2020 Retirement, Trust, Estate - Week 2

WEEK 2

2020 Retirement, Trust & Estate Planning A SPECIAL SECTION BROUGHT TO YOU BY

2020 | Retirement, Trust & Estate Planning

Talking to your family Don’t be surprised if your family is caught off guard and has questions about your health. Especially if this will be the first time you have addressed your legacy, it’s understandable they may get the wrong idea. You can avert suspicions by explaining you are concerned about having a plan in place to lessen their responsibilities at the time of your death.

Try to hold the conversation in a comforting place that offers privacy.

SCHEDULING

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It’s never easy to discuss the topic of death with loved ones, but it’s necessary to have a plan in place. Commit to having a conversation with your family so that they understand your final wishes. Here are some ways to prepare for the necessary dialogue and how to handle the situation gracefully.

TIMING COUNTS

Family tragedies or emergencies can heighten your interest in developing an estate plan and relaying your wishes to loved ones. But it’s best to put off a discussion until everyone has had some time to process the loss.

It’s imperative to coordinate a meeting that blends with your loved one’s hectic schedules. To limit the number of times you discuss a plan, it will make sense to wait until everyone involved is available, if they are comfortable with a group conversation.

Your initial meeting should relay wishes regarding how assets should be handled and considerations for key members like power of attorney or living trusts.

If needed, hold a second discussion where your family can talk about concerns after they’ve processed the initial conversation.

DEFINE YOUR LEGACY

Planning your estate while you are in good physical and emotional health gives you the opportunity to determine how to honor the legacy left behind.

Take advantage of the removing the stress of difficult decisions from your family’s shoulders by instructing the exact details of how to handle your assets.

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Explaining wills and trusts

It’s never too early for adults to think about estate planning. Estate planning is an important part of money management.

While it’s easy to think of estate planning as just a way to dictate how your assets are allocated after your death, estate planning also can protect people and their money should accidents or injury make them incapable of managing their finances on their own.

Some familiar terms may come up when people begin planning how they hope to transfer their assets. Two more common terms are wills and trusts. Understanding the distinctions between the two can help people as they begin estate planning.

WHAT IS A WILL?

The online financial resource Investopedia notes that wills are legally enforceable documents that dictate how people want their affairs handled and assets allocated in the wake of their deaths.

Wills should include a host of information, including who a person wants to assume guardianship of their minor-aged children should they pass away. This is especially important information to include in a will, as surviving relatives may have to go to court to contest guardianship if parents do not dictate

who they want to serve as guardians in their wills.

WHAT IS A TRUST?

A trust is a relationship in which another party is given authority to handle a person’s assets for the benefit of that person’s beneficiaries. When making a trust, a person will need to designate someone as a trustee, who will be tasked with distributing assets in accordance to the terms dictated in the trust.

There are many types of trusts, and working with an attorney who specializes in estate planning can help men and women determine which type of trust, if any, is best for them.

WILL OR TRUST?

Both wills and trusts can be useful when estate planning. In fact, wills are often used to establish trusts, and many people have both a will and a trust.

Estate planning is an important part of managing one’s finances. A qualified attorney who specializes in estate planning can help people write their wills and, if necessary, establish trusts that can help surviving loved ones in the wake of their death.

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109 N. Main St., Spearfish 605.642.2757 nkhillslaw.com

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Retirement, Trust & Estate Planning | 2020

Saving as a senior You likely spent earlier years saving money for a bountiful retirement.

Once you reach this milestone, the practice of being frugal doesn’t end. In fact, to get the most out of this exciting time of your life, savings becomes even more important.

According to a 2017 study by the Federal Reserve Board, one third of retirees eventually reverse their retirement and return to work in some capacity. It says those in the lowest income percentile usually do this because they need more income.

Don’t find yourself struggling during a time that should be about enjoying the life you built with years of hard work.

EVALUATE INSURANCE POLICIES

One way to cut costs is by assessing your insurance policies and making adjustments. Look at different coverages you have including automotive, housing and health care. You may be surprised by the savings in premium if you find a broker who offers a bundle package to house all your insurance needs under one policy.

For some, changes to their Medicare policies can make a difference too.

According to the American Association of Retired Persons (AARP), the time to

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make an adjustment is between Oct. 15 to Dec. 7 during the annual enrollment period.

CUT OUT TRANSPORTATION EXPENSES

The American Automobile Association reports that the average cost to own

and operate a new vehicle is $8,469 per year. This includes maintenance, insurance and repairs. You can save a great deal of money by consolidating to a single vehicle or taking advantage of public transportation and ride-sharing services in your area. While it may not be feasible for all families to eliminate their vehicles, limiting its use is an efficient way to keep dollars in your bank account.

RECONSIDER LIVING CONDITIONS

If you live in an expensive home but plan to spend part of your retirement at a vacation residence or traveling, you can benefit from placing the property on the market. If selling isn’t in your plan, consider renting it out to a trusted loved one or reputable tenant while you will be away.

Job Change?

Ease the Transition with an IRA Rollover

Let’s talk and see if an IRA rollover may help you meet your goals.

There may be benefits to leaving your account in your employer plan, if allowed.

Northern Hills Group 110 E. Grant St., Spearfish, SD 57783 605-717-0005 Shannon Lee Rolando Associate Representative

605-722-4645

shannon.rolando@thrivent.com

Marcus A Stacey, RICP® Financial Associate

605-722-6700

marcus.stacey@thrivent.com 28394 R8-20

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Retirement investment ideas It’s never too early to get on top of your finances or plan for retirement. With a proper strategy, you can build your savings account or have a steady flow of income after you step away from a career.

According to the Harvard Business Review, Americans between 40 and 45 have an average of $14,500 in their retirement account – that’s less than 4% of what is needed to retire. Consider investing in your future with one of these practical ventures.

REAL ESTATE

A recent survey from the United States Census Bureau reveals that Americans paid an average monthly cost of $981 for rent in 2016. Becoming a landlord comes with many difficulties but, if done properly, has big advantages.

Some concerns to weigh are unforeseen expenses like negligent renters, vacancy and property maintenance. Over time, a rental can be very profitable, just make sure to have an emergency fund to cover unexpected fees.

A quicker way to fill a retirement fund with profits earned through real estate is flipping properties. With a little knowledge in construction or an affordable contractor, you can earn big bucks by giving outdated homes new life.

BOND LADDER

Buying bonds has long been used to prepare for retirement. Building a bond ladder means you can strategically plan for the payoff and rely on a steady cash flow at a specified date.

A bond is basically a loan you are supplying to a company or city or local government, usually to fund construction projects or satisfy debts. The borrower

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is required to pay you back the provided amount plus interest. Choose bonds with different maturity dates to stagger the payouts during retirement.

With any investment, there is a level

of risk. For a safe bet with a smaller return, look for full faith and credit bonds. Typically, these are offered by governments and federal factions. When you buy bonds from a private company,

the return may be higher, but there is a chance they will default on their commitment. Do your research before building the bond ladder to fund your future.

605-642-2633 or 307-283-3334 fidler-isburg@rushmore.com www.fidler-isburgfuneralchapels.com

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Estate planning and charitable giving

might begin to feel intimidated by estate taxes, feeling their heirs won’t get as much of their money as they hoped. But Schwab Charitable notes that including a charitable contribution in your estate plan will reduce your estate tax liabilities, which will help to maximize the final value of your estate for your heirs. Speak with your estate attorney and ensure your donation is spelled out in your will.

DONATE YOUR RETIREMENT ACCOUNT

Another way to utilize an estate plan to donate to charity is to designate the charity of your choice as the beneficiary on your retirement account. Schwab Charitable notes that charities are exempt from both income and estate taxes, so choosing this option guarantees the charity will receive 100 percent of the account’s value once it has been liquidated.

EXPLORE A CHARITABLE TRUST

Charitable giving comes in many forms. Some people donate annually to their favorite charities, while others may volunteer their time or professional services. One way many people choose to give to charity is to donate at the time of their death. Including charitable giving into an estate plan is wonderful way to support a favorite cause. When

researching this approach, it can be easy to become overwhelmed by references to tax codes, attorney fees and other items that can make including charitable gifts in one’s estate plan seem more complex than it needs to be. Schwab Charitable, an independent nonprofit organization, notes that there are various ways to incorporate charitable giving

into an estate plan, and that doing so is something almost anyone can do.

DICTATE GIVING IN YOUR WILL

When reading about charitable giving and estate planning, many people

Charitable trusts provide another way to give back through estate planning.

For example, a split-interest trust allows men and women to donate their assets to a charity but retain some of the benefits of holding those assets. A split-interest trust funds a trust in the charity’s name, and people who open one receive a tax deduction any time money is transferred into the trust. But the donors still control the assets in the trust, which is passed onto the charity at the time of their deaths. You have various options at your disposal in regard to charitable trusts, so speak to a financial advisor to help you pick the best one for you.

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Plan during good health

Pre-planning your estate can be a stressful time due to crucial decisionmaking to protect your assets when you’re gone. The process can be much easier to manage when practiced in good health. You will have the advantage of creating your final wishes with a clear head and practical thinking. Some may feel that creating a strategy at a young age is unimportant as the thought of death is far from your mind. However, getting on top of estate planning early will provide peace of mind that the intricate details are in place as you get older.

In fact, the Certified Financial Planner Board of Statistics recommends updating your plan after these significant events.

• Getting married or divorced.

• Welcoming a newborn.

• Moving to a new state.

• Buying new property or buildings.

Take advantage of these other benefits you gain when building your estate plan at a young age and in good health.

PREPARED FOR EMERGENCIES

Even if you’re in optimal health, an accident can occur, leaving you incapable of making decisions regarding your family and assets, or worse. Build

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your estate plan before a life-changing situation affects your life.

Make sure the legally binding agreement between your estate and executor are ironclad in case of an emergency. Ensuring your family’s finances are secure offers immeasurable peace of mind.

Another factor to consider is obtaining life insurance at a young age. According to the Insurance Information Institute,

premiums are usually lower for younger policyholders. A quality plan can cover funeral costs, medical expenses and even pay off a mortgage.

GUARDIANSHIP

If you have young children, estate planning requires additional decisions.

Here are a few considerations you should make.

• Who should be appointed legal guardian in the event both parents die simultaneously?

• How and when will the estate assets be transferred to your children?

• Should the child have full access to assets at a certain age, or will you hire a trustee to assist them in managing funds?

When pre-planning your estate at a young age, don’t forget to update it regularly after monumental life events.

Choices

Social Security gives you choices that can provide a foundation for your retirement income.

Contact me to discuss your options and how to maximize Social Security in your financial plan.

Waddell & Reed, Inc. and its representatives do not provide tax or legal advice. You should consult your legal or tax advisor with questions about your specific situation.

Securities and investment products and services are offered through Waddell & Reed, Inc. (WRI), member FINRA/SIPC and Federally Registered Investment Advisor.

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Estate planning tips and advice Estate planning might sound like a process reserved for the wealthy, but the truth is everyone can benefit by preplanning in the event of your death.

Like every end-of-life issue, it may not be among the most pleasant things to discuss, but making a plan for how your affairs will be handled after death is the best thing you can do for your loved ones, regardless of your financial standing.

Document how you want your property and other assets handled to help your family avoid legal difficulties, inconvenience, unnecessary taxation and family arguments. An estate planning professional can have a lasting impact on your legacy.

Estate planning isn’t just about protecting heirlooms and it’s more than just creating a will; it also provides security for your family. Consider these tips for creating a sound, logical estate plan.

SEEK LEGAL COUNSEL

While some people use online forms to draft a simple will, most people will benefit from consulting with an estate planning attorney. This experienced professional can create legal documents with your specific circumstances in mind.

It’s true everyone should have a will, regardless of age. But that is only the first step in developing a solid estate plan. You should also create a living will, power of attorney and possibly a trust.

Consult an attorney who has experience in developing estate plans for those whose situations are similar to yours. Do not try to do it alone.

LIFE INSURANCE POLICIES

Life insurance policies provide for loved ones in the event of your death.

There are a wide range of options, and only a few will make sense for your situation. A professional can guide you through the possibilities and help you make appropriate choices.

Term life insurance policies are generally less expensive than other types of coverage. But whole life policies, annuities and other insurance products may be more appropriate for your circumstances.

Understand what you might be buying.

In some cases, a policy may benefit the salesperson more than it does the customer.

It is essential you take all the time you need to learn about a particular policy before purchasing it. If you have any hesitation or confusion, ask another professional or keep researching. You should feel certain that you are choosing the best policy for your needs.

FUNERAL EXPENSES

Funerals are very expensive, sometimes costing up to $10,000. You don’t want to leave your family with large bills. That’s why you should plan ahead to cover the cost of your own funeral.

Pre-paid funeral plans are a popular option, or you can simply buy a burial plot in advance so that one major task will be handled before your death.

It may be uncomfortable and even frightening to consider, but it is

Looking after your finances so you don’t have to.

something that must be addressed as part of a solid estate plan. Visit funeral homes in your area to discuss prepayment options.

COMMUNICATION IS KEY

Communicate with your family in general terms about your estate plan.

Talking to them about what they can

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expect could head off estate disputes and heartache.

A good estate planner can help you navigate complicated family dynamics and concerns that may accompany this process. The right estate plan and experienced professionals can make your legacy a blessing that your heirs will treasure for the rest of their lives.

It is better to plan ahead than to be a burden on loved ones.

Protect Your Legacy

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