It’s Time for a Midyear Checkup—Financially Speaking

Reviewing documentsOver a third of Americans thought about a financial resolution this year, according to a Fidelity Investments survey. Their top goals were to save more, spend less and pay down debt.
If you were one of these go-getters and goal-setters, this summer is a perfect time to look at your progress, says US News in “Keep Your Money Goals on Track with a Midyear Financial Checkup.”
While summer is a natural halfway point between New Year's financial resolutions and year-end tax planning, it's also a convenient time to contact financial experts, tax planners, human resources representatives and other advisors—who are less busy during their “off-season.” For your midyear financial checkup, look at each of these financial areas.
Taxes. By summer, you should have a decent idea of what's going on with your tax situation and can start planning. Are there any major life changes since last year to include in your tax strategy? This will mean a transition in your tax situation. Also, if you earned a nice tax refund in April or paid a large tax bill, you should ask for a W-4 from your employer and adjust your withholding. Also, look and see if you're maxing out workplace tax benefits—like your flexible spending accounts and retirement contributions.
Insurance. Use the summer to determine if your insurance plans are meeting your needs. Many employers have an open enrollment for health insurance and other benefits in late fall, so now’s the time to think about this.
Estate Planning. If you don't yet have an estate plan in place, speak with an experienced estate planning attorney. Don’t be one of the 64% of Americans that don't have a will. Get the basics prepared, such as an up-to-date will, power of attorney and health care directive.
Emergency Fund. Check on your emergency fund and see if it was depleted by a summer vacation or another event like a change of jobs. Time to beef it up! You should keep three to six months' worth of living expenses readily available. Build your rainy day fund by putting a percentage of your paycheck into savings every month. If you don't see that money available in your checking account, you won't miss it.
The Long Term. Summer vacation is also a great time to look ahead and consider where you'd like to see yourself in the future. Get started with financial strategies that will help you reach those goals.
Reference: US News (July 28, 2016) “Keep Your Money Goals on Track with a Midyear Financial Checkup”


Bonjour! Cross-Border Moves Take Planning

Hand with keyIf you’d like to retire abroad or move back to the U.S. after working overseas, you’ll need to calculate how it will impact your finances. Financial planning means considering tax rules, currency fluctuations and political instability.
Nasdaq’s recent article, “Money Crossing Borders Requires Special Planning,” says the good news is that a new kind of financial planning is emerging to help people navigate the potential pitfalls of such moves.
If you are or plan to be…
· An American with financial interests outside of the U.S.,
· An American who lives abroad,
· An American who has dual citizenship,
· A foreign citizen moving to the U.S., or
· The foreign children or spouses of American citizens,
…you can definitely benefit from cross-border planning.
You need to make sure you protect your financial interests.
Financial and legal issues around the world can be very complex and change frequently. When you’re talking about money internationally, there are questions of immigration, taxes, labor, real estate, securities and other topics of concern. Problems can pop up in cross-border financial transactions such as penalties for failing to pay taxes or financial institutions refusing to transfer your money between domestic and foreign accounts. That said, here are some of the most important components of cross-border planning to consider:
Cash management: Remember there are disclosure requirements and regulations governing the movement of funds in and out of a country that can tie up your money, and if a U.S. citizen doesn’t disclose accounts overseas on the annual Report of Foreign Bank and Financial Accounts form, he or she could get hit with a $10,000 per violation penalty (or more!). Plus, currency exchange rates can really affect the value of your money.
Income taxes: American citizens living abroad still have to pay U.S. income taxes—plus any taxes from the income they earn in the country where they live and work.
Retirement planning: Every country is different as to their laws on the taxation of retirement savings. Failing to adhere to the rules may mean overpaying taxes on retirement funds, underpaying and being subject to penalties, or missing out on the government benefits for which you’re eligible. For instance, an employee who wants to rollover a U.S.-based retirement plan such as a 401(k) to Canada could find those accounts becoming taxable as soon as they are rolled over! However, if you do your homework and understand the tax laws of both countries, you should be able to handle the transfer mostly tax-free.
Estate planning: Foreign countries may not recognize and honor an estate plan created in the U.S. Inheritance tax regulations and tax treaties are different with every country. Heirs might inherit tax-free in one place and be hit hard with taxes in another. Talk with an estate planning attorney and make sure that your plan will work effectively if you will be retiring abroad.
Investing: There will be taxes and regulations to contend with when looking at investment income generated or moved internationally.
Insurance: Some insurance benefits may not be 100% transferable from country to country—like your U.S.-based health insurance policy may not pay your benefits in a foreign country. Also, a foreign country may not let your heirs receive a U.S.-based life insurance payout without some taxes. Sound planning may help you avoid these issues.
If you or your money will be moving in or out of the U.S., be careful and make sure you speak with a qualified attorney about cross-border planning before you make the move.
Reference: Nasdaq (July 27, 2016) “Money Crossing Borders Requires Special Planning”


When to Take Your Parent in to Live with You

Bigstock-Extended-Family-Relaxing-On-So-13907567People wonder if they should bring their aging parent to live with them. Typically, this issue comes up when one parent passes away. When that happens, the parent may remind the adult child of the promise he or she made some time ago that “you’ll never put me in one of those homes.” Most children agreed readily without much thought. But time changes things, says the Forbes article “Aging Parents and The Rise of the Multi-Generation Household.”The Dickensian concept of “being put in a home” is based on largely outdated ideas of poorhouses and debtors’ prisons. While perhaps a bit drastic, it may not be that far off for Depression-era kids who saw the treatment of seniors before Medicare and Medicaid provided some care. Some nursing homes are still found to violate government regulations, but most are decent, well managed and comfortable places to care for seniors who need a lot of attention for a multitude of medical needs. Licensed board and care homes may be another option for long-term care, usually at a lower cost than nursing homes. They don’t offer skilled nursing, but they do have a more intimate environment with a less institutional atmosphere.
It’s critical that parents make certain that any savings and investments won’t disqualify their child from means-tested government benefits, which can impact the parents’ ability to save for retirement. To avoid this, parents should ask an elder law or estate planning attorney to help them create a special needs trust. The assets held in the trust for the disabled person won’t affect his or her eligibility for government benefits.
Families who must address this question should look at how things might be in the future, both short and long term. Can family members manage a parent’s care needs—with more medical equipment and increasingly frequent trips to the doctor, therapy and the pharmacy for meds? An adult child has to assume increasing obligations to transport and accompany the parent to his or her appointments, advocate and care for the parent, and monitor the medications, diet and follow-through. This burden can become unbearable for some, and living with a parent and satisfying all of his or her care needs can be too great a task.
For some families with kids in the house and both parents working, it can be nice to have a grandparent there to babysit—if he or she is able. Also, if the older parent can help with the family chores, it’s great. As the grandparent ages, children can learn responsibility in helping to care for a dependent person, which can help them mature. Plus, the one household can make the best use of the aging parent’s assets. But this situation doesn’t always work out, and it isn’t for everyone. There can be tension from having an in-law in the house, and adoring grandchildren may grow into reluctant teens.
It’s good to have a backup plan in place now for the possibility that the caregiving responsibilities in the future will be too great and become too much for one primary caregiver. Care facilities have their place and may be the best option in some situations.
Reference: Forbes (July 7, 2016) “Aging Parents and The Rise of the Multi-Generation Household”


Communication Key in Caring for Parents

Bigstock-Extended-Family-Outside-Modern-13915094Good news for older parents: your children will help support and care for you as you age. That’s according to a new study from Fidelity Investments. However, the bad news is that most families don’t agree on exactly what that help should be and the types of responsibilities children should assume.
Fidelity’s most recent Family & Finance report surveyed two members of each family—one parent and one adult child—on things such as retirement income, eldercare and estate planning. The results found that about 40% disagree on the roles children should play as parents age.
Money’s recent article, “Here’s What Your Aging Parents Say They Want You to Do for Them,” says that these kinds of mismatches can create major emotional and financial problems down the road. Families should not wait until a health crisis or other unexpected event demands a caregiving or financial planning conversation; it is far better to have these conversations in advance of any triggering events. One clear finding on financial support for parents was that while over 90% of parents who responded said they wouldn’t like to become financially dependent on their children, only 30% of children shared that view, and about 25% are already planning to support their parents financially.
There were other expectation differences with financial assistance tasks. About 70% of parents expect that at least one of their children will help manage investments and retirement finances, and about the same percentage thought the kids would pitch in on household expenses, budgeting, and bills. However, 36% of children didn’t know they were expected to handle investments, and 44% were unaware their parents wanted help with household budgets.
The big reason children are clueless when it comes to what their parents expect is the simple fact that their parents have never told them. That’s a problem. There are many reasons why parents might choose to give responsibilities to one child over another, like location or having a particular skill set that makes them better qualified to handle certain roles. However, if that person doesn’t know the plan, they won’t be prepared, which could be problematic. It could mean a lack of access to paperwork, delays, confusion and extra expense—not to mention poor care.
When asked about family conversations, most respondents said they’d never had detailed conversations about topics like long-term care, living expenses in retirement, estate planning and the location of important documents. The survey found that the majority of both parents and children felt that discussions about financial planning don’t need to happen until the parents have retired and either health or finances are an issue. But this might be too late. To eliminate any confusion and to clarify expectations for all family members, conversations should happen well before parents intend to retire or health issues arise.
A qualified elder law attorney can help facilitate family understandings on these important matters.
Reference: Money (June 28, 2016) “Here’s What Your Aging Parents Say They Want You to Do for Them”


Be a Smart Shopper When Looking for a Final Resting Place

Old lady gardeningA Sarasota, Florida cemetery was warned by county officials to bring the grounds up to code or be fined. Recent reports had described overgrown grass and weeds at Sarasota Memorial Park; however, after a news article appeared, workers were seen mowing the lawn, weeding, and edging around tombstones.
WTSP 10 News recently published a story, “Protecting your loved ones last resting place,” which reported on the problems discovered during Memorial Day weekend. Residents walking their dog nearby noticed the overgrown cemetery. They complained to the property manager and filed a complaint with the county’s code enforcement department about the tall grass and trees on the graves.
The dog walkers even called on volunteers to mow Sarasota Memorial Park. They mowed a section one morning until they were told to leave. However, their complaint to the County Code Enforcement Department resulted in a warning to the cemetery property owners. They were ordered to clean up the cemetery or face a notice of violation and fines.
Cemetery maintenance is contractual, and it’s expected when you pay for a plot. But a contract is only as good as the company behind it. Like anything else you purchase, you need to look carefully when making a decision about a burial plot.
Research the reputation of the cemetery you’re considering. Remember: just because the cemetery looks good now—like Sarasota Memorial Park—doesn’t mean it will stay beautiful forever. Prior to making a plot purchase, ask how much is in the endowment trust fund.
In Florida, state law dictates that 10% of the purchase price be placed in a trust fund for maintenance of the property, which is monitored by the state. Also, Florida State Statue §497.262 says that cemeteries are required to be “well cared for and maintained in a proper and dignified condition.”
Be selective, and keep a digital record of the cemetery's conditions—take a photo of it the day you buy a plot and any time you visit in the event you need to file a complaint.
Reference: WTSP 10 News (June 27, 2016) “Protecting your loved ones last resting place”

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