Posts Tagged ‘legacy’

Now Money, Later Money, and Never Money…how do the three money types impact your life?

Friday, November 2nd, 2012

The way you relate to your money has a very real and tangible impact on your life, and the lives of your loved ones.  There are three “money types” that people tend to deal with:

1.) NOW Money – the money that is for your current and everyday needs.

2.) LATER Money – money that you save and invest for future income needs (child’s college tuition, retirement, vacation home, etc).

3.) NEVER Money – money that you don’t think you will ever have to touch.  In other words, money/assets that you would like to leave to children, grandchildren, charity, etc).

This post is going to focus primarily on your NEVER Money.  Never Money can take a variety of forms – stock portfolios, IRA’s that you and your spouse created and grew over the years, real estate investments, and many more.  Whatever it is, it is critical to take steps to ensure that it goes to the right person or organization, and in the right way.  Below are 10 common legacy/estate planning mistakes that people often make:

10 Common Estate Planning Mistakes

1. Procrastination.  Simply failing to get around to it.

2. Believing that estate planning is only for the wealthy.  When taking into account the people are often surprised at the size of their “estate.”

3. Not reviewing or updating your beneficiaries and will.  Life changing events such as births, deaths of family members, divorces, and changes in general in your family structure can have a significant impact on how your assets are distributed.

4. Not having a tax-planning strategy in place.  Current tax laws are complex and ever changing.  There are strategies available to help you minimize taxes and avoid estate tax penalties.  Sit down with your tax professional to implement advanced tax and estate planning strategies.

5. Take advantage of gifting.  The government allows tax-free annual gifting of $13,000 per individual or $26,000 per couple annually to as many individuals as you choose.  This is a means of giving away some of your estate tax free to family members.

6. Joint titling of assets.  It is true that joint titling of assets may allow you to avoid probate, but do not overlook the additional risks; misappropriation of assets by the joint title holder, exposing of assets to a divorcing spouse of the joint account holder, exposing assets to creditors of the joint account holder.

7. Failure to provide someone you trust with the location of important documents.  All of the work you have gone through in planning the distribution of your assets is worthless if nobody can find the documents.

8. Leaving everything to your spouse.  The government offers an estate tax credit (repealed for 2010) by leaving all of your assets to your spouse you are sacrificing their share of estate tax credit.

9. Doing it yourself.  Not seeking out expert advice.

10. Naming your estate as the beneficiary.  By directing your assets to be paid to your estate   “pursuant to the terms of your will” assets that would normally avoid probate-will become subject to probate which can be both time consuming and expensive.

As you can see, tax issues are mentioned in several of these 10 mistakes.  With a proper tax strategy, there are ways to leave money in a legacy that doesn’t include a huge tax bill for your heirs.  Life insurance is one option to consider when planning your legacy.  It is unique because it is designed to create a lump sum benefit when you pass away that is paid to your beneficiaries, and they don’t pay income tax on the benefit.  Properly designed and structured, it can be one of the most flexible and efficient financial tools you can use.

Ask these 6 questions before purchasing a term life insurance policy:

What are your income needs?
It’s important to consider your family’s income needs over the course of your policy, including expenses such as mortgages, college tuition, medical bills and funeral costs.

What length of term do you want?
The length of your term will depend on your long-term income outlook. For example, if you’re working for 10 more years and then have retirement benefits and Social Security, a 10-year term may work for you.

Can you convert the policy?
If you outlive your term life insurance policy, you may want to convert it near the end of the term without needing another medical exam. Be sure to read the fine print on the conversion option, as there can be time limitations for conversion.

What other benefits do you want?
Riders – such as disability waivers that pay your premiums if you become disabled – are more common on whole life insurance policies than on term life insurance policies. But they are available, so look into them.

How applicable are advertised rates?
Even if you’re relatively healthy for your age, the rates promoted in online or newspaper ads may be based on an applicant with exceptional health. The price quoted may not be applicable to you.

Is the insurance company stable?
Life insurance companies are usually in excellent financial health, but you should still check out their rating. Agencies that rate life insurance companies include A.M. Best Company, Fitch Ratings, Moody’s Investors Service and Standard & Poor’s Ratings Services.

My last point relates to mistake #3 – not making sure beneficiary information is up-to-date.  A periodic beneficiary review  (video) is a critical tool to ensure that you leave the legacy that you want to the people you want to leave it to.

If you want to learn more about the three money types and how they impact your life, tune in to Your Financial Editor – this Saturday morning @ 8 on AM 930 WFMD.  Listen live


You can’t avoid death or taxes, but you can have control over how your assets are passed to your loved ones. This week on Your Financial Editor.

Friday, October 7th, 2011

My guest this week is Wall Street Journalpersonal-finance reporter Rachel Emma Silverman. We’ll walk you step-by-step through the process of good estate planning. Chock-full of clear and solid advice on how to get the most out of the main estate planning tools – including wills, trusts, life insurance, guardianship papers, and powers-of-attorney documents – Ms. Silverman’s book, Wall Street Journal Complete Estate-Planning Guidebook, will help make your estate-planning process as simple, smooth, and un-intimidating as possible.

Join me this Saturday morning at 8am on AM 930 WFMD, or listen from your pc by logging onto WFMD’s website and click the listen live button.

About this week’s guest:

Rachel Emma Silverman is an editor and reporter at the Wall Street Journal, where she has worked since 1998. She currently edits and co-writes The Juggle, the Wall Street Journal’s work-and-family website and reports on career, workplace and family issues. Before that, she covered personal finance, focusing on estate planning, wealth management, insurance, philanthropy, art and collectibles, and financial aspects of marriage and divorce. She graduated summa cum laude from Harvard University and was elected to Phi Beta Kappa. She now lives in Austin, TX with her husband and two young sons.

Money is Love…

Friday, April 15th, 2011

Estate planning, death planning, wealth transfer, etc.  There are many names for giving what’s yours to others when you eventually move on to bigger and better things (die).  There are dozens of ways to “skin the cat” when it comes to avoiding or eliminating taxes, fees, and administrative costs.

However, often the problem with estate planning discussions is that the main objectives are lost.  Good, hardworking people want to accomplish 2 main things when they focus on this necessary planning:

1.) They want to make their family stronger by empowering their beneficiaries with their assets when they are gone.

2.) The want to prevent as many outsiders (government, attorney’s etc.) as possible from eroding the value of those assets.

You see, for many money is love.  It is another way to enrich the lives of the people (or institutions) that matter most to them.  They can provide the resources for a grandchild to attend college, then medical school, and perhaps find a cure for a terrible disease one day.  The institution they may leave assets to may feed the hungry or offer a hand-up to those who need it.  So, when you engage in this important planning process, always keep in mind the huge difference you may be making.  With careful and considerate estate planning, your footprint on this earth can be a very good one.  View video of 10 Simple Estate Planning Tips.

Also  – a good story on retirement planning – 6 ways to Retirement Planning Pitfalls.

The “ins” and “outs” of Charitable Giving – this week on Your Financial Editor.

Friday, March 4th, 2011

 In today’s tough times of government budget cuts and scarce grant monies available, charitable giving becomes critical for many charitable organizations to survive.   Join Chris Murray this week on Your Financial Editor to learn about the different types of giving and the advantages and disadvantages to each.  Minimize your taxes and maximize your gift.

Join us this this Saturday morning at 8am on AM 930 WFMD, or listen from anywhere on your pc by logging onto and clicking the listen live button.

This week’s guest is Mike Delauter of Miles & Stockbridge P.C.  Mr.  Delauter is the managing principal of the Frederick office of Miles & Stockbridge P.C.

Mr. Delauter is a business and transactional lawyer concentrating primarily in the areas of commercial real estate transactions, commercial financing, general business transactions and estate planning and administration. In the area of general business and real estate transactions, Mr. Delauter represents area businesses by providing counsel in the formation of corporations, partnerships and limited liability companies, in the acquisition, sale and merger of businesses, and in the acquisition and leasing of commercial real estate. In the area of commercial financing, Mr. Delauter has represented area banking institutions in real estate-based and asset-based lending, with representative clients including regional and national banks. He also has over 15 years of experience as an estate planner and estate administrator, which includes the preparation and administration of wills and trusts and other estate planning and tax planning instruments.

Mr. Delauter joined Miles & Stockbridge in September of 1990 as a tax lawyer in the firm’s Baltimore office, and in 1993 transferred to the Frederick office where he engages in his current practice. With his tax background, Mr. Delauter teams with our experienced tax lawyers often in providing business and transactional tax planning and counsel. He has extensive experience in structuring forward and reverse tax-free exchanges. He is also a participant on the firm’s Life Sciences Team and BRAC Team.

What the heck is estate planning?

Thursday, March 3rd, 2011

What is estate planning and who the heck wants to talk about it when they find out?  Just blogging on the subject of estate planning makes me feel a little creepy.  I mean who wants to not only talk about dying, but planning for it!  But the fact of the matter is that proper estate planning is just as important as investment planning, tax planning, insurance planning, wealth management, etc.  I mean, why bust your hump your whole life to create a decent (or beyond decent) net worth, just to have leave it in shambles for those you love to fight over.  By the way, I don’t use the term “loved ones” lightly.  Money is used by many, many people as an extension of their love.  While we are alive, we provide college educations, pay for memorable weddings for our daughters, donate to our churches or synagogues, help monetarily when disasters strike, etc.  But when we die, if estate planning is done correctly, we leave that legacy through our estate planning.  We ensure our grandchildren get the education or business support to follow and achieve their dreams and make this world a better place.  With proper estate planning, the local hospitals and clinics will have the private funds needed to enhance our communities health and safety.  So, whether you have an extremely small net worth or you are a multi-millionaire (it’s all relative – what we have is very important to each one of us), take some time to do your estate planning.  OK, enough of the Adams family atmosphere, have a good day!  For tips that make estate planning easier, go to this article on Wallet Pop, or check out these videos on our website.