This is part two of the two part series talking about how to plan now, and save yourself the stress and the headache later.

5. Have you thought about making investments? Even though the most common way to save money is opening a savings account, investments yield a higher return on your money. Look at all the different ways you are currently saving – i.e. through savings accounts, retirement plans, pensions, etc. – and see if there are ways you can earn more on this money. Speak with your attorney about ways you can diversify in order to see a higher return.
6. Do not, under any circumstance, cash in your retirement. This is tempting, particularly for those going through financial crisis. Incorporate other options into your financial planning; otherwise you are going to regret this decision in the future. This is also true for individuals losing a job or changing jobs. Learn what to do with your 401(k) or your pension, as well as how you can roll them over into other investment opportunities.
7. Are you familiar with IRA accounts? An IRA is an Individual Retirement Account. These accounts allow up to $5,000 worth of annual deposits, but you are able to open the account with less. For individuals ages 50 and older, the option for higher annual deposits is present. There are also tax advantages to having IRA accounts. Discuss all of this information with your bank or financial institution, as well as with your estate planning attorney. Be aware that there is more than one type of IRA account – a traditional IRA and a Roth IRA. Hold regular discussions to determine which is best for your financial future.
8. Plan ahead for Social Security: each year, the Social Security Administration sends out annual statement outlining what your benefits are going to be and when you become eligible to receive them. If for some reason you are not receiving these statements, call your local Social Security office and request this documentation. It should be included in with your financial planning, as well as your estate planning documents.

Remember, throughout the entire retirement planning process, there is no such thing as asking too many questions. If you are unsure about an investment, or don’t feel comfortable with them for any reason, set up a meeting with your financial institution or your estate planning attorney to discuss these concerns. This is your financial future, and it is important you feel comfortable with all the decisions made and all the plans put into place.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

One of the biggest mistakes young adults make leading up to their senior years is neglecting to set up a retirement account. Gone are the days of depending on Social Security benefits to provide enough income to meet day to day needs, if that ever really was the case. The need for funds necessary to cover living expenses, medical expenses, nursing home expenses, long term care, and anything else that comes up in terms of finances is an ever-growing reality.

This two part series talks about how to plan now, and save yourself the stress and the headache later.

1. Create a savings plan with goals: if you have a savings account already, don’t dip into it for any reason. Keep adding to it, and develop a habit for saving. While they say you should have between eight and ten months worth of expenses put away into a savings account, establish this account first (incase something should happen and you are unable to work), and then create another savings account to help you meet your retirement planning financial goals. Don’t look at this as an option, make a priority just like paying your electric bill or making a mortgage payment.
2. Understand your financial picture: in order for your financial planning to work, you must have a solid understanding with regards to what you are going to be spending on in your future. Set up an appointment with an asset protection attorney or an estate planning attorney to discuss your plan, and request information about the things you need to start planning for. They will help you devise a realistic plan, and ensure you do not leave anything out.
3. Save through your employer: if you are not self-employed, inquire through your employer about a retirement savings plan. Many companies offer a 401(k) plan, which allows you to contribute directly from your paycheck during each payment period. If you are unsure if this is a good idea or not, put your mind at ease once again by speaking with your attorney.
4. Does your employer offer a pension plan? Again, if you are not self-employed, you may be covered by your employer’s pension plan (if they have one). Inquire about this option, and see if this benefit is available to you. If so, request statements to keep with the rest of your financial records and other documents found within your estate plan.

For more tips, move on to part two of this series.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Planning for retirement is an important aspect of having a comprehensive estate and incapacitation plan in place for your later years.  It is a task best done sooner rather than later in life.  Some aspects to consider for retirement planning:

1.         Retirement plans play an important role in estate planning.

Any unused funds in a retirement plan are left to a beneficiary that was named on a form that was completed when you began the account.  Like other aspects of an estate plan, beneficiary forms should be reviewed on a regular basis to keep them up to date with life changes.

2.         There is no ‘one size fits all’ retirement plan.

Each retirement plan has advantages and disadvantages and should be chosen to meet your specific needs.  It is important to carefully evaluate your choices and seek the advice of a qualified professional rather than relying on the advice of a friend or family member.

3.         Contribution amounts should be based on your family and personal situation.

Determining your contribution amount is a complex decision, and can have many variables, including:

• Your current age;
• The age you wish to retire;
• Your family’s assets;
• Your retirement goals;
• Current contribution limitations.

4.         The nature of retirement planning is changing.

With life expectancies increasing and early retirements becoming the norm, it has become more likely to have a shorter working career and you will need to sustain yourself for more years in retirement than previous generations.  No longer can you simply depend on a company pension plan to sustain you in later years, you should consider a more ‘multi-dimensional’ approach.

Retirement planning is but one aspect of planning for your later years, there are several others that an estate planning attorney can assist you with, including incapacitation planning, estate planning, disability planning and even planning for the costs of long term care.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

There are a new set of challenges for retirement and estate planning.  People are living longer, costs are rising, and more.  It is now more important than ever to have a comprehensive plan in place to address the issues that seniors are facing.  An estate planning attorney can help you address the top four risks that can derail your plans:

Long Term Care and Health Care Expenses

With the average cost of a nursing home in Florida now topping $80,000, it is now critical to address nursing home and long term care expenses early in the retirement and estate planning process.  One process, known as Medicaid planning, helps position assets to preserve family wealth for seniors who may need to turn to this need-based program to help address care expenses, but planning needs to start early.

Outliving Your Assets

According to a recent survey, the average person plans for less than 20 years of post retirement living.  But in reality, the average person is living longer and looking for an earlier retirement.   Your retirement plan will need to support you longer, and this should be a critical aspect of retirement planning.

A Rising Cost of Living

Inflation is a fact of life.  While $80,000 annually may allow you a comfortable lifestyle today, what will it get you during retirement?  If retirement is 20 years away, you may need as much as $130,000 annually for a similar lifestyle.

Lack of Contingency Planning

As they say, even the best laid plans….Both retirement and estate planning can change as you age and your life changes, but working with a professional can help you address the ‘what ifs’ that can derail your plans, such as incapacity, disability and more.

An estate planning attorney can help you avoid the risks that plague those who choose to turn to do it yourself planning.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Part two of two

In part one we talked about re-visiting your IRAs from time to time, especially as life changes occur, to ensure that your beneficiary or beneficiaries are up to date.

Many people aren’t aware that they can:

• Name more than one primary beneficiary.
• Name a contingent beneficiary or beneficiaries, who will inherit your funds should you and your primary beneficiaries pass away.
• Use percentages to split up beneficiaries’ inheritances.

When you set up an IRA, most fund administrators don’t call much attention to these options.  But with a bit of planning and maybe some guidance from your Estate Planning attorney you may find that some of these options are good for you and your heirs.  Also, changing beneficiaries in an IRA account is a simple process.

Note also that if you have a Trust or a Will in place, that naming your beneficiaries in your IRA will take precedence over a Trust or a Will unless you designate in your IRA document that your IRA funds should go to your estate.

Let’s talk a bit more about options when it comes to primary beneficiaries.

First, it’s a good idea to be familiar with these two terms as you are naming a primary beneficiary: per capita; per stirpes.  These terms may vary from one state to another.

The per capita arrangement addresses a situation where you have more than one primary beneficiary named, and one of them predeceases you.  The intent is to provide for any children that the beneficiary may have had.  An example: you have a son with two children and a daughter with no children.  Each of your children is named a 50/50 beneficiary in your IRA.  Should your son die before you do, the IRA beneficiary arrangement would change so that it’s split into three equal parts instead of two: equal parts for the two children and the daughter.

The per stirpes arrangement (it’s sometimes called rights of representation) is similar to per capita.  It does not affect any additional primary beneficiaries but it does deal also with a beneficiary who dies before you do.  It simply arranges for the children of that beneficiary to share equally in the IRA funds that you meant to leave to that beneficiary.

When naming beneficiaries be sure that you avoid general phrases such as “all of my children” – always state full legal names and their relation to you.

And be sure to consult with your Estate Planning attorney, who can help you plan your IRA beneficiaries in light of your other Estate Planning tools.  Note, too, that IRA withdrawals have tax consequences, so professional advice is recommended.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Part one of two

Many working or retired adults have at least one IRA; some have several.  When you opened your account, especially if it was many years ago, maybe you didn’t focus too much on the section that asks you to name a beneficiary.

Actually, many IRA forms simply ask you to name “your beneficiary” and don’t bother to explain that you can name more than one, and that you can name both primary and contingent beneficiaries.

Note that contingent beneficiary action only kicks in if you pass away and the primary beneficiaries also pass away.  However, most people draw from IRA accounts on a monthly basis, not all at once (for tax reasons) so it’s probable that a contingent beneficiary can benefit from funds that are still left over in an IRA.

But as you grow a bit older it’s a good idea to think about what would happen to your IRA holdings if, say, you and your beneficiary should die at the same time.  Or maybe there have been changes in your immediate or extended family structure that call for a review of who you may want to receive your holdings should you pass away.

It’s important to note that if you have a Will or a Trust in place, those documents will not over-ride the beneficiary designation(s) in your IRA document(s) unless you name your estate or trust as your beneficiary.

What may people don’t know (and again those IRA forms don’t always make these options clear) is that you can name more than one primary beneficiary and more than one contingent beneficiary.  You can also spell out percentage disbursements to individuals.

If you want to change beneficiary designations in an IRA it’s easy and there is no cost; simply contact your account administrator then fill out and sign a form.  Be sure to get a confirmation.

It’s important to note that distributions from an IRA will have tax consequences for your beneficiaries, so check with your Estate Planning attorney.  Your Estate Planning attorney can also help you put your IRA in perspective as it relates to your other plans and options.

In part two we’ll look more into primary and contingent beneficiaries.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

If you would like to name anyone other than your spouse as the beneficiary of your retirement account, your spouse must sign a waiver.  And, if you live in a community property state such as Washington, your spouse must sign a prenuptial or marital agreement in addition.

Typically, we all name our spouses as the beneficiary of our retirement account.  However, sometimes we may want to name another individual, our revocable living trust, or a trust for our spouse.  In all these cases, the spouse must sign a waiver indicating that it’s okay for you to name someone (or something else, in the case of a trust.)  The waiver is an ERISA law.

• If the spouse doesn’t sign the waiver, your spouse has a right to all of the retirement account assets upon your death.
• If you get married with an existing account and fail to have your new spouse sign the waiver within one year, your spouse has the right to all of the retirement account assets upon your death.

In community property states such as Washington, spouses are deemed to own one-half of retirement account assets that were set up and funded during the marriage.  Therefore, at your death and unless there is a written agreement otherwise, your spouse has a right to community property assets, including your retirement assets.  This is a Washington state law.

In addition, if you wish to name a minor as beneficiary of your retirement account, don’t.  Instead, name a trust for the benefit of the minor.

Minors legally can’t inherit.  If you name the minor, the court will have to be petitioned.  The court will then name a guardian to oversee the funds on the minor’s behalf until the minor reaches the age of majority, age 18.  This is also state law.

Guardianships require annual accounting to the court which continues to supervise the guardianship until funds are dispersed.  This costs money and time.  So, simply avoid the problem and don’t name a minor as the beneficiary of your retirement account.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

The AARP Public Policy institute has released a survey that documents the impact of the recession on Americans aged 50-plus, and takes a look at the effect the recession has had on peoples’ plans for retirement, among other things.

As a whole, middle aged and older Americans took quite a financial hit as a result of the recession.

• Almost one-third of the survey participants experienced a substantial decline in the value of their homes.
• With the high rate of unemployment and the increase in living expenses caused by the recession, many people were forced to rely on their savings to cover their expenses. Just under 25% of survey participants exhausted their savings.
• Many people responded to financial pressures by saving less, or by not saving at all. Among those who did this, about 36% cut back on the amount of savings earmarked for retirement.

The concern for the survey participants was that, because of their age, they have less time to recover from the recession and prepare for retirement. The two main strategies that people seem to be choosing are to delay retirement and to work part-time in retirement.

If you’ve taken a financial hit as a result of the recession, and you’re wondering how you’ll be able to afford to retire, you should take a step that many Americans ignore: consider seeking the advice of a qualified, reputable financial advisor. He or she can help you make the most of your financial situation, and may very well be able to suggest some fresh strategies that can make all the difference.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

If you have a traditional IRA and you’re over age 70 ½, you know that there’s a minimum amount you’re required to withdraw from your account each year. If you don’t rely on IRA distributions to cover your living expenses, there are two drawbacks to these required distributions. They reduce the overall value and growth potential of your account, and they’re considered taxable income.

While there’s not much you can do about the first drawback, there is something you can do about the second: consider a charitable IRA rollover in place of this year’s Required Minimum Distribution (or at least a portion of it).

 In order to qualify a charitable rollover has to be made by a taxpayer age 70 ½ or older, it has to go directly to an IRS-approved charity, and it can’t exceed $100,000. However, if these conditions are met, then you’ll have accomplished two things: you’ll have supported a worthy cause, and you’ll have reduced your taxable income.

The charitable rollover isn’t limited to traditional IRA holders. If you have a Roth IRA, you can also take advantage of the opportunity. Although there’s no RMD  for a Roth, the rollover will still reduce your Adjusted Gross Income.

There is one catch: the provision of federal law that permits charitable IRA rollovers is scheduled to expire at the end of 2011. So, unless Congress acts to extend it the provision, you have a limited time to take advantage of it.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

So much of planning for retirement is focused on the financial, and for good reason: Americans are living longer than ever, and that means many of us will need to finance retirements that last twenty or thirty years, or even more. While it’s important to ensure that you’ll be able to fund your retirement, it’s easy to overlook some of the nonfinancial aspects of retirement planning.  Moneywatch recently published an article highlighting some of these nonfinancial concerns, including:

• Planning for Your Health: Staying healthy is a priority during retirement. Not only does good health mean the ability to enjoy your retirement years, it also benefits your bottom line by reducing medical expenses. With that in mind, it’s not only important to have a good doctor in case you get sick, you might also want to look into health care practitioners (nurse practitioners, nutritionists, personal trainers) who focus on general health and wellness.
• Preserving Your Marriage: Retirement can be a huge, and stressful, lifestyle change for a married couple. If you and your spouse have a hard time with the transition, you might want to consult with a counselor or a marriage and family therapist to help smooth the way.
• Changing Your Path: If your retirement plans include taking new life or career directions, it might pay to use the services of a life or career coach. He or she can help you think through your options and systematically address all the issues that might accompany your choices.

As you plan for a healthy and fulfilling retirement, you’ll want to put some of the focus on the nonfinancial concerns you’re likely to encounter.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.