THE EARLIER YOU CAN GET THE INFRASTRUCTURE IN PLACE AND THE MINDSET AND ACCUMULATION PLAN IN PLACE , THE BETTER .
Colin S . Grahl Managing Partner , WGG Wealth Partners says Michael Hackard of Hackard Law . While he doesn ’ t prepare trusts , he often sees the results of poor planning as an attorney who litigates estates torn by elder abuse and family disagreements . He says the benefit of a trust is that in the event of your death , your assets can pass to your specified heirs without going through probate .
“ It ’ s said that if you don ’ t do an estate plan , the state does one for you ,” Hackard says , “ and their planning is not all that good because it takes a lot of time , unnecessary expense and public exposure . Doing a living trust makes a lot of sense .”
Christeen Reeg , a principal and financial advisor at CAPTRUST in Folsom , agrees , noting that probate costs 5 percent of the assets involved . “ That ’ s a lot of money on a million dollars that you ’ re going to pay to nobody ,” she explains , adding that a living will is also an essential part of estate planning . “ You save families . I have siblings ( as clients ) who don ’ t talk to each other because their parents didn ’ t tell them what the situation was going to be upon their death and that ’ s unfortunate .”
Grahl and Reeg both say that getting rid of debt should be a priority for those getting closer to retirement . Even if your assets don ’ t exceed the $ 500,000 or so that many advisors require before taking you on as a client , there are other options such as Fidelity or Vanguard that will help develop excellent financial plans at no cost for customers who invest with them . Senior agencies can also offer guidance and help put people in touch with CPAs and estate planning attorneys who volunteer their time .
“ I definitely think five years before retiring is the time you really need to meet with a financial advisor , not the year before , so that they can help you start to put all the pieces together ,” Reeg says . She adds that her job often includes helping those who come to her change their habits .
“ People who were savers can ’ t stop saving — they still want to save , even though they ’ re retired — and spenders can ’ t stop spending ,” Reeg says . She ’ ll work with spenders to help them stay out of debt and save more money , but she also encourages those who are in a solid financial position to use the money they ’ ve accumulated . “ I have to really work to get people to spend money and enjoy their money and travel and have fun with it . It isn ’ t natural to some people .”
Health care costs , especially those associated with long-term care , can be devastating . Grahl says premiums for traditional long-term care policies have increased by as much as 80 percent over the past three years as providers leave the market . He and Reeg agree that a relatively new product called a hybrid policy , which is a universal life policy linked to long-term care coverage , is worth looking into as early as possible . Typical plans cover $ 3,500 to $ 5,000 per month in long-term care costs for a set term , such as three years , but pay out unused funds in a death benefit that can exceed the cost of the plan .
Annuities , which Grahl likens to buying a pension and says can provide some financial surety , are part of a shift in the insurance industry toward offering more benefits for those who are living rather than only at death . “ We say life insurance is for those who worry about not living long enough ,” Grahl says . “ Annuities are for those worried about living too long .”
One element of estate planning that is often overlooked , Reeg notes , is that as life spans increase and people outlive spouses , they are often entering into unexpected new relationships . “ Estate planning issues have changed because we ’ re living longer and we are either remarrying or repartnering at a time when someone ’ s already been married 50 years and never expected that they would only be 70 and want to have another relationship in their life ,” she says . That raises questions about sharing resources and creates a host of other potentially contentious decisions , such as whether a house owned by one spouse
70 comstocksmag . com | June 2022