Future Trends Regarding Estate Planning Preparing the Next Generations Susan Shockey, PhD, CFCS, CPFFE Certified Personal and Family Finance Educator Financial Security Across the Lifespan

Financial Security Across the Lifespan Trends: 1. About 70 % of planned estates come unglued after the estate transitions. 2. Most givers are not concerned about the size of their estate, but the impact of their wealth on their unprepared heirs. 3. Traditionally financial advisors focus on preparing assets for the givers, little is done to prepare heirs to receive and manage resources. \ Financial Security Across the Lifespan

Financial Security Across the Lifespan Trends: 4. Heirs seek information, but parents provide little information. 5. Families are encouraged to develop “Family Mission Statement” to develop a unifying core to estate planners. 6. Companies offer digital estate planning of organizing digital assets: email, online bank and business accounts, social media accounts, electronic files. \ Financial Security Across the Lifespan

Financial Security Across the Lifespan Situation: Baby Boomers will pass an estimated $30 trillion on to the next generation. Facts: In 2017 an individual could leave $11 million without paying Federal Estate Taxes ($5.49 million to an Individual) Individuals are increasingly responsible for their own wealth preservation. \ Financial Security Across the Lifespan

Obstacles to Estate Planning 1. Failure to plan for death 2. Outdated Plan 3. Overlooked Provisions 4. Improper Tax Planning 5. Improper Ownership of Assets 6. Failure to plan for disability, illness, changes in employment 7. Failure to consider inflation 8. Lack of liquidity 9. Psychological factors, such as dealing with mortality and procrastination

Today’s Focus – Estate Planning Learn more & prioritize actions related to: Planning Ahead Talking About Financial Legacy Financial Tools Protecting Your Finances A Plan for Making Decisions

Term “Estate Planning” Encompasses the Accumulation Conservation Distribution of an estate Overall Purpose – Develop a plan that will enhance and maintain the financial security of family members

Planning Ahead

Planning Ahead Know Where Financial Information is Stored Encourage Family Members to have a Will Discuss Estate Plans Know Loved-ones’ End of Life Wishes Discuss Power of Attorney for Medical and Financial

Talking about Financial Legacy

Family Legacy: Discussion Points Do you have a Will? If so, where is it located? Have you granted anyone a durable power of attorney for finances? If so, who has that power, and where is the document? Have you prepared an advance directive or a power of attorney for health care? Do you a have a safe deposit box? Where is the key and list of contents?

Family Legacy: More Discussion Where are your important papers: e.g., birth certificates, Social Security, military service records? Where do you keep your life, health, and property insurance papers? Have you made a list of investments? What are the mailing addresses of the institutions that have the investments? Have you made a list of your personal and real property? Where is the list?

Family Legacy: More Discussion Who are your financial advisers? What are their addresses? Have you developed a letter of last instructions? If so, where do you keep it? If you have a retirement program, is there a death benefit for the survivors? If so, who should the survivors contact?

Tax Systems Transfer Taxes Estate Gift Generation Skipping Transfer Tax Qualified Domestic Trust Estate Income Taxes

Financial Tools & Legal Tools Provide Steps to Take with the Least Risk Develop an Estate Planning Team

The Estate Planning Team You Financial Planner Attorney Bank Trust Officer Insurance Specialist Accountant Investment Counselor

Goals: Easier to Pay bills. Plan for Future Incapacity Goals: Easier to Pay bills . . . Plan for Future Incapacity . . . Give Another Person Legal Authority to conduct financial transactions on one’s behalf. Tools: Joint Bank Accounts Automatic Bill Payments Power of Attorney Living Trusts

Issue: If plans have not been made, there are fewer options, more complex, and more intrusive. Tools: Representative Payee maybe appointed If Lack of Trust is not an issue, direct deposit of monthly income checks into a joint account Conservatorship/Guardianship Involves a court process

Guidelines

Guidelines for Financial Legacy Planning Financial Legacy carries with it the expectation that assets will be used in a manner that reflects the givers’ values. Understanding future trends and their impacts are of importance to family members who are the givers and to the future heirs, who are the receivers.

Guidelines Give the family member as much control as possible Involve and inform your family member Respect financial privacy Keep accurate and complete records Keep your family member’s money separate from your own Reconcile bank statements

eXtension Resource Prepare Your Estate Plan

Protecting Your Resources

Guidelines for Protecting Yourself Different Types of Retirement Plans Social Security Pension Roth IRA Traditional IRA CSRS or FERS (Federal Government) Others

Guidelines for Protecting Yourself Paying for Care Long-term care Insurance Veterans benefits Medicare and Medigap Medicaid

A Plan for Making Estate Planning Decisions

A Plan – 7 Step Model Identify the Purpose of Wealth Transition Gather Information Generate Options Evaluate Options Create a Plan Act on the Plan Reassess the Plan Yearly

References Fontaine, C. J. (2014), Fundamental of Estate Planning, 14th Edition. The American College Press Hayhoe, C. (2005), Protecting Your Retirement & Other Financial Information for Family Caregivers. Virginia Cooperative Extension, NEFE – National Endowment for Financial Education. Presser, V & Williams, R. (June 2010) The Future of Estate Planning. Trusts & Estates (trustsandestates) available: http://www.phase3.biz/core/userfiles/heirs/files/Trust%20 %26%20Estates%20Article%20June%202010pdf.pdf Schmall, V.L., Nay, T., and Bowman, S. (October 2005), Helping Older Family Members Handle Finances. A Pacific Northwest Extension Publication (PNW 344), Oregon State University, Washington State University, and University of Idaho.