7 Common Mistakes of Estate Planning

Even though planning your estate isn’t an enjoyable job it’s necessary so that you can efficiently and successfully transfer all of your assets to those you leave behind.  With a bit of careful planning, your heirs can avoid having to pay estate taxes and federal taxes on your assets.  As well, a well planned estate avoids confusion for your loved ones.

Still, with all the advantages of estate planning, many people make a great many mistakes in the process.  The most common mistake when it comes to estate planning is not getting around to doing it at all.  Make sure that you take the time to plan at least the financial portion of your estate so that you leave your loved ones behind with some amount of security. The following seven mistakes often put families into great difficulty after a loved one’s passing.

1. Don’t fall into the trap of thinking that estate planning is just for the rich.  This is completely false as planning your estate is essential for anyone who has any amount of assets to leave behind.  Many people don’t realize that their estate is as large as it really is, especially when they fail to take into account the assets from their home. 

2. Remember to update your will and to review it at least once every two years.  Factors that can change information about your beneficiaries include deaths, divorce, birth, and adoption.  As your family structure changes so does the change in your assets and who you want to leave them to.

3. Don’t assume that taxes paid on your assets are set in stone.  Talk to your financial planner about ways that your beneficiaries can avoid paying taxes on your assets.  There are several strategies for tax planning so that you can minimize taxes or avoid them altogether. 

4. All of your financial papers should be in order so that it’s easy for someone to find them.  Make sure that one of your loved ones has information on where to find the papers necessary for planning after your death.

5. Don’t leave everything to your partner.  When you leave all of your assets to your spouse you are in reality sacrificing their portion of the benefit.  You’ll get an estate tax credit but will forfeit part of this if your spouse is your only beneficiary.

6. Ensure that your children are well planned for.  Many people take a lot of time deciding what to do with their assets and forget that they need to appoint guardianship for their children.  There are many details to take into consideration when it comes to guardianship.

7. If you don’t have a financial advisor, get one. Financial Planners and Advisors are trained intimately in these matters and can provide asset protection well above whatever fees they may charge. If you need help selecting the right financial advisor, get the Financial Advisor Report.

The above mistakes are common when people are planning their estate.  Take the time to plan for your death even though you think that you have years before it becomes an issue.  The key to successful estate planning is being prepared.

Your Guide To Retirement Planning

Title: In life, nothing is permanent in this world. Everything that comes will definitely go. That is why it is best to put our best foot forward and save more for the future. The best thing that you have to start with is to have a retirement plan.

Some wait to long before they decide to plan for their future. This is not a good idea because we can never tell what lies ahead. So, here's how and when to start retirement planning:

1. The retirement year.

First, decide on what year you would like to retire. It is always best to start something with a goal in hand. This will keep you focused and determined to push it through.

2. Do your homework.

The best way to help you start making your retirement planning is to consult your “employer-sponsored 401(k) or IRA,” or to any of your retirement schemes and investigate on the objective date of your mutual funds and see if it matches your target date of retirement. If it does, then start funding your nest egg immediately.

3. Backups.

There are many instances where your plan can backfire. So, it is best to have backups.

So, when making a retirement plan, better include a backup that will serve as a fallback in case your nest eggs fails or if something else goes wrong. It is best that you do not depend entirely on your funds because sometimes there are circumstances that are beyond our control.

3. Opt for annuities.

When doing a retirement planning, you should take note also of the different retirement planning strategies that will surely make your plan work. One good example of a retirement planning strategy is the annuities.

Basically, annuities are adaptable indemnity bonds that are exclusively patterned to bestow additional wages at the same time assist you accomplish “long-term” saving goals.

These annuities are the “long-term’ items recommended by most insurance companies, though, there are brokers and other financial establishments that provide this kind of service. They will help you set-up a specific goal and aim for it.

There are two types of annuity: the immediate and the tax-deferred annuity.

In the immediate annuity, you start your retirement planning by giving a hefty amount of money to the insurance company or any financial institution for that matter. After which, your payment scheme will start at once. This type of annuity is usually applicable to those who are already 60 years old and above.

On the other hand, the tax-deferred annuities you may choose whether you will pay the retirement amount instantly or make a monthly disbursement until the time you reach your target date.

This is usually appropriate to those who start their retirement planning early, generally those who are 20 years old at the least.

4. Consider the Modified Endowment Contracts.

Annuities had been heading the limelight for so many years now. Most people would go for annuities, as this is the most popular retirement planning strategy. However, like most plans, it is still vulnerable to problems and crisis. That is why, it is best to make an alternative option when making a retirement planning.

The next best retirement planning strategy is the Modified Endowment Contract or the MEC. This is, basically, one kind of “insurance policy.”

In reality, MEC is similar to annuity, especially the tax-deferred annuity, in terms of the preliminary premium rates. Though, they differ in terms of tax codes.

In annuity, the tax code appears to be very unfavourable especially when the benefactor dies while the “annuity accumulation” stage is in full force. This, in turn, makes the deferred wage taxes on development suddenly becomes payable.

In contrast, the MEC resolves this problem by providing the benefactor or the beneficiaries with an “insurance rider” included in the agreement. The “insurance rider” is made to hand over the full amount to your recipients absolutely free from any taxes.

Moreover, MECs can give you the suppleness of choosing between the variable and fixed account preferences. This, in turn, will make your retirement planning relatively easier.

Nevertheless, whatever retirement planning strategy you choose, the bottom line is that it is really important to save for your retirement as soon as possible.

Most often than not, people linger on a little longer before they start making their retirement planning. This should not be the case because you can never tell what will happen next.

As they say, life is suspense; you will never know what it can offer you until the end. So, the best time to do retirement planning is now.

Long Term Care Insurance Should I Get This?

Yes, you may want to consider a long term care insurance plan if you don’’t want to drain your retirement savings and other investments in the future! It is currently estimated that nursing home costs are more than $10,000 per month. Imagine, how much this will cost you on an annual basis if you had to pay this money out of your pocket if you needed care from a nursing home! This would be financially devastating without long term care insurance.

Did you know that prior to the passage of the Deficit Reduction Act of 2005, most Americans were able to count on Medicaid to assist them with long term health care. The Deficit Reduction Act changes all of that. This new law places the majority of long term health care costs on you, especially if you have assets. Unfortunately, middle class Americans will be hit the hardest with this new law.

How does the Deficit Reduction Act affect me if I need nursing home care and have assets? Well, for the most part, you will need to exhaust your assets before you will be eligible for Medicaid. Under this new law, there is a five year look back period from the date that you apply for your Medicaid benefits. This five year look back period, is to ensure that you have not transferred assets to relatives, friends, or other individuals. If you have transferred your assets to someone, Medicaid will count this against you and you will have a period of penalty wherein you will not qualify for benefits. Basically, this means that you could be out of money and Medicaid will not pay for your nursing home care!

The other side of this new law is that even if you have not transferred your assets to someone, you cannot have more than $500,00 in home equity. The majority of your assets including trusts and annuities are viewed differently under this new law.

It is important, that you consider long term care insurance as part of your retirement planning. With passage of the Deficit Reduction Act of 2005, it is a must! Unless you are independently wealthy and don’’t mind coming out of your pocket with more than $10,000 per month for your prospective nursing home care! For the average person, this would be a severe financial hardship.

What age should I consider getting a long term care insurance plan? You may want to consider in your early to mid fifties. However, it is recommended that you consult your insurance agent or financial advisor about this.

Planning is important, in order to assist you in eliminating a potentially devastating financial disaster. You want to live out the golden years of your retirement as stress free as possible. So make sure you plan for your future long term health care needs!