What are you waiting for?

I know you all have excuses or just don’t “feel” like planning now. Your young, healthy, and super busy… Well, I hope you read the top 10 questions to ask yourself this week and then give me a call. Come in and schedule your Family Wealth Planning Session, before the summer slips away. Let me know if you have any specific questions I can answer on my blog or via email. Remember I would love to protect your family and loved ones from creditors and predators alike. Stay cool and I will talk to you soon.

FEATURED ARTICLE

Top Ten questions when planning for Financial Security By: Robert E. Hammond, CFP®, CLU, ChFC There are many “Top Ten Question” lists published throughout the financial services industry. But this list is quite different from those others. Other lists focus on questions like “how much life insurance do I need?” or “should I buy Term or Permanent life insurance?” or “how much money will I need in retirement?” You won’t find any of those questions here. Because I believe that when you think about how to protect your livelihood from certain risks, or how to build the financial resources needed to live your life as you wish, there’s a whole other set of questions that you should be considering first. My Top Ten Questions and Answers 1 | What is important to me? Before even thinking about the right financial products for your needs, you should clarify what’s truly important to you – the people you care about, the aspirations you have, the things you want to protect, and the support you’d like to give to others. Whether you reflect on this question alone, with family members, or alongside a financial professional – answer this one first, as it will then create the framework around which your financial strategy can be built. 2 | Who depends on me today, and who might depend on me tomorrow? This question should be at the heart of your decision making process, and is one that should be answered well before you consider what financial products you need and in what amount. As a matter of fact, answers to those more traditional questions of “what kind” and “how much” really depends... well, on your dependents! Think carefully about who depends on you today and who might in the future. While spouses and children are commonly thought of as the most obvious dependents, there can be others, for example, parents, in-laws or siblings who, due to age, disability, or other circumstances, may be unable to care for themselves. Even individuals who are single without a family have dependents, namely, themselves, since their well-being depends on their own ability to earn an income. With your list of current and potential dependents in hand, you’ll be better prepared to plot your course toward greater financial security. 3 | Who is providing for my dependents now? Have you considered if there is someone in your family who provides non-financial, but invaluable, support to those you care about? Think of the stay-at-home parent – they may not support their family with earned income, but the support they do provide is just as valuable as any paycheck. And if a stay-at-home parent were unable to provide that support, it would surely be expensive to replace. For this reason, when you develop your financial strategy, it’s important to make sure that you account for all of the people who provide essential financial or non-financial support to your dependents. 4 | What risks have I overlooked or not fully considered? A financial strategy is meant to protect you and your family from a variety of risks. While life insurance is usually a critical component of such strategies, it isn’t the only one. When it comes to planning for financial security, people sometimes concentrate on the risk of premature or accidental death – to the point where they actually overlook other risks to their well-being and livelihood ,e.g., a breadwinner unable to work due to an illness, an aging parent unable to care for themselves, a retiree dealing with rising healthcare costs, a business owner faced with a succession problem. As you work to construct your strategy, be sure to think broadly about the financial risks you face today, or may face in the future. 5 | Are my plans flexible enough? Life is filled with uncertainties, and so no matter how hard one tries, it’s difficult to lock in financial strategies that will account for every possible circumstance you may encounter. It’s these uncertainties that sometimes prevent people from planning in the first place. But there is a solution. To build a strategy that will stand the test of time, in spite of a world filled with uncertainties, it must be flexible. There are numerous ways that financial product solutions can be structured to provide future flexibility and adjust with your evolving needs. When speaking with your financial professional, ask about flexible solutions that can be upgraded or downsized as events in your life unfold. 6 | How do I pick the right financial professional to work with me? Aside from you and your family, there are two key parties who play critical roles in this process, the financial professional who helps you plot a course, and the financial services companies that provide the associated product solutions. When choosing a financial professional, work with someone who is not only competent, but also inspires your trust and confidence. The best financial professionals are good listeners who seek to fully understand your circumstances and financial objectives before ever proposing possible solutions. They should have access to product solutions from multiple companies, should clearly explain how they get paid for their services, and should provide references upon request. Lastly, make sure your financial professional has a solid support network behind them, those affiliated with a strong reputable firm will likely have access to better resources to support your changing needs. When choosing a financial professional, work with someone who inspires your trust and confidence. 7 | How do I pick the right financial services company to work with? Based on your specific needs, your financial professional should present you with financial product solutions from companies that they hold in high regard and with which they have had positive experience. Just as you’ll want to align yourself with a strong, reputable financial professional, you’ll want to do the same with regard to financial services companies. In many cases, these products will be used to address financial needs and objectives that last for decades, if not a lifetime. To help ensure that your financial product providers will be there when you (or your loved ones) need them, work with strong, stable companies that have received high marks from independent ratings agencies such as A.M. Best, Standard & Poor’s, Moody’s and Fitch. 8 | What if I already have a plan? That’s great. However, even the best financial strategies should be revisited and updated regularly and at least once a year. Common life events such as marriage, having children, changing jobs, or even moving can affect your existing approach. So, too, can just having another birthday – particularly if it means you’ve reached a financial milestone, such as the year you can begin collecting Social Security, receiving Medicare benefits, or taking distributions from your retirement accounts. An experienced financial professional should regularly review your strategy with you, to help ensure that it remains aligned with your objectives and appropriate for your circumstances. 9 | What is the downside of putting this all off? Developing a financial strategy is a critically important activity that should not be rushed. There is, however, a fine line between not rushing the process and not focusing on it at all. Oftentimes, people tend to focus on those things that they know well, or that give them instant gratification, while postponing action on things they’re unsure about or from which they don’t see an immediate benefit. By putting this off, we expose ourselves and our families to unnecessary risks and lost opportunities, be it by not safeguarding our lifestyle from unexpected events, by not insuring our livelihood and legacy while in a position of health and strength, or by not capitalizing on even one extra day to build and protect our retirement nest egg. But you need not resign yourself to these outcomes, by being conscious of these pitfalls you can overcome them. and by actively focusing on this process, you can help protect your interests and shape your future. 10 | So what am I waiting for? Hopefully, after reading the preceding nine questions, nothing! You should now know what to consider as you begin developing your financial strategy, as well as how to go about securing the best resources to turn that strategy into a reality. And, perhaps most importantly, you should now understand how to avoid the common pitfalls that lead some to take what is perhaps the greatest risk of all – the risk of doing nothing. Now armed with all of this information, we encourage you to take the next step – by doing additional research on your own or seeking guidance from an experienced financial professional.

Are You Ready for Back to School?

As many of you know, we just got back from an Estate Planning conference in Chicago and then on to see my 89 year old grandma! Whew, it was wonderful to be back in Southern California. Our weather is so nice compared to the rest of the country!

Many of the kids were starting school last week in the Midwest. However, here we don’t start until the end of the month or the first week in September. So there is still time to make sure your emergency contacts that you listed on your school forms match your Temporary Guardians! Did you know that the school CANNOT release custody to your emergency contacts!!

So you need to give me a call so we can name those temporary guardians. This week the ezine is taking a break from the legal stuff and I am focusing on all those with children who start school this year.

While you may be breathing a sigh of relief that your routine is going back to normal and you can stop hassling with keeping your kids busy and out of trouble, your kids are probably feeling a little uneasy about heading back to class.

They’re facing new classes, new kids, new teachers and possibly even a new school. Here are a few tips to make the start of a new school year a little less painful for everyone so read on.

Remember I would love to hear from you on my blog… And if you have a specific topic that you would like for me to discuss, feel free to post it.

Be safe and enjoy the final days of summer vacation.

The First Day Back

• Remind your kids that they’re not the only ones nervous about the first day of school, meeting new people and starting out with a new teacher. Everyone there is in the same boat.

• Help them remember they’ll see friends they haven’t seen all summer and how much fun they’ve had on previous first days of school.

• Let them walk to school or meet at the bus stop with one of their neighborhood friends. It will give them someone to talk to and keep their mind off the fact that they’re a little uneasy.

• If your child is really nervous and you think it will help, drive them to school and pick them up on the first day to allay some of the first day jitters.

Choose the Right Backpack

• Make sure you choose a backpack with wide,
padded shoulder straps and a padded back.

• Don’t overload your child’s backpack. Use all the compartments if you need them to be organized but pack heavier items closer to the middle of the back. The backpack should never weigh more than 20 percent of your child’s body weight.

• Your child should always use both shoulder straps. How many times do you see a child walking with the pack slung over one shoulder? That’s a good way to seriously strain shoulder muscles.

• If your child has an unusual number of books and supplies and can’t really manage the weight of backpack, think about getting a rolling backpack. The only drawbacks to one of these rolling packs are that they can be a problem if your child has to go up and down stairs at school and they don’t always roll well in snow ( not that we have any snow!!!)

Establish Rules for Getting To and From School The Bus

• If your child rides the bus to school, make sure they use a seat belt and don’t move around while on the bus.

• Make sure they always remain in clear view of the bus driver and check to see that no other traffic is coming before they cross the street.

Carpooling

• If your child goes to school by car, make sure they wear a seat belt and that the car has a size appropriate car safety seat or booster seat (if your child is under 4’9” tall).

• Your child should always ride in the rear seat of the car until they are at least 13 years old.

Teen Drivers

• If you have teenagers, remember that many car accidents occur while teen drivers are going to and from school. Remind your teenager to always use their seat belt, limit the number of teen passengers in the car with them, do not allow eating, drinking, cell phone use or texting while they are driving.

Riding Their Bike

• If your child rides a bike to school, always require that they wear a helmet.

• Remind them to always ride on the right, in the same direction as automobile traffic.

• Teach them to honor all traffic lights and stop signs and use appropriate hand signals.

Walking

• If your child walks to school, make sure that their route is safe with trained adult crossing guards at each intersection.

• Use good judgment about your child’s age and maturity level when deciding if they should be allowed to walk to school. Young kids areimpulsive and will dart out into traffic without thinking.

• If you have young kids or they are going to a new school, walk with them for the first week or so to make sure they know how to get there and that the route is indeed safe.

• Make sure they wear a bright colored jacket to make them more visible to drivers.

Getting Back to the Routine of Homework

• Create a place in your home conducive to doing homework and studying. Kids need a permanent spot somewhere in the house that is quiet and gives them some privacy.

• Make sure you schedule enough time in the day for them to actually do their homework. This is a good lesson in time management and you can never start those habits too early.

• Turn the TV off during study time.

• Always supervise Internet use.

• Make sure you’re available to answer questions but don’t do their homework for them. They’ll never learn that way.

• If your child is really struggling with a particular subject, talk to their teacher. You may need to find a tutor to give them extra help.

• Be reasonable in scheduling study time. Sitting for hours on end is bad for the eyes, neck and back and leads to brain fatigue. Remind them to take breaks and stretch.

By incorporating these tips into your back to school routine, it will make the transition from summer fun to hitting the books a little easier for everyone. If you’re consistent with the routine and everyone knows what to expect, there will be less confusion and chaos. And that’s never a bad thing.

More Planning

Well I am feeling the summer heat here in Chicago. It’s a bit humid, try 80% humidity! Whew it is hot. I am in Chicago for a convention of estate planning attorneys. Each year the meeting is held with all the best estate planning attorneys from throughout the country, and of course learning from the best of the best! My husband was able to join me and get continuing education credits as a Certified Financial Planner, so it’s a double education source for us. Yesterday, we had a little time off and took a walk to the Navy Pier and nearly melted in the humidity.

Today we are in full force for an all day session. I will keep you posted of our week and the latest developments in estate planning and especially in tax with the upcoming changes taking place in 2011. If you would like to follow me you can follow on twitter or even my blog. I would love to hear your comments about my articles.

When I return, I will be implementing some new marketing and strategies. So hang tight! In the meantime, give me a call to schedule your appointment before school starts.

In the featured article today, is a discussion explaining the difference between traditional and roth IRA’s.

If you have any questions, give me a call at 888-735-7686 or send me a note via twitter or even my blog! Plenty of room to make comments, would like to hear from you!

Traditional vs. Roth IRAs – Which is the Better Choice?

The talk this year about changes in the availability of Roth IRAs has raised questions from many people eligible for the benefits of these individual retirement accounts. One of the hottest topics of discussion is the advantages of a traditional IRA versus a Roth IRA, and whether or not you have to convert your traditional IRA to make it a “stretch” IRA.First of all, the answer is no, you don’t have to convert your traditional IRA to make it a “stretch” IRA.

A “stretch” IRA is not a particular type of IRA. It’s merely a strategy used to stretch out or prolong the tax advantages of an IRA (most commonly a traditional IRA or a Roth IRA).
Before Congress passed the Taxpayer Relief Act of 1997 and created Roth IRAs, the term “stretch” IRA was used to describe the financial strategy used by a spouse, child or grandchild to draw out distributions (and tax deferrals) when they inherited a pretax traditional IRA. The longer the beneficiary expected to live, the smaller each payout had to be to “stretch” the advantages.

With a traditional IRA the money is taxed as you take it out of the IRA. By stretching out the IRA, you have extra time, and this could be decades, to compound tax-deferred interest. That’s one of the things that makes an IRA a good investment opportunity.

Now that Roth IRAs are available to taxpayers at all income levels (beginning this year), there are more ways to stretch out a Roth IRA as well.

This is what you need to know to take full advantage of the tax savings:

If you have a traditional IRA, you have to start taking withdrawals by April 1st of the year after you turn 70 and a half. To calculate your required minimum distribution, just take the account balance on December 31st of the previous year and divide it by the number of years left in your life expectancy (you can get this number from the Internal Revenue Service’s “Uniform Lifetime” table). You pay taxes on what you take out in each withdrawal.

Now, this is what confuses people with regard to a Roth IRA. In converting to a Roth IRA from a traditional IRA, you move money to the Roth IRA and must pay ordinary income taxes on whatever amount you move. However, you don’t have to take annual minimum payments and all future growth in the IRA is tax free, and so are any future withdrawals. That leaves more money for your heirs to stretch out unless you have to take money out for your own living expenses.

By converting from a traditional to a Roth IRA, you can leave a larger IRA for your heirs and it will be tax-free rather than tax-deferred. That’s why the Roth IRA is such a big deal.
One more thing to think about when considering an IRA is your choice of beneficiary. You have to indicate your choice on the beneficiary designation form when you open the account. Don’t worry. You can amend it later if you need to. Money in your IRA is distributed according to this form, NOT your will.

If you leave the IRA to someone other than your spouse, they have to take required minimum distributions, regardless of the type of IRA. A Roth conversion eliminates this requirement for you, but not for your heirs. These requirements are slightly more lenient for your spouse than for a non-spouse heir.

And one more word of caution. Never name your estate as the beneficiary of your IRA. If you do, under the worst possible combination of circumstances, the money may have to be withdrawn within five years of your death. If you have a traditional IRA, the income tax has to be paid as the money comes out. Always name contingent beneficiaries just in case your first choice dies before you do. Otherwise, the funds go to your estate by default.

If you currently have an IRA and want to know more about converting it or want to make sure that you’ve set it up properly for estate planning purposes, call us to schedule your Family Wealth Planning Session today. We can identify what needs to be done to ensure that you have the right documentation to make your wishes known and followed. Our Family Wealth Planning Session is normally $750, but since you are reviewing the ezine, you can mention this article and have a complete planning session with me at no charge.

Do Advance Directives Really Work?

Summer is moving quickly and soon the kids will be back in school. But there is still time to get your documents in order. Last night was girls’ dinner and we were talking about documents you need to get in place. There were still a couple of my friends who were not sure about these documents. So today I have simple definitions for all the documents you need and what they mean and if they really work. They do! Read the stats…

A Living Will…

A Durable Power of Attorney…

An Advance Health Care Directive…

Any of these documents can help to establish your wishes when it comes to the medical treatment you receive at the end of your life.

But do they really work?
According to one of the largest studies on the effectiveness of documents specifying medical treatments desired, or not desired at the end of life, yes, these documents do work. And more and more Americans are using these tools to make their wishes known.

The results of this study, published in the New England Journal of Medicine, showed that seventy percent (70%) of the people followed in the study lacked the ability to make choices toward the end of their lives because of their mental or physical health. Fortunately, most of them had advance directives and their wishes were not only known but followed. The will of the patient prevailed.

So which documentation is the right choice and what do they all mean? Read below for the definition of all these documents and get them in place for yourself, your parents or grandparents!

Living Will
A Living Will specifies the type of medical treatment you desire if you become incapacitated. If you are permanently unconscious or terminally ill, your Living Will merely tells your family and the medical community whether or not you desire to receive life sustaining treatment. The Living Will does not allow you to appoint someone else to make decisions for you. It just makes your wishes known.

Durable Power of Attorney for Health Care
A Durable Power of Attorney for Health Care allows you to appoint an agent with the legal authority to make decisions for you, relating to health care issues and treatment, should you become unconscious, mentally incompetent or otherwise unable to make those decisions. By making this a “durable” document, you are including language to make sure that this document remains effective or will take effect if you are mentally incompetent. In many states, you can also include language to make your wishes known with regard to “life-sustaining procedures” if you are in a coma or terminally ill. But a word to the wise, even if you include language about your wishes in this regard, make sure you discuss them with the person you designate as your agent.

Advance Health Care Directive
Here I California, the Advance Health Care Directive has replaced the Living Will and Durable Power of Attorney for Health Care as the document for making your wishes known with regard to health care treatment and decision making. This document instructs others (your family and the medical community) about your care if you are unable to make those decisions on your own. It only becomes effective under the specific circumstances you provide for in the document itself. The Advance Health Care Directive allows you to do either or both of the following:

- Appoint a health care agent
- Prepare instructions for health care

This document provides a very clear statement of your wishes about your choice to prolong your life or to withhold or withdraw treatment. You can be as specific as you like about the medical care you want at the end of your life. For example, if you are a vegetarian or vegan, you can specify that you do not want to be fed meat. You can indicate whether or not you want hydration and nutrition to be withdrawn and that it goes beyond whether or not you can breathe on your own.

The Advance Health Care Directive allows you to do everything in one document that a Living Will or Durable Power of Attorney for Health Care allow you to do separately. If you already have a Living Will or Durable Power of Attorney for Health Care, don’t worry. Both of these documents are still valid until you take steps to replace them with an Advance Health Care Directive.

If you have any of these documents in your current estate plan, make sure that copies are provided to your appropriate family members, your primary care physician and/or anyone you have named as an agent in these particular documents.

If you don’t currently have these documents in your estate plan and would like an expert opinion on which is appropriate for your particular circumstances, call us to schedule your Family Wealth Planning Session today. We can identify what needs to be done to ensure that you have the right documentation to make your wishes known and followed.

Also, as part of our estate planning process, we will interview you about your specific wishes and what you want your family to know. We provide you with a copy of the interview so you can pass on the information you want your family to remember. We understand that it’s not just about the paper you leave behind, but the voice you leave behind. Our Family Wealth Planning Session is normally $750, but this month I’ve made space for the two more people who mention this article to have a complete planning session with me at no charge. Call today and mention this article.