3 Crucial Planning Points


By Gary Meeks, RICP®

It’s probably safe to say most of us are hoping for a better year in 2021. As the new year approaches, I decided to make a short list of three basic but crucial financial wellness ideas. These three things are not difficult to do but sometimes get overlooked or procrastinated. I would invite you to act on these items if you haven’t already done so.

Protect your family: This is particularly important if you are young, married and/or have young children. Make sure you have adequate life insurance on those whom your family depends on for financial support. The cost of life insurance is very affordable when you are young and in relatively good health. Do not leave your spouse or children destitute if you lose your life.

Disability insurance is often overlooked but may be just as important. Imagine you become disabled and unable to work; social security disability may not be enough to meet your family’s needs. Often, your employer offers life and disability insurance at lower group rates. If you don’t have life insurance, check with your employer first, then get some quotes from an insurance agent to get the coverage you need at the best rates.

Estate Planning: I believe the most important thing you can do is get an experienced, qualified attorney to assist you with your estate plan.

What exactly is estate planning? Everyone has an estate. An estate is comprised of all your stuff – everything you own. Estate planning is the process of anticipating and arranging a plan in advance for the management and disposal of your estate after death. One goal of estate planning may be to avoid probate. What is probate? Probate is the need to have a court appoint an executor to administer a deceased person’s estate—pay debts, distribute estate assets, etc. Probate can take time and cost money.

A will spells out the deceased wishes, which is important, but a will does not eliminate probate. The will must be presented to the court to be approved, and often an appointment letter or court order makes it possible for the executor to move forward with settling the estate. Without a will, the court will decide who the executor will be.

A trust will avoid probate. Upon death, a successor trustee will be able manage the affairs of the estate without the need for probate. With a trust, it is very important to fund the trust, which means ensuring the assets you want covered by the trust are actually in the name of the trust. You do this by presenting the trust document to your financial institution and directing them that the asset should be owned/registered in the name of the trust. Other important estate planning items may include healthcare directives and power of attorney appointments. or other items your estate planning attorney may direct.

Not all assets need to be probated; these include IRAs and other retirement plans, annuities, life insurance, and joint accounts. You can also add a Transfer on Death (TOD) registration to bank accounts, investment accounts and other non-retirement accounts, just ask your financial institution to help you set this up.

Saving for your Future:  Saving for the future means saving for retirement, college funding or other large expense items. If your employer offers a 401k or other retirement plan, that is likely the best place to start. If the employer matches your contributions, be sure to contribute enough of your own money to get the full match available.

Other vehicles to save for retirement include traditional IRAs, Roth IRAs and tax-deferred annuities. You must have earned income to contribute to an IRA or Roth IRA unless you are married filing jointly and your spouse works, then your spouse can contribute to a spousal IRA for you. The IRA and Roth IRA contribution limit for 2020 is $7,000.

Plans available for college saving include 529 College savings plans, Coverdale Education Savings accounts, Custodial accounts and Roth IRA.  There are tax incentives available with these plans, so do your homework to determine which best fits your needs.

With any of the above ,invest according to your time horizon and risk tolerance. The most common investment options are fixed income (bonds) and equites (stocks). Long-term investors (10 years or more) should consider equities because equites generally outperform fixed income over long periods. Medium-term investors should consider some combination of equities and fixed income. Savings, money market and CDs are best suited for short investment periods.

Diversification is an important tool to reduce risk, and adding other asset types may help such as real estate funds and commodities.

Over time, your risk tolerance may change, or your time horizon will shorten, and it is important to adjust your portfolio accordingly. Stay engaged and aware.

If you need help with these important financial planning ideas, seek professional help.

Act now, do not procrastinate! “Those who fail to plan, plan to fail!” to quote an old adage.

Gary D. Meeks, RICP®, is a registered representative offering securities and advisory services through Cetera Advisor Networks LLC, member FINRA/SIPC, a broker dealer and Registered Investment Adviser.  Cetera is under separate ownership from any other named entity.  90 W 100 N STE 6, Price, UT 84501 (435)-637-8160.

“The information in this material is not intended as tax or legal advice.  It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation”.”

“Distributions from IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 ½ may be subject to an additional 10% IRS tax penalty. A Roth IRA offers tax free withdrawals on taxable contributions.  To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 ½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law Roth IRA distributions may be subject to state taxes.”.

“Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer’s official statement and should be read carefully before investing. Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits only from that state’s 529 plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision.  The investor should consult their financial or tax advisor before investing in any state’s 529 plan.”.

“A diversified portfolio does not assure a profit or protect against loss in a declining market.”.

“Cetera Advisor Networks LLC does not offer direct investments in commodities.”.

Sources: https://www.estateplanning.com/What-is-Estate-Planning/

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