Not to be Morbid, but You Should Be Preparing for the End of Your Life

Man in cafeSome of the basics we all need to have are a budget, a bank account, insurance and an estate plan. This last one shouldn’t be delayed until your 50s, 60s or later, says The Huffington Post in its article “Why Estate Planning Makes Sense at Any Age”
An estate plan is essential no matter what your financial situation or age.
Sure it’s easy to not think about taking steps for estate planning. In fact, a recent ABC News poll found that only about 50% of Americans have created a will. Fewer still have created supporting estate documents.
Having a plan can help bring you peace, get you on the road to stronger financial security, and help those about whom you care most.
Estate planning can be a holistic process to set your finances on a much more successful track for the rest of your life. Proper planning is about creating and maintaining good financial behavior.
The estate planning process isn’t supposed to be a “set it and forget it” process. When your life changes in a significant way, that’s a reminder to review both your financial and estate plans to make sure you’re still on course. Estate and financial planning need to be connected.
How do you begin an estate plan? Of course, there are a lot of carefully drawn documents involved. But it’s the planning behind them that really makes it work.
Speak with a qualified estate planning attorney soon to make certain your plans fit your needs and those of your loved ones.
If you die without a valid will, the state will distribute your assets based on the intestacy laws.
Reference: Huffington Post (June 8, 2016) “Why Estate Planning Makes Sense at Any Age”


What NOT to do with Your Financial Future

Calculator"Some we get right. Some we are left wondering the possibilities of what could and should have been."

Last week we looked at Forbes' recent article, "10 Financial Choices You'll Regret in 10 Years," which lists some financial decisions that you'd kick yourself for in 10 years.

Here are the next five decisions:

  1. Trying to be a DIY investor when you haven't a clue what you're doing. Would you try an open heart surgery after watching a few YouTube videos? Of course not. So why would you consider investing by yourself without the help of a professional?
  2. Viewing important insurance policies as being lame. If you passed away today, what kind of shape would you leave your family in? You may need life insurance or disability insurance—and perhaps long-term care insurance if you're over 55 years old. Don't avoid a review of insurance policies that will protect you from financial ruin.
  3. Treating your retirement like a distant second cousin. Saving for retirement is crucial. If you're depending only on Social Security for income, think again and think much harder! You won't be able to maintain the lifestyle you want in retirement with Social Security alone unless you're the most frugal person in the country. Perhaps not the most desirable title to have when trying to enjoy your golden years.
  4. Neglecting important money conversations with your spouse. Want to blow it big time? Go ahead and try to handle all of your financial goals without the input of your spouse. These money decisions should be discussed and agreed upon. It will be worth it, now and in the future.
  5. Being blind to your recurring expenses. These expenses can put a hole in your wallet. Examine your recurring expenses and decide which ones you absolutely have to have and which are discretionary. For example, if you have a high cable bill, ask about a discount. There are many ways to save on recurring expenses.

Reference: Forbes (February 15, 2016) "10 Financial Choices You'll Regret in 10 Years"


In Your Dreams: Winning Big in the Lottery

Congradulating man"Here's how to make a windfall of cash last a lifetime."

It seems like just about everyone had lotto fever recently, thanks to the first billion dollar jackpot. However, for most of us, those lottery dreams will remain just that: dreams.

You know that it's a long, long, long, long shot for you to win the lottery. The Multi-State Lottery Association reports that the odds of hitting the jackpot are one in 292.2 million. Add another "long" to that shot. Even so, we can dream, right?

US New & World Report's recent article "Lottery Winner or Not, Have a Windfall Plan," says let's have fun with the fantasy that your purchase of a $2 lotto ticket will make you a billionaire by discussing a lottery game plan:

Lottery Game Plan

  1. Sign your ticket (after making sure your state allows it).
  2. Place the signed ticket in a safe deposit box.
  3. See if your state allows you to claim the prize money anonymously (DE, KS, MD, ND, OH, or SC).
  4. Don't claim the prize immediately. You need to get yourself organized with an attorney, a CPA, and a financial planner.
  5. Prepare to handle family requests and preemptively let those family members know how this will work.
  6. Execute your lottery game plan.

It is fun to daydream about lottery winnings, no matter how great the odds.

It's also a good exercise to have a plan in place for how you would handle a financial windfall of any kind. There are, after all, many other ways to receive a big chunk of cash. For example you might receive an inheritance, life insurance proceeds, an insurance settlement, or funds from selling a business or real estate. Even if you never play the lottery and have no real need for that game plan, you still need to know how to deal with more realistic situations. Here are some suggestions:

Create breathing room. Getting an unexpected lump sum is exciting. We can't help but start to dream of the possibilities. But it's best to step back, take a deep breath, and try to avoid making any impulsive decisions.

Figure out your taxes. As you might expect, some windfalls will have a tax impact, and those implications will vary based on the type of asset.

Inventory your desires. That sounds serious! Yes, make a wish list of everything you want to have and do, including education goals, vacations, cars, and homes. When you have it set, put that list away for 30 days to give you a little time to settle down. At that point, common sense and rationale thought may have a better chance of entering into the decision-making process.

Create a debt plan. Pay off your credit cards ASAP. Organize your remaining debt, including mortgages, student loans and auto loans to create a long-term debt plan.

Take five. Spend no more than 5% of the windfall on wish list items in the first six months. There's no reason to hurry with major financial purchases—you've done ok without them, now just wait a little while longer. Keep your impulses and emotions in check and take some time to make wise purchases.

Replenish the reserves. Make sure the windfall will, at the very least, let you build up your emergency cash fund. Set aside enough money to cover living expenses for six to 12 months.

"Snap out of it!" As Cher said to Nicholas Cage in Moonstruck. Each of us will experience a big psychological impact when we receive a financial windfall—the adjustment time will vary. To help address this, take a break from decision making and allow as much time as possible before making major decisions about money or life.

Organize a financial team. Begin by educating yourself on sudden wealth and investing. The more you learn, the better your odds for a successful relationship with your money. Consider hiring a fee-only financial planner, an accountant and an estate planning attorney.

It's fun to daydream about what you might do with a lottery jackpot. But it's even more fun to have a well-thought-out plan in order to be prepared if and when an unexpected financial gain comes your way.

Reference: US New & World Report (January 15, 2016) "Lottery Winner or Not, Have a Windfall Plan"


Student Loans Can Impact Your Future

Bigstock-School-Funding-Shortage-6812713"Millions of graduates are having problems repaying their loans because of difficulties dealing with servicing companies."

Applying for and receiving student loans for college is pretty simple. But repayment can be tough. Forbes' recent article, "How to Tackle The Top Three Student Loan Issues," explains that colleges could do better at telling students what they need to know. Students can experience obstacles when they start to repay their loans, such as lacking the necessary income to cover the monthly payments. Others go back to school to earn a graduate degree, but are given poor advice on more affordable repayment options.

Students need to make sure they know their rights.

A loan servicer must respond to requests for more affordable income-based repayment plans. Under the federal loan program, a student has numerous options that can help with loan repayments. The article points out some of the most common issues and how to tackle them:

Federal Loans Made by Private Lenders. Private loans are under the same repayment requirements as the federal program, but anything involving a federal loan entitles the student to some breathing space. Payments can be based on income or gradually increased. There are provisions in the event the student becomes disabled, out of work, or is going back to school.

Don't Fall into Default! Even if you're not making any payments, do what you can to stay out of default status. The Consumer Fraud Protection Bureau found that one in five students were in a no man's land of not making payments, yet not into default status, which triggers the collection process. There are about four million borrowers in default. The article advises to find a workable repayment program before this happens.

Find Out More About Repayment Options. The federal program can alter loan terms, and a student can consolidate loans to save money.

Be proactive and avoid the situation where you get in deep water with payments and never look at alternatives. Don't be uninformed. Get started now.

For more information about estate planning, please visit my estate planning website.

Reference: Forbes (November 18, 2015) "How to Tackle The Top Three Student Loan Issues"


Pro Football Players Get Estate Planning Playbook

Bigstock-Pro-American-Football-on-the-F-50332916"The biggest questions they have when they retire are: What do I do next, and how do I make my money stretch after I'm not playing football anymore?"

The NFL and the NFL Players Association have teamed up to build a comprehensive wellness program that helps retired football players make a better transition into a life without football, both financially and emotionally.

A recent article in The Employee Benefit News, "NFL aims to keep players financially fit," describes "The Trust," which officially launched in 2013. It's an extensive financial wellness program that includes education, lifestyle, health, and career services. It has helped about 1,000 former players each year.

Players who enroll are assigned a case manager who identifies their key issues. Then The Trust and its service partners devise a customized "game plan" that tells the player where he is financially, where he should be, and how to get there. A critical part of the program works to create a community for these retired players where they share their personal stories with each other and mentor others who are in need.

The most popular financial topics are estate planning, setting up college funds for players' children, business counseling, and investment strategies. The Trust also offers advice on health, fitness, relationships, mental health, new careers, and going back to school.

Many players who retire from pro football—frequently earlier than expected because of injuries—must deal with mental health issues. It's a big letdown when their playing days are over. When it ends, they can be left feeling alone and uncertain about what will come next. Plus, many players are managing money for the first time.

For more information about estate planning, please visit my estate planning website.

Reference: Employee Benefit News (November 23, 2015) "NFL aims to keep players financially fit"

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