Do You Need to Update Your Estate Planning Documents?

 The question should be WHEN do you need to update your estate planning documents, not IF. If you don't have estate planning documents in place yet, and you are over the age of 18, now is the time to get at least Durable Power of Attorney documents for both health care and financial decisions in place. These Durable Power of Attorney documents give someone else the ability to make decisions and take actions on your behalf during your lifetime if you are unable to do so for yourself. A simple Will is also appropriate for most individuals, even if you don't have significant assets or property.

When to Review Documents

If you already have documents in place, the common rule of thumb is to review your documents at least every 5 years. Changes in estate law or significant life changes may warrant a change in the meantime. Examples of these life changes are:

  • Birth of your first child (update will to name guardian(s) in the event that both parents pass away before the child is an adult).
  • Divorce
  • Death of a spouse
  • Second marriage
  • Inability of one or both of your Durable Powers of Attorney, named executor, or Successor Trustee become unable to serve
  • You desire changes to your plan (how you want assets distributed, to whom, by whom)
  • You have a significant health change

It is important to note that if changes to your estate documents are made, there are steps you need to take to ensure that they can be followed at a later date, when/if needed:

  • If you have a trust, make sure that appropriate assets are titled to the trust and that beneficiaries are updated on retirement accounts, life insurances, etc.
  • Make sure that your financial advisor has updated copies of all documents.
  • Most importantly, make sure that key family members/friends know that the documents exist and know where they are kept.

Keeping your legal affairs up-to-date, and making sure that your legal and financial plans are working in tandem, are vital to ensuring that your future desires are met. Work with your financial planner to discuss what documents and changes might be appropriate for you.

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

You should discuss any legal matters with the appropriate professional. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. C14-013670

Catching up with Center co-founder Estelle Wade

 Estelle Wade is an important part of our family here at The Center. She co-founded our firm along with Dan Boyce and Marilyn Gunther in 1985. While she retired from The Center and her financial planning career in 2002, Estelle has continued to be an important presence in our lives.

This month, Estelle returned to Michigan for a visit. She and her husband, Gene, moved to Scottsdale, Arizona shortly after retiring and have been on the go ever since. It’s hard to keep track of all the wonderful places they’ve visited over the last decade. They’ve also spent time watching their five grandsons grow.

Over the years, we’ve often referred to Estelle’s wisdom, particularly in our weekly Monday planning meeting. She coined the phrase “go-go, slow-go, and no-go” in retirement and was using it 15 or 20 years ago – well before it became a catch-phrase concept for financial media like it is today. Estelle and Gene tell us that her “go-go” retirement years have been terrific.

Estelle continues to be a shining example of the power of compassion and caring when it comes to financial planning. Her wisdom has always been matched by her warm personal connections and that is no different today. For any of you who worked with her over the years, Estelle is still asking about how you’re doing and what you’re up to. This is less about the dollars and cents and more about the issues that you’ve faced over the years. It’s so great to catch up with Estelle to be reminded of the critical importance that relationships have to the overall financial planning process.

To mark Estelle’s special visit, we hosted an evening at the Detroit Symphony Orchestra. This was especially appropriate since Gene Wade was principal French horn with the DSO for many years. More than 100 clients and friends of The Center joined us in honoring Estelle. And wouldn’t you know it? Although Estelle had been away from Michigan for twelve years, she knew more people in the room than anyone.

While the faces around here change from time to time, the culture and values cultivated by Estelle and our team partners many years ago continue to prevail. Across the miles we keep in touch with Estelle and Gene, but that can’t replace good old-fashioned hugs that they distributed liberally during their time here.

Estelle Wade is no longer affiliated with Raymond James. C14-01346

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New Rule for IRA Rollovers

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 At some point in your life, you’ll most likely have to complete what’s known as an “IRA rollover”.  It’s a pretty straightforward concept.  If you have a 401k with an old employer or an IRA with a firm and you want to move what you saved to different management, you complete a rollover.  Paperwork is completed and funds are moved over to the new IRA.  Simple enough, right?  Usually.  Rollovers are usually simple to complete, but if the ball is dropped, it can result in substantial taxes and penalties that can lead to a less-than-pleasant situation. Recently, the plot has thickened due to an IRS ruling now limiting the frequency of IRA rollovers.

Trustee-to-Trustee Transfer 

To keep things simple, most rollovers are completed by way of “trustee-to-trustee” transfers.  Meaning funds are sent from one institution to another, without the investor ever “touching” the money.  This may happen electronically or a check might be issued to the investor, made payable to the new financial institution, not the individual.  You are able to complete an unlimited amount of these types of transfers during the year. 

60-Day Redeposit

The other type of rollover allows funds to be sent directly to you in your own name or electronically to a checking or savings account, but you must deposit the money into an IRA or eligible 401(k) within 60 days.  If the funds are not deposited within the 60-day window, the distribution will be deemed as a taxable event, which could cost investors a significant amount in taxes and penalties.  This type of rollover is only permitted once a year. 

Rollover Short-term Loan

As my colleague, Tim Wyman, explained in a recent blog, this 60-day rollover rule could also be used for a short-term loan.  So, if you were closing on a new home and needed some cash because your current home wasn’t sold yet, you could take a distribution from your IRA and, as long as you put the money back into the IRA within 60 days, there would be no tax consequences – essentially, a short-term bridge loan.  Previously, the 60-day rollover was permitted once every 365 days for each IRA you own. 

Stopping the Rollover Merry-Go-Round

Think about this:  If you had multiple IRAs, you could feasibly take a distribution from IRA #1 and use funds from IRA #2 to pay back the first distribution within 60 days.  The 60-day clock would then start over with IRA #2.  If you did this every sixty days, you would only need six different IRA accounts to do the 60-day rollover “merry-go-round” and give yourself an ongoing tax-free loan from your IRA.  However, the US Tax Court recently ruled that you are now only allowed one 60-day rollover every 365 days as an aggregate for ALL of your IRAs.  Meaning no matter how many IRAs you have, only ONE 60 day rollover is permitted in a 365 day time period. 

It seems as if our tax laws change faster than Michigan weather.  There is always something new and it’s important to work with an advisor who is up to speed on the ever changing landscape in financial planning.  If you ever have questions about your personal situation, don’t hesitate to contact us. We are here to help!

Nick Defenthaler, CFP® is a Associate Financial Planner at Center for Financial Planning, Inc. Nick currently assists Center planners and clients, and is a contributor to Money Centered and Center Connections.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. You should discuss any tax or legal matters with the appropriate professional. C14-013208

The 8th Annual Fun Run Recap

The 8th Annual Kacy Wyman fun run/walk event took place Sunday May 4th.  Once again, over 350 walkers/runners participated in the event and raised much needed dollars to find a cure for Kacy’s rare disease called Cystinosis. Thanks to about 37 pills a day Kacy leads an active life and is a true inspiration for our family and community.

About Cystinosis

Cystinosis is a rare disease that is typically diagnosed prior to age 2. Cystinosis is a genetic metabolic disease that causes an amino acid, cystine, to accumulate in various organs of the body. Cystine crystals accumulate in the kidneys, eyes, liver, muscles, pancreas, brain, and white blood cells. Without specific treatment, children with cystinosis develop end stage kidney failure at approximately age nine. Cystinosis also causes complications in other organs of the body. The complications include muscle wasting, difficulty swallowing, diabetes, and hypothyroidism. It is estimated that at least 2,000 individuals worldwide have cystinosis, though exact numbers are difficult to obtain because the disease is often undiagnosed and/ or misdiagnosed.

For more information visit www.cystinosis.org

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Tax Update: Borrowing from Retirement to Buy a Home

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There may come a time in your life when you simply need some money. As a general rule, taking money from an IRA, 401k, or other retirement plan for “non-retirement” purposes is ill advised.  However, there can be some exceptions.  Perhaps you bought a home without selling your current one and need funds to bridge the closing dates.  The IRS allows you to withdraw funds from an IRA and avoid income taxes and a 10% penalty (if under age 59.5) by rolling the money back into the IRA within 60 days.  This can be done once every 12 months. The gray area had been whether the 12-month rollover applies to each separate IRA or to all of your IRAs. In February 2014 a court ruling stated that this rule applies on an aggregate basis for all of your IRAs.  Therefore, the strategy can still be used, but proper planning will be even more important in order to make sure the transaction is nontaxable.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a frequent contributor to national media including appearances on Good Morning America Weekend Edition and WDIV Channel 4 News and published articles including Forbes and The Wall Street Journal. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), trained and mentored hundreds of CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. You should discuss any tax or legal matters with the appropriate professional. C14-011297

Elder Care Planning: Difficult Conversations

 

People almost never change without first feeling understood."

Douglas Stone, author of Difficult Conversations, How to Discuss What Matters Most

There will be many times during your lifetime when you must approach difficult subjects with loved ones. It seems that some of the most difficult conversations for adult children are those conversations with older adult parents, especially when the discussions involve potential changes in lifestyle.

Some common difficult topics to discuss with an older adult parent involve:

  • Downsizing and decisions related to moving or bringing help into the home
  • Driving and transportation alternatives
  • Financial issues and financial capacity
  • Family relationships
  • End of life planning

Ideally you are able to have family conversations with your older adult parent before there is an urgent need for action. However, if this isn't the case, it is important not to rush in and demand that changes be made (i.e. need to move from current home, stop driving, change registration on accounts to joint or take over financial affairs by way of conservatorship or guardianship). Attempting to impose your wishes for change on someone who has been in charge of their own life for as long as they can remember will likely be met with negative reactions such as refusal, defensiveness, denial, and possible irreparable damage to your relationship. On top of that, the situation will remain unchanged and your fears for your parent’s safety and well-being will remain.

Even when the need for change may be urgent, attempt to approach your older adult parent with respect and a desire to give them as much control over their situation as possible. Consider using the CARE conversation model developed by Dan Taylor, author of the Parent Care Solution to help you to have meaningful and productive conversations with your older adult parent

CARE Conversation Model

Challenges - What challenges does your parent currently have or see in their future related to living situation, health/care, and finances?

Alternatives -- What options does your parent want to consider to address these challenges?

Resources -- What resources can you identify to address these challenges (family, financial, community, government, etc.)?

Experience -- What is the experience your parent would like to have as they age?

It may be helpful to hold a family meeting with the help of your financial advisor to discuss these very important issues. An impartial party, like your advisor, can help ask the difficult questions and ensure that all concerns are heard. Your advisor can also help to document the conversations and help to develop a formal action plan to address issues of concern.

 

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

Any opinions are those of Center for Financial Planning Inc. and not necessarily those of Raymond James C14-012699

Have you had “The Talk” about Health & Housing?

 There are plenty of conversations that can make us feel squeamish, reluctant, or just downright uncomfortable. As a parent of three kids ages 20, 18, and 11 I have gotten comfortable with “The Talk” you have with your children. For me, the first time through was given with a discernable quiver in my speech, but as they say, practice makes perfect.  Lately, “The Talk” I find myself having with a lot of clients is the one about Health and Housing. Frankly, I am not sure which one is easier, but I do know they are both important! 

What is your Housing Plan?

As comprehensive financial planners, we are concerned with helping our clients lead a more fulfilling life.  As you age, health and housing become critical elements that can determine the success of your retirement plan.  Clients used to ask, “Will I have enough for retirement?” Now what I hear is, “Can I afford the type of care and housing I want?” This “Talk” is so much more than a conversation about nursing homes.  Do you want to live in the three-story home where you raised your family?  You know, the one with all those stairs and the lovely yard that seems to need so much attention?  Have you had an expert come into your current home to suggest safety measures such as rails and bars in key areas?  Is a first-floor condo in your future?  Should you consider moving closer to one of the children? Should you buy or rent/lease? Do you want to involve your children or others in the conversation?

If you’ve asked yourself any of these questions, it's a sign that you need to have “The Talk”. Only you can determine the correct answers and, while “The Talk” can be a little intimidating and uncomfortable, the decisions will be much better if you develop a plan before a health or financial crisis. We are here to help.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a frequent contributor to national media including appearances on Good Morning America Weekend Edition and WDIV Channel 4 News and published articles including Forbes and The Wall Street Journal. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), trained and mentored hundreds of CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James C14-012690

Raymond James Alternative Investment Conferences

 Risk seemed to be the word on everyone’s lips at two recent Raymond James conferences. In early April, Portfolio Manager Angela Palacios attended a conference in New York dedicated to alternative investment. She attended sessions where experts spoke on topics including Venture Capital, Real Estate, and Managed Futures. The goal of many of these investment options is to seek to reduce overall portfolio risk over time. Because volatility has been very low over the past few years, investors have ignored some of these risk-mitigating investing options, leaving them behind the flashier equity market returns. Angela’s take-away from the conference:

This is precisely the time to be reminded why these alternatives are an important aspect of all portfolios.”

Center Partner Matthew Chope attended another Raymond James conference in April. The Las Vegas alternative investment conference echoed the theme of risk management. Matt attended sessions that broadened his knowledge about mitigating risk by adding specialized securities to portfolios. Matt said the strategy comes with challenges:

We want to find ways to mitigate risk without impacting long-term returns. I came back looking for ways to implement these ideas for our clients on a case-by-case basis.”

With a vigilant eye on the ever-changing landscape of investing, The Center team is committed to staying at the forefront of the latest strategies and then putting them to work for our clients.

Alternative investments are available only to those who meet specific suitability requirements, including minimum net worth tests. Please review any offering materials carefully, and consult with your tax advisor or accountant prior to investing, There are special risks involved with alternative investments, including investment strategies, and different regulatory and reporting requirements. There can be no assurance that any investment will meet its performance objective. Futures trading is speculative, leveraged, and involves substantial risks. Investing involves risk and there is no assurance that any strategy will ultimately be successful or profitable nor protect against a loss. C14-013296

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