New Year, New Start: 9 Tips for Financial & Estate Planning

The beginning of a new year is a natural time to review your financial and estate plans, or even to finally put one in place. We sat down together with two local experts, Joan Nelson Hook, Esq., Board Certified Elder Law Attorney from The Hook Law Group and Patricia Jones, CPA/ABV CFF CFE from Jones & Company CPAs PA, for their advice on common financial and estate planning questions.

What advice would you give to someone just beginning their financial and estate planning?

Joan Nelson Hook: In the beginning, you want to be sure that you have the necessary basic legal documents, which are a Durable Power of Attorney and Living Will with designation of a surrogate. Each of these documents have to do with you personally. When you own property or assets, you should also obtain a Will or Trust.

Pat Jones: The sooner you begin financial planning the better. I recommend that individuals work with a Certified Financial Planner (CFP). Certified Financial Planners must meet the education, examination, experience and ethics requirements. Never hesitate to ask the fees the financial planner or advisor will charge. We also recommend that you research the advisor through www.finra.org to see if any complaints have been filed against the individual.

What happens if someone dies without a will or a trust?

Joan Nelson Hook: When someone dies without a Will or Trust, anything that has a title – car, house, boat, etc. – must be retitled in the name of the beneficiary. This is the probate process, which is retitling from the person who died to the person who survives.

Also, if someone dies without a Will or Trust, he/she is said to have died intestate. Each state has laws about which relatives inherit property of a person who dies intestate. Property cannot pass to a charity or friends if one dies intestate. It is important to decide while you are alive, what property is to go to whom. That is what a Will or Trust does.

How often should I review my financial and estate planning documents?

Joan Nelson Hook: Documents should be reviewed each time there is a significant event in your life, i.e., marriage, divorce, birth of a child, move from one state to another.

Pat Jones: I recommend reviewing your investment and retirement portfolio annually to see if you are meeting your retirement or savings goals.

Who should I appoint to make decisions for me if I can no longer make them for myself?

Joan Nelson Hook: You should appoint someone you unquestionably, implicitly trust. Naming the wrong person as the agent under a Durable Power of Attorney could be license to steal.

Why is it important to have an Advance Directive or Power of Attorney?

Joan Nelson Hook: Basically, an Advance Directive or Living Will tells your healthcare providers what treatments you want or don’t want at the end of life. The Power of Attorney addresses your stuff – money, property, etc. However, the Florida Durable Power of Attorney may cover both. It is important to understand that both documents, the Living Will and Durable Power of Attorney, expire when you die. Upon your death, those left behind then consult your Will or Trust to see what wishes you have expressed to distribute your assets and to bury or cremate your body.

How much should I save or spend each year?

Joan Nelson Hook: I recommend that you save as much as you can and spend what you need to spend.

Pat Jones: It’s never a good idea to spend more than you have. A young person in their 20s may start out by saving small amounts, while someone in their 50s will start saving more as retirement years are approaching. Set a goal for yourself for savings. Set the savings plan up as a percentage of your income (1%, 5%, 10%, etc.) or a specific dollar amount each pay period.

How do I know if I will have enough to retire when I wish?

Pat Jones: I recommend that you review your retirement accounts and also be sure to check out the Social Security calculator. At www.ssa.gov, you can set up your personal account to verify your Social Security benefits. You can also calculate your Social Security benefits based on your earnings and the age you plan to retire.

Joan Nelson Hook: My suggestion is to speak to a certified financial advisor and develop a plan. You’ll want to review your changed status. Will you move to a smaller home? Will you need to spend less on transportation, clothing? These are important questions to consider as you develop your retirement plan.

Have I named the proper beneficiaries of my insurance and retirement accounts?

Joan Nelson Hook: Check regularly to see who the plan administrator has on file. After a divorce or death of a family member, people often leave a person named as beneficiary to whom they no longer wish to leave assets.

Pat Jones: Beneficiaries should be named on all of your accounts - checking, savings, retirement, investment accounts, annuities, etc. Whenever there is a life changing event, such as a death in the family, a divorce, or a disability, it is a good time to review the named beneficiaries on your accounts.

Should I put my child on my bank accounts?

Joan Nelson Hook: This is a tricky question. It’s not necessary to put your child on your bank accounts if you’ve named your child as an agent under your Durable Power of Attorney. Alternatively, you can name your children as POD (Payable on Death) which will avoid probate. But there are pitfalls and pluses to each strategy. Speak with a lawyer to achieve the best result for your family situation. Remember, if your child gets a divorce or incurs great debt, your bank account may be an available asset to his/her creditors.

Pat Jones: Please be careful with this one. If the only reason you are adding a child to your account is for them to access the monies upon your death, please consider naming the child or children as beneficiaries on the account or payable on death. The money would then be passed to them directly and the bank account would not be available to their creditors.

 For more information about financial and estate planning, visit The Hook Law Group or Jones CPAs.