Planning Process

How Trusts Can Help You Control Who Gets What [VIDEO]

· May 18, 2016 · Planning Process · , · No Comments

A lot of people think trusts are only for the super-wealthy which is not entirely true. A trust can benefit anyone who wants to manage how they leave their money to their family. The trust can give you control over who gets what and when, how they get it, and why.

A trust can benefit anyone who wants to manage how they leave their money to their family.

Create Containers for Your Assets

Trusts are like containers you can put things into. You the grantor can place assets like your house, life insurance policies, investments and other possessions into a trust. These assets become property of the trust and are managed by your trustee.

Pick Someone You Can Trust

You appoint a trustee to ensure your wishes are carried out. As grantor, you decide who receives the assets inside your trust. Typically, your spouse, your children, grandchildren and charities of your choice are the beneficiaries who receive the assets held in trust.

Some trusts are designed to manage who receives your assets and others may offer tax planning benefits

Decide Where Your Money Will Go

When you create a trust you determine how the funds inside your trust will be used and when they will be dispersed. For example, you may want to use assets in your trust to jump-start your children’s careers when they are 25 or supplement their retirement when they turn 60. You may want to pay college tuition expenses for your grandchildren or provide annual scholarships to your Alma Mater. Your appointed trustee ensures everything is managed according to your instructions.

There Are Many Kinds of Trusts

It’s important to know there are different kinds of trust for different purposes. Some are designed to manage who receives your assets and others may offer tax planning benefits.

Here are some examples:

  • Living Trust
  • Special Needs Trust
  • Marital Trust
  • Credit Shelter Trust
  • Irrevocable Life Insurance Trust
  • Charitable Remainder Trust
  • Qualified Personal Residential Trust

Make sure you work with financial experts so that your trust is properly structured to carry out your specific intentions. A trust can offer you and your family many financial advantages. You’ll want to talk with  an estate planning attorney find out how you can create a lasting legacy for those you love the most.

For more financial planning tips, download my free report: “8 Steps to Organize and Optimize Your Financial Life”. Thanks for reading!

Why You Need a Will and How to Create One [VIDEO]

· May 11, 2016 · Planning Process · , , · No Comments

Many people are not sure if they need a will because they don’t think they actually have an estate or they simply procrastinate in getting the document drafted. If you are wondering whether you have an estate or not, you most likely do. Simply put, if you own anything you have an estate. So, if you have any assets held outside qualified accounts (i.e. savings accounts, a house, cars, etc.) or have people you care about and/or rely on you (i.e. children, a spouse, etc.), you should have a will. The problem is most adults in America do not have a will. In fact, 58% of American adults don’t have one! So, here’s what you need to do to avoid being part of the 58%.

58% of adults in America do not have a will!

What is a Will?

A will is a legal document that defines who is going to take care of your children and outlines what to do with your assets when you’re gone. If you die without a will the state will decide who will inherit your assets. Having a will allows you, not the government, to control your assets after your death.

What is Involved in Creating a Will?

To do it right, I suggest working with a lawyer to make sure your will is structured properly so that it is valid and enforceable.

Here is a checklist of things to address:

• Name A Guardian: If your children are minors make sure you name a guardian for your kids.

• List of Assets Make a list of all your assets and where they are.

• Determine Values: Determine the values of your real estate, insurance policies, investments, business ownership, personal possessions and anything else that has economic or sentimental value to you or your family.

• Who Will Get Your Stuff?: Decide who will receive these assets and when (Typically your surviving spouse will be your primary beneficiary).

• Provide Instructions: Provide instructions on how and when to distribute assets to your children, grandchildren, and the Charities of your choice.

• Executor or trustee: Name an executor or trustee to oversee and carry out your instructions.

• Power of Attorney/Medical Directive: Grant the power of attorney to someone you trust to make health care and financial decisions if you are not able to make these decisions yourself.

• Update Regularly: Update your will every three years to make sure it fits your present situation and conforms to current state laws. This way you know your family, your loved ones, and your assets are all protected.

TIP: Update your will every 3 years to make sure it fits your present situation and conforms to current state laws.

When you have people who you care about and who count on you it’s best to prepare for the unexpected. So, if you don’t have a will in place now is the time to get going. If you do have a will but haven’t reviewed it in some time you may need to make updates.

Get Organized!

Getting all your stuff in order is one of the first steps you’ll need to take in order to prepare your will. The video below shows the online system we use to help our clients get organized. It helps gather the information you need to give your attorney so they can create your will. As a thank you for reading this post, I am offering free access to this great system to help you get started. Simply send me your email request at sweiss@weiss-financial.com and I’ll get you up and running quickly.

For more financial planning tips, download my free report: “8 Steps to Organize and Optimize Your Financial Life”. Thanks for reading!

Top Money Posts: Week of February 15, 2016

· February 17, 2016 · Planning Process · · No Comments

College and Taxes seem to be on everyone’s mind this time of year so I figured I’d share a few articles on both topics worth checking out:

From Around the Web:

I’d love to hear from you! Feel free to post a comment in the “Leave a Reply” box below if you have thoughts or questions about any of the articles I’ve shared, or simply click the “Like” button.

You can also let me know if you are enjoying the content I am sharing and if there is anything in particular you’d like to read about or have me write about. My goal is to send you these round ups once a month and write at least one original piece of content per month. Thanks for reading!

 

How to Protect Your Loved One’s Financial Future

· February 8, 2016 · Planning Process · , , , · No Comments

Financial Planning Tip: February

As Valentine’s day approaches, we are thinking about the one’s we love and coming up with ways to show them we care. Once you have finished purchasing your cards, flowers and chocolates take some time this month to think about those people and whether you have appropriately planned for them. It may not be the most romantic thing to do, but now is a great time to sit down and determine if you have the proper insurance coverage to protect your loved one’s if you are not around to provide for them or if you become incapable.

To get started, ask yourself a few questions. Have your needs changed over the years? Did you get married? Did you have a child? Did you retire? Are you thinking about retirement? Have you taken on other financial responsibilities that would negatively affect the people you care about should you pass away too soon? The answers to these questions will help you figure out if you need to make some changes to your coverage. You should periodically evaluate your life insurance coverage, disability insurance coverage, and determine if long-term care insurance is appropriate. There are many resources online to help you get started. For example, to get a basic idea of how much life insurance coverage you may need, use this online calculator as a starting point. Thinking about your own demise is no fun at all, however with smart planning you will sleep better at night knowing you have taken the right steps to protect the one’s you love most.

Watch this video for even more tips:

If you would like to discuss your particular situation and how much insurance you may need to protect your family, feel free to contact me at sweiss@weiss-financial.com.

For more financial planning tips download my free report: 8 Steps to Organize & Optimize Your Financial Life. It’s packed with helpful advice, useful tips and valuable resources.

To learn what I can do for you visit www.weiss-financial.com.

How Big Should Your Emergency Fund Be?

· February 2, 2016 · Planning Process · 2 Comments

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Having an emergency fund is essential to a successful financial plan. You won’t truly understand how important it is to your financial health until the day comes when you absolutely need it. So, how much do you actually need in your emergency fund?

Rule of Thumb

The basic rule of thumb has been 6 months of take home pay or 6 months basic living expenses. However, the problem with rules of thumb is that they don’t take into account the nuances of people’s lives. The size of your fund will depend on your personal situation and financial needs. Figuring this out is more art than science.

When I work with a client I actually do use a general rule of thumb as a starting point to determine how much they should have. I try to figure out if they should save 3, 6, 9, or 12 months basic living expenses or 3, 6, 9 or 12 months take home pay. What’s the difference? Well, for one thing saving for basic expenses may be a lot easier than saving for take home pay. However, saving only for basic expenses could mean a lifestyle change when you need to start tapping that fund. Whether you can make those changes is an important question you’ll need to ask yourself when building your fund.

Questions to Ask Yourself

Take some time to think about the list of questions below. The answers to these questions will help you figure out what your emergency fund goal should be:

  • How much do you take home in your paycheck every month?
  • What are your basic monthly expenses (i.e. groceries, mortgage, car payment, insurance, utilities, etc.)?
  • What are your extras every month (i.e. shopping, entertainment, dining, vacations, children’s activities, etc.)?
  • How much are your insurance deductibles?
  • Are you married or single?
  • Do you have anyone you are financially responsible for?
  • How secure is your job?
  • If you lost your job how difficult would it be to replace your income?
  • How long would it take for you to get another job?
  • Are you retired?

Now let’s take a look at my more broad rules of thumb and who they might be good for. Keep in mind, the examples I use below to illustrate a hypothetical emergency fund assume saving for basic living expenses. You will need to increase that amount if you want to save for take home pay.

The 3 Month Fund

In my opinion, this is the bare bones amount anyone should have in their emergency fund. When you are just starting to build a fund your goal should be to set aside 3 months of basic monthly expenses.

Who is this good for?

  • Anyone just starting to build an emergency fund (Having a small fund is better than having no fund at all!)
  • Someone in the early stages of their career
  • Someone who does not have any dependants or still lives at home

Example:

  • Monthly take home pay = $3,000
  • Monthly living expenses = $2,500
  • Emergency fund = $7,500

The 6 Month Fund

Once you’ve started to make some money and have responsibilities like auto payments, rent, student loans, etc. this should be your goal.

Who is this good for?

  • Anyone with financial responsibilities
  • A married couple with no children
  • Someone who many not have a mortgage

Example:

  • Monthly take home pay = $5,000
  • Monthly living expenses = $4,000
  • Emergency fund = $24,000

The 9 Month Fund

At this point in your financial life, you may be married, have children and have a mortgage. You have accumulated a good deal of financial responsibilities and a disruption in income will cause a significant lifestyle change.

Who is this good for?

  • Someone with a mortgage
  • A couple who have similar salaries
  • A married couple with children
  • Someone who feels they can land another job within 6 months of losing their current job

Example:

  • Monthly take home pay = $7,500
  • Monthly living expenses = $5,000
  • Emergency fund = $45,000

The 12 Month Fund

When your financial situation gets more complicated and your financial responsibilities have grown, you may need to consider this larger emergency fund.

Who is this good for?

  • A married couple with unequal incomes
  • Someone with a mortgage
  • Someone who is concerned it will take awhile to replace their income if they lost their job
  • A married couple with children
  • Someone who is fairly risk averse and knows they will sleep better at night if they have a large emergency fund

Example:

  • Monthly take home pay = $10,000
  • Monthly living expenses = $8,000
  • Emergency fund = $96,000

Bonus: The 24 Month Fund

This fund is reserved specifically for retirees. It covers a much longer time frame because the emergency fund serves a different function during retirement than it does during your working years. If you are taking systematic withdrawals from your investment accounts to fund your retirement, you should have at least 24 months of basic living expenses set aside to use during market downturns. This money should be in safe and highly liquid investments like traditional savings accounts, CD’s, money market accounts or money market mutual funds.

Who is this good for?

  • Retirees taking systematic withdrawals from investment accounts
  • Retirees not wanting to make lifestyle changes during market downturns
  • Retirees not wanting to reduce their withdrawals during market downturns

Example

  • Monthly withdrawal from investments = $2,000
  • Emergency fund = $48,000

5 Important Things to Remember

  1. Never invest your emergency fund in equities
  2. Always keep the money for your emergency fund in safe, highly liquid investments like traditional savings accounts, CD’s, money market accounts or money market mutual funds.
  3. If you deplete your fund, make it a priority to build it back up
  4. To assist in building your emergency fund, set up a separate, designated savings account and have automatic transfers deposited into that account
  5. Avoid using a line of credit as your emergency fund

As you have seen, there is no one right way to build an emergency fund. I’ve illustrated what I believe to be a prudent approach and provided a sample of possible solutions. As such, I tend to be fairly conservative and risk averse in my recommendations as far as emergency funds are concerned. To determine your ideal emergency fund, I encourage you to honestly answer the questions above and closely examine your personal financial situation. What is good for you may not be the same as what is good for someone else.

To learn what I can do for you visit www.weiss-financial.com.

Best Personal Finance Books of 2015

· January 6, 2016 · Planning Process · , , , , , , , · No Comments

I often get asked for book recommendations, so I thought now would be a great time to pass along my favorite personal finance books of 2015. I’ve broken down my list into a few categories so you can find one right for you, but, truthfully, all of these are fascinating reads. As you’ll see, my favorites are those that manage to take complicated financial topics and explain them in an easy, approachable way.

Books

Best for Parents:
The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money.
by Ron Lieber

This was actually my personal favorite, probably because, being a parent, it had the most direct impact on my life. Any parent today can attest to how difficult it is to make our kids understand and appreciate all they have. Stuff is so easy to acquire these days that they often take for granted all they have. Lieber outlines many strategies for dealing with this modern parenting issue, however, his take on allowance was the most intriguing to me. The premise is in order to teach our kids about the value of money, give them a weekly allowance not tied to chores. The theory is if you want to teach your kids how to budget, save and value their money, give them a weekly allowance. If you are trying to teach your kids about discipline and the value of hard work then focus on their studies, extra curricular activities and sports programs. I had my doubts, but figured I it was worth testing out since my previous attempts at giving allowances to my 6 and 9 year olds fizzled out after a short period of time. Surprisingly, it worked for us. I started giving my boys $5 a week in April. My youngest son initially spent the money as soon as he got it. My oldest son decided he would save his money to buy a new Wii. Between his allowance, birthday gifts, and various holidays he accomplished that goal quicker than my wife and I expected. The deal is they can use the money for whatever they want. Toys, apps, video games, books, whatever, it’s their money. My youngest soon learned the value of saving and stopped spending his cash so quickly. The bonus for my wife and I was that the kids stopped asking for stuff all the time. After 4-6 months they realized they could get whatever they had enough money for (and mom and dad approved of). If they don’t have enough money they now know they need to save. What they haven’t totally figured out yet is that they could make more money if they started doing some work around the house! The author suggests paying the kids for tasks you might pay someone else for. I got my youngest son to do some weeding in the summer but so far I haven’t had much additional success. I’m not saying this will work for everyone but both my wife and I were very surprised at how quickly the kids learned to budget, save and learn the value of a dollar. Definitely worth a read.

Best For Planning:
The One-Page Financial Plan: A Simple Way to Be Smart About Your Money
by Carl Richards

I believe everyone should have a financial plan. The problem is if you don’t know where to start, are just beginning your career, or you are not working with a Certified Financial Planner, you probably haven’t created one. This book outlines how to focus on the big picture and create a simple, workable financial plan. It clears away all the noise that distracts most people from creating a plan and helps you stick to the important stuff and get you headed in the right direction.

Best For Everyone:
Happy Money: The Science of Happier Spending
by Elizabeth Dunn, Michael Norton

This is my second favorite book I read in 2015. Even though it was actually published in 2013 I kept in on my list because of how good it is. The idea behind it is that money CAN actually buy happiness… if you use it wisely. Their research revealed some fascinating things like luxury cars often do not provide more pleasure than economy cars, and that spending your money on experiences will give you more happiness bang for your buck than buying stuff. No doubt, after reading this book you will question where you are currently spending your money and if you are getting the most happiness you can out of those purchases.

Best For Pre-Retirees:
Get What’s Yours: The Secrets to Maxing Out Your Social Security
by Laurence J. Kotlikoff

Alright, admittedly this is the least exciting book on the list. I mean, who really wants to read a book about Social Security during their free time? Nevertheless, Social Security can be an incredibly confusing maze of options. Knowing which claiming strategy is best for your situation can be overwhelmingly difficult for most people without enlisting help. Choosing the wrong strategy can cost you tens of thousands of dollars over your lifetime. This book explains the options in plain english and uses real world examples to help it make sense. I strongly recommend this book for anyone trying to decide when to start claiming social security. One caveat, with file and suspend having recently been eliminated, some of the advice is no longer relevant.

Want some great financial planning tips? Download my free report: 8 Steps to Organize & Optimize Your Financial Life. It’s packed with helpful advice, useful tips and valuable resources.

To learn what I can do for you visit www.weiss-financial.com.