Our advisors share their financial insight with you! Their writing is featured in local publications.
Jill Ciccarelli Rapps | Life in Naples Magazine | Aug • Sep • Oct 2017
For most Americans, financial independence is an important goal that motivates us throughout our entire lives. Even though our personal ambitions and goals may differ, we all share a common aspiration: generating enough money to live comfortably.
While many people think of work as a means to achieve financial independence – earning a salary to pay your bills and provide a high standard of living for your family – the term takes on a whole new meaning as you approach retirement. As a retiree, financial independence means that you are earning enough money from your investments and other assets to live your desired lifestyle.
Becoming financially independent requires a long-term commitment and a cohesive plan that can lead you towards your goals. Consider these “stepping stones” as you continue your journey to and through retirement!
Be patient. During your life, you will encounter many “get-rich-quick” schemes that promise wealth and success with little to no effort. However, as you probably have learned, very few people become wealthy overnight. Instead, the most effective way to achieve financial independence is to plan for the long term, stay committed to your goals, and make smart, stable investments.
Spend less than you earn. Each month, set aside a little money for savings before you pay your expenses; in other words, pay yourself first! The amount you save will vary based on your income and circumstances, but typically a 10-25% savings rate is a good goal to set (your financial advisor can provide you with more clarity). Over time, your regular savings habit will help you to develop resources for purchasing investments; then, your money can begin to compound and grow exponentially as you reinvest your returns.
Stay informed. Given all of the stocks and securities available on the market, it is important to consider the various factors that can impact your success as an investor. Understanding the current tax environment, inflation and interest rates will be critical in order to create an effective investment plan. In doing so, you will position yourself to build a portfolio that is stable and resilient, even amid the fluctuations of our economic climate.
Be proactive, not reactive. Neither the bear market nor the bull market will ever stay permanent; rather, the market is in a constant state of flux. When the market takes a turn for the worse, it can be difficult to focus on the long-term view – and many people end up making impulsive decisions that are not in their best interest. For this reason, you should be wary of reacting to the natural ebb and flow of the market. Instead, build a solid, proactive investment strategy and stay the course.
Of course, that is not to say that changing your investments is off-limits; but adjustments to your investment plan should reflect careful planning and analysis, not a spur-the-moment reaction to an emotional situation. By remaining calm, focused and logical when assessing your financial situation, you will be able to make smarter decisions that guide you towards financial independence.
Diversify. As the old saying goes: “Don’t put all your eggs in one basket.” A diversified approach to investing will strengthen your staying power (the ability for your portfolio to withstand fluctuations in the long run). As a result of this staying power, you will likely experience steady growth over time – cushioning your assets from volatile market conditions and mitigating your losses.
Seek professional advice. A professional financial planner provides the perspective and experience you need to identify and capitalize on opportunities to strengthen your portfolio. While many “DIY” investors are well-versed in market conditions and investment strategies, they often overlook these opportunities or make unforced errors along their journey to financial independence. Even if you consider yourself an expert on investing, seeking professional advice can greatly enhance your financial plan.
As a financial planner, I have witnessed the efficacy of these strategies in guiding my clients towards financial independence. While there are a plethora of factors to consider when creating a successful financial plan, the underlying theme is simple: save money early and consistently; invest proactively, not reactively; and seek guidance from the experts.
With these stepping stones to success, financial independence is easily within your reach.
Jill Ciccarelli Rapps | èBella Magazine | May 2017
Communication can make or break any relationship, especially the special bond you share with your significant other. In particular, failing to communicate about your money can place undue strain on your marital relationship. Without proper communication, you will find it nearly impossible to appreciate your spouse’s aspirations and philosophy regarding money.
Whether you’ve recently gotten married or have been married for decades, you and your significant other will both benefit from regular discussions about finances. Open and honest communication will not only enable you to avoid common misunderstandings that lead to hurt, resentment or confusion; but will also promote your long-term financial success.
Facilitating the Discussion
As a result of practicing these healthy communication habits, you will likely reduce conflict in your marriage and develop a mutually satisfying agreement about your financial plan.
Start by discussing your overall perspectives on money. What is your underlying approach to managing your finances? Are you a spender, a saver, or an investor? What important lessons or beliefs about money have informed your opinions? You’ll want to be completely honest when discussing your perspective on money. Your personal attitudes and beliefs about spending and saving will shape your behavior; which, in turn, impacts the financial outcomes that you and your spouse will achieve.
Recognize your differences. Differences of opinion are a healthy and normal part of any relationship. In many cases, you will discover that your perspective on money does not align perfectly with your spouse’s viewpoint. Unfortunately, minor disagreements about money can bubble under the surface for years and could eventually lead to a heated argument.
To prevent this downward spiral of conflict, it may be a good idea to have a third party, such as a financial advisor or coach, to help you bridge the gap between your perspectives and goals. In doing so, you will likely find some common ground – or at the very least, reach a clearer understanding of your spouse’s financial perspective.
Identify common goals. Where do you want to be at the end of 2017? How about in five years or 25 years? Both of you should dedicate plenty of time to articulating and clarifying your goals. Then, pinpoint the similarities between your respective visions. By discussing your common ground, you will find it much easier to focus on creating a unified blueprint for your financial future.
Find a compromise. As you discover areas where you and your partner are at odds, you may need to seek a centrist solution. For example, if your partner is adamant about having cash on hand to spend freely, create a budget that allocates some extra spending money for them. On the flip side, if your partner is savings-oriented, consider how you could reduce your expenses or generate supplemental income to develop your retirement nest egg.
No matter the situation, there is usually a compromise that fulfills both of your needs and reflects the big picture of your financial plan.
Designate your “family CFO”. You may find it useful to view your personal finances in the same light as a business. Most companies have a CFO who closely monitors their cash flow, expenses and profitability. An effective CFO will analyze the data, make informed recommendations, and work with other executives to make decisions that bring about positive financial change.
In the same way, you could benefit from appointing a family CFO, who will play the lead role in managing your budget and portfolio. It is crucial that your CFO is capable of overseeing your financial plan in a way that is fiscally responsible, agreeable to both parties, and aligns with your underlying goals. While the balance of financial power in your relationship may not be equal, both of you should have some level of involvement in the decision-making process.
The Foundation for a Healthy Future
Conversations about money can be uncomfortable and contentious for some couples. That being said, a willingness to communicate openly about your finances will help you to achieve your goals and sustain a healthy spousal partnership. By celebrating your differences, collaborating on common goals, and developing a unified vision, you can revitalize your relationship and enhance your financial wellness.
If you would like to improve your communication with your significant other, a financial advisor can facilitate conversations about money and serve as an objective arbiter for recurring disputes you have encountered. A gentle push from an expert can be instrumental in finding consensus and opening new doors in your collective pursuit of financial success.
Jill Ciccarelli Rapps | Life in Naples Magazine | May • June • July 2017
In 2016, more than 10 million Americans – about 3% of the U.S. population – served as the primary caregiver for their elderly parent. The continuum of caregiver responsibilities vary based on needs, but often involves the daily basic care needs such as feeding, administering medicine, and helping with personal hygiene; as well as financial and emotional support.
As a caregiver, your obligations to your parent or loved one can be draining – both financially and mentally – so it is crucial to have a plan in place. By preparing for your role as a caregiver, you should ensure that all of their needs are met while still taking care of your own.
Here are some key tips to keep in mind to make the most of your time as a caregiver.
Have the Conversation Early
If possible, talk to your parents before their health degrades about putting a plan in place. By preemptively addressing these concerns in advance of need, you can prevent many of the hiccups that you are bound to encounter.
First, take a look at both of your parent’s financial resources and your personal financial situation. This crucial first step can help you to determine what options are feasible for your family to consider and can help you to make decisions about filling any gaps that may lead to financial hardship.
You should also draft a living will, and establish power of attorney and a healthcare proxy. The best approach is to partner with your financial advisor and attorney to develop a plan that meets your needs.
Gather All the Necessary Paperwork
You will also want to compile all of the necessary paperwork for your loved one’s next stage in life. Create a file of their important documents and ensure that this file is kept in a secure location that can be accessed by all parties concerned.
You will need to collect:
- Income information including pension, 401(k) and retirement plans, and SSI benefits
- Savings bonds, stock certificates, and annuity contracts
- Partnership, corporate, or company operating agreements
- Tax returns
- List of all bank accounts
- Documentation of any loans, debts, or credit cards or accounts
- Copies of their health and life insurance policies
- Medicaid/Medicare information
- Social security cards and birth certificates
- Property deeds and vehicle titles
- Contact information for their medical doctors and insurance agents
- Power of attorney, healthcare power of attorney, living will, and/or authorization to release healthcare information
- Medical histories and prescription information
Develop a Budget
Once you understand the full extent of your combined resources and have gathered your key documents paperwork, you should develop a budget. Though it may be difficult to determine a budget before you know the full extent of your parent’s health care costs, a financial planner can provide an informed estimation about their living expenses.
When creating your budget, consider all costs – not just medical and hospice care, but also factor in their day-to-day living expenditures (housing, food, utilities, etc.). Determining your budget can also help you decide if your parents should move in with you, if you can leave your job to provide full-time care, or if you can hire outside help. Most importantly, a well-formulated budget can help reduce the mental and emotional stress that arise from financial woes.
Get Help When You Need It
No one will ever be able to care for your parents like you can. However, that does not mean compromising your own future financial security for the sake of being their caregiver. If caring for your aging parents becomes unmanageable, tap into some of the resources that are available in your community.
For instance, a financial planner can provide you with the clarity and insight you need to plan your budget effectively. Additionally, there are myriad benefits available through Medicare and Medicaid, as well as free or low-cost government programs that can assist you in finding quality hospice care and medical support. Make sure that you take the time to learn about the full extent of these benefits!
Though caring for your aging parent is a difficult prospect to consider, it is critical for you to develop a comprehensive plan in the event that you find yourself in this position. By properly planning for future needs, budgeting for medical and living expenses, and seeking out community resources, you can effectively provide financial and emotional support for your aging parent.
Kim Ciccarelli Kantor | Naples Daily News | March 2017
In a perfect world, you would know exactly what to do and who to call when your spouse passes. You would have checklist of key estate planning considerations, which you had discussed with your advisors and your spouse before they passed. But for all the preparation in the world, it can be difficult to know where to start amidst the sorrow and grief of losing your spouse.
Of course, your first responsibility is family: handling all of the necessary arrangements for your spouse’s funeral and coordinating with your family members. Next, you need to notify your advisors – specifically, your attorney and your family financial advisor – and set up a meeting to gain a better understanding of your responsibilities as the surviving spouse.
Unfortunately, many people fail to adequately prepare for their spouse’s death. Of course, most people execute and sign their key estate planning documents in accordance with their wishes. They work with their financial advisor to name beneficiaries and properly title assets. They open a safe deposit box and make sure there are multiple signors. They secured their domicile and filed the necessary homestead papers. They prepare a balance sheet or a ledger of assets.
While all of these steps are necessary and valuable to the estate planning process, these actions will not sufficiently prepare you for the reality of losing your spouse.
By completing a thorough post-death dress rehearsal with your spouse and advisor team, you will effectively bridge any gaps in your plan that could undermine the proper execution of your estate. Create a comprehensive list of the most important priorities to contemplate at the time of your spouse’s death. As morbid as a post-death rehearsal may sound, a detailed rundown of your responsibilities will prepare you for the worst imaginable scenarios.
For instance, pre-death planning is especially imperative if both you and your spouse are deceased or incapacitated, and you need to defer to your Power of Attorney or successor trustee for oversight. Without a complete understanding of your responsibilities after your spouse’s death, that situation could be a total nightmare.
Your life plan hinges on how well you settle your affairs and the decisions you make. Prior to meeting with your advisors, claim nothing, make no decisions, and do not inform institutions of your spouse’s passing. Instead, gather information in preparation for this time together. Visit your safe deposit box, and bring your original estate documents and your spouse’s death certificate. Review your cash balances in accounts that are in your name – both individual and joint – to ensure that you have “operating” funds during the estate settlement process. Create a list of funeral expenses and medical bills – but wait to pay until you’ve met with your advisors.
During the meeting, talk earnestly with your advisors, who are well-versed on your personal circumstances as well as the planning and distribution options under your plan. Have your advisors review a flow chart of how your affairs should be handled, as well as a checklist of items you will be required to complete in accord with your attorney. Determine who will handle your required income tax return filings, and be sure that creditors are notified if a formal process needs to be followed.
If you need more clarity about your immediate duties after your spouse’s death, run through the process before they pass away. Evaluate your list of executor activities, and seek out estate planning opportunities that allow you and your family with the flexibility you need.
Most importantly, address the question: “What are my most timely priorities?” Then, begin to move forward.
Jill Ciccarelli Rapps | Life in Naples Magazine | March 2017
Financial planning involves more than just discussing investments. In fact, our greatest asset is not a stock or a bond; it is our health.
An unhealthy lifestyle places a major strain on your finances, while embracing wellness can reduce your long-term financial burden. With the cost of health care rising exponentially, it is more important than ever to take care of yourself. By keeping your body and mind in top condition, you will find it easier to enjoy all aspects of your life.
Bad Habits Are Expensive
Unhealthy habits like smoking tobacco, drinking too much alcohol, eating junk food or buying sugary coffee drinks all come with huge price tags. Eliminating or reducing these bad habits will enrich your health, lower your chances of developing a costly long-term health condition, and save you hundreds of dollars every month. The money you save by kicking these habits can go towards preserving your family’s financial future.
Being Healthy Increases Your Earning Potential
Being in good health can increase your earning potential. The healthier you are, the more equipped you are to work longer hours and thrive in high-paying positions that have more demanding schedules and responsibilities. Being healthy also reduces the number of sick days you need to take, as well as the number of doctor’s visits you need to make. Lastly, healthy people can keep working and generating steady income well into their golden years.
Healthy Habits Save Money
Making small adjustments to your lifestyle can save a substantial amount of money over time. Biking and walking cost less than driving a car. Packing a healthy lunch rather than eating out is good for your waistline and your wallet. Unlike drinking sodas and other sugary drinks, water is usually free. Maintaining a healthy weight can reduce the number of clothes you have to buy. All of these healthy habits can help you cut on daily expenses that detract from your savings goals and retirement plans.
In addition to daily savings, being healthy can have long-term financial benefits for your entire family. The combination of increased earning potential and increased savings on daily expenses will enable you to contribute more to the household budget. Secondly, healthy habits set a positive lifestyle example for your children, which will encourage them to be healthier throughout their lifetime. Finally, a wellness-focused lifestyle will reduce the need for expensive and time-intensive health care procedures later in life.
Here are some resources that will help you to jumpstart your healthy lifestyle!
• Discover tips for staying healthy and wellness-related guidance at Blue Zones of Southwest Florida
• Check out the upcoming SpelLIFE Women’s Wellness Summit in Naples on April 1 at www.AEuphoricLivingFoundation.org
A Strong Mind Manages Finances Better
One of the most critical aspects of healthy living is ensuring that your mind stays sharp well into your golden years. As your mental capabilities decline, managing your personal finances becomes more difficult. Between the calculations required for your monthly budget to determining the best investment strategies, you need your mind to be functioning at peak efficiency; otherwise, you could end up making very costly errors. The best way to promote mental wellness and alertness is to maintain an active, healthy lifestyle.
A Healthy Lifestyle Reduces Healthcare Costs
Finally, and most importantly, the biggest benefit to living a healthy lifestyle is reduced healthcare costs. Medical care in the United States is the most expensive in the world. The average American spends hundreds of thousands of dollars on healthcare during their lifetime.
Your life insurance and health insurance premiums are based on your current state of health. If you are in poor health, or engage in habits that deteriorate your health over time, you will pay more for monthly insurance coverage. Insurance premiums grow quickly over time, and could ultimately become one of your biggest expenses.
Being healthy also correlates to lower insurance premiums, fewer doctor’s visits and a major decrease of spending on pharmaceuticals. In addition, healthy people are more apt to seek out preventative care, which is less costly than the high fees associated with chronic illness. Simply put, the healthier you are, the less money you have to spend on medical care.
Our health is our greatest asset. Taking care of your health can save you a lot of money – from small saving on daily expenses to larger savings on insurance rates and healthcare spending. By making a continual commitment to healthy living, you lay the groundwork for a successful financial future.
FSC Securities Corporation and Ciccarelli Advisory Services, Inc., are not affiliated, endorsed nor employed by the companies listed here which includes but is not limited to at Blue Zones of Southwest Florida and A Euphoric Living Foundation.
Jill Ciccarelli Rapps | Life in Naples Magazine | February 2017
My father always said that your “golden years” are between ages 50-80. This is when you are in good health, have gained wisdom and hopefully have gathered enough assets to support your lifestyle. It is an exciting time in your life. If you plan well, you will finally have the time to do everything you’ve always wanted: exploring the world through travel, spending time with your family, or discovering a new favorite hobby.
In order to bring your retirement dreams to fruition, you need to create a financial strategy that will support your desired lifestyle. By preparing and executing a strategy that reflects your wishes, you will likely find the golden years of your retirement to be a liberating and enjoyable experience.
Determine Your Goals
In order to understand your income needs during retirement, it’s imperative to spend some time determining how you want your golden years to look. We take our clients through a special process of defining and clarifying what is most important to them by allowing them to brainstorm ideas on a blank canvas.
As an example, you may want to relocate another climate, or move closer to your family. Do you envision yourself travelling and exploring exotic places around the world? Or would you rather just relax – maybe rebuild a classic car or learn how to paint? Your retirement goals serve as the framework for your savings plan, and will be instrumental in helping you to go confidently in the direction of your dreams.
The key to living to the fullest in your golden years is to start planning early. Understanding where you are today and where you want to be in your golden years; making necessary adjustments today can make all the difference tomorrow. When you are 3-5 years away from retirement, you should begin thinking about creative ways to create the income you will need and consider how best to reduce taxable income. As with everything that is worthwhile, this takes time. The more time you have to plan, the better!
Think Long Term
When you imagine your retirement, you likely think about the early years – when you are in good health and medical complications don’t impede on your livelihood. Though our health tends to decline as we age, you shouldn’t hesitate to make plans well into your later years. In fact, the number one area that retirees tend to underprepare for is health care costs. Setting retirement goals that extend well into your 80s and 90s can inspire you to continue leading an active, purpose-driven lifestyle – which, in turn, often leads to increased longevity and life satisfaction.
Partner with a Financial Expert
The best way to enhance your retirement experience is through a partnership with a financial expert. Given all the complex variables that exist in today’s retirement landscape – inflation, rising insurance and health care costs, changing tax laws, potential fluctuations in your future income, and family dynamics – the need for expert financial advice is greater than ever before.
Start with a Clean Slate
Retirement is the ideal time to re-evaluate your overall attitude towards money. Consider how your money can serve as a tool for achieving your highest values in life. By retirement age, you have probably collected all the physical possessions you need, and you likely have plenty of free time to pursue new endeavors in your life. Based on that, you may find it to be advantageous to start thinking about money in terms of the experiences you can afford.
Whether you are saving for a grandchild’s college tuition or supporting a charitable cause that is close to your heart, a fundamental shift in how you view money can empower you to achieve these aspirations.
Through careful planning and consistent motivation, you will have a better opportunity to position yourself to meet all of your retirement goals. In the end, a solid financial plan and a winning team of financial professionals will serve as your GPS – guiding you towards happiness and personal fulfillment throughout your golden years.
Jill Ciccarelli Rapps | éBella Magazine | December 2016
Sooner than later, you may find yourself in a position where you need to take care of your spouse, parents, grandparents, or another family member. Becoming a caregiver for your ailing family member is a major commitment that can be emotionally and mentally draining.
You can ease the stress of being a caregiver through preparation and balance. By practicing the four keys to effective caregiving, you empower yourself to handle your caregiver responsibilities in a way that meets both of your needs.
Understand Your Financial Resources
Financial preparedness is a vital aspect of caregiving. The cost of health care is astronomical and continues to rise at a steady rate. By failing to account for health care expenses, you may find yourself in a predicament where you and your loved ones can no longer maintain the lifestyle you all currently enjoy.
When you become the primary caregiver for your loved one, you need to develop a nuanced understanding of your family’s financial resources. Creating a detailed budget is the most effective way to fully evaluate your situation. Review your important financial documents – tax returns, estate planning documents, bank statements, and insurance policies – and record monthly expenses.
You should discuss your budget with a financial advisor. Your advisor can help you consolidate and simplify financial information, recommend updates to your health care strategy and estate plan, and conduct a conversation about how your loved one would like to address health care decisions. By examining the “big picture” with your advisor, you position yourself to make financially prudent health care decisions.
As a caregiver, you will have to juggle a plethora of responsibilities – caring for your loved one’s basic needs, managing their medication and therapy schedules, and handling household chores. Getting organized is the key to proactively addressing your obligations and minimizing stress.
There are two simple ways to combat stress through organization. First, consider what you do best. Focus on these tasks and “give away the rest”. By hiring people to assist you, you can capitalize on your strengths and let the professionals handle tasks that you find to be difficult.
Secondly, create a system for tracking and documenting your loved one’s health-related information. Your organizational system should account for their day-to-day needs (medication, diet and exercise requirements, etc.), appointments, and health care expenses. As a result of keeping orderly records, you can facilitate open communication with medical professionals and your family.
Spend Quality Time Together
The caregiver-patient dynamic can strain your relationship with your family member – especially if your interactions are exclusively related to caregiving. To prevent this friction, make sure to schedule quality time together.
Each day, dedicate a few hours to enjoying each other’s company – watching TV, playing cards, or engaging in a lighthearted conversation. Spending quality time together will foster healthy communication and affection, and will help you to maintain and develop your relationship.
Take Care of Yourself
When you dedicate your time and energy to ensuring that your loved one’s needs are met, you may find it difficult to focus on your personal wellness. Many caregivers feel guilty when they think about themselves instead of paying attention to their ill family member. However, you should not allow guilt or other emotions to prevent you from satisfying your needs.
Your ability to effectively serve as a caregiver is compromised when you don’t take care of yourself. Make sure that you are eating right, exercising, and meeting your wellness needs. Take care of your own financial security and avoid making sacrifices that could negatively impact your future. Feel free to take a break occasionally.
If you feel overwhelmed, do not hesitate to ask for help. Capitalize on the resources that exist in our community – other family members, friends, community health care services or home care professionals. A little assistance can provide you with the stamina you need to continue providing exceptional care.
A financial planner can serve as a valuable asset for caregivers. Your advisor can guide you in developing an organized financial plan, empowering you to become an effective caregiver and achieve balance in your life.
By Steven Merkel, CFP®, ChFC® | Investopedia.com
While many of us like to think that we’re immortal, the old joke is that only two things in life are certain: death and taxes.
Not only is it essential for you to have a plan in place in the unlikely event of your death, but you must also implement your plan and make sure your loved ones understand your wishes. As Benjamin Franklin’s famous quote goes, “By failing to prepare, you are preparing to fail.”
If you’ve procrastinated on your estate plan, this article will help you move in the right direction.
- Do a Physical Items Inventory
To start things out, go through the inside and outside of your home and make a list of all items worth $100 or more. Examples include the home itself, television sets, jewelry, collectibles, vehicles, guns, computers/laptops, lawn mower, power tools and so on.
- Follow with a Non-Physical Items Inventory
Next, start adding up your non-physical assets. These include things you own on paper or other entitlements that are predicated on your death. Items listed here would include: brokerage accounts, 401k plans, IRA assets, bank accounts, life insurance policies, and ALL other existing insurance policies such as long-term care, homeowners, auto, disability, health and so on.
- Assemble a Credit Cards & Debts List
Here you’ll make a separate list for open credit cards and other debts. This should include everything such as auto loans, existing mortgages, home equity lines of credit, open credit cards with and without balances, and any other debts you might owe. A good practice is to run a free credit report at least once a year. It will identify any credit cards you may have forgotten you have.
- Make an Organization & Charitable Memberships List
If you belong to certain organizations such as the AARP, The American Legion, Veteran’s associations, AAA Auto Club, College Alumni, etc., you should make a list of these. Include any other charitable organizations that you proudly support or make donations to. In some cases, several of these organizations have accidental life insurance benefits (at no cost) on their members and your beneficiaries may be eligible. It’s also a good idea to let your beneficiaries know which charitable organizations are close to your heart.
- Send a Copy of Your Assets List to Your Estate Administrator
When your lists are completed, you should date and sign them and make at least three copies. The original should be given to your estate administrator (we’ll talk about him or her later in the article). The second copy should be given to your spouse (if you’re married) and placed in a safe deposit box. Keep the last copy for yourself in a safe place.
- Review IRA, 401(k) and Other Retirement Accounts
Accounts and policies in which you list beneficiary designations pass via “contract” to that person or entity listed at your death. No matter how you list these accounts/policies in your will or trust, it doesn’t matter because the beneficiary listing will take precedence. Review each of these accounts to make sure the beneficiaries are listed exactly as you like.
- Update Your Life Insurance & Annuities
Life insurance and annuities will pass by contract as well, so it’s equally important that you ensure that your beneficiaries are listed correctly on each of these accounts.
- Assign TOD Designations
TOD stands for transfer on death. Many accounts such as bank savings, CD accounts and individual brokerage accounts are unnecessarily probated every day. Probate is an avoidable court process through which assets are distributed per court instruction, which can be costly. Many of the accounts listed above can be set up with a transfer-on-death feature to avoid the probate process.
- Select a Responsible Estate Administrator
Your estate administrator will be responsible for following the rules of your will in the event of your death. It is important that you select an individual who is responsible and in a good mental state to make decisions. Don’t immediately assume that your spouse is the best choice. Think about all qualified individuals and how emotions related to your death will affect this person’s decision-making ability.
- Create a Will
Everyone over the age of 18 should have a will. It is the rulebook for distribution of your assets and it could prevent havoc among your heirs. Wills are fairly inexpensive estate planning documents to draft. Most attorneys can help you with this for less than $1,000. If that’s outside your budget, there are several good will-making software packages available online for home computer use. Make sure that you always sign and date your will, have two witnesses sign it and obtain a notarization on the final draft.
- Review & Update Your Documents
Review your will for updates at least once every two years and after any major life-changing events (marriage, divorce, birth of child, and so on). Life is constantly changing and your inventory list is likely to change from year to year too.
- Send Copies of Your Will to Your Estate Administrator
Once your will is finalized, signed, witnessed and notarized, you’ll want to make sure that your estate administrator gets a copy. You should also keep a copy in a safe-deposit box and in a safe place at home.
- Visit a Financial Planner or an Estate Attorney
While you may think that you’ve covered all avenues, it’s always a good idea to have a full investment and insurance plan done at least once every five years.
As you get older, life throws new curveballs at you, such as figuring out whether you need long-term care insurance and protecting your estate from a large tax bill or lengthy court processes. Tips like having an emergency medical contact card in your purse or wallet are little things many people never think of that an expert can help you learn.
- Initiate Important Estate-Plan Documents
Procrastination is the biggest enemy to estate planning. While none of us likes to think about dying, the fact of the matter is that improper or no planning can lead to family disputes, assets going into the wrong hands, long court litigations and huge amounts of dollars in federal tax.
At minimum, you should create a will, power of attorney, healthcare surrogate, and living will – and assign guardianship for your kids and pets. If you’re married, each spouse should create a separate will, with plans for the surviving spouse. Also make sure that all the concerned individuals have copies of these documents.
- Simplify Your Finances
If you’ve changed jobs over the years, it’s quite likely that you have several different 401(k)-type retirement plans still open with past employers or maybe even several different IRA accounts. While this normally won’t create a big problem while you’re alive (except lots of additional paperwork and account management), you may want to consider consolidating these accounts into one individual IRA account to take advantage of better investment choices, lower costs, a larger selection of investments, more control and less paperwork/easier management when assets are consolidated.
- Take Advantage of College Funding Accounts
The 529 plan is a unique tax-advantaged investment account for college savings. In addition, most universities do not consider 529 plans in the financial aid/scholarship calculation if a grandparent is listed as the custodian. The really nice feature is that growth and withdrawals from the account (if used for “qualified” education expenses) are tax-free. If you have grandchildren and the assets to do it, consider opening a plan for each grandchild.
The Bottom Line
Now you have the knowledge you need to get a good jump-start on reviewing your overall financial and estate picture; the rest is up to you. While you’re sitting around the house watching your favorite sports team or television show, pull out a tablet or laptop and start making your lists.
You’ll be surprised how much stuff you’ve accumulated over the years. You’ll also find that your inventory and debts lists will come in handy for other tasks such as homeowners insurance and getting a firm grip on your expenses.
Content was created by the author for a third-party website. Acknowledgement to Investopedia.com for the use of their article.
Jill Ciccarelli Rapps | Life in Naples Magazine | January 2017
Estate planning can be a difficult subject to discuss. Many people prefer to avoid broaching this topic, as it can be uncomfortable to think about your own mortality.
That being said, having an in-depth conversation about estate planning is the key to protecting your assets and providing a bright future for your family. By partnering with a financial advisor to plan your legacy, you can prevent common estate planning pitfalls and promote the financial well-being of your spouse, children and future generations.
The following tips will help you establish a plan that reflects your desires and vision for the future.
Create an Inventory of Assets
The first step in estate planning is creating a comprehensive inventory of your assets – including property, business holdings, savings, and annuities. In your inventory, be sure to include all of your account numbers, dated statements and an explanation of how each asset is owned. By doing so, you will find it much easy to keep your records up-to-date when your estate plan is executed.
With this foundation in place, you can develop a succession strategy in accordance with your wishes. To make this vision a reality, it is crucial to understand how the estate laws and taxes will impact your assets. A financial expert can help you navigate the red tape and capitalize on opportunities for tax relief.
Evaluate Life Insurance Coverage
Life insurance can be a critical component of your estate plan, especially if your family members rely on you for financial support. Life insurance provides you with the liquidity you need to protect your business holdings and make sure that your heirs are not forced to sell assets. Life insurance also serves as a great method for passing tax-free inheritance to your loved ones.
To take full advantage of life insurance benefits, you need to understand the types of coverage that are available. You should evaluate the differences between life insurance plans (i.e. term versus whole life coverage) and determine which policy will best fulfill your needs.
To effectively safeguard your assets, you should review all of your existing policies with your financial advisor every 2-3 years, or whenever you experience a major transition in your life. It is also crucial to make sure that your beneficiary designations are up-to-date.
Consider a Living Trust
A living trust can also play a key role in preserving your assets. Living trusts can help you to bypass probate, and reduce the costs and hassle associated with passing your inheritance to your family. Living trusts are especially advantageous if you have minor children, property in multiple states, or a large estate that will be subject to estate tax burdens (i.e. estates with assets totaling $5.45 million or more).
Draft a Will
Once you have a clear picture of your assets and a strategy for managing your inheritance, you will need to create a will. In your will, you designate the placement of your assets, name beneficiaries, and establish the executor of your estate. Your will serves as the cornerstone of your estate plan; in fact, your loved ones may receive little to no inheritance if you fail to draft a will.
While there are many online resources to help you draft a will, these templates may not cover all of your estate planning needs. The best approach for creating your will is to collaborate with an attorney and a financial advisor. A team of professionals can assist you in alleviating any complications you may experience when your will is executed.
Gather Official Documents
Once you have planned your estate, you will need to gather your official documents, including:
- Your will
- Powers of attorney and advanced medical directives
- Life insurance policies
- Inventory of assets (including bank statements, property titles and deeds, safety deposit boxes, stocks and savings bonds)
- Beneficiary forms for life insurance and retirement accounts
- Living trusts
- A list of important contacts (your attorney, financial planner, trustees and executor)
Once you complied your official documents, find a secure location to store your paperwork that is easily accessible to your family.
In order to preserve your legacy for future generations, you need a detailed estate plan that reflects your wishes. Whether you have $1 million in assets or an estate of $10 million or more, establishing a partnership with a financial advisor is the best decision you can make. Now is the time to organize your estate plan, facilitate a winning strategy and provide for your family’s future!
Jill Ciccarelli Rapps | Life in Naples Magazine | December 2016
Managing your money can be a headache, especially if you make financial decisions on the fly. A haphazard approach to overseeing your finances can damage your financial wellness, leading to unnecessary costs and wasteful spending.
As we transition into 2017, many of us are pursuing New Year’s resolutions. As you consider ways to improve your quality of life during the new year, we encourage you to follow these five easy steps for simplifying and organizing your financial life.
By doing so, you put yourself in a position where you can proactively control your money – empowering you to achieve financial success.
Set financial goals
Articulating your goals will help you to prioritize your spending. Identify the biggest financial undertaking you face – for instance, paying off your mortgage, purchasing a second home, saving for your dream vacation, putting your grandchildren through college or preparing for retirement – and write them down where you can visit them often.
Draw up a spending budget
Review all of your income and earnings statements, and understand how much revenue you will have for the month. Then, go through your expenditures and prioritize your future spending. Refer to your budget at least once per month to ensure that you adjust for unexpected income or expenses.
Once you develop a clear picture of your cash flow, you can create a budget that accurately reflects your lifestyle and empowers you to realize your goals.
Create a filing system
Maintaining files of your important documents is instrumental to organizing your life. The key to organization is finding a system that works for you. By doing so, you will find it much less cumbersome to keep up on your financial files.
For instance, many people prefer working with physical files and paper documents. If this is your preference, I recommend keeping a large basket on your desk for dropping receipts, statements and tax information. Twice a year, you should dedicate time to sorting through these documents. Often times, you will find that the paperwork you thought was important at the time can actually be shredded. After your biannual sorting session, you should retain all of your crucial information in categorized manila files.
Finally, dedicate a folder to housing your official documents – including your estate planning files, social security card, savings bonds and insurance policies. All of your files should be saved in a secure location, such as a safe at home, deposit box at the bank, or an online vault. These files should be easily accessible for you, your trustee and your family.
Consider using financial software
For those of you who are more technologically inclined, financial software can serve as a valuable resource for managing your money.
Many of these programs feature built-in templates to help you devise your monthly budgets. Some financial software will also provide you with detailed analytics about your spending habits, enhancing your ability to monitor and control expenses. There are even applications that will scan your receipts and important documents, creating digital archives for your financial information. If you choose to work with financial software, make sure to protect your information from unauthorized access by using encrypted software and creating strong passwords.
Your financial advisor can help you input and consolidate all your financial information in the program, further simplifying the process of managing your money.
Set up direct deposits and withdrawals
Arranging automatic deposits and withdrawals saves you time and effort while ensuring that your bills are paid on time. All regular income should be directly deposited into your bank account; most banks will allow you to split your deposits between different accounts, so you may allocate your deposits to various goals you have identified.
You should also set up any regular monthly expenses – rent, car payments and utilities – to be automatically withdrawn. Although you may prefer paper bills, setting up automatic payments will be helpful in the event that someone else needs to pay your bills (for instance, if you were to become incapacitated).
While these tips will guide you towards a simplified and organized financial life, you should also consider meeting with a financial planner. Financial planners may help you achieve your financial goals by designing your monthly budget, consolidating your key documents, and generating creative solutions to maximize your money.