Overview

There are many reasons you may have multiple investment and banking accounts.

• Job changes resulted in multiple retirement plans located at different institutions
• You started investing in companies or mutual funds by directly buying a small number of shares over a long period of time
• A family member gifted shares of stock to you
• A bank offered great rates on savings or loans that you just could not pass up
• You don’t trust the financial services industry, and decided to keep multiple accounts to decrease the risk of an institution going out of business or someone stealing your money

These all seemed like good ideas at the time, but there are many reasons you should simplify.

Lost Accounts

As the years go by, you may move once, twice, or a dozen times, and forget some of the outstanding accounts you have created. Without any “action” in these accounts, institutions may not be able to find you, and then they will turn over your little pot of gold to the state.

Tax Preparation

In addition, with non-retirement accounts, you will have many outstanding tax forms which can make preparing tax returns more complicated and expensive. Did your grandmother gift you that one share of Disney and now you receive a 1099 for $1.37 for the year? Not only do you have that hassle with that 1099, that one share of stock will also go through probate when you die.

With many institutions providing tax forms online, you may forget to download the form only to be reminded a year later with a fun letter from the IRS letting you know about underpayment.

Retirement Plan Distributions

Most retirement plans have required distributions at age 70 ½. If you have multiple retirement accounts, it will be important to keep track of the required amount that needs to be distributed from all the accounts total. IRA accounts are calculated separately from 401k and 403b accounts. By consolidating accounts, it makes distributions much easier to track. And given the penalty for not taking a distribution is a hefty 50%, you don’t want to mess this up.

Ease of Future Financial Caretaking and Estate Administration

The more assets you have floating out there, the more work that will be required by your financial caretakers if you become incapacitated and by the executor of your estate if you die. This increases hassle, costs, and the risk of mistakes.

So how do you simplify?

Before simplifying, make certain you understand the tax and estate implications of your current situation. After that is clarified, begin to pare down the number of accounts to the following:

• One checking and one savings account at one institution.
• One IRA account and all old retirement plans such as 401k and 403b accounts should be rolled into this IRA.
• One Roth IRA account (if you can have a Roth) – and all Roth 401k and Roth 403b contributions should be rolled into this Roth.
• One brokerage account – all outstanding stock certificates, direct mutual fund holdings, and other investment accounts should be held in this account.

In addition, if you think there are accounts that you have forgotten about, check the unclaimed property site in the state you think it may be located. The USA.gov website has a great resource for this.

When you consolidate, check the titling and beneficiary designations to make certain they are congruent with your estate plan and your wishes.

By simplifying, you can ease your financial caretaking as you age and save you and your family money and angst in the process.

 Content provided by: Whealthcare Planning, LLC

The information presented here is not specific to any individual’s personal circumstances, and does not constitute investment, tax, legal, or retirement advice or recommendations.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

I am pleased to present the latest edition of Financial Planning Tips.  This month, I have selected a topic that is often overlooked – picking a financial caretaker to manage your financial affairs if you are no longer able to do so yourself (either temporarily or permanently).  I believe everyone, at any adult age, should plan for this possibility.  Many people think that this type of planning only applies to older folks, but the reality is that even younger people can experience health or other life events that call for this type of assistance.

Picking a financial caretaker

At some point in your life, you may need a financial caretaker to pay your bills, watch over your investments and take care of your tax filings. For many people, the choice is easy – most often adult children or nieces and nephews are willing to help. For some people, there may not be anyone who you can easily turn to. What do you do if you are in this situation?

Hire a friend and a professional

If you do not have family you trust to help with your finances, consider hiring a friend you trust. However, to provide additional protection, hire a professional to oversee the person taking care of your finances, such as an accountant or fiduciary financial planner. How would this work?

First simplify your finances and consolidate your financial picture using a portal such as Mint.com or Yodlee. Set up automatic bill pay for as many payments as possible. Provide your friend and a professional with the login to your aggregator site. The two can work together to make certain you are doing a good job managing your finances.

Once you need assistance with your finances, you can begin with your friend “supervising” your bill paying, watching over your investments, and filing your taxes. Make certain they have a power of attorney to take over for you when needed, and that all of your financial institutions accept your power of attorney document.

Once your friend takes over paying the bills, make certain the financial planner or accountant periodically “audit” your friend’s work. You will have to pay for this service, but the peace of mind with having multiple eyes on your financial picture is well worth the cost.

What if there is no one who can help you pay your bills?

There are professional bill payers, but unfortunately, this profession is in its infancy and is not regulated. The American Association of Daily Money Managers is a great resource for professional bill payers, and they may also provide many other services.

If you hire a professional bill payer, they should provide a monthly accounting of your expenditures, collect all your financial statements, organize your information for your tax return, and review your investments with your professional advisers.

It is important to have your finances set up to your specifications in advance of hiring help so your instructions can be followed. For example, have an investment policy statement, budget, and plan for your sources of income and have the bill paying professional agree to follow your directives.

Content provided by: Whealthcare Planning, LLC

I hope you find this information to be helpful.  Please contact me with any questions, and feel free to forward to anyone who may benefit.

The information presented here is not specific to any individual’s personal circumstances, and does not constitute investment, tax, legal, or retirement advice or recommendations.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Controlling your health care costs

Health care costs are spiraling out of control. New technology, advanced testing, and “designer” drugs along with a “fee for service” system encourages doctors to do more, putting pressure on health care costs. What can you do to get the care you need and keep costs under control? There are a number of steps you can take.

• Live a healthy lifestyle – it shouldn’t have to be said, but the most important factor to stay healthy is to eat a healthy diet, exercise regularly, don’t smoke, and drink alcohol in moderation. Even if you already have health problems, lifestyle changes makes it easier to keep your health problems in good control.
• Get appropriate preventive care – the medical system is geared to doing too much, and preventive care is not immune to this. There are competing recommendations on what is valuable in helping prevent illness or detect it early. The U.S. Preventive Services Task Force publishes unbiased recommendations based on what has been proven to be appropriate preventive care. Consider these guidelines along with your personal circumstances when choosing preventive testing.
• Become an empowered patient – work with your doctor to understand the testing and treatment being offered and why it is being done. Ask the following questions:
  • How will the test being done help the doctor with diagnosis or treatment? Many tests are ordered because of “protocol” or “just because it would be good to know” and these are not good reasons to order costly testing. In addition, tests frequently have false positives or false negatives and you can spend even more time and worry chasing down tests that should have never been ordered in the first place.
  • What are all the options for treatment? Often doctors just recommend the treatment they think is best for you. Make certain you understand what is involved with the treatment and ask if there are any other treatments available that you should consider.
  • Are there less costly drugs that can be used? Doctors often provide medications that are convenient and don’t always consider the costs.
  • If you are on chronic medications, revisit your medication list with your doctor periodically to see if medications are still needed or if better or less expensive options are available.
• Shop around for medications – charges for medication vary from pharmacy to pharmacy. The price difference is occasionally dramatic.
• Stay in your insurance provider’s network – out of network doctors or hospitals can add greatly to the cost.
• Follow your doctor’s advice – once you’ve agreed to a plan of care, be sure to follow through. And if for some reason you can’t follow the recommendations, be sure to let your doctor know that you aren’t following through and the reason you are unable to do so. They can help you make adjustments so you can follow through on what is needed to take care of your health.

It is sometimes difficult to be an empowered health care consumer when you are ill. If this is the case for you, enlist a family member or friend to help you better navigate your health care and follow through on these tips for your health care.

Aging and the changes it brings are often regarded with apprehension. We know in many ways it can be good to get older, and enjoy the fruits of a life well lived.  However, we often fear the changes to our body and mind that may cause us to lose independence and control. Discussing these possibilities is not always comfortable for the aging person or the people who may have to care for them.

When to delegate financial decision-making, change living situations, quit driving, and seek assistance with health care decisions are difficult topics. They can be emotionally and financially very costly if plans are not put in place. People are forced to make decisions under duress, elders may often be neglected or abused, and family fights ensue.

I am excited to announce that I am now able to provide planning services that address many of the financial and related concerns that people often have around aging.  I am using tools developed to prepare families for the challenges associated with aging.  My approach is to help plan for aging-related transitions well in advance. This will reduce the likelihood of reactive decisions and the subsequent unnecessary costs that result from lack of preparation. My goal is to provide people with peace of mind at all stages of the aging process.

I pleased to be able to offer this service to both new and existing financial planning clients. The approach starts with three online questionnaires.  Each one takes about 15-20 minutes to complete.

• The “Financial Caretaking Plan” outlines steps you may have taken to prepare for transferring bill paying, investment management, and estate planning, and the tasks you need to complete to get ready for the day you can no longer manage finances on your own. This module collects trusted contact information specific to the person answering the questions, and generates a customized financial decision-making transition plan
• The “Risk Profile” is designed to identify traits that could place a person at risk for bad financial decision-making and financial exploitation. The questionnaire is based on a study conducted by geriatric psychiatrists.
• The “Proactive Aging Plan” addresses a person’s living situation, transportation needs, and health care preferences. The program generates health care and long-term care cost estimates based on a person’s own situation, and provides a customized plan for managing life transitions.  Recommendations include ways to reduce unnecessary costs and age successfully in the living situation a person desires.

After a client fills out each questionnaire, the software will provide me as planner with a report indicating what the client is doing now and what they need to do to optimize their situation. It will contain a personalized list of to-do items, and information a client can give to their family to inform them of the client’s desires as they age. The reports also include links to a wealth of educational materials to help clients complete the recommended tasks. I send the reports to clients, answer any questions and provide any additional clarification, and I assist in implementing the tasks where appropriate.

Please contact me if you would any additional information about this valuable service.  I hope to have the opportunity to work with many of you to build a successful aging plan!

For many people in the middle years of life, the prospect of parents getting older and being less able to do as much for themselves is scary.  And when there is a life changing health diagnosis or other health event and suddenly that time is much closer, people experience many emotions and a slew of questions are often raised.  Questions are often wide ranging – how can I best help my parent or other family member?  Does this mean a change in living situation?  How much time do we have?  What can we do now to prepare for what we can expect to happen?  What are the financial considerations?

My own experience with this subject began when my dad was diagnosed with Parkinson’s when he was in his early 70s.  We soon realized that the trajectory of his life had changed, as Parkinson’s is a progressive and degenerative disease with no cure, and with treatment aimed mostly at providing some relief from symptoms.  Once the initial shock of the diagnosis lessened, my dad resolved that one of his highest priorities was to get his financial and legal affairs in order, and he asked me to help him.

Over the next several months we set out on a planning journey, and Dad structured his affairs in a way that considered his current health and how it was likely to change over time.  Our planning yielded a  financial care plan, which outlined how Dad’s day to day financial affairs, such bill paying and money management, would be handled when he could no longer manage these tasks himself.  The plan also addressed bigger picture considerations such as investment management, estate planning, and risk management/insurance.  We also developed a financial plan that addressed how to handle Dad’s health care and long-term care costs in the context of his overall financial picture, as these costs would likely be much higher now with the Parkinson’s diagnosis.

The result of our planning, and the implementation of the action steps identified, brought some measure of peace of mind and confidence that we were doing what we could to prepare for an ever- changing situation.  We couldn’t change the course of the disease, but at least we could plan for how to navigate through the many changes to come in Dad’s life.

The months and years that followed were often very difficult as Dad’s health declined.  He accepted what was happening to him, but at the same time pushed back against it and handled his situation with grace and humility until the end.  I am so grateful for having had the opportunity to help him in his time of need.

I am also grateful for this incredible real-life learning experience that has provided me with an opportunity to build on what I have learned and help others who are facing, or who may face similar situations.  Over time, I have been able to channel the deep and strong emotions I experienced through this journey into inspiration to help others.  So now I have found myself on a mission to work in this space, doing what I can to help people prepare to navigate through similarly choppy waters.  I am finding this work to be extraordinarily rewarding and meaningful.

I am in the middle of reading Atul Gwande’s book “Being Mortal”, which takes on the topics of aging, decline and death, and how our society has turned these into medical problems rather than human ones.  Gwande reminds us that American medicine has prepared itself for life but not for death, and we treat aging, frailty, and death as just another set of clinical challenges to overcome.  As a society, we are so focused on medical treatment for every ailment at every stage of life, and we often fail to recognize, especially as people age and decline, the importance of a life as meaningful and rich as possible under the circumstances.  Gwande discovers how we can do better, as he profiles reformers in the medical profession who illustrate how the ultimate goal for many people – a good life all the way to the very end – can be achieved.

Reading this book has inspired me to further the development of my own ideas around financial planning for the later years of life.  Most conventional financial planning doesn’t adequately address the financial implications of declining health in the later stages of life.  At the very least, a good financial plan should consider the possibility and financial impact of long-term care events and high medical costs.  But even if someone has a well-constructed plan, what happens when there is a life-changing medical diagnosis?  Suddenly, the trajectory of a person’s life, and finances, changes.  When this happens, many questions are raised – how much will my health care cost?  Can I expect to need long-term care services, and what will that cost?  Do I have enough money to pay for what I need?  What if I don’t?  What changes do I need to make to my finances to manage?  Where can I turn for help?

In future posts, I will address these questions and others in this critically important, and often overlooked, aspect of financial planning.  One initial tidbit of advice – wherever you are in life, there is no better time than now to start planning for life’s uncertainties.  Of course we can’t predict what may happen to our health – and what our health care will cost, especially as we get older – but there are some tools and techniques everyone can use to prepare as much as possible before a major health event occurs.