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Bookmark This! The Estate Planning Edition

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I know that all of these “special days” and “special months” might seem a bit excessive, but in some cases, I believe they might be helpful. For example, October is estate planning month. Let’s face it, we probably don’t want to talk about estate planning. So maybe having an estate planning month kinda reminds us that it’s important and we need to work on it.

Regular readers of Unretirement Project know that Keith and I have been writing about this topic for a while. We’ve been working on our estate plans on and off for a couple of years. Yes, that’s not a typo. Estate planning can be complicated. One document might not cover everything. So, if you’re looking for some resources to start your estate planning process, here are a few articles to get you started:

Loved Ones Must Know Your Health Care Wishes

It might take some time to figure out how you would like your health care treatment handled and who you would like to be your spokesperson. And then of course, there’s the decision of backups in case your first choice isn’t willing or able to take on this responsibility. The point being, the process of putting these plans in place takes time. The ideal time to do all of this is when you’re not under the pressure of having to do it.

Make a FINAL File for Your Loved Ones

Talking about illness and death isn’t fun. None of us want to do it. I remember every time we visited my father-in-law, he would at some point have the “When I die…” conversation. On one hand, you dread it. That’s not why you came to visit. It’s to enjoy his company. But when his health did start failing, we were prepared. And it allowed us to focus on making his final days comfortable versus worrying about papers, insurance, etc.

AARP Personal Estate Planning Course

The AARP Foundation offers a personal estate planning lesson book and record book for download. The documents might be a good way to start conversations like “Who should be my executor?” and “Do I need a trust?” The recordkeeping guide is just that – a place to record information in case someone needs it and you’re not in a position to tell them.

Estate Planning: 3 Important Takeaways

We found out quickly that you should have a Plan A, Plan B, and at least a Plan C when it comes to estate planning. It turns out that different states have different laws regarding things like taxes and executors. And if your will doesn’t follow the laws for your state, chances are the estate will be disposed by probate court. That could mean additional costly headaches for heirs and family.

Estate Planning: Remember Your Digital Life

Most of us can readily think of bank accounts, investments, and insurance when estate planning. But we tend to overlook who should be responsible for our digital streaming accounts when we can no longer Netflix and chill. Take a moment to think of the things you send to cloud storage, and you will see why planning for your digital estate is just as important as who gets your home or car when you’re gone.

Estate planning isn’t the sexiest activity, but it’s a necessary one. We want others to know our final wishes and we want them to respect them. The best time to put these plans in place is when you have the time and the budget to do it.

Estate Planning: Remember Your Digital Life

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artwork surreal facial features representing digital life

We recently wrote about estate planning, discussing what an estate is and our important takeaways from the planning process. If you are new to estate planning or want a refresher on some of the key aspects, be sure to check it out. We definitely had some eye-opening moments and many others that required some serious and informed discussion.

I mentioned previously that we are working with an attorney to create our estate documents. One of the things that struck me when reading the drafts was the volume of legal wording that covers your digital life. You know, Facebook and Twitter accounts, registered web addresses, and even just your Amazon account to name a few. And what about your Apple ID and password managers?

The point is, most of us can readily think of bank accounts, investments, and insurance when estate planning. But we tend to overlook who should be responsible for our digital streaming accounts when we can no longer Netflix and chill. Take a moment to think of the things you send to cloud storage and you will see why planning for your digital estate is just as important as who gets your home or car when you’re gone.

Good news – just about every web-based operation has already considered this and address it in their FAQ, help section or forums. In fact, many digital suppliers even include ownership information in their end user license agreements (EULA) or Terms of Service (TOS). You have carefully read all those, right?

It shouldn’t be a surprise that entire industries have cropped up around digital estate planning. Companies like AfterVault, Clocr and Everplans offer one-stop estate planning for your digital assets. Most of these are fee-based services which can help you sort through your digital life and document your plans in one place. Keep in mind that this will really be a separate place, different from where you document the rest of your worldly goods.

Which brings me back to our original estate planning process. We ultimately wanted a single place where we could document all of our financial, physical and digital holdings and plan for them when we’re gone. And we wanted to make sure all of that aligned with state and federal laws so that our heirs weren’t burdened with probate dispositions. For us, that meant working with an attorney who knew all about these things.

Digital estate planning has become so important that AARP wrote about it last year. The article is a great place to start to plan for after your digital life because they include a very helpful do and don’t section for crafting your digital estate plan. From there, you can decide if a digital vault is a good option or maybe research the pros and cons of online wills on Consumer Reports.

If you choose to look for an estate attorney, check out this Investopedia article with 10 questions to ask before engaging their services. They also include a few questions you should ask yourself after you have an initial conversation. Estate planning can be legally complex and emotionally challenging for you and your loved ones. Put in a little time researching your options and remember to include your digital life. Making informed decisions now will lead to peace of mind.

Estate Planning: 3 Important Takeaways

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let's have a conversation about estate planning nothing is accomplished alone

In our last “What We’re UP To” from a few weeks ago, we mentioned that we’re updating our wills and health care directives. We didn’t expect anything out of the ordinary but surprisingly, there are a lot of moving parts in most estates than you might realize. So, we wanted to share some of our findings with you. To get us started with a conversation about estate planning, let’s start with a definition. Investopedia defines an estate as:

Everything comprising the net worth of an individual, including all land and real estate, possessions, financial securities, cash, and other assets that the individual owns or has a controlling interest in.

According to that definition, we all have an estate to some degree. That’s what an estate is, but there are basically three important documents that help spell out how you want your wishes carried out when you are no longer capable of doing so:

  1. A will
  2. Durable power of attorney for financial matters
  3. Health care power of attorney

As I mentioned, we’re in the process of updating these documents right now. Even though we’ve been through this process before, we’re realizing that things can change over time and wanted to share our takeaways.

Takeaway No. 1 – Your Estate Plan Should Not Be “Set It and Forget It”

Years ago, we did like most people and, with the help of an attorney, created a simple will that was signed and perfectly legal. Then, we immediately placed it in a safe deposit box for 15 – 20 years. The thing is, life has a habit of changing over time and you will want your will to keep up. I would still recommend a safe and secure place to store your official will. But, keep an electronic copy and schedule a regular review every 6 – 12 months and make changes as needed.

I mentioned that we created our original wills through an attorney, and we are doing that again now. Which leads us to takeaway number two.

Takeaway No. 2 – Doing Everything Yourself to Save Attorney Costs May Not Work Very Well 

Yes, you can do that, and it may be just fine. Or, it may not. I’m not an attorney or a certified estate planner so the best advice I can give is this – know if and when to engage an attorney. That might depend on how involved your estate is or how complicated local and state laws are for your estate plan. Just don’t make assumptions that could result in costly headaches for your loved ones.

Speaking of assumptions, the worst assumption you can make brings us to the last takeaway.

Takeaway No. 3 – No, Everyone Does Not Have to Carry Out Your Final Wishes

We found out pretty quickly that you should have a Plan A, Plan B, and at least a Plan C when it comes to estate planning. It turns out that different states have different laws regarding things like taxes and executors. And if your will doesn’t follow the laws for your state, chances are the estate will be disposed by probate court. That could mean additional costly headaches for heirs and family.

Hopefully this article doesn’t seem full of doom and gloom. On the contrary, think of this as caring for those you love when you are no longer able to do so. Yes, it takes planning and dealing with a few decisions that could be a little uncomfortable. That helps avoid pitfalls and provide some peace of mind for everyone. 

Loved Ones Must Know Your Health Care Wishes

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wall art heart showing for health care let all you do be done in love

I’m sure that no one wants to read today’s article, but I’m hoping you will. 

This is not an “older person” article. It’s also not a “pandemic” article. It’s also not about having a will – although that’s a good idea. It’s not meant to cause alarm or panic. But if there was ever a time to say to ourselves, “If I got sick, do my family and friends know my health care wishes?” now would be that time. 

I’m saying this a bit tongue in cheek, but when Buzzfeed…you know, Buzzfeed as the source for all of those cutesy quizzes that fill our Facebook page…when Buzzfeed publishes an article titled “The Four Legal Documents that Everyone Needs to Plan for Their Future”, then pay attention. I don’t want to give the whole article away, but here are three of the documents they mention:

A living will is a written statement detailing how you would like your medical and health care treatment to be handled in the event that you’re unable to express it yourself. 

A healthcare proxy is a document that says who can make healthcare decisions on your behalf, when you’re not able to do so. 

A power of attorney is a written authorization for someone to represent you or act on your behalf when it comes to business or financial affairs. 

As you can see, these documents are very inter-related. It might take some time to figure out how you would like your health care treatment handled and who you would like to be your spokesperson. You also have to figure out if the person making the decisions about your medical treatments should be your power of attorney. And then of course, there’s the decision of backups in case your first choice isn’t willing or able to take on this responsibility. 

The point being, the process of putting these documents in place takes time. It’s also recommended to have an attorney create these documents for you, so you have to budget for that. The ideal time to do all of this is when you’re not under the pressure of having to do it. This requires careful consideration.

I’ve probably mentioned this before, but my father-in-law was the ultimate planner when it came to his health care and final wishes. He talked to us for years about it. When his health started to decline, we all knew his wishes and there were no questions. There were no squabbles amongst family members about decisions. Everyone was focused on the same things. 

As a result of COVID-19, I have a few friends who have already begun conversations with their children about their medical wishes should they become ill. I realize that no one wants to do this. But it can be a big relief to everyone to have these health care conversations and draw up these documents so there’s no confusion about what to do and who will be in charge of decision making. 

Image captured by Sharlyn Lauby while exploring the streets of Gainesville, FL

Financial Scams: 6 Ways to Protect Yourself and Your Loved Ones

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wall art protect your heart like from financial scams

More than 1.4 million fraud reports were filed in 2018 according to the Federal Trade Commission (FTC). In those reports, 25% of people said they lost money and the total amount of losses reported was approximately $1.48 billion. 

I recently listened in on the AARP webinar “How to Protect Your Loved Ones from Fraud”. Don’t let the fact that AARP hosted this event lead you to believe that seniors are only people susceptible to financial scams. In the FTC report mentioned above, younger people reported losing money more often than older people. The bottom-line is financial fraud can happen to anyone. 

During the webinar, the speakers shared several practical takeaways about protecting against financial scams that we could all use. 

  1. Stay current with the news. Last year’s scams might not be this year’s scams. A good case in point is the phone call scam that’s supposed to be from the Social Security Administration. This scam is so prevalent that the Social Security Administration is issuing warnings about it. Both the FTC and AARP have fraud alert resources on their website so you can stay informed about the latest tactics from scammers.
  2. Heighten your awareness about financial scammers. During the AARP webinar, they discussed the psyche of a scammer and reminded us that scammers are looking for individuals who are vulnerable, trusting, and are perceived to have wealth or valuable items. This doesn’t mean we can’t be nice. It does mean we need to pay attention to the world around us.  
  3. Screen your phone calls. Protecting ourselves from financial scams would be easy if they identified themselves on our phone’s caller ID. Unfortunately, they do not. It’s sad to say but it could be in our best interests to send calls to voicemail if we don’t recognize the caller. If you choose to do that, let close friends and family know this is your standard operating procedure so they don’t worry if you don’t answer right away. 
  4. Practice good technology usage. Today’s technology advances are wonderful but that doesn’t mean we should abandon the principles of good technology usage. For instance, having strong passwords for our accounts – especially ones where we have financial information stored – is essential. Also, making sure that the software on our devices is up to date. Outdated software could expose devices to malware or security breaches, which can lead to identity theft. 
  5. Research the credentials of financial advisors. It can make a lot of good financial sense to tap into the expertise of bankers, accountants, and financial advisors. Sharing your financial status with others is sensitive and personal. Knowing that your financial advisors are bound by a professional code of ethics is key. Individuals in the financial services industry should be prepared to discuss with you their experience and credentials. 
  6. Monitor your credit report. Don’t forget that the Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies to provide you with a FREE copy of your credit report every twelve months. Other organizations use this information to evaluate your credit, insurance, employment, and housing. Even if you’re not planning to make a major purchase, make sure the information is accurate. 

My big takeaway from the AARP webinar was that these activities are things I should be doing anyway. We should stay current with the news. We should use technology, including our phones, in a safe and secure way. And we should check out the credentials of the people we work with. 

Consider this article to be a reminder of the things you should be doing to protect yourself from possible financial scams and fraud. Maybe you want to share this list with a loved one, so they remember to do these things as well. It’s easy to get settled into a routine and not be as diligent with keeping your software up to date. Or you ran the free credit report a few years ago but haven’t done it lately. Well, now’s the time to get back on track. No one wants to be the victim of a financial scam or fraud.

Image captured by Sharlyn Lauby while exploring the streets of Las Vegas, NV

What Is the SECURE Act and Why Should You Pay Attention

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typewriter showing Time to Hustle related to SECURE Act and retirement savings

Last month, the U.S. Congress passed a spending bill that included bipartisan legislation called the SECURE Act (aka Setting Every Community Up for Retirement Enhancement Act of 2019). The Act is focused on increasing the number of people saving for retirement and the amount they are able to save. The President signed the spending bill and the SECURE Act into law on December 20, 2019.

Like most new pieces of legislation, there are new things we don’t know and things we will discover over time. To get us familiar with the law, I’ve put together a round-up of articles on the subject.

What is the SECURE Act and How Could it Affect Your Retirement? I’ve become a fan of Investopedia’s daily electronic newsletter. This article from them shares how SECURE could change our individual retirement accounts (IRAs), 401(k)s, and required minimum distributions (RMDs). 

SECURE Act Alters 401(k) Compliance Landscape. You might not be a human resources professional like me but I often find the best way to learn about subjects is from the point-of-view of the person who has to administer programs related to them. This article from the Society for Human Resource Management (SHRM) explains how 401(k) administration will change.

The SECURE Act. Like the SHRM article above, the National Association of Plan Advisors (NAPA) has put together a resource page on the new law. It includes the actual legislation, news articles, etc. NAPA is an affiliate organization of the American Retirement Association, previously known as the American Society of Pension Actuaries. 

A new law is bringing big changes for retirement savers, especially parents. Michelle Singletary writes a nationally syndicated column focused on personal finance for the Washington Post. This article does a nice job of explaining the highlights of the law as well as some of the downsides to the new legislation. 

5 Things Affluent Retirees Should Do Now that the SECURE Act has Passed. Don’t let the word “affluent” in the title deter you from reading this piece from Kiplinger. Like the Washington Post article, the author provides practical suggestions for anyone who is retirement planning.

At times, retirement can seem so far away that it’s easy to push these articles to the bottom of the reading pile. Retirement planning is an important activity. At some point, we have to start carving out time for it. That way, when it’s time to take action, our learning curve won’t be quite as steep.

What do you think of the SECURE Act? What questions do you have about the new law? 

Spend Safely: Stanford Study on Retirement Planning Strategies

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If only we had a nickel for every article about financing retirement . . . well, let’s just say our retirement would be complete! Retirement planning strategies can vary widely for one important reason – everyone is different. What works well for you might not work at all for me. So, the best we can do is gather information, examine our own situation, and make educated decisions that will benefit us when we retire.

That’s why I was happy to come across the “Viability of the Spend Safely in Retirement Strategy” report on aging and retirement, published last month by the Society of Actuaries’ Committee on Post Retirement Needs and Risks. Don’t let the name of the report scare you away . . . my takeaway from the 80-page report can be broken down into two key areas:

  1. Optimize your Social Security benefits.
  2. Use the IRS Required Minimum Distribution (RMD) rules to generate a retirement “paycheck”.

First, a little background. The study was conducted by Stanford University, where they analyzed 292 possible retirement planning strategies, using eight different metrics to measure how a particular strategy might meet retirement income goals. The results of the study were published in 2017 with the goal of providing a framework for helping people approaching retirement age make important life decisions.

The first key point about optimizing Social Security benefits is pretty straightforward, and you probably know it already – hold off claiming Social Security payments as long as possible. You can draw payments as early as age 62, but there are financial advantages to waiting until the IRS mandated age of 70. That being said, I have been seeing quite a few articles lately extoling the virtues of claiming as early as possible, so do your research to determine what strategy works best for you.

Once you reach the Required Minimum Distribution (RMD) age, that’s when key point number two kicks in and you need to claim your Social Security payment. In addition, the Stanford report suggests that you also start collecting that retirement “paycheck” from your individual retirement account (IRA) or 401(K) account. How much you want to withdraw changes as you age, so make sure you know your IRS requirements. The report recommends at a rate of 3.65% of the total. Remember, you are only required to make the withdrawal – you don’t have to spend it. You have the option to pay income tax on the withdrawal and reinvest all or part of the after-tax proceeds, depending on your financial situation.

My takeaway from this report was that if we plan our financial strategy using this model, then we can use the time between age 62 and 70 to ease into phased retirement. This is what unretirement is all about! Talk with your employer to work out flexible scheduling and develop a plan to transition into a limited work arrangement. Employers are looking for ways to keep senior talent engaged so it could be a win for everyone. Or you could try a limited work arrangement in a field you’ve always loved.

The full report is not a difficult read so check it out if you can. There is a great section that points out the primary advantages and disadvantage of this strategy. And it’s important to remember that most investments are always subject to risks as well as bonuses depending on market fluctuations. I like that the study is the culmination of analyzing 292 retirement planning strategies. That can make it a good foundation for safe spending in your retirement.