May, 2019 | Live a Life By Design

Proper Planning For Your Estate is Critical

Posted on May 20, 2019May 17, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

“Should I have a trust? A will? Which is better for my heirs?” These are the types of questions many of our clients pose when we are planning for their estates. The short answers to these valid questions are: Maybe, maybe and depends.

Now that I have clearly confused you, this article will provide you a simple strategy for determining the most important documents to meet your estate planning needs. First, determine what you wish to happen with your estate after your death. Notice I stated the phrase “after your death” in the preceding sentence. The reason for this qualification is that we perform two type of estate planning for our clients: Inter Vivos Planning and Post-Mortem Planning.

During the phase of Inter Vivos Planning, we utilize tax-free gifting and charitable donations to accomplish a reduction of the estate or meet some other objectives. Inter Vivos is a Latin word that means “between two living persons”. Many people have heard of a Living Trust or Inter Vivos Trust. These documents are established while the trustor, the person establishing the trust, is living. If a trust is developed and funded after the individual dies, it is referred to as a Testamentary Trust. Don’t allow the terminology to confuse you. Either way these trusts function in the same manner – distributing your assets to a beneficiary of your choosing.

Post-Morten Planning requires additional thought and serves as strategy to reduce the estate from taxes or to direct trust distributions to other than those individuals listed by the decedent. For example, we utilize disclaimers to avoid estate assets from being received by named beneficiaries, if the person does not wish to receive the asset. Some instances may occur where the decedent, the person that died, failed to update their documents prior to death and their family dynamic may have changed.

Trusts also serve another purpose for families – privacy. If someone dies with a Last Will & Testament, the document must be subjected to the district court’s jurisdiction to provide the recipients marketable title to property, release of any liens from taxes and all potential heirs have been given notice of the right to protest the estate administration. By utilizing a trust, the decedent does not require, in most cases, the decision of the court to disburse the estate assets and the document maintains its private nature with only the filing of a Memorandum of Trust if real estate is owned by the decedent.

We have experienced many different scenarios for families during our 30 years as a financial planner. Do not assume there is a “cookie cutter” approach. This is an area of law that can be very complicated and requires significant time to cure problems if the trust is not funded properly, titles do not reflect the correct ownership or the trust is defective in language.

Your lifetime of assets should be transferred to your intended heirs or charities in a manner that is cost-effective, tax-efficient and private. We provide proactive planning for our clients with estate concerns and work with estate attorneys to guide you through the process efficiently. Have you reviewed your documents lately? If you want peace of mind, spend a few minutes each year to confirm your documents are current. Seek out a CPA and Certified Financial Planner^TM practitioner to assure your family that necessary steps are taken to protect your family’s legacy.

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Are You Confident in Managing Your Investments for the Future

Posted on May 13, 2019May 10, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

One of the most frequent mistakes committed by near–retirees is to attempt to manage their own retirement assets without the appropriate background, or even worse, by listening to pundits on TV. Many people have met with us to review their current financial condition in preparation for retirement. Similar to a physician, we performed a comprehensive review of the various financial and other data to determine if these individuals’ expected course of action was possible.

After adjourning our introduction meeting, we quickly analyzed the information and determined that the goals established by many of them were not going to be realized based on their current financial condition. Generally, other important matters need urgent attention instead of their finances – most often this could be a significantly ill spouse. To provide our clients with perspective and vision toward the future, we perform our analysis and request a meeting to discuss our findings. This is a strategic review meeting and we ask the individuals to bring their spouse.

Is it plausible to believe that women and men think differently about finances? Even more critical, could a spouse’s definition of “happiness in life” differ from their mate? The answer is an emphatic “YES”! Many of the people we guide to, and through, retirement experience a different opinion from their spouses. By reconciling these opinions and providing perspective to the most important of life’s challenges, our clients find solutions that contribute to a more rewarding and enjoyable lifestyle.

Don’t people retire to allow themselves time for those things in life that they had not been able to enjoy during their careers? Most marriages, in our experience, are not equally balanced with input from both partners in deciding financial decisions. To complicate matters, with medical advancements, it is conceivable that many people may live longer in the retirement phase of life than their career spanned! This simply means that one should be prepared for a considerable amount of time in which financial stability and consistency would provide confidence and clarity to the family.

By focusing on our clients, our goal was clear, we seek to provide a plan for retirement that addresses both spouses’ goals and guides them through retirement with practical advice that maintains their desired lifestyle. After carefully defining and understanding our clients’ risk tolerance and cash flow needs, we assist our clients in creating a retirement plan that brings smiles to both of their faces.

To simply plan for appropriate funding of retirement is not considering all the factors that may occur in life. One should always plan for contingencies. Our substantial history as CPAs and Certified Financial Planner practitioners has taught us to live by the phrase – “Plan for the worst and hope for the best”. By simply focusing on one aspect of life, you may set yourself up for some difficult days at a time in life in which you are least capable of surviving financially.

Do yourself a tremendous favor. Seek out a second opinion that your complete financial picture is, in fact, what you think you possess to live life by your design. You may learn from others’ mistakes by utilizing someone who specializes in the needs, desires and challenges of retirees. What have you got to lose? If you are financially “healthy”, wouldn’t it be a relief to know this fact? Conversely, if you knew you weren’t prepared properly for the future, this is news that would give you great confidence in life.

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The Power of Habits

Posted on May 6, 2019May 3, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

Habits are much easier to form than to change. Good or bad, habits are formed by all of us, sometimes subconsciously. For example, which leg do you place in your trousers each morning while dressing for the day? Do you even think about the process of dressing or is it simply a routine that you follow because you have performed the same process for many years?

What do habits have to do with your finances? Everything! Many of the habits involving finances are passed down from generation to generation. Did you know that by simply saving $200 per month and investing it prudently for a period of 25 years, one could amass one million dollars? My personal habit of saving started when I was a young child. Granted, money was a little more difficult to accumulate in the 60’s and 70’s but I digress.

Analyze your living expenses and keep in mind the following phrase: “If your lifestyle exceeds your income, your outlook will be bleak.” One habit that should be learned by everyone is the habit of saving. For example, lets assume both spouses are working and the family has excessive (or discretionary) cash flow each month. Why not assign that excess to a savings plan for future needs? We inform many of our clients that their income needs in retirement will be approximately 80% – 90% of the pre-retirement income. Many are shocked with this statement! Think about what is happening during the retirement phase of life. Are you simply going to stop driving your car, eating regularly, utilizing electricity and other utilities in your home? Of course not.

Another habit we hope you will consider is the habit of exercise. By “investing” in your physical fitness, you will reap generous benefits later in life. Mobility and wellness are easily maintained in our 70’s and 80’s rather than being developed in the same time period. Start now to develop the habit of quitting, yes, quitting. Quit drinking sugar-loaded drinks and consume water instead. Limit your caffeine intake each day. Stop eating processed foods and refined sugar. If you find your willpower lacking, seek out an accountability partner. These simple steps will start you on a path of fitness that will create adventures unsurpassed in your retirement years.

By combining your new habits of saving for the future and maintaining your physical fitness, you have conquered a tremendous number of these hardships experienced by most retirees. Don’t fear being in the minority of retirees who maintain their mobility, mental health and financial security. We believe life is far more than money. Actually, to us, true wealth is all those things that money can’t buy and death can’t take away. If you seek to reach your potential in life, seek out a specialist that works with retirees and understands the challenges faced by this amazing group of citizens.