Graduation Gift? How About Legal Documents?

Graduation gift how about legal documents

Graduation gift – How about legal documents? Arguments have been made that a set of legal documents are the best gift for a high school graduate. Now that’s not quite as bad as coal in a Christmas stocking. But not quite as much fun as a MacBook Air, either. A recent USA Today article explained why it’s worth considering.

Think about it – an 18-year-old is a legal adult.  

“What this means to each of us is the only individuals that can make financial or health care decisions for us are the individuals we legally appoint.  Mommy and Daddy are no longer the legal guardians,” says Clearwater, Florida attorney Linda Chamberlain in her own blog post on the topic: The Best Gift for the Graduate

But They Don’t Own Anything!

You might say, “But my 18-year-old doesn’t own anything. Why do they need a will?” There are other documents that become important upon reaching adulthood. For 18-year-olds who don’t own anything, they still have rights, such as:

  • to private medical records,
  • to make their own health care decisions,
  • to sign their own lease or
  • to open, close or pay bills on a bank account.

If the young adult is incapacitated, parents can no longer legally do those things for them.

The most common worst-case scenario described is an accident where the young adult is hospitalized. This is when documents like:

  • a HIPAA designation (allows consent to share medical records),
  • Health Care Surrogate (consents to have health care decisions made),
  • Durable Power of Attorney (for managing money and accounts), and
  • Living Will

could be crucial.

In Florida, most estate planning attorneys will provide a set of documents for a small flat fee, especially for children of their established clients. Ask your attorney, check your local estate planning council directory, or ask your professional advisors for referrals.

Contact us if you need referrals for Tampa Bay area attorneys or if you have other financial concerns for someone becoming a newly-minted adult. Schedule a call with the online calendar button at our page: Contact.

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New Year: What’s In Your Notebook?

Keep important data in a Notebook

It’s a new year: what’s in your notebook? You know, that one with all of your passwords, account numbers, doctor names, and that very important song that must be played at your funeral.

Yeah, that notebook. Where is it? It might reside digitally on your computer or in the cloud, or it might be a pile of papers in a file cabinet, or it might be in an old-fashioned 3-ring binder. The new year is a good time to ask: how easily can someone who needs it find it?

Who Might Need the Notebook and When?

Everyone needs a someone in mind for the notebook. Your someone (Kate Hufnagel, the Digital Wrangler, calls this Your Person) is who will step in for you and help to handle things when you can’t. If an immediate someone does not spring to mind, consider asking a professional to be that someone – an attorney, accountant, or professional fiduciary, for example.

When will someone step in? At a time when you need the notebook, but can’t get to it. We can imagine all kinds of accidents and tragedies that might bring about a need for the notebook. Rather than dwell on those, let’s imagine that you are suddenly swept away on an all-expenses paid trip out of the country to a remote island with spotty cell coverage.

While you are whale-watching and snorkeling the reefs for an indefinite period, things still need to be handled back home. Bills to be paid. Taxes to be filed. Gifts to be given. People to be notified of your absence and introduced to Your Person who is handling things.

What Goes in the Notebook?

In essence, the Notebook is a central place you keep information that your someone will need in case something happens to you.

Common and essential items in the Notebook include:

  • Your five basic estate planning documents: original will (drafted by an attorney in the state where you reside), living will, health care power of attorney, durable power of attorney, and HIPAA designations.
  • Advanced estate planning documents: trusts, partnership agreements, business buy/sell agreements, shareholder agreements, etc.
  • Insurance policies. ALL of them: life, long term care, health, property, car, boat, liability, and any others.
  • Contact information for professional advisers: attorneys, bankers, accountants, investment advisers, insurance agents, and (of course) your Certified Financial Planner™.
  • Also, if your adviser has an assistant or paraprofessional who knows you and your situation, write down their contact information and a little note to that effect. (“Sharon is the assistant and she runs the whole place.”).
  • All of your health care providers – doctors, dentist, optometrist, veterinarian (who is going to take care of Fluffy?). Put similar information by each one – what they helped you with and if any office or nursing staff know you and your history.
  • Important to remember also, anything handled online: digital password manager, online user ids and passwords, bank statements, investment accounts, real estate deeds and mortgages. So much of our financial lives nowadays keys off of our email address. Can they even get into your email? (See also: Document Your Digital Assets for more online stuff to consider.)

Extra Items for the Notebook

In addition, not-as-essential items some people include are:

  • An “ethical will” outlining your values. This often gives family members guidance when they are unsure what you would want. Writer Susan Turnbull’s book, The Wealth of Your Life, can help guide you through this process.
  • An end-of-life health care management booklet, like Five Wishes.
  • An Aging Plan – describing your wishes for the potential time of life when you may need assistance with activities of daily living, transportation, and housing transitions.

Notebook Update Season

It’s a good time of year to check in on your notebook. The end of January brings tax notices from bank accounts, investment accounts, mortgage statements, health insurance, employers, IRA providers, and more. Take this opportunity to pull together scattered pieces of your financial life. Consider collecting everything not only for the accountant, but also for Your Person.

One way to keep the notebook updated is to check each tax statement and match it up with a corresponding account in the notebook. Perhaps you forgot about those I-bonds you bought on Treasury Direct – no paper statements, all online. Better add that account to the notebook. All those deductions for insurance from your employer – would someone know how to contact the insurance companies if needed? Would the insurance companies talk to them? That contact info, power of attorney forms, and beneficiary designations are good updates for the notebook too.

Think of your notebook as a bread crumb trail helping Your Person work backward from that remote island to the place where you are sitting with paid bills, up to date connections, easily-accessed email and your personal address book at your disposal. A little effort each year will save Your Person many headaches later.

Got a notebook you love already? Comment below on what makes it uniquely yours. Share your best ideas.

For more on this topic, see The Mindful Money Mentality: How To Find Balance in Your Financial Future. Struggling with issues mentioned here? – Schedule a call.

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Roth: To Convert Or Not To Convert

checkbook

Roth: to convert or not to convert. Converting to a Roth IRA might be worth consideration if you have been saving for retirement in a traditional IRA (TIRA)

As you may know, when it’s time to take the money out of your TIRA, you will owe tax on the amount you withdraw (called a “distribution”). So when you think of the balance in your TIRAs, give that number a haircut of 10% – 40% (using current tax rates) that will be sent to Uncle Sam.

Further, when you reach age 73 or 75 (depending on your birth year) whether you need money or not, you will be required to take an IRS-calculated required minimum distribution (RMD). The RMD income can push you into the next tax bracket or, more commonly, into a higher bracket for Medicare premium surcharges. Surcharges mean you could pay up to several hundred dollars more per month for Medicare.

Finally, if you are married and leave TIRAs to your spouse, he or she must eventually take RMDs. When they start filing as single the year after you die, there is a greater likelihood the RMD will push them into the higher income tax or Medicare surcharge brackets.

Review of Roth Advantages

Roth’s have several advantages over traditional retirement accounts (TRAs).

1) When you think of the balance in a Roth IRA, there is no tax haircut. Money in a Roth grows tax-free forever. That’s a bigger balance to spend on world cruises, grandchildren, or a Winnebago.

2) Your heirs will have to withdraw the Roth money if you don’t, but they won’t owe tax then, either.

3) Roths have no RMDs. So that might save you from Medicare surcharges and other additional taxes such as the Net Investment Income tax (NIIT).

4) If you are married and die before your spouse, your spouse will not have to take RMDs from them.

5) If you have a trust, it may be much more beneficial to leave a Roth to the trust than a TIRA. Ask your CPA or tax attorney about this one.

What’s the Catch with Roths?

What’s the catch? The amount of TIRA that you convert to a Roth gets taxed in the year you make the conversion. If you convert $100,000 this year, that’s $100,000 added to your income.

So if you are still working, and you convert some or all of your retirement money to a Roth, you will be paying tax on the converted amount at today’s tax rates, hoping/betting that the growth in the Roth will make the extra tax bite today worthwhile later.

For the hope/bet to have the best chance to work, a few things help:

– You expect to be in a the same or higher tax bracket after you quit working. Otherwise you could wait and pay less tax on the conversion at a lower tax bracket later.

– You don’t expect to need the money in the Roth for many years. To reap the biggest benefit, the Roth needs time to grow.

– You are ok taking more risk with money in the Roth. Since more risk means greater return over the long haul, more risk in the Roth helps to juice the tax-free growth for which you are aiming. Having Roth money sit in CDs or money markets isn’t going to reap the big benefits.

– You can pay the Roth conversion tax bill out of non-retirement money. Otherwise you might have to take an even larger distribution, which then creates higher income and even higher tax.

Have a Strategy

Because of the tax hit from a Roth conversion, one popular strategy is to wait to convert until you quit working, or otherwise experience a big drop in income, and take advantage of the lower-income year(s). The amount to convert is then carefully calculated each year to keep you out of higher tax brackets for both income taxes and Medicare.

This strategy works especially well if you are younger than 70, delay taking Social Security, and live off of already-taxed savings or investments. You may have a couple to several years where small incremental amounts are used to fill up a relatively low bracket. Over that time it’s possible to build up a nice-sized conversion amount in a Roth.

When NOT to Convert

Converting to a Roth may not be the best strategy if any of the following are true for you:

·        You have kids in or going to college over the next 2 to 6 years. The increased income from the conversion (beginning from 2 years prior to enrollment) will possibly increase the amount on the FAFSA (Federal student aid application) you would be expected to contribute toward tuition.

·        You plan on donating most or all of your RMDs to charity. You can do this tax-free anyway by making a Qualified Charitable Distribution (QCD) from IRAs (but not employer retirement plans) beginning at age 70 1/2. You can also count your QCD towards your RMD after age 72. No sense paying tax on the conversion when you’re going to do QCDs.

·        You expect to have high medical and/or long-term care expenses. These will offset the tax on your TRA distributions too. Like QCDs, there’s no sense paying tax on the conversion if you will have high deductions to offset future distributions.

Getting Help

Getting help to convert to a Roth is usually a good idea. The easiest system is to have a Roth at the same firm where you have a TRA. Usually you can make the conversion by doing a simple transfer between the two accounts. Find out how the firm will report the distribution and conversion on your tax records. When you have more than one firm involved, get detailed information from each firm about how to make the transfer show up on their tax records properly.

The next step is to pay the tax on the conversion. Firms may ask about withholding for taxes – this can get tricky to calculate, but in general, as mentioned above, you would want “0” withheld and then submit an estimated amount from your non-retirement funds as soon as possible.

Due to the large tax consequences typically involved with Roth conversions, it’s best to consult with a CPA, tax attorney, and/or CFP™ for more detailed advice. In some cases, the future savings and flexibility a Roth affords may be well worth some extra effort and expense today.

We love to talk taxes. Schedule a 30-minute call and let me know what questions you have: https://bit.ly/3GWZNrc

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Get a Go-Bag: Lesson from the Hospital

Get a go-bag: lesson from the hospital. A 73-year-old client recently had an unplanned hospital stay and gave permission to share her story.

She originally had an outpatient foot surgery. Subsequently it developed an infection missed by her physicians. Once her foot swelled up and was bursting with pain, only then did they send her immediately to the ER.

As you might expect, it was an ordeal of mixed experiences. Once she got a (semi-private) room, the nursing staff was wonderful. The cleaning staff – not so much. Evidently they had missed cleaning her room’s bathroom after the last patients left. Before getting a room, she spent 15 hours parked on a gurney in the ER hallway. Doctors would walk by, see her foot, stop and simply say, “Wow, that looks painful.” Then keep going.

In case you’re wondering, she has a the “Cadillac” Medicare Plan F (no longer available to new enrollees) with supplemental coverage.

She spent three days there, which was long enough for this astute patient to think of all the things she would do differently next time before coming. She had her toothbrush, but not her eye mask for sleeping. She had socks, but shower shoes would have been nice. She didn’t have her face soap, so for three days she used the “industrial” hospital hand soap.

Minimalists might think this is minor stuff. But when you are in a most uncomfortable situation and place, isn’t that when comforts are needed the most?

Lesson Learned

She wanted to ask her partner to bring some of these things, but she realized he really wouldn’t know what all the stuff in her medicine cabinet was. It seemed like a big ask. He had already held ice packs on her feet for 4 hours straight. How could she describe which of her many bottles to bring?

If it had been me, once I got home, I would have been relieved to be out of the hospital, get on with my life and try to forget it ever happened. Not this lady. She immediately shopped for everything she wanted to have but missed. Then she assembled everything in two go-bags. Now, if she is unable to grab them herself, she has told her partner about them, written down on the medicine cabinet where to find them, and what needs to be added at the last minute. All he has to do is bring them along.

Comfort and Dignity

When my grandmother, a tall, beautiful, always put-together woman, was in the hospital, dying, she asked for someone to make up her face every morning. At that time I was a teenager. I didn’t understand this request. It seemed so unimportant in the scheme of things. Several decades later, when my mother-in-law was in a similar state, I read on a Hospice brochure how rubbing the feet is one of the best things you can do. Hospice is the authority on being comfortable and retaining dignity at a time of greatest discomfort and indignity. The founder, Dame Cicely Saunders, said, “People matter, even when they are dying. We all need to care for the dying and not let them become reduced to just a set of physical problems or a list of needs.”

Even if you are not dying, for your comfort and dignity, if you need your Lancome set, you need your Lancome set. If you want your hair rollers, you should have your hair rollers. Hospital stays are not the time for even more comfort sacrifices. You are already being subjected to enough.

This client, like my grandmother was at that age, is always beautiful and put together. So when she shared that she had put a go-bag together, I knew it would be the nicest best stuff. She is also frugal, so it’s not the most expensive, either. Here is her list, and a photo of the beautiful bags they are in.

The Go-Bags and List

Get a go-bag
  • Small net bath puff
  • body wash
  • razor
  • Bath wipes
  • Body lotion
  • Aquaphor
  • deodorant
  • Shower shoes 
  • Kleenex
  • Poo-Pourri (sharing a bathroom!!)
  • Mini Brush/Comb
  • hair ties & clips
  • lip balm
  • tweezer
  • Small Mirror
  • Toothpaste
  • Listerine
  • Floss
  • Sleep mask
  • Face cloth
  • Face sponges
  • Cerave Cleanser & Moisturizer
  • Various sample serums
  • Extra copies of medical insurance cards
  • Underwear!

She says, “The Coach small tote is nice & roomy but nondescript. The black bag is made by Travelon, which I purchased on Amazon. It’s a REALLY nice bag! [My partner] will add cell phone/charger, electric toothbrush & contents of whatever bag I’m using at the time. Obviously, if it’s a trauma situation, this stuff would not be necessary, but it could always be brought later if needed.”

A Few Add-Ons

I advised to add extra copies of her living will and medical directives (HIPAA designation and health care power of attorney documents). Additionally, to reduce having to remember the cell phone charger and electric toothbrush, you could buy an extra of each. For example, I have a cheap travel electric toothbrush which uses AA batteries that could have a permanent home in the go-bag.

What would you add to your hospital go-bag? How would you make it your own? Do you have a parent or family member who could use their own go-bag? It might make a fun shopping trip to put together nice things that they like in a nice bag for them.

Hospital stays aren’t fun to think about. Being prepared with little comforts and reminders of home might help make a rotten situation a little less so.

For monthly tips on money psychology and tax savings mixed with attempts at humor, subscribe to the award-winning monthly e-letter, “The View From the Porch,” at https://bit.ly/3t2uwfn.

Continue ReadingGet a Go-Bag: Lesson from the Hospital

What’s Your Closet Type? Thrifty Penny, Generous J-Lo, Savvy Suze or Imelda Galore

What’s your closet type? Thrifty Penny, Generous J-Lo, Savvy Suze or Imelda Galore

On a 2004 visit to Ghana, a west African country, I noticed lots of people wearing second-hand Western clothes. While others donned beautiful traditional garments of their country, it was equally common to see second-hand t-shirts, khakis and jeans. The second hand clothes were sold in nearly every street market. My hosts told me these were commonly called obruni waawu, which literally means, “dead white people’s clothes.”

I understood that the clothes looked like those of white Westerners, but “Why dead?” I wondered. Before long, an answer dawned on me. Maybe to Ghanians, many of whom don’t have closets, the only reason a white Westerner would give away perfectly wearable clothes would be because they are dead. To them, clothes might be something you use up until the day they are no longer needed at all.

I don’t know if this is the actual reason, but it led me to compare and wonder how often we buy new clothes and get rid of old ones. For some, it’s quite frequent, and not so much for others. Having seen over 400 budgets in my lifetime, I’ve noticed spending on new clothes that ranged from $2,000 to $50,000 a year. But what I have not asked and do not know is, how often are the old clothes being thrown out or given away?

Money Velocity and Money Supply: Closet Velocity and Clothing Supply

There are two concepts in economics that come to mind – money velocity and money supply. Money velocity refers to how many times a dollar changes hands in an economy. There is also money supply, which is the amount of money available in an economy to be spent at any time.

Taking this to the closet analogy, what would closet velocity and clothing supply be? Let’s say closet velocity refers to how often the clothes on hand are changing. This would mean not only how often new ones are bought, but how often old ones are discarded or donated. Correspondingly, the amount of clothes we have on hand at any point in time would be our clothing supply.

Taking four combinations from these two concepts and having some fun with the names, what’s your closet type?

Closet Type: Thrifty Penny, Generous J-Lo, Savvy Suze or Imelda Galore

If you have a low clothing supply and low closet velocity, you might be a Thrifty Penny closet type. This means:

  • you have a small number of clothes that you wear until they have holes, stains, or are otherwise unusable before you replace them
  • you feel ok not being trendy
  • there aren’t a lot of choices of what to wear, and
  • you don’t require a large closet.

Conversely, if you have a high clothing supply and high closet velocity, you started with lots of clothes, are buying lots of new clothes, and are also giving or throwing away old or never-worn ones fairly frequently. This would be the Generous J-Lo closet type.

  • You have a large closet with lots of choices and
  • the latest looks, and
  • you feel ok only wearing a few items a few times, once, or never because you are going to give them away anyway.

If you have a low clothing supply and high closet velocity, you have a small, actively-traded closet. This would be the Savvy Suze closet type (after Suze Orman, who claimed to own one pair of earrings, her signature diamond studs.)

  • New clothes are entering constantly, getting worn, and old clothes are constantly going out.
  • You always look up to date from a carefully curated closet.

If you have a high clothing supply and low closet velocity,

  • you have a large closet of seldom-worn items, with plenty to choose from, and
  • not many clothes going out.

This would be the Imelda Galore closet type, as in Imelda Marcos, the in?famous Phillippine first lady with an enormous shoe collection.

What Could Closet Type Say About Your Money Attitudes?

How we spend on clothes can indicate one aspect of our attitudes about money. In her work with Money Habitudes(TM), Dr. Syble Solomon identified six primary attitudes toward money: spontaneous, selfless, targeted (as in with goals), security, free spirit, and status.

Anyone with a puritanical upbringing might see the last one – “status” – as a negative. Status is something many people want but are supposed to pretend not to, right?

Rather than taking a strictly negative view toward status, though, Solomon recognizes that status purchases like clothing are needed to help us make a good impression. However, if you tend to spend lavishly on clothes you will never wear, or spend more than you can afford for the sake of trendiness, you may have a tendency toward status overspending. Conversely, if you show up in old or frayed clothes a lot, you may have a problem with status underspending. Spending enough so you can suit up and show up when it matters, with care, fun and spontaneity, shows a healthy attitude about status spending.

What About You?

With Dr. Solomon’s more balanced view in mind, I am going to take a second look at my closet. I don’t plan on being a dead white person anytime soon, but I may find potential obruni waawu destined for Goodwill or, ultimately, Ghana.

Which closet type do you best relate to? Did you find yourself spending more or less on clothes during the pandemic? How did the pandemic change your closet? Have you changed your donation or throwing-out patterns? Leave a comment below.

For more on conscious spending patterns and balancing old with new, read Chapters 2 and 4 of The Mindful Money Mentality: How to Find Balance in Your Financial Future.

And for monthly tips on money psychology, tax savings, and good humor, subscribe to the award-winning e-letter, “The View From the Porch.”

Continue ReadingWhat’s Your Closet Type? Thrifty Penny, Generous J-Lo, Savvy Suze or Imelda Galore

Using A Retirement Income Buckets Approach

buckets

Using a retirement income buckets approach: One of the most common questions financial planners receive from soon-to-be-retirees is, “What’s the safest way to give myself a paycheck once I quit working?”

The question often stems from the knowledge that needing to withdraw funds in a down market can be both ill-advised and scary.

Those who have been around long enough probably know someone who retired close to a particularly bad market year, like 2001, 2007, 2008, or now 2022. Because that someone had to, or chose to, sell some investments at that terrible time, they ended up living off of much less than they originally thought. This can be a scary thing to watch. It makes one wonder, “How do I make sure that doesn’t happen to me?”

A Buckets Approach

Enter a buckets approach to retirement income. Below is a link to a video excerpt from the online course, “Retirement Readiness,” outlining the approach in more detail. (A link to the course can be found at the bottom of this article and here.) A description for each of the buckets follows below.

https://youtu.be/mkeqzgJfeFc

Bucket 1 – Cash and Money Market Accounts

The first bucket will provide your paycheck. Here is how it works.

  1. Calculate any retirement income you will have (pension, Social Security, dividends, interest, rental property, for examples);
  2. Figure your annual recurring expenses (do not include one-time expenses such as replacing a car, roof, or paying for a special trip or wedding);
  3. Subtract 2 from 1 to come up with the difference; and
  4. Keep 1 to 2 years of that difference in Bucket 1.

For example, Justine retires at 65. She expects to live past age 82 so she is waiting until 70 to claim Social Security. She has a pension of $800/month ($9600/year). Her recurring expenses are $70,000 annually. The annual difference is $70,000 – $9,600 = $60,400. To start retirement, she decides to keep 1.5 years of the difference in Bucket 1 so $60,400 x 1.5 = $90,600. She puts that in a high-yield money market account and sets up an automatic transfer of $5833.33 monthly to her checking account. Voila – she has a new paycheck.

When she turns 70, she will collect $45,000 in Social Security. At that time the annual difference will fall to $70,000 – ($9,600 + $45,000) = $15,400. She decides to keep 2 years of the new difference in Bucket 1, so $15,400 x 2 = $30,800. She reduces the monthly transfer from the money market to $1283.33 per month.

Bucket 2 – Bonds, CDs, and Bond Funds

The second bucket replenishes Bucket 1. As the paychecks come out, the principal in the money market account will naturally decrease. Eventually it will decrease to a level that makes you say, “Yikes! I only have xx in my checking and money market.” Everyone has a different level of “Yikes.” When the balance approaches your unique Yikes level, a transfer is made from Bucket 2 into Bucket 1.

Bucket 2 is comprised of a combination of CDs, bonds, and/or bond funds. CDs and bonds have maturity dates, so they are structured in a ladder (staggered maturity dates usually 6 to 12 months apart into the future). As each one in the ladder matures, the principal is either transferred to Bucket 1, or, if Bucket 1 is comfortably above the Yikes level, redeployed into a new CD or bond with a maturity date at the end of the ladder. If bond funds are used, they are laddered according to the duration in the fund, and funds are sold as needed to replenish Bucket 1. Using bond funds is a bit riskier due to the lack of maturity dates, so at least some portion in CD and individual bonds are recommended.

Bucket 3 – Stocks and Stock Funds

Bucket 3 replenishes Bucket 2 through harvesting gains in stocks. Here is how that works.

  1. Review Bucket 3 on a regular but infrequent schedule (at most quarterly and at least annually).
  2. If there are gains, transfer those to replenish Bucket 2.
  3. If there are no gains (i.e. the market is in a correction), then do nothing until the next scheduled review.

In this way, stocks are not sold at the most inopportune time. With up to 5 years of paychecks in hand in Buckets 1 and 2, you have provided yourself a secure cushion from market corrections.

Final Notes

Whether each bucket is held in a tax-deferred account or a taxable account makes a big difference. Buckets may be spread across accounts in different combinations to minimize taxes.

You can find many varieties of Bucket approaches online. The goal of this particular Bucket approach is not to generate the best returns of any retirement portfolio ever on record, but rather to help prevent retirees from selling during downturns by providing security in Buckets 1 and 2. It works best for people who want the feeling of security from retirement income but don’ t need the high cost of an annuity to get it.

For monthly tips on retirement income, taxes, and psychology of money in retirement, subscribe to the free e-letter, “The View from the Porch, ” at https://bit.ly/3t2uwfn. And for a short online course on retirement readiness, see Simple Finance Retirement Readiness: https://bit.ly/3p3BkXE.

Continue ReadingUsing A Retirement Income Buckets Approach

As a Child-Free Elder, Who Will Be On Your Team?

“Who will take care of you when you’re old?” someone once asked me when I told her I had no children.

It seemed like an old-fashioned kind of question. Nevertheless, it caused a mini panic attack.

Knowing the statistics, I had made the vague assumption that I would need to make arrangements for care, but something about her question made that statistical probability more real.

About 14 percent of 40- to 44-year-old women had no children in 2018 – up from about 10 percent in 1980, U.S. Census data shows. This is and will be an issue for millions of Americans.

As anyone who has served as a caregiver knows, there are four main questions to ask from the beginning. Answering these can lead to the formation of an elder care support team. The team members may come from two areas – friends and family, professionals, or both.

  • Where will I live?
  • Who will make medical decisions for me?
  • Who will handle my finances?
  • How will I get transportation?

Team Member 1: Where will I live?

The first part of figuring out the team is to know where you will be living. The vast majority of Americans want to age in their homes. For some people that home might be the place they have lived for several decades. If so, then the team member will likely be a home health care company.

For others, home might be a place they move to – with a supportive community, but not a facility (perhaps at first). If that’s you, building a network of friends and professionals in the community can be one of the best ways to reinforce your support team.

Although it’s not in many people’s plans, sometimes aging at home isn’t an option. For people aging without children, it’s more important to get to know assisted living and continuing care facilities, and figure out how you would pay for them. (For myself, I purchased a traditional long-term care policy. But that doesn’t mean that is the right solution for everyone.)

Team Member 2: Who will make medical decisions for me if I can’t?

Preferably someone close by. Ideally this person could be available at a moment’s notice and will not have to travel far to attend appointments with you.

Having a strong primary care physician relationship is also highly beneficial. Some doctors, especially those who specialize in concierge medicine, can and will serve as your legal health care surrogate.

Team Member 3: Who will handle my financial affairs?

Many attorneys recommend having a different person named for financial matters than for health care decisions. As aging progresses, it’s a lot to ask of one person to handle bill paying, money management, and doctor appointments (as anyone who has served as a sole caregiver can attest).

Money management involves several duties. To name a few,

  • Paying bills and making renewal decisions (such as memberships, subscriptions, and/or insurance policies)
  • Making gifts
  • Making transfers between accounts, such as taking IRA withdrawals
  • Managing investments

Your financial team might involve two members – someone who does the day-to-day management, plus a professional investment manager. Most professional investment managers do not provide billpaying and cash flow management. Professional investment managers may charge a fee that is a percentage of the amount they manager, or a flat fee. If a friend or family member is taking over the day-to-day, it’s important to pay that person a fair fee, too.

Or you can find a fiduciary who will cover it all. Trust companies are one example of fiduciaries who will handle all financial duties if they are named as trustee or co-trustee on your documents.

My choice for now is an independent fiduciary. She happens to have a law degree and serves in this capacity full-time. Her services won’t begin unless I’m alone and losing the ability to handle things myself. Hopefully that’s a very long time from now, if ever.

Team Member 4: How will I get transportation?

If you move to a community with many transportation alternatives, you might not need a separate team member for transportation. This is my goal – a walkable community with good public transportation alternatives. The EPA even publishes a National Walkability Index.

But if you are staying in a home or community without many alternatives to your own car, and you don’t want to use ridesharing with strangers like Uber or Lyft, you could assemble a network of friends and acquaintances on whom to rely. So together they will be your transportation team member.

How can I make my affairs easier to manage for the team?

Consolidate and simplify with one financial institution. It will be far easier for your financial surrogate, and the institution may even show you some extra appreciation. Some people are concerned that this is not being “diversified.” Nowadays, most institutions can hold a diversity of cash and investments all under the same roof. Just make sure to keep under the FDIC limit in any bank accounts.

Use the health apps provided by your healthcare providers to give easy access to your electronic medical records.

Have all of your digital passwords in one digital password manager. Most people don’t realize they have on average over 200 accounts with passwords. See “Document Your Digital Assets.”

How do I make it all legal?

Once you have decided who you would like to name as your surrogates, have either a durable power of attorney (DPOA) or living trust drafted by a board-certified estate planning attorney. (See “Do I need a trust?” for more on the topic of trusts.) The same attorney will often also draft your living will and healthcare power of attorney, too. For qualified attorney recommendations, check for your local chapter members of the National Association of Estate Planning Councils.

For more information on planning for aging, check out the e-book, How Does Your Money Flow? A Guide to Common Saving, Spending, and Sharing Decisions (Porchview Publishing, $3.99, available in e-reader-friendly formats). Or, join the list for our free award-winning monthly e-letter, “The View From the Porch.”

Continue ReadingAs a Child-Free Elder, Who Will Be On Your Team?

How I Work Virtually as a CFP®

How I Work Virtually

Although it’s more common to work virtually with a financial advisor than pre-pandemic, many people still have questions about it.

How secure is it to meet virtually? In the beginning of the pandemic there were security concerns about certain online platforms, more notably for telehealth visits than for financial meetings. But the platforms quickly invested in measures that enabled corporations, medical providers, governments, and everyday users to provide a secure place to meet. That being said, no platform is 100% secure. We began with GoToMeeting but now use the Zoom Pro platform because more clients are familiar with Zoom.

How do you get all the documents you need securely? We provide a secure link. You can upload as many documents as you like. We suggest uploading at least 2 weeks before the scheduled meeting.

Will I be able to see my plan clearly on a small screen? We don’t recommend using a smartphone, however, anything from tablets/iPads to full monitors work just fine. We can manually zoom in and out on our end to make the content more viewable on your screen.

What if I need to share my own documents or spreadsheets during the meeting? We can enable two-way screen-sharing so you can share your own documents.

What if the technology breaks? Hey, it happens! We have a couple of backup plans.

What is the backup plan? If the problem is audio, switching to speakerphone is pretty seamless. If the problem is video on one end, we can usually figure the issue out within a few minutes. When there is a video problem on both ends, that usually indicates an internet or connection problem. Although rare, if that happened, we would suggest rescheduling but proceed as audio-only if that’s your wish.

How are you audited or regulated from your home office? We are regulated by the state of Florida who now conducts audits virtually.

How do you keep distractions to a minimum? It’s difficult when the view of the yard, birds and butterflies is so nice! Fortunately the location is quiet except for the occasional leaf blower.

How can I have the best experience meeting virtually with a financial planner? Great question! In the same way we would have you as a guest in person, we want you to be as comfortable as possible during your meeting. Here are a few tips:

  • Consider crafting the ideal spot for you. That might or might not be your office or desk chair. Couches are cool. So are pillows and pets.
  • Dress more comfortably than you would for a meeting in person. Socks and sweatsuits encouraged.
  • When more than one person is participating, we find it makes for a better experience if you each have your own screen. If you are in the same room, turning off one device’s audio will eliminate echo and still allow for us to hear each other just fine.
  • Grab a beverage and your favorite snack.
  • If you feel uncomfortable at any time, don’t hesitate to ask for a break or a few minutes to change rooms/couches/chairs.

Working Virtually Has Advantages for You

People have shared how much they appreciate:

  • Time savings of not traveling to Seminole (no Howard Frankenstein bridge!)
  • Meeting in the comfort of their own home or office
  • Not feeling the need to get dressed up
  • Having their pets close by

Our hope is that by removing pressures of extra time and effort to meet in person, and being a little more comfortable in your own environment, some of the stress that can come with financial planning and decisionmaking is reduced.

What other questions do you have about meeting virtually? What have been your experiences, positive or negative, with virtual meetings? Share your comments and thoughts below, or tell us first-hand by contacting us.

Continue ReadingHow I Work Virtually as a CFP®

New Year: Got Your Notebook?

Keep important data in a Notebook

It’s a new year: got your notebook? You know, that one with all of your passwords, account numbers, doctor names, and that very important song that must be played at your funeral.

Yeah, that notebook. Where is it? It might reside digitally on your computer or in the cloud, or it might be a pile of papers in a file cabinet, or it might be in an old-fashioned 3-ring binder. The new year is a good time to ask: how easily can someone who needs it find it?

Who Might Need the Notebook and When?

Everyone needs a someone in mind for the notebook. Your someone is who will step in for you and help to handle things when you can’t. If an immediate someone does not spring to mind, consider asking a professional to be that someone – an attorney, accountant, or professional fiduciary, for example.

When will someone step in? At a time when you need the notebook, but can’t get to it. Like the new commercial for disability insurance, we can imagine all kinds of accidents and tragedies that might bring about a need for the notebook. Rather than dwell on those, let’s imagine that you are suddenly swept away on an all-expenses paid trip out of the country to a remote island with spotty cell coverage.

While you are whale-watching and snorkeling the reefs for an indefinite period, things still need to be handled back home. Bills to be paid. Taxes to be filed. Gifts to be given. People to be notified of your absence and introduced to the someone who is handling things.

What Goes in the Notebook?

In essence, the Notebook is a central place you keep information that your someone will need in case something happens to you.

Common and essential items in the Notebook include:

  • Your five basic estate planning documents: original will (drafted by an attorney in the state where you reside), living will, health care power of attorney, durable power of attorney, and HIPAA designations.
  • Advanced estate planning documents: trusts, partnership agreements, business buy/sell agreements, shareholder agreements, etc.
  • Insurance policies. ALL of them: life, long term care, health, property, car, boat, liability, and any others.
  • Contact information for professional advisers: attorneys, bankers, accountants, investment advisers, insurance agents, and (of course) your Certified Financial Planner™.
  • Also, if your adviser has an assistant or paraprofessional who knows you and your situation, write down their contact information and a little note to that effect. (“Sharon is the assistant and she runs the whole place.”).
  • All of your health care providers – doctors, dentist, optometrist, veterinarian (who is going to take care of Fluffy?). Put similar information by each one – what they helped you with and if any office or nursing staff know you and your history.
  • Important to remember also, anything handled online: digital password manager, online user ids and passwords, bank statements, investment accounts, real estate deeds and mortgages. So much of our financial lives nowadays keys off of our email address. Can they even get into your email? (See: Document Your Digital Assets for more online stuff to consider.)

Extra Items for the Notebook

In addition, not-as-essential items some people include are:

  • An “ethical will” outlining your values. This often gives family members guidance when they are unsure what you would want. Writer Susan Turnbull’s book, The Wealth of Your Life, can help guide you through this process.
  • An end-of-life health care management booklet, like Five Wishes.
  • An Aging Plan – describing your wishes for the potential time of life when you may need assistance with activities of daily living, transportation, and housing transitions.

Notebook Update Season

It’s a good time of year to check in on your notebook. The end of January brings tax notices from bank accounts, investment accounts, mortgage statements, health insurance, employers, IRA providers, and more. Take this opportunity to pull together scattered pieces of your financial life. Consider collecting everything not only for the accountant, but also for your family or special someone.

One way to keep the notebook updated is to check each tax statement and match it up with a corresponding account in the notebook. Perhaps you forgot about those I-bonds you bought on Treasury Direct – no paper statements, all online. Better add that account to the notebook. All those deductions for insurance from your employer – would someone know how to contact the insurance companies if needed? Then would the insurance companies talk to them? That contact info, power of attorney forms, and beneficiary designations are good updates for the notebook too.

Think of your notebook as a bread crumb trail helping your loved ones work backward from that remote island to the place where you are sitting with paid bills, up to date connections, easily-accessed email and your personal address book at your disposal. A little effort each year will save your someone(s) many headaches later.

Got a notebook you love already? Comment below on what makes it uniquely yours. Share your best ideas.

For more on this topic, see The Mindful Money Mentality: How To Find Balance in Your Financial Future. Struggling with issues mentioned here? Tell me more – Schedule a call.

Continue ReadingNew Year: Got Your Notebook?

NOW I Get It: 5 Lessons From Disaster Checklists

storm

Like many in Florida this time of hurricane season, I am remembering the not-so-distant past experience with Hurricane Irma. Below are 5 lessons from disaster checklists.

In that year, I thought I was prepared with a set of handy checklists. But in my Monday morning quarterbacking after that storm, there were areas where I did something right, intentionally or not, and others where I got to say, “Oh. NOW I get it.” I am a lifelong Floridian. I’ve been through hurricanes. Further, I love camping and have been doing it since I was little. But I take more time preparing for camping trips than I did for Irma.

All the official checklist advice didn’t sink in until I got a taste of the real deal.

Irma was a huge pain and inconvenience for several weeks, but in my immediate area no lives were lost or in imminent danger. I realize now, though, how unprepared I was if it had gone differently. With no property damage or bodily injury, I was given a chance to do a better preparation job next time.

So as we stare down another storm season and other climatic catastrophes, below are five lessons I didn’t expect to learn from Irma.

Checklist Confusion

What I Thought I Did Right: When Irma was one week out, I dug up the checklists and took inventory. But I became confused. One list was for evacuating the state, one was for staying at home, and another was for going to a shelter or friend’s home. I never thought I wouldn’t know which it was going to be. With a 92-year-old mother-in-law, leaving was not a simple option. Neither was staying. As we debated for five days before it hit, I bounced between the checklists, creating triple the preparation anxiety.

NOW I Get It: This could have been avoided with a kit prepared in advance for each option.

Lesson #1: If you are evacuating, and especially going to a friend’s house or shelter, the time to go is not 24 hours before the eye arrives. By then, or even 2 days before, the 50 mph wind and flooding rain has already begun. Once tree branches start flying across the highway (gee, that does happen before the eye arrives), all the stores are closed and you can’t go home for more canned soup, batteries or underwear.

Lesson #2: Prepare the kits. Decide early on (like, 5 days out) to stay or go, and stick with it.

Flashlights and Batteries

What I Did Right: All the checklists say, of course, “flashlights and batteries.” In preparation, I dug up as many flashlights as I could find. I checked the batteries. I replaced the batteries in the ones that didn’t work. The worst of the storm was to come at night, so before bed, I placed one on my bedside table and one on the kitchen counter underneath the light switch.

NOW I Get It #1: Unfortunately I waited until the day before the hurricane to check the flashlights. We were low on batteries. Batteries were gone from the store shelves five days before that. Oh, duh.

NOW I Get It #2: When I thought about needing a flashlight, I imagined the times when power has gone out before. I imagined it would be a handy supplement to dim natural light.

What actually happened was the power went out at night. The clouds were too thick for moonlight or stars. Of course, there were also no street lights. It was truly dark, windy, and scary.

Inside, hurricane shutters blocked out any sliver of light there might have been otherwise. My house was a cave. I could not see my hand in front of my face. The flashlight was an absolute necessity, not a helpful little handy supplement. I could have used one for each room in the house. Maybe two.

Lesson #3: Change checklist to “Several flashlights.” Put on calendar on June 1: “Check flashlights, flashlight batteries and battery supply.” There’s usually a sales tax holiday in Florida that week anyway. Best time to stock up.

Food and Clothing

What I Thought I Did Right: The checklists say to have three days of food and clothing. I planned ahead for having three days of healthy food for three people. On the last day before, we realized we hadn’t checked the propane so we could cook the food. By then, propane was all sold out. We ended up cooking on a small charcoal grill. Not ideal.

NOW I Get It #1: I didn’t quite understand why three days of food and clothing were needed, especially if we stayed home. It had been too long (2005) since I had gone several days without power. 48 hours after the storm, it felt like a race against time to eat or cook the food in the fridge before it spoiled. Also, in Florida when there’s no fans or A/C after a hurricane, you sweat a lot. Ick.

On Day 3 my mother-in-law’s ALF got power so then, we did evacuate. We left to a hotel for 4 more days until our house got power restored. If we had evacuated before the storm and not been able to return, we would definitely have needed more food and clothing.

Lesson #4: Have 3 days of food and clothing packed just in case. Maybe 5.

On Your Own

One of my checklists says, “After an emergency, you may need to survive on your own for several days.”

What I Did Right: Food and flashlights. That’s about it.

NOW I Get It #1: When I read the above sentence, I thought, “On our own? That can’t mean the suburbs. That’s for people in the country.” Now I realize we were lucky our county had generators to run water and sewer services for 500,000 people for several days. Otherwise, we could have been, yeah, on our own. (Hola, Puerto Rico. I see you.)

NOW I Get It #2: Now I recognize that just because the storm is over doesn’t mean you can get home. After the eye passed and the sun was out again, 60 mph winds on Irma’s backside took down huge trees that blocked our street. It took neighbors with chainsaws a couple of days to clear them so cars could get through.

NOW I Get It #3: We had been in our neighborhood about a year when Irma hit. We had met the neighbors, had them over for Superbowl, and waved as we were coming and going. We knew them, sort of, but had no idea how much we would come together in a crisis. I did not think of counting on my neighbors, nor did I give a thought to them counting on me.

But as Irma’s track got clearer, we formed a texting group, including a young couple who moved in the week prior. We checked in as soon as the sun came up. One shared their freezer operating on a generator. Others immediately helped cut and clear fallen trees. We shared our stories and asked how we could help each other. As long as I live here, I know I will not have to survive “on my own.” We will be helping each other.

Lesson #5: There are many little lessons from Irma that I can recount, but this last one was the big V-8, SMH moment. We are not all “on our own” if we have a community. I am lucky to be part of a caring community that pulled together, whether it was unlucky tree karma in your yard or failing to buy batteries and propane in time. When I hear the same old story on the news from a natural disaster, “We all pulled together,” “This is a community who cares,” NOW I know what that kind of community feels like. I feel very fortunate about that.

Still, I will do a better job taking care of my needs so I can be better prepared next time to take care of others.

NOW, I get it.

Need a checklist? Here’s Pinellas County’s Emergency Management page.

Continue ReadingNOW I Get It: 5 Lessons From Disaster Checklists