What are you thankful for today?

In honor of the Thanksgiving holiday, let’s look at five reasons to be thankful you have a financial advisor:

5. You don’t have to spend your day clicking around at do-it-yourself stock trading sites, because your financial advisor has carefully created an investment plan tailored to your unique financial situation and future goals.

4. As others are retiring without any savings to speak of, your financial advisor has made sure you have a workable savings plan . . . and by following it, you know your retirement goals are within reach.

3. You can sleep at night knowing the estate plan your financial advisor helped create will safely pass your assets on to your family, reduce your estate’s tax liability, take care of your loved ones, keep your business running without you, and more.

2. While the average household’s debt is growing, yours is either rapidly dwindling or nonexistent, thanks to the financial plan your advisor developed for you to follow.

1. No matter what the economy is doing or what the national political landscape looks like, you know your financial advisor is on top of things and will guide you safely through any rough financial waters to come.

If you don’t already have a financial advisor, take the time now to search the All Financial Advisors database to find one in your area. And on behalf of everyone at All Financial Advisors, have a safe and happy Thanksgiving!  

Important Beneficiary Designation Considerations

Although you may have a formal estate plan established with a trust or will — make sure beneficiary designations on all accounts are consistent with your goals. 

Accounts having beneficiary designations will control who receives the assets.  Common assets with beneficiary designations are:

• Annuities
• Individual Retirement Accounts (IRA)
• Life Insurance
• Qualified Retirement Plans (401K, 403b, 457, SEP, SIMPLE, Pension, ESOP)
• Employee Benefit Plans (Group Term Insurance, Stock Option, Stock Purchase, Non Qualified Retirement Plans)
• Transfer on Death (TOD) Accounts

Additional items to consider:

• Update designations for life events such as birth, death, marriage and divorce.
• If you make changes to your will or trust ensure beneficiary designations are up to date.
• Name contingent beneficiaries
• Use caution when naming a trust as beneficiary, get a legal opinion from a estate planning professional
• Consider naming a charitable organization as a beneficiary

Beneficiary designations are a powerful tool allowing for efficient transfer of assets to heirs.  Consult with an estate planning specialist to ensure beneficiary designations have been recognized and completed throughout all assets.

Contact a qualified estate planning financial advisor within our free and secure directory — to discuss your exact needs.  SEARCH HERE.

Thanks for using AllFinancialAdvisors.com

Michael Jackson’s estate was not kept up to date.  A news worth event for fans and the general public alike.

Michael Jackson’s estate plan included a will… in conjunction with a family trust.  Unfortunately, Michael Jackson’s will was missing vital information, beneficiary designations!

When this happens, this critical estate planning omission temporarily disqualifies the originally appointed administrator and executors from exercising their powers to privately settle the estate. 

As a result, the estate now must be exposed to the state probate system; the state probate will then determine who gets control over the estate and make many of the proceedings public record.

Mrs. Katherine Jackson, Michael Jackson’s mother, was one of the original administrators of his estate.  She was apparently in various disagreements with two of Michael Jackson’s former business colleagues, an attorney and a recording label executive.  Michael apparently appointed them as his executors, when he established the estate plan in 2002.

Any individuals like these type business persons, would obviously be interested to gain immediate control over the estate for business purposes.  You can see how the viewpoints of a mother mourning the loss of her son could differ from two businessmen awaiting to take control of her son’s estate. 

Estates with multiple administrators and/or executors who have differing agendas can become very difficult to settle, expensive and emotionally taxing.

This is a great example of why it’s important to keep an estate plan updated.  Additionally, be very careful and ask lots of questions before deciding who will handle your affairs.  Not all financial advisors are equal in their experience and/or education. 

Don’t let your estate become a “Thriller”…

IMPORTANT QUESTION:
Who will take control of your estate plan when you are gone? 

Choosing 2-3 qualified Financial Advisors with Estate Planning expertise — may be the way to go!  That way you can interview them to see if they have past clients with similar estate planning issues that you have.  Just a thought…

Meeting your new Financial Advisor for the first time…  Expectations / Goal Setting!

Once you’ve chosen the financial advisor you feel is best for you, what can you expect from your first meeting?  Every advisor is different, of course, but a few things will likely happen the first time you sit down with your new financial advisor.

Come prepared to ask and answer questions, and bring any documents that might be helpful (for instance, copies of wills and trusts, insurance policies, account statements, etc.).

At the meeting, your financial advisor will likely ask you detailed questions about your current financial situation.  Answer honestly, even if you’re not happy with where you are currently.  The more information your advisor has, the better he or she can meet your needs.

The advisor will also ask you about your future needs.

Before the meeting, think about where you want to be in terms of retirement (when do you want to retire, and what kind of lifestyle do you want to lead in retirement?). 

• Do you plan to pay for your children’s college education?
• Do you currently save anything, and if so, do you want to save at a higher rate?
• Do you plan to leave your job to start a business, start a family, or for any other reason?
• Do you have a will and other estate planning documents in place?
• Are you financially prepared for the unexpected, such as a job loss, illness or major life change?

These are all things a financial advisor needs to know.

Your financial advisor will talk with you about your financial goals.  Then, using all the information you’ve provided, he or she will come up with a plan to meet all your goals. 

That plan may include anything from getting on a budget to investing aggressively; it all depends on your unique situation.  Once you approve the plan, the advisor will implement it–and you can relax, knowing you’re one step closer to realizing your financial dreams.

NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

Estate Planning and Charitable Giving Options:
You might be thinking about incorporating charitable giving into your financial planning.  Your reasons may be altruistic–to give back, to support a worthy cause, to uphold the teachings of your faith–or they may be motivated by personal gain–to lessen your tax burden, for instance.  Your motives for wanting to give charitably are yours alone, and although we are not going to delve into them in this forum, you should be able to define them for yourself and your financial advisor before planning your giving.

AllFinancialAdvisors.com recommends working with your personal financial advisor to create your giving plan.  There are many ways to give, and an independent registered investment advisor (RIA) can help you determine which is right for you.  A financial advisor will also be able to help you figure out how much you can afford to give, work this ‘giving’ component into your budget, while taking tax issues into consideration, and evaluate giving opportunities.

That said, let’s take a look at some of the ways in which you can build charitable giving into your financial plan.

• If you want the tax benefits associated with charitable giving, be sure you and your financial advisor are following the Internal Revenue Service (IRS) guidelines.
• Donate assets like vehicles, art, real estate, retirement accounts, household goods and other items of value; all can be tax-deductible.
• Set up a charitable remainder trust.  A charitable remainder trust is your own private fund to which you can contribute cash, investments and tangible assets. It will provide a designated taxable income for life, payable to yourself or to your beneficiaries. After the income is paid or all beneficiaries have died, the money remaining in the trust is given tax-free to the charities you name. 
• Give appreciated stocks. If you’ve held stocks or a mutual fund for at least 12 months, you can gift those assets to a charity and receive a tax deduction of their fair-market value.
• Bequeath money to charity. When you write or revise your will or living trust, you can include instructions to distribute a portion (or all) of your estate to specific charities. Assuming those charities are qualified according to the IRS, your bequest can be deducted from the federal tax on your estate.
• Name a charity as the beneficiary of a life insurance policy.
• Give to a pooled income fund. These are similar to charitable remainder trusts, but the charity is in charge of the fund, and you simply contribute to it. The charity pools all contributions to the fund, invests them, and pays you a taxable income. When you die, your interest in the fund reverts to the charity.
• Volunteer.  Many charities need the time and talents of people from all walks of life.  When you volunteer, you can deduct some of the expenses associated with that volunteer work–including the mileage you drive to volunteer.
• Give good old-fashioned cash.  It’s quick, it’s not complicated, and you can deduct the amount you give from your taxable income, provided you donate to a qualified charity and get a receipt.

 
Your financial advisor and/or financial planner can explain these and other ways of giving to charities (including gift annuities, donor-advised funds and private foundations) and help identify ways to make the most of your contributions, such as employer matching funds.  Financial advisors have varied views on the appropriate fashion to give, so check in with your current financial advisor and ask these questions.

If you don’t currently have a financial advisor, simply SEARCH HERE for qualified financial advisors who have various specializations in Estate Planning, Charitable Giving and/or Money Management — or start by entering your Zip code in the space provide above — to begin your search.  Best wishes. 

Today’s blog is in honor of Martha Brogley’s lifelong charitable giving of herself and her artistic talents.  MB

The Basics of Will and Trusts:

You know you need a will, but do you need a trust?  And what does either of them have to do with a financial plan?  Does your financial advisor have the right experience to most effectively help you?

To answer those questions, let’s back up a little.  If you die without a legal will or trust, then the state will decide what happens to your property–and to your minor children, in the event their other parent is not able to care for them. No one wants to think their wishes won’t be honored after they die, and that’s where wills and trusts come into play.

A will, as you probably know, is a legal document stating your wishes in regard to your property and guardianship of your minor children after you die. A living trust, on the other hand, is a legal arrangement you create yourself while you’re alive; under a living trust, a trustee holds legal title to the beneficiary’s property. You can be both the trustee and the beneficiary while you are alive. Upon your death, the trust passes to a successor trustee you have determined, and he or she is responsible for the disposition of your property according to your wishes.

So what’s the point of putting all your property into a living trust for which you are the trustee and the beneficiary?

Simple:  A living trust keeps your estate out of probate.  When you die with a will in place but without a living trust, the will goes into probate.  In probate, all your property must be inventoried and appraised, debts and taxes must be paid, and only then can the remaining assets be allocated according to your will.  A living trust completely eliminates that costly and time-consuming legal process (unless you have property you haven’t put into your trust, in which case, only that property will go into probate).

Your attorney can help you decide whether you need a revocable or irrevocable living trust, and he or she can also help you with your will.  Once those are established, keep the paperwork in a safe place–and make sure your successor trustee and executor both have access to it.

Disclaimer: AllFinancialAdvisors.com does not give legal advice. 
Always consult your attorney before making any legal decisions.

Search by STATE for Financial Advisors with Estate Planning expertise.  These financial planning professionals will be able to review your personal situation and help you connect with a local attorney (if you do not currently have one).

Written by Jeff Camarda: Camarda Financial Advisors (Jacksonville, FL).

Control Over Estate Taxes 

There can be no doubt that the estate tax is here to stay, and will apply in some form – likely the same exemptions and rates on the books for this year – for 2010, the previously-legislated year of the long-awaited appeal. After that, all bets are off, but my hunch is the tax will become much more oppressive, to feed massive Federal deficits, and because higher taxes have become “fashionable” again.

However things break, there are some basic rules we’d do well to remember:

1) Each of us gets to gift or pass on a limited amount tax-free

2) While each of us gets our own exemption amount, if the first spouse to die does the natural thing and leaves everything to the other spouse, their exemption is completely wasted.

3) Life insurance, which, if owned by you or your spouse, can cause some pretty big numbers to be needlessly pulled into your taxable estate. Another special type of trust, called an “ILIT”, can help solve this problem.

4) The last tax issue involves “stretching” IRA-type accounts, so that heirs pay tax as they pull money out, instead of up front in a big lump sum. Many clients want to have their kids be able to stretch the taxes, but still benefit from the protections of trust planning. For this, so-called “conduit” provisions are needed in the trust document.

* * *

Many of our advisors are members of the Financial Planning Association (FPA) and also the National Association of Personal Financial Advisors (NAPFA: the nation’s leading organization promoting Fee-Only comprehensive financial planning).

Using the services of a qualified financial advisor (to help you identify the strengths and weaknesses in your financial picture) will ensure you can retire comfortably! 

NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

An Inherited IRA is also known as a Stretch IRA

As IRA account owners pass away their assets are typically inherited by designated beneficiary(s) named on the account. The beneficiary(s) have a choice to receive a lump sum distribution, minus ordinary income tax, or establish their own Inherited IRA account, which offers additional tax deferral. If the later option is chosen, the IRS requires annual beneficiary distributions to be taken based upon a uniform life expectancy table. Therefore, younger beneficiaries inherently have an advantage to grow inherited IRA assets due to relatively small-required annual distributions.

Ask a financial advisor to show you a hypothetical illustration for inherited IRA distributions with beneficiaries who vary in age. This may become an opportunity to include loved ones who are younger than you into your estate plan while providing them with a financial foundation.

Many of our advisors are members of the Financial Planning Association (FPA) and also the National Association of Personal Financial Advisors (NAPFA: the nation’s leading organization promoting Fee-Only comprehensive financial planning).

Using the services of a qualified financial advisor (to help you identify the strengths and weaknesses in your financial picture) will ensure you can retire comfortably!

NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.

Carefully consider beneficiary designations; they have a significant impact on the distribution of your estate.

Most financial advisors specializing in estate planning, suggest using a will or trust to formally outline the final distribution of assets held within one’s estate.  However, these documents, unless specifically named as the beneficiary, usually do not have any effect on the distribution of many important assets.  Personal assets such as IRAs, annuities, life insurance, retirement plans, employee benefit plans, and transfer on death accounts use beneficiary designations to control which entity receives these assets.  Financial advisors can help you decide on which beneficiary designations are best for you.   These can include people, charitable & educational organizations and religious entities among others. Also, most financial advisors highly recommend naming back-up beneficiaries; commonly called “Contingent Beneficiaries”. If a primary beneficiary dies before you the contingent beneficiary will receive its share of the asset.

Most financial advisors suggest making it a habit to review beneficiary designations regularly and update them as necessary for employment changes, birth, death, marriage and divorce. 

Many of our advisors are members of the Financial Planning Association (FPA) and also the National Association of Personal Financial Advisors (NAPFA: the nation’s leading organization promoting Fee-Only comprehensive financial planning).

Using the services of a qualified financial advisor (to help you identify the strengths and weaknesses in your financial picture) will ensure you can retire comfortably!

NOTE: Experts recommend contacting 2-3 financial advisory firms, so that one may compare/contrast each firm, thus making the best-qualified choice.