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An Estate Planning Checklist

An Estate Planning Checklist

Things to check & double-check as you prepare.

 

Provided by MidAmerica Financial Resources

           

Estate planning is a task that people tend to put off, as any discussion of “the end” tends to be off-putting. However, those who die without their financial affairs in good order risk leaving their heirs some significant problems along with their legacies.

   

No matter what your age, here are some things you may want to accomplish this year with regard to estate planning.

 

Create a will if you don’t have one. It is startling how many people never get around to this, even to the point of buying a will-in-a-box at a stationery store or setting one up online.

 

How many Americans lack wills? The budget legal service website RocketLawyer conducts an annual survey on this topic, and its 2014 survey determined that 51% of Americans aged 55-64 and 62% of Americans aged 45-54 don’t have them in place.1

 

A solid will drafted with the guidance of an estate planning attorney may cost you more than a will-in-a-box. It may prove to be some of the best money you ever spend. A valid will may save your heirs from some expensive headaches linked to probate and ambiguity.

 

Complement your will with related documents. Depending on your estate planning needs, this could include some kind of trust (or multiple trusts), durable financial and medical powers of attorney, a living will and other items.

 

You should know that a living will is not the same thing as a durable medical power of attorney. A living will makes your wishes known when it comes to life-prolonging medical treatments. A durable medical power of attorney authorizes another party to make medical decisions for you (including end-of-life decisions) if you become incapacitated or otherwise unable to make these decisions. Estate planning attorneys usually recommend that you have both on hand.2

 

Review your beneficiary designations. Who is the beneficiary of your IRA? How about your 401(k)? How about your annuity or life insurance policy? If your answer is along the lines of “It’s been a while,” then be sure to check the documents and verify who the designated beneficiary is.

 

You need to make sure that your beneficiary decisions agree with your will. Many people don’t know that beneficiary designations take priority over will bequests when it comes to retirement accounts, life insurance, and other “non-probate” assets. As an example, if you named a child now estranged from you as the beneficiary of your life insurance policy, he or she is in line to receive that death benefit when you die, even if your will requests that it go to someone else.3

    

Time has a way of altering our beneficiary decisions. This is why some estate planners recommend that you review your beneficiaries every two years.

 

In some states, you can authorize transfer-on-death or payable-on-death designations for certain assets or accounts. This is a tactic against probate: a TOD designation can arrange the transfer of ownership of an account or assets immediately to a designated beneficiary at your death.3

 

If you don’t want the beneficiary designation you have made to control the transfer of a particular non-probate asset, you can change the beneficiary designation or select one of two other options, neither of which may be wise from a tax standpoint.

 

One, you can remove the beneficiary designation on the account or asset. Then its disposition will be governed by your will, as it will pass to your estate when you die.3

 

Two, you can make your estate the beneficiary of the account or asset. If your estate inherits a tax-deferred retirement account, it will have to be probated, and if you pass away before age 70½, it will have to be emptied within five years. If you name your estate as the beneficiary of your life insurance policy, you open the door to “creditors and predators” – they have the opportunity to lay claim to the death benefit.3,4

  

Create asset and debt lists. Does this sound like a lot of work? It may not be. You should provide your heirs with an asset and debt “map” they can follow should you pass away, so that they will be aware of the little details of your wealth.

    

One list should detail your real property and personal property assets. It should list any real estate you own, and its worth; it should also list personal property items in your home, garage, backyard, warehouse, storage unit or small business that have notable monetary worth.

  

Another list should detail your bank and brokerage accounts, your retirement accounts, and any other forms of investment plus any insurance policies.

  

A third list should detail your credit card debts, your mortgage and/or HELOC, and any other outstanding consumer loans.

 

Consider gifting to reduce the size of your taxable estate. The lifetime individual federal gift, estate and generation-skipping tax exclusion amount is now unified and set at $5.34 million for 2014. This means an individual can transfer up to $5.34 million during or after his or her life tax-free (and that amount will rise as the years go by). For a married couple, the unified credit is currently set at $10.68 million.5

 

Think about consolidating your “stray” IRAs and bank accounts. This could make one of your lists a little shorter. Consolidation means fewer account statements, less paperwork for your heirs and fewer administrative fees to bear.

 

Let your heirs know the causes and charities that mean the most to you. Have you ever seen the phrase, “In lieu of flowers, donations may be made to…” Well, perhaps you would like to suggest donations to this or that charity when you pass. Write down the associations you belong to and the organizations you support. Some non-profits do offer accidental life insurance benefits to heirs of members.

 

Select a reliable executor. Who have you chosen to administer your estate when the time comes? The choice may seem obvious, but consider a few factors. Is there a stark possibility that your named executor might die before you do? How well does he or she comprehend financial matters or the basic principles of estate law? What if you change your mind about the way you want your assets distributed – can you easily communicate those wishes to that person?

 

Your executor should have copies of your will, forms of power of attorney, any kind of healthcare proxy or living will, and any trusts you create. In fact, any of your loved ones referenced in these documents should also receive copies of them.

 

Talk to the professionals. Do-it-yourself estate planning is not recommended, especially if your estate is complex enough to trigger financial, legal, and emotional issues among your heirs upon your passing.

 

Many people have the idea that they don’t need an estate plan because their net worth is less than the lifetime unified credit. Keep in mind, money isn’t the only reason for an estate plan. You may not be a multimillionaire yet, but if you own a business, have a blended family, have kids with special needs, worry about dementia, or can’t stand the thought of probate delays plus probate fees whittling away at assets you have amassed… well, these are all good reasons to create and maintain an estate planning strategy.   

 

MidAmerica Financial Resources may be reached at 618.548.4777 or greg.malan@natplan.com.

www.mid-america.us

 

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

   

Citations.

1 - forbes.com/sites/nextavenue/2014/04/09/americans-ostrich-approach-to-estate-planning/ [4/9/14]

2 - ksbar.org/?living_wills [9/10/14]

3 - nj.com/business/index.ssf/2013/12/biz_brain_beneficiary_designat.html [12/9/13]

4 - nolo.com/legal-encyclopedia/naming-non-spouse-beneficiary-retirement-accounts.html [9/10/14]

5 - forbes.com/sites/deborahljacobs/2013/11/01/the-2013-limits-on-tax-free-gifts-what-you-need-to-know/ [11/1/13]


Weekly Economic Update

MidAmerica Financial Resources Presents:

WEEKLY ECONOMIC UPDATE

 

WEEKLY QUOTE

              

“No law or ordinance is mightier than understanding.”

     

- Plato

      

   

WEEKLY TIP

             

Schedule your yearly financial review to coincide roughly with an anniversary or a birthday. The life event will provide a ready reminder.

  

   

WEEKLY RIDDLE

            

What 2 common English-language words both contain 2 Cs in a row, 2 Ss in a row and two Ls in a row? 

  

Last week’s riddle:

What word measures weight and turns negative if spelled backwards?   

   

Last week’s answer:

Ton.

September 29, 2014

    

NEW HOME SALES JUMP, RESALES DIP

Existing home sales slumped 1.8% in August – their first retreat since March, according to the National Association of Realtors. This followed gains of 2% or more in each of the previous three months. News about new home purchases was better: the Census Bureau recorded an 18.0% increase for August, more than making up for two months of declines. Keep in mind that these numbers may be significantly revised (as an example, May’s apparent 18.6% advance in new home buying was reduced to an 8.3% gain a month later).1,2

       

CONSUMER SENTIMENT RISES

At a final September mark of 84.6, the University of Michigan’s much-watched consumer sentiment index climbed 2.1 points above its final August reading. Economists polled by Bloomberg expected it to reach 84.8, however. This month’s preliminary reading for the index was also 84.6.3

       

AN 18.2% DROP FOR HARD GOODS ORDERS

The August descent was the biggest monthly dip ever recorded by the Commerce Department, following the biggest monthly rise ever seen – the revised 22.5% gain in July. Major variations in aircraft orders affected those percentages. Minus the transportation sector, durable goods orders were up 0.7% last month.4

    

5 VOLATILE DAYS ON THE STREET

U.S. air strikes against ISIS. Key economic indicators soaring and plunging. An Apple selloff. Q2 GDP revised up to 4.6%. Bill Gross leaving PIMCO for Janus. All this made for a choppy week on Wall Street, with 5-day performances of major indices as follows: S&P 500, -1.37% to 1,982.85; NASDAQ, -1.48% to 4,512.19; DJIA, -0.96% to 17,113.15.3,5

     

THIS WEEK: August personal spending statistics and August pending home sales figures arrive Monday, along with earnings from Cintas. Tuesday offers the latest Conference Board consumer confidence index, July’s Case-Shiller home price index, September’s HSBC manufacturing PMI for China, September readings on eurozone unemployment and inflation and earnings from Walgreens. Official September factory PMIs for China, Japan and the euro area come out on Wednesday along with September’s ISM factory PMI for the U.S.; investors will also consider the latest ADP employment report. The European Central Bank holds a policy meeting Thursday, and that day also brings a new initial jobless claims report, August factory orders data and Q3 results from Constellation Brands. Friday, the Labor Department issues its September jobs report and ISM releases its September non-manufacturing PMI.

  

% CHANGE

Y-T-D

1-YR CHG

5-YR AVG

10-YR AVG

DJIA

+3.24

+11.64

+15.41

+7.13

NASDAQ

+8.04

+19.14

+23.16

+14.26

S&P 500

+7.28

+16.73

+17.97

+7.97

REAL YIELD

9/26 RATE

1 YR AGO

5 YRS AGO

10 YRS AGO

10 YR TIPS

0.57%

0.47%

1.60%

1.72%

 


Sources: online.wsj.com, bigcharts.com, treasury.gov - 9/26/146,7,8,9

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.

These returns do not include dividends.

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Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser.
MidAmerica Financial Resources and Malan Financial Group are separate and unrelated companies to NPC.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

Citations.

1 - investing.com/economic-calendar/ [9/26/14]

2 - forbes.com/sites/erincarlyle/2014/07/24/new-home-sales-slip-8-1-in-june/ [7/24/14]

3 - businessweek.com/news/2014-09-25/asia-stock-index-futures-fall-after-u-dot-s-dot-drop-dollar-holds-gain [9/25/14]

4 - marketwatch.com/story/us-durable-goods-orders-sink-record-182-in-august-on-fewer-jet-contracts-2014-09-25 [9/25/14]

5 - markets.on.nytimes.com/research/markets/usmarkets/usmarkets.asp [9/26/14]

6 - markets.wsj.com/us [9/26/14]

7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F26%2F13&x=0&y=0 [9/26/14]

7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F26%2F13&x=0&y=0 [9/26/14]

7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F26%2F13&x=0&y=0 [9/26/14]

7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F25%2F09&x=0&y=0 [9/26/14]

7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F25%2F09&x=0&y=0 [9/26/14]

7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F25%2F09&x=0&y=0 [9/26/14]

7 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=9%2F27%2F04&x=0&y=0 [9/26/14]

7 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=9%2F27%2F04&x=0&y=0 [9/26/14]

7 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=9%2F27%2F04&x=0&y=0 [9/26/14]            

8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [9/26/14]

9 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [9/26/14]

 





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