If you haven’t considered yourself as a candidate for estate planning, you might be underestimating the value of your assets. In fact, you might think of items like your home, your car and your life insurance simply as part of the background of your life, but they are, in fact, assets – and valuable ones at that. And if you’ve underestimated your need for putting together an estate plan, you’re not alone. The unhappy result of failing to plan may be unnecessary fees, expenses and delays at a time when your loved ones are struggling to cope with loss.

“As many as 120,000,000 Americans do not have up-to-date estate plans,” says Clark McCleary, president of the National Association of Estate Planners & Councils (NAEPC). “That makes it one of the most overlooked areas of personal finance, but it’s also one of the most important. Estate planning protects you, your family and your family’s future, so it shouldn’t be put off.”

The complex nature of planning your estate might put some people off, but in that situation, a professional, Accredited Estate Planner (AEP) can simplify the process.  Working with a team of professionals ensures that your plans are streamlined, understandable and clear-cut, to avoid confusion down the road. The NAEPC makes it easy to find vetted professionals in your area with a search tool on its website.

The economic challenges of the past few years have shown many Americans the importance of saving and making well-considered financial decisions.  Even as awareness has grown, programs that support the development of financial literacy have also gained traction. As important as it is to create and maintain a household budget and use credit wisely, it’s equally essential to include estate planning as part of an overall understanding of personal finances.

For most people, the human element of estate planning is key, but it sometimes gets lost in the discussion of accounts and numbers. The most important thing to remember is that planning your estate well ahead of time – when you’re feeling your best and when you’re calling the shots – ensures that your goals will be accomplished.

Though young people often don’t feel the need to take action, a well thought out plan is the best way to ensure that your wishes, from guardianship of young children to charitable intents to caring for older parents, are carried out the way you want them to be. Your plans can always be updated as life’s inherent changes alter the landscape, but establishing a starting point that clearly represents your wishes is the first step that needs to be taken.

Giving yourself and your family peace of mind about the financial concerns of the future is a great gift. If you’ve never considered an estate plan, speaking to an Accredited Estate Planner can help shed light on how a plan can benefit you and your loved ones for years to come.

Provided by: ARA

Safe, secure, required

“As this deadline approaches, we’re urging the remaining 10 percent of federal benefit recipients who still receive a paper check to make the switch to electronic payments as soon as possible,” says Treasurer of the United States Rosie Rios. “The switch to electronic payments is a win-win for federal benefit recipients and for taxpayers. It provides a safer, more secure, more convenient way for Americans to access their federal benefits, while also improving government efficiency and delivering more than $1 billion in savings. The sooner everyone makes the switch, the sooner we’ll realize those benefits.”

The Treasury Department published a final rule in December 2010 to gradually eliminate paper checks for federal benefit payments.

Since May 1, 2011, all people newly applying for federal benefits, including Social Security, Supplemental Security Income (SSI), Veterans Affairs, Railroad Retirement Board, Office of Personnel Management benefits and other non-tax payments, have had to choose direct deposit or a Direct Express(R) card when they sign up for the benefit. March 1, 2013, is the final deadline by which all remaining federal benefit check recipients must receive their money electronically.

Ninety percent already use direct deposit

For the first time in recent history, the number of monthly paper check payments for Social Security, Veterans Affairs and other federal benefits has dropped to approximately 7 million. Currently, about 90 percent of Social Security and SSI payments are being made electronically, up from 85 percent in December 2010.

“We’ve come a long way in informing Americans that direct deposit is a faster, easier and more reliable way to receive their money, but there is still more work to do,” Rios says. “We are continuing that strong commitment to public education, aggressively reaching out to check recipients with information about how to easily make the transition and helping them through the change.”

Make the switch today

Federal benefit recipients can switch to electronic payments online at www.GoDirect.org or through the U.S. Treasury Electronic Payment Solution Center toll-free at 1-800-333-1795. It’s free to switch and takes less than 10 minutes.

Most people enjoy retirement even more than they expect. A recent study by The Hartford and the MIT AgeLab confirmed that 64 percent of people less than 10 years away from retirement said they expected to feel happier in retirement. And when those who were already retired were surveyed, 77 percent said they were happier in retirement than they were when they were working.

But that doesn’t mean retirement comes without its challenges. Through his research on the topic, Dr. Robert Pokorski, chief medical strategist for The Hartford’s individual life insurance business, has identified the four most common nonfinancial challenges that most retirees face:

* Climbing health-care costs. Health problems are more common during retirement, and the associated costs are often much higher than expected.

* Widowhood. It’s not pleasant to imagine life after the death of your spouse but three in four married people are widowed for five years or more.

* Needing long-term care for a chronic illness. Many retirees don’t plan on the need for chronic care but three in five men and four in five women will need care later in life.

* Outliving your retirement savings. More people are living to age 90 and beyond, and that’s a good thing. However, this also means more folks have to stretch their retirement savings over a longer period of time.

Addressing these challenges
Given these many challenges, most people find it difficult to save enough to guarantee financial security during retirement. Fortunately, there are new options that address these common issues.

Medicare supplement insurance can help address the challenges of rising health-care costs. Medicare supplement insurance pays for some health care not covered by Medicare, according to Pokorski.

Ways to address the other challenges Pokorski identified are available through new life insurance and annuity products that provide greater financial flexibility to help meet changing financial needs as people age. There are life insurance policies on the market that can provide funds for chronic care needs or be tapped as a source of cash during retirement. Any lifetime benefits taken from these products during life will reduce the remaining death benefit available to the policy’s beneficiaries. Annuities can be a source of guaranteed income that can last as long as the retiree lives.

Everyone has different financial planning needs and goals, Pokorski points out, so it makes sense to consult a professional financial advisor about your financial needs as you age. While you can’t predict exactly what challenges you may face in retirement, you can prepare for common issues and protect your finances by building as much flexibility into your financial planning as possible, he said.

Perhaps you have already chosen an executor , a person who will be administering your estate when you pass. This is a great start to getting your affairs in order to ensure that your family and loved ones receive your assets when you pass away. The next step is to have a frank conversation with the person you’ve chosen to handle your estate.

You may be in your 50s, 60s or even younger. You’re in good health and not planning on dying. No real rush. So the question comes up: when and how should I talk to my future executor, family and any other beneficiaries about my estate plan? 

The answer is simple: whenever you’ve determined that you have an estate, you should talk about it. By the way, it may come as a surprise, but unless you own absolutely nothing, you have an estate. 

Plan on having the conversation sooner rather than later. Realize it may not be a one-time conversation. As time passes, a chosen executor may bow out or even die before you do. You might remarry or your financial situation may drastically change. You may buy a new home or decide to own more pets. Each of these events could be reason to have at least a brief conversation with your executor.

To start the conversation with your future executor, you might want to say the following, according to financial planner and estate expert Myra Salzer: “I’m doing my estate plan and there has to be an executor. This is what’s involved and I’d like you to consider helping me. I also want you to know that if at any time this is too much of a burden for you, that you don’t have to do this. I can find someone else.”

Leaving your executor an out is very important, Salzer says. “The biggest disservice one can do in appointing an executor is not giving them a way to decline,” Salzer says. “For example, if the executor is being treated for cancer, it’s a burden to take on the role of executor as well, especially if there is no planning or warning of death.”

 During your talk with your potential executor, you should outline all of the duties of an executor:

• distributing assets according to law
• paying off debts
• handling insurance policies
• taking an inventory of assets that need to be dealt with
• handling the sale of the house or belongings.

You should give your executor a list of the people that will facilitate the process of settling your estate such as insurance agents, financial planners, family attorneys and accountants. The location of any lock boxes or house keys should also be disclosed. 

The next thing to discuss with your executor is how everything needs to be distributed. Much of this is set out in your will, but you need to discuss this in detail, even to the point of asking the executor if he/she feels comfortable with receiving something. Make sure that you tell them about the information they can find in your EstateLogic account, or anywhere else you keep your important papers.

It’s better to have somewhat superficial conversations with your family or intended beneficiaries about what is important to them. Don’t start some sort of sordid auction about who wants what; it will only cause hard feelings. Instead, feel out each beneficiary individually with a light question.

“What’s important to some may not be important to others. For example, you might have a collection of restored antique paintings, but not all of your heirs may appreciate them as you do. It’s interesting how some people relate to things with historic value while others are future-based and couldn’t be bothered with restoring pictures.”

Another example Salzer gives: You may have a motorcycle left over from your midlife crisis and would like to give it to your 16-year-old grandson who salivates at the very thought of that Harley. You want to make the kid happy, right? But if you don’t discuss how his parents might think of such a gift, you could be setting up a big family fight.

Expect most issues to arise over things with sentimental value, such as family photos and heirlooms that have no marketable value. My most treasured inheritance from my dad, a lifelong bricklayer, is his bricklaying tools. I use his trowels to this day for my own projects and it comforts me as I work to think of Dad.

Conversations like these get things out in the open. “It gives beneficiaries and heirs the opportunity to communicate with the estate holder, ‘This is what’s important to me. The greatest gift you ever gave to me was when you took me camping when I was 5 and I want the tent. I’m going to take my grandson camping.’” 

“If the conversation doesn’t happen, the estate holder doesn’t know that the old tent is important to that specific person,” Salzer says.

Once you get feedback from your heirs and you make your decision on who gets what, communicate your wishes through your last will and testament and your executor, who will, upon your death, distribute your assets based on your very well thought-out plan.

Being able to live a long and full life is good news, of course. But you will have to plan well to be sure that you don’t run out of income when you may need it the most. Here are some suggestions from Dr. Robert Pokorski, The Hartford’s chief medical strategist, for planning a retirement that may include a 90th birthday celebration:

Consider buying a life insurance policy with an optional longevity rider. While the main purpose of life insurance is to provide income to your heirs when you die, paying extra for The Hartford’s new LongevityAccess Rider will allow you to begin receiving installments of your own death benefit when you turn 90 and meet the rider’s eligibility requirements. You are then free to use it to simply enjoy life or to help ensure you don’t outlive your retirement savings.

A $500,000 policy works like this: When you reach the age of 90, you can elect to receive a guaranteed minimum withdrawal benefit of up to 1 percent of the death benefit of your life insurance policy. In this example, you may receive monthly payments of as much as $5,000 per month for eight years. Even if you eventually withdraw the entire death benefit, a guaranteed residual death benefit will be provided, subject to the terms of the rider. Your heirs will still receive 10 percent of the benefit – in this case, $50,000.

Consider purchasing an annuity to cover many of your fixed expenses later in life. Making conservative investments like this can help ensure that you’ll have a reliable source of income to cover such necessities as rent or mortgage payments, utilities, prescriptions, groceries, insurance and transportation. Any other retirement savings you have can be used to cover the cost of travel and entertainment or to pay for unforeseen expenses.

Postpone retirement. While you might consider putting off retirement to be a bad thing, you may decide to continue working in order to increase your monthly Social Security benefit. Delaying Social Security from age 62 to 67 will increase the amount you will receive each month by 30 percent. Postponing retirement will also increase any pension benefits you will receive in the future. You could even use the time to try working in a new field that has always appealed to you.

Plan for a health emergency. Nobody likes to think about becoming ill, but planning for health-care emergencies is a part of smart retirement planning, especially when you consider that the Centers for Disease Control and Prevention estimates that 70 percent of retirees will need to pay for chronic care sometime during their lives. The Hartford offers life insurance policies with its LifeAccess Accelerated Benefits Rider. If you become chronically ill and meet the claim criteria, you can use the money you receive from the death benefit any way you like. You can, for example, use it to pay a family member to take care of you.

Turning 90 is a milestone worth celebrating. With good planning, you could live a long and comfortable life without worrying too much about your finances.

If you are an adult with elderly parents, you may be used to getting periodic updates on the status of their physical health. When it comes to the state of their financial health, however, elderly parents may not be quite as forthcoming. Many adult children are surprised when they find that their elderly parents are actually struggling to make ends meet.

That’s why now may be the right time to take a closer look at your parents’ financial well-being. Here are some signs of possible problems:

• Stacks of unpaid bills
• Late-payment notices or calls from creditors
• A home that has fallen into disrepair.

According to Tim McDonald, head of Wells Fargo’s Senior Products Group, some seniors may simply forget to pay bills or deposit checks, don’t have enough income to cover their expenses or have become physically unable to write checks. Additionally, older homeowners may avoid taking on home repair projects because of costs.

“Most of the time, parents won’t let on when they’re having trouble managing things on their own,” said McDonald. “But there will be red flags around the house when money is an issue.”

That may be the time to call a family meeting, noted McDonald. “Those interactions can be a good way to learn about an elderly parent’s financial situation.”

A Reverse Mortgage May Be an Option

For many people, retirement means limited income and increasing expenses because of health care costs and prescription drug payments. A reverse mortgage loan can help seniors take care of their own needs and live more comfortably, and ease the concerns of adult children.

“Adult kids are taking care of their own families, and many are preparing to retire themselves. They shouldn’t have to worry about their parents’ finances at the same time,” added McDonald. “A reverse mortgage loan can bring everyone some peace of mind.”

How it Works

A reverse mortgage loan enables senior homeowners age 62 or older to convert a portion of their home’s equity into tax-free proceeds without the burden of making monthly mortgage payments like a traditional mortgage. Seniors can use the proceeds for any purpose, including daily living expenses, home repairs, prescription drugs or long-term health care costs.

Interest accrues on the amount of money withdrawn, but instead of the borrower making monthly payments like one does on a traditional mortgage, the loan balance is due when the last surviving borrower no longer occupies the home as his or her primary residence.

Said McDonald, “The last thing retirees want to do is worry about money. A senior can turn to a reverse mortgage loan and receive funds in one lump sum, monthly proceeds or as a line of credit.”

As a key consumer protection, all potential borrowers must participate in an education session with a HUD-approved counselor to determine if a reverse mortgage is the best option for the senior. All borrowers are responsible for paying all taxes and insurance as well.

A New Type of Reverse Mortgage

One of the latest developments in reverse mortgage products is the HECM Saver, which allows homeowners access to a lower portion of their home equity with lower upfront costs than a standard HECM reverse mortgage. The lower cost comes by way of a significantly reduced upfront-mortgage insurance premium.

HECM Saver loans have different qualification requirements than traditional home equity financing, and offer the same features and benefits of all FHA-insured HECM reverse mortgage loans, such as flexible payout options, no income or credit score qualifications and no monthly mortgage payments as compared to a traditional mortgage.

Additionally, Wells Fargo currently offers no origination or servicing fees on all its FHA-insured HECM reverse mortgages, including the HECM Saver. The reduced fees mean senior borrowers will save more money upfront and over the life of their loans.

Social Security and Medicare Are Not Affected

Proceeds from a reverse mortgage loan are not considered income, so Social Security and Medicare are not affected. Local program offices or attorneys should be consulted to determine how or if reverse mortgage proceeds might affect eligibility for other programs, such as Medicaid.

There are no income or credit score qualifications, except when reverse mortgage loan proceeds are used for purchase transactions. In this instance, verification of income sufficient to pay real estate taxes, insurance and maintenance costs on the borrower’s new property is required. If the departure residence will be retained as an investment property or second home, verification of income sufficient to pay any mortgage payments for that property is also required.

A consumer-friendly website with a reverse mortgage calculator has been created by the bank to help seniors learn about reverse mortgages, download free educational materials and calculate an estimate of how much a reverse mortgage could provide them in retirement.

Say you don’t have a trust.  Instead, all you have is a Will, and it states that when you die, all of your property is to be given to your children in equal shares.  Eventually this will be accomplished, but your Will guarantees that a probate proceeding will be required in order to transfer title of your home to your children.  Here’s why:

At some point, your children will want to sell your house and split the proceeds equally.  They’ll hire a real estate broker, find a buyer, and the sales documents will be in escrow.  However, before the sale can be finalized, a title insurance company will need to conduct a records search at the local county Recorder’s Office to make sure that title is properly passing from your children to the buyer.

Unfortunately, the last recorded deed will show that you’re still the title owner of record.  You’re now deceased and can’t sign another deed to transfer title from yourself to the buyer.  Your kids tell the title insurance company that they own the house because that’s what your Will states.  But the title insurance company must refuse to accept the Will as evidence of ownership (anyone can forge a Will), and will instruct your children to hand the Will to a judge and open up a probate case.

Now the whole process becomes a public matter.  Most states require that notice of the probate petition be published in the local newspaper.  The court may require proof that all of your relatives to the second-degree have received notice of the probate case and hearing.   Everyone and their brother get the opportunity to show up in court and throw in their two cents.  Only after the judge is convinced that every relevant person has had an opportunity to be heard, will s/he sign a court order that states that your children now own title to your house. 

This may take a year or more, and will certainly involve court costs, publication costs, attorney fees, and executor fees.  What a nightmare.  And it all could have been avoided if a proper trust had been created and title of your home transferred into the trust.

In a simple living trust, you’re called the “trustor” (or “settlor”) – meaning you’re the person who created the trust and gave written instructions on who receives your estate when you pass away. 

You’re also called the “trustee”.  You manage the trust and actually own title to trust property in that capacity. 

Lastly, you’re the “beneficiary” and entitled to use all of the trust property for your benefit while you’re alive.

So, how do you transfer title of your house into the trust?  Simple.  A new deed is created and recorded in the local county Recorder’s Office. 

Let’s say your current deed states that the owner of your house is “Sally Smith, an unmarried woman”.  The new deed would state that “Sally Smith, an unmarried woman, grants full title to Sally Smith as the trustee of the Sally Smith trust”.  It’s that easy.

Remember that every trust must have a “trustee”.  Your trust will name someone (one of your children, for example) as your “successor trustee” – to take your place when you pass away.  Your successor trustee will then record a simple document that identifies your trust and the fact that you named him/her as your successor trustee, along with a certified copy of your death certificate. 

In their new capacity as successor trustee, they now have full legal authority to do exactly what the trust instructs them to do: divide the house (via sale) into three equal shares for your children.  There’s no reason to ask a judge for permission to do anything. 

That’s how a trust “avoids probate” and how you transfer title into your trust.

George F. Dickerman is a Riverside, California elder law attorney.  His practice focuses on advocating for, and protecting, the elderly and their loved ones.  For more information, please visit: elder-law-advocate.com.

Currently, 8.2 million Americans have purchased long-term care insurance that pays for home care, for assisted living or for care in a nursing home.

Such long-term health care costs are not usually covered by medical insurance, by Medicare supplement plans or group insurance. For seniors on Medicare, the long-term care benefits are limited–especially when considering the cost of a debilitating disease such as Alzheimer’s.

Fortunately, long-term care insurance may be more affordable than you realize. Here are a few tips on how to save from the experts at NAIFA:

• Take advantage of the tax deduction. The Internal Revenue Service recently increased deductibility levels for long-term care policies. If you own a business, you may be able to deduct 100 percent of the cost. As an individual, your premiums may be partially tax deductible. Deductibles are based on age and range from $330 to $4,110.
•  Compare policies. Each insurer sets rates based on the type of client it seeks to attract. The company with the lowest cost for a 55-year-old married couple may not be the least expensive for a 55-year-old single individual.
• Stay healthy. Individuals with few or no current health conditions pay less for their long-term care insurance.
• Involve your significant other. Discounts are offered to married adults and even unmarried adults who live together if both individuals purchase insurance coverage.
• Add a deductible. Deductibles on long-term care insurance policies are typically referred to as the Elimination Period, the number of days you choose to pay fully until your benefits for qualifying care begin. The longer the Elimination Period, the lower your annual premium.
• Set a defined benefit period. Deciding how long you will need the benefits could save you more than 50 percent of the cost.
• Share benefits. A shared care benefit gives couples a pool of money to work with.
• Pay your premium once a year. Monthly premiums typically cost 7−8 percent more.

Provided By: NAPSI

Many are also finding that taking advantage of what preplanning has to offer may be easier if they do their homework about what they may want and the options available before they sit down with the experts.

Although some people may find it hard to talk about advance planning, it can be harder on your family if you don’t talk about your wishes for your final arrangements. One way to tackle planning without feeling overwhelmed is to break up the process into more manageable steps.

Memorial or Funeral Service–Focus on the type of service you would want and how you can personalize that service, whether it’s more traditional, somber or a unique celebration of your life. Decide if it should be a more intimate or larger gathering and consider music, readings or any other unique element to personalize the service.

Burial or Cremation–If burial is your preference, consider purchasing a cemetery plot in advance. If you decide on cremation, remember to make plans for permanent placement of the cremated remains. Consider a mausoleum or columbarium to give your family a physical place for visitation and reflection. This also prevents the possibility of the ashes being misplaced or discarded in later years if kept with a family member.

Select a Funeral Home–Compare the options available and the quality of service provided. With the right funeral provider, you can feel more confident that your wishes will be fulfilled and you won’t feel uncomfortable asking questions or rushed into making selections.

Funding Options–One advantage of prearranging your funeral is that you can lock in today’s prices for products and services that may be more expensive in the future. It’s best to work with a professional to understand the particular laws and regulations that protect those funds.

Flexibility–Remember, not all providers offer the same services. For example, if you use a Dignity Memorial provider to prearrange your funeral or cremation service, you can enjoy the security of National Transferability of Prearranged Services. Should you move more than 75 miles from where your original arrangements were made, your prearranged funeral services are fully transferable and will be honored by any Dignity Memorial provider throughout North America.

Provided By: NAPSI

According to experts, retirees should give plenty of thought to matters such as health coverage and seek a combination of income and asset protection to ensure their savings will last throughout retirement.

John Haver, senior vice president at Mutual of Omaha, offers the following information to help retirees plan well for their financial future.

Health Coverage

Many people age 65 and older choose Medicare as their health coverage.

However, even with Medicare, out-of-pocket costs such as deductibles, coinsurance and co-payments can add up. That’s why some 10 million Medicare participants also choose a Medicare supplement insurance policy to fill many of the gaps in coverage. Medicare supplement insurance even works with Medicare to automatically process claims, which means participants don’t have to worry about submitting claims themselves.

Guaranteed Source of Income

When a steady paycheck is gone, retirees often find they miss the dependability of an income to cover monthly expenses. A single premium immediate annuity (SPIA) can help. This is an insurance product that can guarantee a source of income in exchange for a lump sum premium payment. You can select an SPIA to provide income for a certain number of years or even for the rest of your life.

Asset Protection

According to Haver, retirees need to plan for long-term care needs. With longer life expectancies, the likelihood of needing some sort of long-term care services increases. And, with the cost of such services on the rise, self-funding long-term care is unrealistic for most people.

“Long-term care insurance protects your assets so you don’t have to watch your life savings whittle away. It provides coverage for all types of services whether at home, in an assisted living facility or a nursing home,” Haver said.

Provided by: NAPSI