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The Benefits of Estate Planning

The Benefits of Estate Planning

It’s the one personal finance topic people often try to avoid, even though they know they shouldn’t. Estate planning refers to a number of activities dealing with how decisions are made and assets are handled and disposed of just prior to and following death or incapacity. 

While far from the most upbeat of topics, it’s a very important one to contend with nonetheless. But rather than focus on specific estate planning strategies, let’s consider the potential benefits of addressing this issue at all. 

Leave a legacy. Many people want to leave something tangible to those they love, whether to their children, grandchildren and great-grandchildren, nieces, nephews or friends. Knowing that your lifetime of hard work and saving can make affording college, buying a first house, a car, or starting a business easier or possible for someone you love can be gratifying. A final will and testament spells out the specifics of how your assets are disposed of. And you can also leave an explanatory letter to your beneficiaries to let them know what they meant to you, why a gift was made and how you hope your bequest will help enrich their lives. 

Unburden your loved ones. Making difficult end-of-life medical decisions can be stressful and anxiety ridden for those who care about you. But this is a burden you can take off their shoulders by putting in place advanced directives — otherwise known as a living will — that express your wishes for continuation of life-support and other medical decisions if you aren’t able to make them for yourself. And it’s a very loving thing to do for your children or other family members 

Support a charity. Do you have a charity that means a lot to you? You can leave a lasting gift by remembering that nonprofit organization in your will. Whether you want to support curing childhood diseases, environmental efforts, animal welfare, or a church, synagogue or mosque, you can take comfort in knowing that you’ll help support the causes that matter most to you even after you’re gone. 

Take control. Estate planning in some ways, is the ultimate assertion of control over your final destiny. Whether through the establishment of a trust, the creation of a will or the documentation of your advance directives, youll be able to maintain greater control over important decisions throughout your life and beyond. 

Remember, estate planning isnt only for the wealthy. Everyone will have to make end-of-life decisions that have tremendous consequences for themselves and their loved ones. Once you have all the essential documents in place, you most likely will not have to revisit these decisions very often. And with an appropriate estate plan in place, you can get on with enjoying your life in the here and now. 

Source https://www.nolo.com/legal-encyclopedia/how-write-explanatory-letter-your-will.html 

Retiring Soon? You Need to Be Doing These 7 Things Now

Retiring Soon? You Need to Be Doing These 7 Things Now

Retirement can be a rewarding and exciting time. Make the most of yours by preparing ahead so you can relax and focus on all the fun stuff ahead.Are you in the final countdown to retirement? Congratulations! This can be an amazing time full of new opportunities. Put yourself in the best position possible for your next adventure with these seven retirement readiness tips.


1.  Revamp your budget. If you’re retiring soon, some expenses will likely go up — like medical and travel. But others will probably go down. You may not need to spend as much on clothes for work, and you may not even need a second car if you’re married. If you’re going to lose employee-sponsored health insurance and are not yet Medicare eligible, you’ll have to budget for purchasing insurance privately or buying it through one of the Affordable Care Act exchanges. And while you may have hoped to have all your debt paid off before retirement, unfortunately for many this is not the case. But you should at least audit all your debt including: mortgages, home equity lines of credit, cars, credit cards and other loans. That way you can budget for those expenses during retirement. Or you may decide to work a few more years part time to help expedite that process.


2.  Know Your Tax Strategy. Your taxes may change dramatically once you stop working, and different sources of income may be taxed at different rates. For example, IRA or 401(k) plan withdrawals are taxed as ordinary income, but for Roth IRAs or Roth 401(k) plans, withdrawals can be tax free. You may be subject to capital gains if you withdraw from a taxable investment account and required minimum distributions may push you into a different tax bracket once you reach age 70½. Consult your tax advisor to know what you can expect in your particular situation.


3.  Have a Social Security Plan. Your benefits will be reduced if you start taking Social Security before your full retirement age, which is probably about 66 to 67 depending on when you were born. If you wait, your checks will be higher. Determining exactly when to opt in can be a


complicated decision that would also benefit from an open discussion with your financial advisor. Taking benefits early can affect how much you can earn without your Social Security

benefits being reduced. Many people don’t realize that a large portion of their benefits may also be taxable.


4.  Get a handle on Medicare. What you’ll end up paying for your Medicare benefits depends on several factors, including your income. Medicare is a complicated program and you don’t want to be figuring it all out at the last minute, so now is a good time to do your homework and speak to your financial and/or Medicare advisor. According to research from Fidelity Investments, the average 65-year-old couple will spend more than a quarter million dollars for health care over the rest of their lives. Having Medicare and the right supplemental insurance is critical in planning for this phase of your life.


5.  Finish your estate plan. If you haven’t already, take care of your will, durable power of attorney, healthcare power of attorney, and/or advanced directives. Other documents such as a trust, guardianship designation or letter of intent may also be appropriate. Consult an estate planning lawyer regarding your specific needs.

6.  Reassess investments. Hopefully you’ve been keeping a watchful eye all along, but if not, it’s especially important to reevaluate your allocations before retiring. Your portfolio may not have time to recover from a serious market downturn. Check risk in all your retirement accounts. Make sure your market exposure is appropriate given your age and risk tolerance.

7.  Plan your free time. You’re retiring soon and that means your life is about to undergo major changes — and not all of them financial. Your daily rituals will be different and you may not be seeing a lot of the same people day to day. While sleeping in and hitting the links may be satisfying in the short term, for some it may gradually give way to boredom or depression. Consider joining some clubs or volunteering to keep yourself busy and meet new people. Couples who may have never spent all day long together may also need a little time to readjust to a new routine.

Source: https://www.cnbc.com/2018/11/02/if-youre-planning-to-retire-in-2019-heres-how-to- make-sure-youre-prepared.html

Tags: estate planning, retirement, budget, estate


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