What Should I Think About Before the Baby Comes?

Prince William Living’s recent article, “Baby on the Way? Here’s How You Can Prepare Financially,” says that as you plan to welcome your child, consider these seven tips that can help you decide how to provide your family with the lifestyle you desire.

Examine your career. A new baby may cause you to think differently about your career goals—you may seek a promotion, a job with a higher salary or better benefits, or more education. Perhaps you or your spouse want to decrease your hours or become a stay-at-home parent. If you are thinking about changing your job status, examine the effect it may have on your take-home pay, retirement nest egg and benefits.

Lifestyle changes. Look at how your baby will affect your day-to-day activities. If your perfect lifestyle involves a new car or home, talk to a financial professional about whether to make the move now or in the future.

Childcare expenses. Nearly one-third of parents spend 20% or more of their income on childcare. In some states, the cost for a year of care can be more than one year of college!

Tuition. Private elementary or secondary school often costs money, and the price of a college education continues to rise at a pace faster than inflation. The 2017 tax reform expanded the use of 529 plans, so you can now withdraw up to $10,000 federal income tax-free per beneficiary, per year to pay for kindergarten through 12th grade tuition at a public, private or religious school.

Review your financial position. Unanticipated events can impact your finances at any time. Resolve to build or maintain an emergency fund that could cover three to six months of expenses.  You should also prioritize your retirement savings. After your baby arrives, update your estate plan and insurance coverage as needed.

Consider family values. Consider how you want to teach your child about financial responsibility. Being intentional early, can help create clear expectations and ensure that you and your spouse are on the same page.

The family bucket list. Look at what activities matter to you and add them into your financial plan. Taking an annual vacation or having a vacation home are common goals for many families.

Adding a new member to your family has a way of putting your priorities into perspective. Use these reminders to plan accordingly. Don’t forget that you’ll need an estate plan now that your family is growing. Your will should name a guardian in case something happens to you and your spouse. If there is no will, or no guardian named, the state will decide who will raise your child. Talk with an estate planning attorney to make sure that your planning for the future is complete.

Reference: Prince William Living (December 2018) “Baby on the Way? Here’s How You Can Prepare Financially”

Continue Reading

What If Mom’s Executor Won’t Sell the House?

What if the father died first, then the mother? They both wrote identical wills and named the youngest child as executor. The middle child was named as the alternate. The will states that if the first executor can’t or won’t carry out the duties of the will, then the alternate executor takes over. It also states that within six months after the mother’s death, the home should be sold, and the proceeds divided evenly between all three siblings.

Time passes, and now it’s been now a year after her death. The oldest child is occupying the house—but he can’t qualify for a mortgage or buy the other two kids out of their shares.

Is the alternate executor permitted to just assume the executor duties and sell the home?

nj.com weighs in with a recent article, “Family fights over mom’s will when executor won’t sell the house. What’s next?” According to the article, being named in the will doesn’t give you the automatic right to serve as executor.

If an individual is named as successor executor in the will, there must be two steps taken, before he can assume the administration of the estate.

In this situation, the youngest brother, as the current executor, must either resign or be removed.

The easiest, quickest and least costly option is for him to voluntarily step aside. However, he obviously has to agree to it.

The second option is to go to court and ask the Chancery Court judge to remove him.

To be successful in removing the executor, a person must show the Chancery Court judge that the executor is refusing to take the necessary action, as directed by the mother’s will. If the judge is convinced, she can remove the youngest brother by court order.

The middle child would then need to be appointed by the judge as the new executor.

Typically, when a person is named as the alternate, it isn’t a problem. It’s merely an administrative process. The middle child would have to go to the probate court and sign the required paperwork.

Reference: nj.com (December 27, 2018) “Family fights over mom’s will when executor won’t sell the house. What’s next?”

Continue Reading
How Do I Contest a Will?
Will contest

How Do I Contest a Will?

The ways that children of a first marriage can contest a will fall into several scenarios. However, in order to do so, a person must have “standing.” Typically, a person has standing in two situations, explains nj.com in its recent article, “Can children from a first marriage contest a will?”

One way is when the individual is the decedent’s heir at law and would inherit under the laws of intestacy if the will were declared invalid. Another way a person could have standing, is if there were a prior will in which the person is a named beneficiary, and the prior will would be reinstated, if the subsequent will were set aside.

For example, in Mississippi, probate laws take blended families into consideration. If a person dies without a will and has descendants, like children or grandchildren who are not descendants of the surviving spouse, then several things would happen. The surviving spouse would inherit a child’s share of the estate. The descendants from outside the marriage would then inherit the remainder of the estate in equal shares.

Let’s say George and Gracie were married and had baby Benny. After George and Gracie divorce, George marries Phyllis. If George dies intestate—without a will—then Benny would inherit one-half of his estate. If George dies with a will, Benny has standing to challenge the validity of the will.

As a practical matter, Benny should only challenge the will, if he’d stand to inherit more under intestacy than under the will, and he has a valid challenge justifying that the will be set aside.

The four most common challenges to a will are lack of capacity, improper execution, fraud and undue influence/duress.

It’s not uncommon for will contests to be successful. However, it really depends on the facts and circumstances of each specific case. For example, Benny would have a much tougher time proving undue influence, if John and Phyllis were similar in age and married for 30 years prior to George’s death, than if Phyllis was 50 years younger than George, and he had some level of dementia.

Reference: nj.com (December 11, 2018) “Can children from a first marriage contest a will?”

Continue Reading
Why are Heirlooms the Source of Family Conflict in Probate?
Family jewelry and guns are often the source of controversy after a parent dies.

Why are Heirlooms the Source of Family Conflict in Probate?

When a family member dies, personal items and heirlooms can be the cause of significant conflict among family members, The Guardian says in its recent article, “When It Comes To Heirlooms, It’s Personal.” Many of these hotly-disputed items may have little to no monetary value. However, that doesn’t make them any less important to those family members who treasure their “priceless” emotional value.

A person can typically leave his estate to whomever he wants, provided that it satisfies the obligations to a spouse and dependents. There are several ways to ensure that an estate is equitably distributed, according to the wishes of the deceased. However, making decisions on personal effects and family heirlooms is often one of the hardest parts of the estate planning process.

Here’s what can you do to make sure the cherished personal property you wish to leave to your heirs doesn’t become the focal point for future disputes:

  • Avoid any surprises. Avoid potential conflicts by sharing with your family the contents of your will and your reasons for the way that you’ve decided to distribute your assets, so there are no surprises after you are gone.
  • Know what “fairness” means. Fairness doesn’t always mean “equal.” That is especially true when it comes to your personal items and heirlooms. Decide what “fairness” means to each of your family members, and if you agree, distribute your items accordingly.
  • Talk about your special assets. Create a list of the items you want to bequeath and ask your family who should get what.
  • Get appraisals and consultations. Have your personal property appraised and consult with your heirs to be certain that the items you bequeath are appropriately valued–both monetarily and emotionally.
  • Create a list. Attach to your will a letter that lists your personal property items and the heirs you want to receive them. The letter won’t be enforceable as part of your will, unless you incorporate it into the terms of the will.
  • Make choice now. While you’re still alive, list your personal items and have your heirs take turns choosing what they want.
  • Choose later. If you don’t want your heirs to select your personal items in advance but still prefer they are the ones who chose, leave a direction in your will that your heirs are to take turns, until all of the items have been chosen.

Reference: The Guardian (December 23, 2018) “When It Comes To Heirlooms, It’s Personal”

Continue Reading

What Do I Need to Do To Get Financially Fit in My 30s?

Whether you’re 30 or 39, retirement will come up fast. Many people are surprised when they see how much they need to put away to keep their current standard of living in retirement.

Once you decide when you want to retire, you need to calculate how much money you’ll need and how you’ll get there. Of course, you should take advantage of company matching and various tax deductions, when saving for retirement. Don’t wait until your 40s or 50s to try to catch up. That will be painful, or worse, impossible.

Forbes’s recent article, “3 Steps To Financial Fitness In Your Thirties,” advises that when you start to accumulate wealth, be sure someone is watching your investments and that those investments are suitable for your time frames and financial goals.

Work with a financial advisor you think can help improve your situation. This should be someone you trust, and most important of all, who you feel has your best interests at heart.

If you are accumulating assets, make sure they’re protected. Be certain you and your family are covered by having the correct insurance policies. Of course, in a perfect world nothing would happen. For instance, most people on disability would much rather be healthy. They’d love to be able to joke and say that having that disability insurance was a “bad investment”. However, those who are disabled and aren’t covered with a disability insurance policy, most likely wish they’d made sure they had this income protection in place.

Another form of protection is an emergency fund. If you don’t have one, start by regularly putting some amount of money into a non-retirement account. Even if it’s a small amount, something is better than nothing. If you were to be laid off, chances are that your unemployment benefits would not be enough to pay the rent or make a mortgage payment.

If you’re single, you should protect yourself—even more so than someone who has a partner to rely on. Many life insurance policies have living benefits that can protect you, if an emergency happens.  You may also be able to use cash value life insurance to partially fund your retirement.

Finally, it’s critical that you think about estate planning. You should have an estate plan, including a will, Powers of Attorney, health care power of attorney and, if you have minor children, a guardian should be named in your will.

Let’s say you’re living with someone. If something happens to either of you, the living partner will most likely will be treated as a roommate—and have no legal rights to your property. An estate plan can be prepared to provide your partner with legal protection.

Reference: Forbes (December 17, 2018) “3 Steps To Financial Fitness In Your Thirties”

Continue Reading

How To Keep Your Financial Resolutions in 2019

New Year’s Resolutions: we all make them but keeping them is another story. About 30% of all Americans plan on making financial resolutions for the year ahead, reports CNBC in the article “The secret to keeping next year’s financial resolutions.”

Getting more specific, most of the 2,000 people surveyed by Fidelity said they were going to save an extra $200 a month for their long-term 2019 goals, like retirement, college costs and health care. Half said they were going to boost contributions to their retirement savings plans, usually a 401(k) or their IRA. Higher limits for contributions to both are expected to increase the savings rate.

The unexpected ups and downs of life could stand in the way of your resolutions. Rising costs of health care, the volatile stock market and concerns about the trade wars are on most people’s minds. Try to focus on what you can do, rather than what you cannot control.

Like most of us, the people surveyed also admitted to making some spending mistakes they know made their savings less than they wanted. Chief among them: eating out too often and splurging on things that are way out of their budget.

How can you be sure to make and keep your financial New Year’s resolutions in 2019?

Try a budgeting app. There are several well-known, tried and tested budgeting apps that make keeping an eye on your spending and finding costs to cut easier. Once you’ve identified places you can cut spending and created a surplus, put that money into your savings account. Or, increase your retirement plan contribution. Even a little bit, can make a big difference over time.

Can you do better with your savings interest rate? Rising interest rates may make it possible to get a better return in 2019. As the Fed has raised its benchmark rate, yields on savings accounts are on the rise. While many savings accounts are only averaging 0.2%, some high-yield accounts are at 2.25%. Consider switching to a bank that offers at least a 2% return.

Note that the opposite goes for your credit cards: rising interest rates mean you’ll want to pay those off as soon as you can. Today’s average credit card interest rate is more than 17%. Try to pay the balance in full every month to avoid paying any more in fees than necessary.

Take control of your health care costs. If your Health Savings Account permits, increase the amount of money you contribute to your plan. If you didn’t use up all your funds in 2018, make an appointment for mid-year 2019 to schedule appointments or procedures you know you’ll need before the year is out. Make a resolution not to throw away health care dollars in 2019, especially if you have a “use-it-or-lose-it” flexible spending account.

Reference: CNBC (Dec. 15, 2018) “The secret to keeping next year’s financial resolutions”

Continue Reading

What Should I Be Doing 10 Years Before Retirement?

Investopedia’s recent article, “5 Things to Do 10 Years from Retirement,” explains that there’s a red zone both in football and retirement planning. In many instances, that zone is where the game is won or lost. In football, the red zone is 20 yards from the goal line. For retirement, it’s 10 years from your target retirement date. As you move towards your goal, you may need to “huddle up” and look at your game plan.

  1. Figure Out What Retirement Means to You. Before you start making financial plans, be clear on what retirement means to you. It may mean working 40 hours instead of 60 or never working another day for the rest of your life. Whatever you like, it’s important to have some idea of what you want to do every day. From there, you can start to shape a financial plan to support your retirement vision.
  2. Determine How Much Money You’ll Spend Every Month. Once you’ve defined what your retirement will look like, you can begin planning for it financially. First, determine how much you’ll be spending every month on your retirement budget. Many pre-retirees just don’t know how much they need to live on a monthly basis. An accurate retirement plan will be based on your monthly household expenses.
  3. Examine Your Sources of Income in Retirement. While looking at your spending, be aware of all the types of income you’ll have during retirement, such as Social Security, a pension, a 401(k) or an IRA. There are choices that will have to be made, if you have a pension. The timing for collecting Social Security payments is also important.
  4. Rework Your Investment Strategy. The way you’ve been investing for the past 30 years, is not how you should invest for the next 30. Younger people focus on accumulation, but when you’re in or nearing retirement, you need to concentrate on income and keeping pace with inflation. Diversification is important, but what’s more powerful than diversification is asset allocation.
  5. Consider Hiring a Financial Professional. You can do-it-yourself, since there are many inexpensive funds and research information available. However, there’s much more that goes into creating a comprehensive retirement plan than just investments. Your retirement plan should address your need for income, estate planning, survivorship planning, insurance needs, business continuation, inflation, and other points.

As in football, the team that wins the game, is often the team who played well in the red zone. Don’t fumble the ball at the goal line or settle for a field goal. Score a touchdown with smart retirement planning.

Reference: Investopedia (September 7, 2018) “5 Things to Do 10 Years from Retirement”

Continue Reading