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Estate Planning

Thursday’s need-to-know money news

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Wills-in-TexasToday’s top story: Tips for writing your will. Also in the news: The most important thing to ask your financial advisor, how to spend the rest of your FSA money, and how to calculate your tax refund by checking out your pay stubs.

5 Tips for Writing Your Will
An unpleasant but absolutely necessary task.

The Most Important Question To Ask Your Financial Advisor
No, it’s not “can you make me rich?”

3 Tips to Use Remaining Health Flexible Spending Account Money
Don’t let your FSA money go to waste.

3 Ways to Calculate Your Tax Refund Using Your Pay Stub
Get a preview of next year’s bounty.

How to Stop Making Excuses and Finally Get Your Finances in Order
Excuses are for wimps.

Get free financial advice

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Zemanta Related Posts ThumbnailNeed some free, one-on-one financial help from a qualified advisor with no strings attached? Check out the Financial Planning Days being offered around the country throughout October and November.

These events are brought to you by a host of reputable organizations: the Certified Financial Planner Board of Standards, the Financial Planning Association, the Foundation for Financial Planning and the U.S. Conference of Mayors. Kiplinger is the national media sponsor.

Given how hard it can be to find good, un-conflicted advice–let alone getting it for free–these sessions can be a real boon. Even if you don’t sign up to talk to a CFP, you can attend one of the informational workshops on various financial planning topics.

Sound good? Check out this link to see if there’s an upcoming event in your area. LA and OC peeps: your events will be held Sunday Oct. 18, so register now!

Thursday’s need-to-know money news

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images (2)Today’s top story: Organizing your finances in just two minutes a day. Also in the news: How to retire in comfort, estate planning mistakes boomers should avoid, and what to look out for when buying an older home.

How to Organize Your Finances in Just 2 Minutes a Day
Surely you can spare two minutes.

Get These 4 Big Things Right to Retire in Comfort
Focus on the essentials.

Estate Planning Mistakes Every Boomer Should Avoid
Don’t go it alone.

5 Things to Look Out for When Buying an Older Home
Avoiding a money pit.

How Investing Affects Your Taxes
Don’t get caught off guard.

Q&A: Maximizing retirement benefits

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Dear Liz: I don’t know where to turn. My husband is 76. He has a federal government pension and collects Social Security but he has only a $17,000 life insurance policy. We still have a $229,000 mortgage and no savings other than my small 401(k). I am 59 and also a federal worker. Do you have any suggestions or guidance for me? Is there such a thing as an insurance policy that could pay off the mortgage if he passes before me?

Answer: Buying a life insurance policy on your husband that would pay off your mortgage isn’t necessarily impossible, but it would be expensive and might not be the best use of your funds. You can explore that option, of course, but you also should research your own retirement resources and what’s likely to remain after he’s gone.

Will your husband’s pension make payments to his survivor or will it end when he dies? How much will your own federal pension pay you when you retire? How much will Social Security pay you, and how does that compare with your survivor’s benefit (which is essentially equal to what your husband is receiving when he dies)? What are your options for maximizing those benefits?

You also need to know if your Social Security benefits could be reduced because of your public pensions. Some federal employees and employees of state or local governments receive pensions based on earnings that were not subject to Social Security taxes. When that’s the case, their benefits could be reduced by the Windfall Elimination Provision or the Government Pension Offset. Most federal employees hired after 1983 are covered by Social Security, but just in case you should check out the information at http://www.ssa.gov/gpo-wep/.

Once you have an idea of your income as a widow, you can compare that with your expected expenses and see whether continuing to pay your mortgage will pose a burden. If that’s the case, you might consider downsizing now to a place you could afford to buy with cash or a much smaller mortgage. Reducing your expenses also could help you build up that 401(k), which will help provide you with a more comfortable retirement.

Establishing a relationship with a fee-only planner now will help you prepare for the future and give you someone to turn to for financial advice should you be left on your own.

Q&A: Inheritance vs Reality

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Dear Liz: I have really bad credit. I always have because I have never really had any money. So now I am inheriting a lot of property and some cash. Most of the property is rental properties that bring in income. There are no mortgages on them. I may want to sell one or two of them and buy a four- or five-unit apartment building so I can live in one and rent the others out. How do I do that? Unfortunately, it isn’t happening as quickly as it should since one of my siblings thinks it is all hers. So I have to go through litigation first.

Answer: Let’s start with some reality checks.

The kind of litigation you’re talking about can get expensive fast and eat into the estate’s assets. If your sister happens to be the executor, she may be able to have the estate pay for her defense. You’ll need to come up with the money to hire your own attorney to advise you, but often in these cases a settlement makes a lot more sense than a family war.

The next reality check has to do with your bad credit. Yes, it’s harder to pay your bills on a low income, but people do it. In fact, income is not even a factor in credit scoring formulas, since how much money you make doesn’t predict whether you’ll pay your debts. If you have bad credit, it’s because you borrowed money that you didn’t pay back on time, not because you “never really had any money.”

What will change if you get your hands on a substantial amount of money is that your creditors will renew their efforts to get paid. You’ll probably need some more legal advice to deal with those efforts and to avoid getting sued.

What probably won’t change, without some effort, is your poor money management skills. If you don’t improve, you’ll probably blow right through your inheritance. So you should add to your list of advisors a fee-only planner who can help you with budgeting, rebuilding your credit, investing and retirement planning. Seeking good advice and following it are the key to making money last. You can get referrals to fee-only planners from the Garrett Planning Network, http://www.garrettplanningnetwork.com. Another option is the National Assn. of Personal Financial Advisors at http://www.napfa.org.

Thursday’s need-to-know money news

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download (1)Today’s top story: Are you behind the financial times? Also in the news: How to better organize your bills, talking with your family about inheritance, and learning the five parts of your credit score.

6 Signs You’re Behind the Financial Times
Still writing checks?

4 Ways to Better Organize Your Bills
And kiss late fees goodbye in the process.

On Inheritance, UBS Urges Families to Break the Silence
The importance of difficult conversations.

Everyone Should Know the 5 Parts of a Credit Score; Do You?
Let’s find out.

5 Ways to Make Peace With Money
What to do when money is your nemesis.