDAQ’s article, “Long-Term Care and Wealth Planning for Aging Parents,” points out some of the most important financial issues, decisions and plans to discuss with your parents:

  1. Consider a living trust. In addition to a will, your family may also benefit from creating a living trust to designate which beneficiaries will inherit the assets. The difference between a trust and a will is that assets included in a properly-executed living trust will not be part of the probate process. A living trust may be a bit more expensive to create than a will, but it will let your parents do wise tax and estate planning to protect their wealth. This definitely requires the expertise of an experienced estate planning attorney.
  2. Plan for possible long-term care. It’s not too early to start planning for long-term care. The U.S. Department of Health and Human Services says that there’s about a 70% chance that a 65-year-old will need some type of long-term care at some point. In fact, some will require long-term care for more than five years.
  3. Consider housing options. It’s critical to discuss housing options with your parents and what they would want to do in the event they can no longer live without aid in their own home.
  4. Figure out transportation needs. If your parents are having trouble with remembering things, they may no longer be able to drive safely. What’s the plan for when they can no longer drive themselves?
  5. Talk to your parents. Research shows that many adult children and their parents frequently are not on the same page with money issues. Some folks have difficulty talking about who’ll make financial decisions on behalf of parents if they no longer have the ability to handle their money safely, and others disagree on what role children should play in the care of their parents.

Despite being somewhat uncomfortable, a conversation with your parents about their health and wealth as they age is very important. You can show your parents that you have their best interests at heart and can avoid some future conflict and challenges.

Reference: NASDAQ (August 10, 2016) “Long-Term Care and Wealth Planning for Aging Parents”

Changes are Happening All the Time: Keep Your Estate Plan Current

Congratulations! After putting it off for as long as humanly possible, you’ve finally completed and implemented your estate plan. Check that box and cross that off the list! But are you really finished with the planning? The answer must be “no,” or this would be a very short post.

There’s one very important step that remains: a periodic review and update of your estate plan in its entirety. 9-28-2016


Yes, that’s right. If your plan was done five years ago or longer, there might be a few changes in your life besides new drapes and a flat screen TV.

Real life changes can happen—like getting married, getting divorced or maybe having a child … or two … or three. It could be that you’ve reconnected with a daughter or son who was once estranged.

These changes can be outside your control—like income tax and estate laws that are amended, repealed or are newly effective. That once perfect estate plan may not be a “10” any more. It has lost some points because it’s out-of-date and—in its current state—has the potential to be inaccurate and cause much grief for your heirs.

Change is constant, and WMUR’s article, “Money Matters: The 'final' estate-planning step,” says that there are some key indicators that show when a review is in order.

It could be a change in:

  • Estate valuation: The value of your estate may have changed significantly, like through receiving a sizable inheritance or winning the lottery.
  • Economic situation: Your income level has been modified or you’re retiring.
  • Employment: If you or your spouse has a job change, it may call for an estate plan modification.
  • Family situations: The marital status has changed for your child, grandchild or you. There’s a new baby in the family. Your spouse, child or grandchild has died. You or a family member are now ill or incapacitated. Other individuals like your parents are now dependent on you.
  • Businesses: Your closely held business interest may have changed. Maybe you formed, purchased or sold a closely held business, which could mean liquidation or reorganization. Did you execute a buy-sell agreement with your partner, or are there differences in employee benefits, pension plans or deferred compensation plans?
  • Major transactions: This includes making substantial gifts and borrowing or lending money—even purchasing, leasing or selling assets or investments.
  • You moved: If you moved to another state, it may impact your planning.
  • A new vacation home in another state: This could have ramifications.
  • Any litigation: Lawsuits can affect your finances.
  • Insurance coverage: Changes in your insurance coverage may impact your estate planning needs or may make updates necessary.
  • Death of a trustee, executor or a guardian: If one of the individuals you designated dies or changes his or her mind about serving, you must revise your estate plan and replace that person.

Unless you can read tea leaves, you’re not going to know about every event that should prompt you to review and revise your estate plans. Use your common sense and think about what’s going on in your life and in the lives of your family and loved ones. If it’s been four years or more since you reviewed your estate plan with your attorney, now is the time to make that appointment.

Reference: WMUR (August 11, 2016) “Money Matters: The 'final' estate-planning step”

Is Whole Life Insurance Right for You?

Term life insurance will cover you for a certain period of time. Alternatively, whole life insurance also includes a savings account known as its cash value, which builds over time. You can borrow against the cash value or surrender the policy for the cash.

Huffington Post’s article, “5 Questions to Ask Before You Buy a Whole Life Policy,” sets out things to ask yourself before buying a whole life policy.

  1. Do I really need it? Whole life can be helpful, but it’s not necessary for everyone. If you require just some temporary coverage until you’ve paid off debts or your kids get through college, choose term life insurance. It’s inexpensive if you’re young and healthy. However, whole life can be a good if you: 9-27-2016
  • Have a big estate that’ll be subject to taxes when you die;
  • Want to provide money to heirs for a funeral and final expenses or leave a legacy, even if you spend all of your retirement funds;
  • Are the parent of a lifelong dependent, such a child with special needs—a life insurance payout can fund a special needs trust; or
  • Maxed out contributions to tax-advantaged retirement savings accounts and want a safe place to grow cash long-term as part of your diversified portfolio.
  1. Can I afford it? Whole life costs a lot more than term life because some of the premium goes into the cash value savings account—and the interest rate and death benefit are also guaranteed. Note: it takes years to build up substantial cash value, and if you decide to quit the policy after only a few years, you’ll be out a chunk of change and have little or no cash value to take with you. There’s also a fee to surrender the policy during the early years. If you’re in need of permanent coverage, but can’t afford the premiums, look at a term life insurance policy that can be converted to whole life. Regardless of what type of policy you’re buying, get quotes from several companies and work with a qualified life insurance professional.
  2. How much coverage should I get? This depends on how you want to use the insurance. If you want it for estate planning, the payout needs to cover the estate taxes so that your heirs don’t have to pay them. Note: you will want to create an “irrevocable trust” to own the life insurance and to be the beneficiary on behalf of your loved ones to keep the proceeds from becoming part of your taxable estate. If you want to take care of final expenses, make sure it covers the funeral and any debts you’ll leave behind.
  3. How’s the cash value going to grow? The cash value in a whole life policy has a guaranteed annual return. If the company is a mutual insurer, there might also be annual dividends. This is a share of a company’s surplus, but they’re not guaranteed. Each year, a mutual company makes the decision whether to declare dividends and the amount to give to policyholders. The dividends you get will be based on your policy’s cash value. You’ll be eligible to earn larger dividends as you maintain the policy and let the cash value grow.
  4. How’s the company? Check on the financial strength ratings of the insurance companies you’re comparing. Get ratings online from A.M. Best and select a company with at least a B+ rating.

Talk with your estate planning attorney about your overall finances and how life insurance fits into your comprehensive strategy before making a purchase. He or she can refer you to a qualified life insurance professional to help.

Reference: Huffington Post (August 3, 2016) “5 Questions to Ask Before You Buy a Whole Life Policy”