estate planning

3 Mega-Celebrities Who Died Without A Will: Do Not Follow In Their Footsteps!

A will documents who gets what (and when) after you die. Without a will, state law doles out your belongings. In many cases, your assets may end up in the hands of complete strangers.  That’s exactly what happened to these three mega-celebrities:

  1. James Dean. Dean died intestate (without a will) in 1955 at the age of 24. State law awarded most of his meager estate (he had only made three movies) to his father – now most of that is in the hands of his father’s relatives. 

His father did use some of that money to create a foundation to maximize the commercial value of his name, likeliness, and image. Ironically, Dean has consistently been one of the top 10 highest earning deceased celebrities up until 2012. His income in 2015 alone was $8.5 million and he’s been deceased for over 60 years!

  1. Jimi Hendrix. Legendary singer and guitarist Jimi Hendrix died intestate in 1970 at the age of 27. Like Dean, the state awarded most of his estate to his father who created a family trust. 

By 2002, his father had grown trust to $80 million. Jimi’s father left the fortune to his adopted daughter. In turn, she created trusts for almost everyone in the family – except Jimi’s own brother Leon. Although he sued, he never got a dime of the estate now worth $175 million. Clearly, there’s another story there.

  1. Pablo Picasso. Famous painter Pablo Picasso died intestate in 1973 at the age of 91.  Given his age, it’s surprising that he did not assign a beneficiary to his estate (which today would have been valued at nearly $200 million). 

His heirs, including Paloma Picasso, battled in courts with everyone who wanted part of his fortune – including the French government who alleged that Picasso owed millions in back taxes. His children received the bulk of his estate in the end, but not without a great deal of heartache.

Despite the differences in age, the above celebrities left millions of dollars on the table and started an avalanche of lawsuits by those who wanted a piece of the pie. The takeaway? Do not follow in their footsteps!

Make Your Intentions Crystal Clear in a Will or Trust

Regardless of whether you’re a famous actor, singer or painter – or a regular working Joe or Jane, you have the power to make sure that your family, friends, or organizations get what you want them to have. The process is simple – make your intentions crystal clear by creating a will or other form of estate planning tool such as a trust drafted by an experienced attorney.
Call our office today to find out what you need to do to protect and provide those you choose and get a will in place.

Find more resources on our LinkedIn and Wordpress.

Can Family Caregiving Change Your Reputation (and Self-Perception) For the Better?

Are you the unappreciated black sheep in your family? Have you wished you could redeem your reputation and at the same time shift your own perception of yourself?

Consider taking on the role of family caregiver for an elderly parent, a niece or nephew, or even having a baby of your own.
One AARP commentator suggests that family caregiving may be a way for a child to recover from a negative image in the eyes of his or her family. In his article “How a Black Sheep Can Become a White Knight,” clinical psychologist Barry J. Jacobs describes how a child on the “outs” with her family made inroads by caregiving for her parent.
Jacobs suggests that caregiving may be the perfect time for caregivers to “seek to change their family reputations.” He describes, for example, a workaholic who cares for his disabled wife as well as a one-time rebellious teen who reconnects with her parents through caregiving.
Jacobs gives three tips for you, if you want to try to recover your image or reputation within your family:

  • Consistency is the key. Jacobs suggests that building dependability is important because family members will be on guard for errors, if you have not appeared reliable in the past.

  • Say you’re sorry and make amends. Even if you previously apologized for wrongs done, when you are taking care of a family member, your words may be better received and making amends, means not just saying you are sorry, but taking full responsibility, stating what you learned and showing how you are making it right.

  • Provide genuine loving care. Jacobs says that the primary purpose of taking care of someone you love is to reflect your values and not to gain recognition. You may need support here because caregiving is often a thankless role. Look for caregiver support groups in our area. Or contact us for referrals.

Work-Life Balance: A Personal Perspective

Pick up the latest copy of just about any business magazine, and you’re likely to find at least one article on work-life balance. Employers all over the country are talking about how to retain employees, particularly millennials, by enhancing work-life balance. But the conversation really can’t stop or start with employers.  It must start with you.
For the next two weeks, use a tracking calendar to track all of your waking time. It’s easy to do this using a google calendar that you set up specifically for identifying what you spend each hour of your day doing.
Then, at the end of the week, identify how much time you spent on self care, how much time you spent on family, and how much time you spent working. 

You’ll quickly be able to see where you might be out of balance.

While it may be counter-intuitive, investing in your self care first, family second and work third, is the equation that will keep you happier at home and at work, which ultimately translates to a more positive bottom line for you and your employer.

If you are out of balance, first and foremost, take personal responsibility by using a time blocking calendar to block time each week for self care.
This may mean putting time on your calendar for exercise, medical and dental appointments, pampering, and play.
Block this time and keep it as sacred as you would a meeting with your boss, or one of your co-workers or clients.
Then, block time for family activities. And notice what you have left over for work.

If you find that you cannot realistically complete your work in the time you have left over, consider having an honest and direct conversation with your boss (or yourself, if you are the boss), about how you can get more support.
Knowing what you want and asking for it are the first steps to taking personal control of your circumstances and creating the life you want, and it gives your employer the opportunity to have you doing your best work and retain you as a team member they want for the long-term.
How does this tie into estate planning for your family?
Proactively planning for death is one of the best ways we can come into alignment during life. We support you to make the most of your life by guiding you to face the reality of death through our estate planning process.
Your real wealth is not just your financial wealth, but includes your most valuable non-renewable resources, time, energy and attention. Through our planning process, we can help you reclaim what really matters.

Even Celebrities Like Queen Latifah Act as Caregivers for Their Aging Parents

We may not think about it often, but even celebrities take care of their aging parents. Actress, singer, and songwriter Queen Latifah plays an active role in caring for her mother, Rita Owens, who was diagnosed with heart failure more than 10 years ago.

Owens learned of her condition when she passed out at work one day. She moved from New Jersey to California to recover and be close to her daughter. There, Queen Latifah cared for her mom and acted as a coordinator for a network of healthcare providers, family, and friends.

After her recovery, Owens was able to return to her home in New Jersey. Now, the two are working with the American Heart Association to raise awareness of heart failure.

Queen Latifah’s story is far from unique, and can help you remember that if you are a caregiver of an elderly or sick parent, you are not alone. And there are resources available to support you.

AARP reports of a study that found more discontent in relationships between U.S. elderly parents and their adult caregivers than in five other countries. In the U.S., 20% of the relationships were rated as disharmonious. In the five other countries surveyed—England, Germany, Israel, Norway, and Spain—less than 10% were similarly ranked. Here in the US, it is sadly “normal” for caregivers of elderly or sick parents to feel frustrated, unappreciated, and resentful. But, it doesn’t have to be that way. With advance planning, strong communication, and family coordination, the potential for a disharmonious relationship can be greatly reduced. 

Are You Leaving Your Retirement Account at Risk Due to Poor Planning?

You’ve spent your entire life building up your retirement account. It may even be the biggest asset you’ll leave behind for the people you love.

If that’s the case, you may want to consider creating a special trust designed specifically to receive your retirement account assets in the event of your death.

If you leave your retirement account to the people you love outright, simply by naming them as beneficiaries on your retirement account rather than through a special trust, here are the risks:

  1. Some studies indicate 80% of retirement account beneficiaries immediately liquidate the account and frivolously spend the assets (and on top of using the assets in ways you may not agree with, they also lose significant tax benefits for these assets you worked so hard to create);

  2. If your beneficiary is married and does not properly handle the retirement assets you leave behind, and then gets divorced, your hard-earned assets could end up in the hands of the future ex-spouse of your beneficiary;

  3. If you are in a second marriage situation with children from a prior marriage, you may be setting your spouse and children up for conflict after you are gone, due to the way you have planned (or not planned) for the passage of your retirement account.

  4. If your beneficiary is ever in a situation where he or she has creditors or may have to file bankruptcy, and you’ve left your retirement account to him or her without a special trust, your retirement account would go to satisfy those creditors first.

Here’s the good news, it’s not hard to protect your retirement account for your beneficiaries with the right planning. We use a variety of special trusts to ensure the retirement assets you’ve worked so hard to build up throughout your life are passed on to the people you love so they are totally protected from a future divorce, creditors, bankruptcy and so that they do not create conflict for your loved ones.

Reduce the Impact of Caring For Elderly Family Members

How To Proactively Plan To Reduce the Impact of Caring For Elderly Family Members

Much has been written about our nation’s need to help mothers in the workplace. Many benefits, such as maternity leave and nursing stations, are present or well on their way towards implementation in many U.S. states. With employees working later in life, due, in part, to the rise in the regular Social Security retirement age, it is becoming increasingly important that we start to talk about the crisis facing the other end of the spectrum: America’s working daughters, many of whom are also mothers.

According to the Census Bureau, 44 million unpaid eldercare providers work in the U.S. Many of these people are family caregivers: The Bureau of Labor Statistics reports that in 2013-2014, “[t]here were 6.3 million elder care providers who cared solely for someone with whom they lived.”

The impact on working daughters is significant. In addition to lost wages, Social Security and retirement benefits drop when women earn less due to caregiving responsibilities. And that’s only for the women who are fortunate enough to stay in their current positions. Many must quit their jobs or take less demanding, lower-paying work so that they can care for their elderly family members.

By planning in advance, you can mitigate the risk that caregiving an elderly parent will have on your family.

It begins with getting comfortable talking with your parents (or your children if you are in the senior generation), openly and honestly about late in life care. When families work together there doesn’t need to be a burden, but instead the whole family can create a plan that most effectively uses the family’s resources to create an outcome that supports everyone.

What Happened to Prince's Estate?

The untimely death of superstar Prince has brought a surprising issue to American living rooms: estate planning. If current reports are correct that Prince died without a will, state law and the Court system will dictate who controls and inherits his sizeable estate. It is also likely that taxing entities will take a bigger bite out of his estate - costing his family millions, unnecessarily --  before anyone inherits anything.  All of this could have been avoided and there’s an important lesson here for you and your family.

Prince died on Thursday, April 21, at the age of 57, in Carver County, Minnesota. He had one half-sister, Tyka Nelson. He also had six half-siblings. Prince was predeceased by both of his parents and two of his half-siblings. He was divorced twice and had no living children.

Ms. Nelson recently filed documents with the Carver County probate court, asserting that she believed that her brother died without a will. She also asked that the court appoint a special administrator to handle Prince’s affairs until a personal administrator was appointed. A judge appointed a banking affiliate to serve in this role temporarily.

When a person passes away without a will, they are said to have died “intestate.” When this happens, state law directs the distribution of the person’s property, known as the “estate” through a process called probate. And, it’s up to the Court to decide who controls the estate.

If Prince indeed died without a will, these statutes will result in his siblings dividing his estate, including his half-siblings. This may or may not be what Prince would have wanted, had he made provisions himself.  And, his estate is likely to be overseen by a paid executor, instead of a family member or friend he would have chosen.

So, what does this mean for you?
Just like Prince, if you do not plan for your death, your family will get stuck in Court and could end up in conflict as well.  It’s an unnecessary expense to your family, causes additional heartache and grief, and is totally avoidable.

Let Prince’s death be an inspiration to you to leave your loved ones with a legacy of love, not a big mess to clean up. We can help.

The Final Log-Off: What Happens to Your Data When You Die?

What Happens to Your Data When You Die?

Take a moment and consider how much of your life you live online. If you are like most of us, you bank, pay bills, make purchases, connect with friends and communicate with just about everyone you know online. Think about all the digital assets you have accumulated - account information, passwords, email, photos, videos, etc. What happens to all of it when you die? 

Since you will not be around anymore to need this information, you may not care what happens to it. But chances are pretty good that your loved ones will care. There have been many stories of families trying to get access to a deceased family member’s photos and emails on social media sites - in fact, there have been so many requests that most of these sites have policies in place for family to gain access or deactivate online accounts:

Google. Last year, Google unveiled its Inactive Account Manager, which allows users to choose whether to name a beneficiary for their online account activity on all Google sites (which includes YouTube) or to delete it after a set amount of time passes during which the account is inactive. 

Facebook. Facebook allows family members to request that a decedent’s account be deleted or provides them with an option to “memorialize” the decedent’s page so it stays up, but is essentially frozen in time. Facebook requires you to provide a death certificate or a published obituary to accomplish this.

LinkedIn. LinkedIn provides an online form to remove a deceased member’s profile page from the site. You will need to furnish the member’s name, email address, the URL to their LinkedIn profile and some other information as well as a link to their online obituary.

Twitter. You must email Twitter a request to delete the account of a family member who has passed and mail them a copy of the death certificate, the obituary as well as a copy of your ID and proof that the decedent owned the account if his or her Twitter handle is different from their givenYahoo. You can have an account deleted by providing Yahoo with paper copies of the death certificate and the document appointing you are the executor of the estate or personal representative of the deceased along with a letter furnishing the Yahoo ID of the decedent and your request that the account be deleted. Yahoo will not transfer or preserve any data in the account.

But why make your loved ones jump through hoops to deal with your digital assets when you can take care of it yourself with these three simple steps:

List all your digital assets. You may already have a list of all your online accounts and passwords (who can remember them all?) so you’re halfway there. Add to that a list of documents on your computer as well as photos and other data that may be stored on backup or thumb drives.

Decide on keep or delete. Review your list and decide which items are worth preserving and which ones can be tossed. Not everyone wants their family to have access to all their digital files, so decide which files are worth preserving and which files can be deleted. Then tell your family.

Designate a digital executor. If you have already named an executor in your estate plan, you may want the same person to handle the disposition of your digital assets. If not, then designate someone in your will to handle this task. Do NOT include your accounts and passwords in your will! These are public documents and can easily be stolen by identity thieves.

Talking with Your Family About Your Estate Plan

Talking with Your Family About Your Estate Plan

Is it time to have “the talk” with your kids?  We’re not talking about a “birds and bees” talk but one that is equally important, perhaps more so.  Everyone has concerns about what will happen when they die.  Some people worry about their homes, cars, or money.  Others worry about their children.  Rare, however, is the person who actually wants to talk about these things with their families.

Opening these conversations with your family will be difficult, but nowhere near as difficult as it would be on your family in the absence of advance planning. Fortunately, there are steps you can take before the conversation - and during the conversation - to help it go more smoothly.

Preparation Is Key

Before the meeting with your family, consider the questions that may arise.  For example, if you are concerned that one child will be upset because you named another child executor, be ready to answer questions about why you made that decision.  It may be that the person you chose is an accountant and would be well-suited for the job, or it may be that you’re concerned about overburdening the other child.  Whatever the case, be prepared to offer your reasoning.  Your explanation will go a long way toward reducing any hard feelings and potential disputes after you’re gone.

Come Prepared for Business

Once you have your family together, it is important that you not only let them know what your decisions are, but also that it is important to you that they support you and each other.  Have copies of your documents available so your family can ask questions about them.

You should be prepared to answer potential questions.  And remember, this may be an uncomfortable topic of discussion for your family members.  If someone just can’t get onboard, remember that you are dealing with your life and your assets.  The ultimate decisions as to how you handle them are yours, and you can even terminate the meeting if necessary. Also, make sure your family knows that your decisions may change as time goes on.

Finally, remember the goal for this discussion is to provide your family with more than just a set of legal documents outlining your wishes.  By talking to them about your intentions you are helping them gain understanding, comfort, and even buy-in with your plan.

Protect Your Senior Relatives, Legal Strategies to Avoid Guardianship

As senior citizens continue to age, the likelihood increases that they will become physically or mentally incapacitated. Hopefully, people in such a situation have family members who step in and help keep their affairs in order. That is not always the case, however. If no one steps in to help, courts may be petitioned to appoint someone–a guardian–to look after that person’s very existence. This often happens  when a person becomes incapacitated by illness and cannot make decisions.

 What Can I Do?

For medical situations, a medical power of attorney - a document that identifies a person of your choosing (your agent) to make decisions for you in the event of your incapacity - should be executed. Your agent can be family member or friend. The key is to make sure it is someone you A power of attorney can also be used to appoint someone to deal with non-medical issues. This document can be set up to either take effect immediately, or only at such time as you are unable to make your own decisions. The former is known as a "durable" power of attorney, while the latter is a "springing" power of attorney. The durable power of attorney is the more effective of the two in that it requires no consideration of whether a person lacks the capacity to make decisions.

 Also, consider setting up a trust to administer your assets as you age. Unlike a power of attorney, with a trust, the trustee has sole control of your assets. And there are further legal steps you can take, such as establishing a limited liability corporation or a family limited partnership to manage your assets.

 All of these processes will prevent the need for a court to appoint a guardian for you if you become incapable of managing your own affairs. Those of us who are in our senior years should recognize the increasing chance of the need for someone else to make decisions. And those of us who have elderly parents or loved ones should help them think about these issues. The time to plan for potential incapacity is now. Once someone becomes incapacitated, it’s simply too late.

Pets in Your Will

For those of us who have pets that would be left behind after we die, there may be a desire to make arrangements for their well-being. Making provisions for pets in your will can only be done through the establishment of a trust. Pets are considered property and, as such, cannot be left money or property directly.
A trust is an entity that is established to receive and hold money and property for the benefit of designated beneficiaries which can be people, pets, organizations or other entities. There are two trust options for pet care.

Traditional Trust

With a traditional trust, you name a trustee to administer the money, and also appoint a caregiver for your pet. In your will, you designate money or property to be received by the trust. If life insurance proceeds are to be used, you would designate the trust as the beneficiary of the policy. Remember, you can divide up life insurance proceeds between multiple beneficiaries in the event you have other people or organizations you want to benefit.

Statutory Trust

A statutory trust can be specified within your will. It is a statement that indicates you are leaving money or property "in trust" to your pet. In this situation, however, the probate court is then responsible for appointing persons to serve as trustee and caregiver.

Another Option

A pet protection agreement is a less formal option for providing for your pet. This is a simple agreement with another person to care for your pet after your passing. This could also be used in cases of incapacitation, just as you would execute a power of attorney for other affairs. This option makes sense if, for example, your pet's life expectancy was limited, and not much money is in consideration.
Additional Tips
Trusts for pets can be easy to establish, but there are some things to consider, such as the following:

  • They make the most sense for animals with longer life spans such as horses and birds;

  • There is usually no need to leave an excessive amount of money;

  • Name a successor beneficiary for funds left after your pet dies, preferably not the caregiver;

  • Ensure the willingness of the trustee and caregiver to serve in those roles;

  • Name successors for the trustee and caregiver;

  • Do not make the trustee and caregiver the same person; and

  • Provide detailed instructions of your wishes for the care of your pet.

The Best Gift You Can Leave to Your Loved Ones

A Wisconsin woman, whose story was widely reported in media nationwide, has died. Heather McManamy, who was diagnosed with cancer in 2013, was told her condition was terminal in 2014.

She began reflecting on what the future lives of her friends and family would be like, after she passed away, and gained national popularity as the dying mother who had written cards for many of her daughter’s future milestones.

She particularly wanted to communicate life lessons and advice to her daughter, Brianna, who was only a toddler. So McManamy decided to write greeting cards for big events in her daughter’s life, to be opened as each occasion took place.

The Wisconsin mom left over 40 different cards for events in her daughter’s life, including formal events such as birthdays and her wedding, as well as informal ones, such as advice for bad days and her first breakup. McManamy also prepared a note for her husband to post on her Facebook page, which he did after her death in December. Her note showed her love of life and for her friends and family.

McManamy’s announcement of her death, like her greeting card notes to her daughter, left wise advice for its readers:

“From the bottom of my heart, I wish all my friends long, healthy lives and I hope you can experience the same appreciation for the gift of each day that I did. . . . Please do me a favor and take a few minutes each day to acknowledge the fragile adventure that is this crazy life. Don’t ever forget: every day matters.”

 McManamy’s memoirs will be published in book form in April 2016, “Cards for Brianna: A Lifetime of Lessons and Love from a Dying Mother to Her Daughter.”

McManamy’s positive attitude and writings also serve as sage advice of something we too often forget. Preparing for and facing death openly and honestly is a gift to our loved ones because it allows us to leave behind what really matters, not just what we’ve accumulated financially, but our wisdom, our love and our leadership.

That’s why we build Family Wealth Legacy Interviews into our estate planning process, so we can ensure you leave behind what really matters. Give us a call today if you’d love to ensure you leave a legacy of love to the ones you care about most. 

Trusteed IRAs: An Estate Planning Tool to Consider You may be familiar with IRAs

You may be familiar with Trusts. You may not be familiar, however, with the ‘trusteed IRA’, what many financial planners and estate planning attorneys are touting as an excellent and elegant financial planning tool, particularly for well-off baby boomers. It combines the best of the IRA world with that of the estate document world. However, current trends show that IRA withdrawals will increase significantly over the next decade, both in dollar amount and as a percentage of total retirement income, as the baby boomer generation enters retirement. Total IRA withdrawals increased to about $189.8 billion in 2007 from just $23.7 billion in 1988, according to one research firm Sabelhaus and Schrass, and rose to $227.5 billion in 2008. Similarly, although they held only 45.7% of IRAs nationwide in 2004, taxpayers age 55 and older controlled 72.7% of the total IRA assets. In a typical situation, a person who creates an IRA designates a beneficiary for the amount left in the IRA when the IRA creator or ‘grantor’ dies. The beneficiary is usually a spouse and or children. As a reminder, an Individual Retirement Account (IRA) – around since 1974 – is a kind of savings account with great tax advantages. It has become a popular way to put away money for retirement as the money is invested. Money put into an IRA is not taxed. Rather it is taxed on the backend when one withdraws money later in life. Further, the money grows tax-free when it is in the IRA. With traditional IRAs, a person must start withdrawing money when they reach age 70.5 in the form of RMDs (required minimum distributions). An individual, a selfemployed person or a small business owner, can create IRAs. Usually a person can only place $5,000 a year (if you are under 50) into an IRA. Statistics reveal that IRAs have been one of the fastest developing parts of the nation’s retirement market during the past ten years. It is guesstimated that IRA assets total some $5.5 trillion in assets and that IRA assets denote more than one quarter of the $19.5 trillion U.S. retirement market. Statistics also show that assets held in IRAs have increased on average 10%, from about $636 billion in 1990. No question that millions of Americans are using IRAs to save for their retirement. An estimated 48.9 million U.S. households, or 40.4%, owned IRAs as of 2012. Further, an estimated 39.4 million households owned traditional IRAs, making it the most common type of IRA. A total of 20.3 million households owned Roth IRAs, and 9.2 million U.S. households owned employer-sponsored IRAs such as SEP IRAs, SAR-SEP IRAs, or SIMPLE IRAs.

The problem, however, from an inheritance point of view that arises for the IRA creator is that when he or she dies, the beneficiary can withdraw part or all of the IRA funds at that time. That may be a cause of concern for the IRA creator since the beneficiary might be prone to squandering all the money and not ‘stretch’ and invest it out as the creator really intended or would have liked. Recent statistics suggest that heirs go through inheritances in about two years. Estimates also show that approximately 80% of IRA assets are withdrawn from custodial accounts by beneficiaries within two years of the grantor’s death. Most likely, however, is that the grantor intended the IRA to be similar to a long-term ‘pension’ plan for the beneficiary’s life, not a one-time payout. Further, even if a beneficiary does not deplete the IRA assets quickly, an IRA grantor normally does not have any say as to where the funds go after that first beneficiary passes away. The first beneficiary can control that. The remaining beneficiary or the wording of the IRA agreement usually specifies who would get the IRA funds. Thus, the following scenario could take place: A person passes away and a spouse is the primary IRA beneficiary. Nothing would prevent that spouse from later naming his/her new husband, if he/she remarries, or naming children from a previous marriage as the new primary beneficiary(ies) and, in effect, disinheriting the original grantor’s children. That is probably not what the IRA creator intended long term. What if there was a way, however, to control the ultimate beneficiaries, a way in which one could designate contingent beneficiaries that could not be altered by the primary beneficiary? What if one could continue growing that money tax deferred and make it ‘stretch’ out for several generations like a pension? For example, let us say that someone inherited a $150,00 IRA at age 50. After inheritance taxes and other expenses, the beneficiary may net $100,000 or so if he or she depletes it. What if, however, there was a way that that $150,00 could grow into $500,000 or more for the beneficiary long term? And continue to give the beneficiary RMDs, guaranteed monthly distributions akin to a pension or Social Security Enter the trusteed IRA or ‘individual retirement trust,’ an estate-planning device, which gives people considerable control and flexibility over their IRA funds. If one has a trusteed IRA, one cannot stop the required minimum distributions to a beneficiary with a trusteed IRA but one can set up a situation to stop any additional payments to the beneficiary or a complete withdrawal.

One could only have the beneficiary receive RMDs. In addition to dispersing RMDs to beneficiaries, a trustee could also set it up to disperse additional funds to a beneficiary for such things as health, education and welfare, similar to a spendthrift trust. Meanwhile the funds continue to do what they have always done – accrue tax deferred. The trusteed IRA could also be set up so that a beneficiary could withdraw all the funds — but only at a certain age the creator specifies. The trusteed IRA gives one much more flexibility and control over the ultimate recipient(s) of IRA funds. With a traditional IRA, if one dies and names a spouse as the primary beneficiary, that spouse can name a new spouse, if there is a remarriage, or children from a previous marriage as later beneficiaries, something that may have never been intended. With a trusteed IRA one can set it up so that a spouse will receive RMDs but when that person passes away, children or other specified beneficiaries will receive the remains of the IRA. In addition, if one has an IRA and becomes incapacitated and could not manage one’s own financial affairs, that person would not be able to manage the IRA and invest funds, make RMDs, or use the funds for support. A power of attorney would be required or even a guardianship/ conservatorship. With a trusteed IRA, a designated trustee would be able to manage funds, pay bills, oversee RMDs, etc. How is a trusteed IRA created? One needs to find a financial institution that offers this type of IRA planning. One needs to research and shop around to find professionals, including perhaps an estate planning attorney, who can help create the instrument and language that is desired and needed. Be warned, however, that Trusteed IRAs are not appropriate for everyone. Usually there should to be a significant amount of money in the IRA and the associated fees for setting them up are higher that with normal IRAs. Usually it is for IRAs worth at least $3 million that are right for trusteed IRAS. Now trusteed IRAS are cheaper than a traditional trust and over the long term probably won’t cause many Federal tax issues. Many banks and financial service providers are now offering trusteed IRAs. Typically, trusteed IRAs are for those folk that are planning on leaving IRAs to their heirs with the intent of creating long term distribution plans for withdrawals.

Retirement Planning Reality Check

The National Institute on Retirement Security states that the funds American workers have set aside for retirement are inadequate to the tune of trillions of dollars. Why? Well as the old adage goes, failing to plan is as good as planning to fail.

One of the first pitfalls in retirement planning is giving up before you ever start. Many people look at projections of what will be needed to retire and conclude it is simply out of reach, so why even try? In conjunction with this defeatist attitude about saving, they may also think Social Security will provide them with a safety net. But the cold hard reality is, Social Security provides nothing more than a meager income at best. It does, however, provide at least a part of what those projections tell you is going to be required.

Do You Already Have One?

A lot of employers provide retirement plans, which, together with Social Security, will get you closer to that projected number. Employer-funded programs these days are mostly what are known as defined contribution plans, which means the only certainty is the amount of money that will be contributed by the employer. Employees, normally, also contribute to the plan. Often these are in 401(k) plans, with which most people are familiar.

Your first objective with these plans should be to contribute enough of your earnings to build up a nest egg that meets your projected goal. The next objective is simply to invest wisely. These plans are administered by investment brokers that offer various investment strategies with varying degrees of risk. When you are a number of years away from retiring, you can take more risk and build the nest egg. As you approach retirement, however, money should be moved to more conservative investments that will hold value.

Other employers may offer defined benefit retirement plans. These plans specify a benefit that will be paid when a certain age and/or years of service plateau is reached. These plans are nice in that they relieve you of worrying about specific investments. They do not, however, typically pay a benefit that meets the projected retirement number.

Should You Do More?

Whether you are in a defined contribution plan, a defined benefit plan, or have no employer plan, the key is to start saving. Do not put it off until you are out of debt. Chances are you will never start. Take advantage of whatever tax-deferred saving instruments are available, such as Individual Retirement Accounts. But don't be lulled into thinking that those IRA's are a panacea, because you still have to pay tax on the withdrawals.

Finally, do not underestimate how much you might actually need. These days, many parents are still supporting adult children. In addition, as life spans have increased, many retirees find themselves having to care for one or more parents whose own retirement income has become very dated. Health care costs are also volatile. Medicare will not cover all your health expenses, and you never know what your health care issues may be. Consider long-term care insurance to cover some of these gaps.