Tag Archive | "will"

Retiring? 5 Ways to make sure that you are ready

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Retiring? 5 Ways to make sure that you are ready

I can’t count the number of articles that I have read outlining how to prepare for retirement. But what about once you reach retirement? I’m certain that we all hope to be living on the beach sipping a cool drink in the shade. But if the financial markets in the last few years have taught us anything then it is that the unexpected happens.

Rocking ChairNot having a steady source of new income exposes you to a new foray of potential problems. To make sure that you continue to be financially prepared, I’ve compiled a few suggestions.

  • Invest in income producing assets with an eye on capital preservation – During the accumulation and growth phase of life, the objective is to save money and make it grow. In retirement however, your objective is capital preservation and income. Therefore, you need to take the time to move the majority of your investments (stocks, mutual funds, bonds, real estate, commodities, currencies, etc) into assets or investments that are low risk (capital preservation) and pay out on a regular basis (income). Speak with a financial advisor to determine what the right mix is for you.
  • Complete your estate planning – Estate planning is the process by which you create the necessary vehicles to transfer the maximum dollar amount from your estate (the stuff you own when you pass away) to whomever or whatever you designate. So for example, proper estate planning helps avoid probate (see Judicial Nightmare) and death taxes. Basically, you are making sure that what you want goes to who you want it to go to without facing costly and timely court procedures and taxes.
  • Update your Last Will and Testament – Although, a Will is part of estate planning, I believe it merits its own bullet point. Different events in life will cause you to update your Will (a new baby for example). However, we tend to wait years in between updates, especially once we stop having kids. But with the addition of grandkids and potentially the consolidation of assets to prepare for retirement, your Will may be out of date or contain provisos that are now meaningless.
  • Make sure your children know what to do in case of an emergency – So assuming you’ve gone to all of the hassle of moving around investments, using a tax attorney to do your estate planning, updated your Will, and then something happens, will your children know what to do? Do they have any idea where the Will is or what your wishes are in the event you need resuscitation? Certified Wellness Counselor Karen O’Neil has actually put together a workbook outlining everything you should do so that nothing goes unforgotten. You can read more about her and A Guide to Getting Affairs in Order at her website.
  • Protect against identity theft and scams – Unfortunately, retirees and senior citizens are often targets of identity theft and scams. Use the same cautionary sensibility that got you where you are to guard against deviants. Also, strongly consider using credit monitoring to protect yourself. Several years ago, a laptop containing the private information of thousands of war veterans was stolen. That information was used to steal many of the identities. So invest the $10 a month to gain peace of mind.

As I mentioned above, retirement is about fulfilling your dreams, spending time with family, and generally just doing what you want. So make sure to take the necessary steps so that your retirement isn’t interrupted by costly mistakes.

Posted in Investing, Featured, RetirementComments (1)

4 Steps to financially prepare for your own death

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4 Steps to financially prepare for your own death

I know that the title of this post is somewhat morbid and not many people want to talk about death. However, we are all going to pass on at some point and just like anything else in life, we need to be financially prepared.

Final WishesUnfortunately, too many people don’t take the necessary steps to financially prepare for death. Often, the result is a mess for your family. To help you know what to do and how to get it done, I’ve created a simple checklist with information and resources.

Step 1: Get Life Insurance

By the age of 25, you should have life insurance. You probably have either debt or other financial responsibilities by this age. And if you don’t, then you soon will and term life insurance at this age is cheap.

  • Sufficient to pay all obligations at time of death – This calculation can be a little tricky since you don’t know when you will pass away or under what circumstances. However, you should leave at least enough to cover final expenses (everything related to the funeral and burial), a sum for possible medical expenses, and any debt obligations that you expect to have during the term of the policy. For example, I have 20 year term. So I’ve left enough to pay off our mortgage the day I die, the funeral, and possible medical expenses.
  • Cover the long term economic loss to your family – If you are an income earner, then your family is suddenly facing what can be a very large economic challenge. So using a time value of money calculator, figure out how much money your family needs today to be the equivalent of what you would have earned during your life. Also, make sure that you leave instructions on how this money should be invested and distributed in order to last a life time (do this in your will or estate planning).
  • Transition period expenses – Your spouse may have the desire or need to go back to school in order to gain skills relevant to today’s job market. So calculate and leave enough money to cover these transition period expenses.
  • Long term goals for your children – Do you have any long term goals for your children like a college degree? Hopefully, you are already using a 529b Account to invest money on a set schedule for your children’s education. If you are, then you have probably calculated how much your children will need in that account come college time. Again, use a time value of money calculator to determine how much you would need to put in that account today in order to have it fully funded when they are 18 and ready to go to college.
  • Convertible to permanent life insurance – Better known as whole life or universal life insurance, permanent life insurance does not have an expiration as long as you keep paying. You may want to convert part or all of your policy at some time in the future to permanent life insurance. So check to see if your provider offers this capability. It can be a nice option.
  • Specify a primary AND contingent beneficiary – A lot of people only specify a primary beneficiary, but if you outlive the primary beneficiary, then you need to have a secondary or contingent beneficiary designated.

Step 2: Create a Will

As Dave Ramsey says, “Not leaving a will when you die is just rude.” And it is. Your family is facing a time of grief and mourning. If they are faced with haggling over your belongings, then fighting is bound to happen. Make sure that your will covers at a minimum the following topics.

  • Designate an executor – The executor is responsible for executing your will. Or in other words, the executor resolves any claims against your estate (i.e. your stuff), carries out any special wishes left in your will, and distributes your property.  You will want to select someone who you have great confidence in. Someone that is very trustworthy. This person will gain control of your belongings and can steal them if he or she do desires. So be careful. Also, I recommend not telling anyone, including this person, who the executor is. That way, no one is offended if you later change the executor. Last, specify a second and third executor in case someone does not want the job.
  • Who gets what – Generally, you will leave 100% to your spouse. Though make sure to specify a secondary beneficiary after your spouse. If you have children, then this would be your children.
  • Custody of your children – Your spouse should be first on the list, then a second option in case you and your spouse are in a common disaster, and then a third option. Again, I recommend that you do not tell the second or third option that you have them in your will. That way, if you later change who is listed, then no one is offended that they were removed.
  • How your children are to receive their inheritance – If your children are minors, then you should not simply leave them their inheritance. You want to create a trust or give control to a custodian (ideally the persons who you are leaving your children to) until your children meet a certain criteria. For example, we specified that our children do not receive full control of their inheritance until they are 25 or earn a college degree, whichever comes first.
  • Do not create a will when you are mad – Unfortunately, I’ve seen this happen. Recently, I saw great heartache and resentment created due to a will that was written eight years before the person passed away in a moment of great anger. That will has soured many family relationships and the damage is near irreparable. So if you are angry, then wait until you calm down to create your will. And just don’t be vengeful. I promise, you won’t have the last laugh.
  • Adhere to the laws of your state – In order for a last will and testament to be valid, then there are certain sections or statements that have to be made. You will want to make sure that they are included. Wikipedia offers a starting point with its list of Requirements for Creation. The best way to ensure that you have complied with the law is to use a lawyer or LegalZoom.com. My wife and I used LegalZoom and highly recommend it. Actually, here’s my review of writing a will using LegalZoom.

*Side Note – Make sure that your will and your spouse’s will match in areas like custody of the children and second/third executor.

Step 3: Create a Living Will and Medical Power of Attorney

A Living Will, or Advance Health Care Directive, gives instructions on what you want to happen if you are left incapable of making decisions for yourself. For example, if you were in an accident that leaves you in a vegetative state, then you can leave directions to pull the plug and cease life sustaining treatment. Your Living Will is important because decisions like ceasing treatment may be too difficult for loved ones to make.

A Medical Power of Attorney goes along with the Living Will in that it gives someone the legal right to make medical decisions on your behalf if you are incapable. Basically, you are making it clear to doctors and anyone else who they should listen to. I know that my mother would be very upset if I were in a terrible accident and in a coma. She may want to make decisions on my behalf. However, my wife is the one who has that responsibility. The Medical Power of Attorney makes that clear.

Step 4: Plan Your Funeral

This is really a last step and may be too awkward for some people. However, think about it for a moment. You’ve just passed away and your family is just trying to deal with the loss. It can be very difficult to have to sit down and plan a funeral program. So ease their burden and do it for them in advance. This also helps ensure that the tone and feeling that you want at your funeral is represented.

Bonus Step: Get Life Insurance for Your Children

No one wants to fathom for a moment that you may outlive your child. I certainly don’t want to think about. However, the unfortunate happens from time to time.  Which is why this Bonus Step is actually very crucial. So when you setup your own policy either add a rider to your policy or get a policy for each child.

Let me give a little bit of advice on the amount. Many insurance policy riders are for about $10,000 for children. I submit that that amount may be insufficient. Let me illustrate an often overlooked “financial cost” with an actual example.

Several years ago, I listened to a man describe the days and weeks after his teenage son passed away. He was a sales rep for a company in Phoenix, AZ. He said that in the weeks subsequent to his son’s passing, he found that there were days when he arrived at work that he simply turned his chair towards the window, looked out over the city, and sat there lost in thought and grief, incapable of working for hours. This man’s family’s income was dependent on him actively selling. Fortunately, they had a life insurance policy for their son and the lost income from those days of grief were paid for or made-up by the life insurance policy.

So, make sure that you have enough coverage on a child to (1) pay for all final expenses and outstanding medical bills and (2) give you time to grieve.


Preparing for your own passing can be one of the most important things you ever do in your life. Make this your responsibility and don’t put it off onto your family.

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Review of writing a Will on LegalZoom

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Review of writing a Will on LegalZoom

LegalZoom LogoMy wife and I hand wrote Wills several years ago before we had any children or assets for that matter. With the birth of our second girl two weeks ago, we decided that it was definitely time to update our Wills. We decided to try LegalZoom.com this time to make sure that we didn’t miss anything. There are three packages available, shown below. The big difference between the packages is whether or not you believe you’ll need to make revisions in the next 30 days or over the next year. Also, the Premium package gets it to you faster. We selected the Standard option.

LegalZoom Pricing

What I liked

  1. Straightforward questionnaire – You simply fill out a questionnaire, review your answers, and then make your purchase. Meaning, you can complete the whole process before making the purchase decision. You will have to setup an account though.
  2. Helpful information – On several of the questions, I wasn’t real sure how to answer. LegalZoom offers additional information via a Help button on every question. Also, you can see on several questions how other people responded. If you find yourself completely confused, you can call a 1-800 number.
  3. Free revisions for 30 days – Apparently I married myself, at least according to my Will. I entered my name when I should have entered my wife’s name on one field in the questionnaire making me my own executor. Luckily, the cheapest option allows for free revisions for the first 30 days.
  4. Advanced clauses and provisions – As I was taking the questionnaire, I had the option to include certain clauses and make provisions that I had never heard of, which I greatly appreciated. For example, I included a clause that says my executor isn’t liable if they make an honest mistake. I also setup a provision that gives my wife the option to setup a Credit Shelter Trust if she so chooses. If my wife and I died in a common disaster, then I have a provision for a Testamentary Trust that manages everything left to my girls until they graduate from a four year college or turn 25 (you set the restrictions).

What I didn’t like

  1. Lost my information – If you don’t have time to finish the questionnaire, then you can save it and return later. Great feature, but it lost some of my work multiple times. Usually it was just some names, which wasn’t a big deal. But I had written several paragraphs that outlined specific instructions to my heirs that was lost and had to be rewritten. I was a bit frustrated.
  2. Hard to pick up where I left off – When returning to complete my Will via My Account, I found that clicking “Finish Your Order” didn’t return me to where I had left off but rather returned me to page one of the questionnaire and I had to advance myself through the questionnaire to where I had left off. Though, I found that if I navigated to the homepage first and clicked the link to complete my Will, it usually took me to the right spot. Very odd and annoying.


We paid $69 for the first Will and $59 for the second one (total $130.95). I’m glad that we used LegalZoom. We spent far less than we would have spent with a lawyer, but I still have the peace of mind that it was prepared correctly and according to my state’s laws. Also, the process was simple and quick. So what you’re really paying for is time and peace of mind. If you don’t already have a Will or need to revise yours, DO IT! Don’t leave loved ones with a mess if you die, it’s just rude. I liked and recommend LegalZoom, but whether you use them or not, get your Will in place.

Posted in Estate Planning, FeaturedComments (10)

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