Some people will very simple situations can use nolo.com or another online provider or estate planning software. Alternatively, some of your friends might know of a good referral (price will depend on your area but simple situations shouldn't cost more than about $500 though I've seen much more charged), And you can often get a free standard form Advance Healthcare directive provided by your state for free online.
@Ed: The estate planning attorneys we work with have charge $300 for a simple set of documents for parents. You can go the Internet will if you can't afford anything. Something in writing is better than nothing.
Ed, my first estate plan was created using software by the same people who make turbo-tax. Quicken WIllmaker will work for simple estate planning needs. I was able to create simple wills, powers of attorney, medical directives.
And here's our next question from Larry.
Fidelity funds are good; and Vanguard funds are great. The advantage of Fidelity is that they have more specialized funds that Vanguard doesn't have. This can be useful for crafting a specific investment portfolio, but not as useful for a general gone-fishing type portfolio. Also, Fidelity has better brokerage services. Vanguard's strength is their funds, not their brokerage services.
Janet, the advisors touched on long-term care earlier, so I'm sure they'll be happy to help.
@Larry: I think it was Bert Whitehead (another NAPFA advisor) who write about a year ago that the best protection against long-term inflation is a 30-year fixed mortgage. My first mortgage was at 12.5% and we were so happy to assume it because the going rate was 18%. I would keep your mortgage.
The biggest issue with estate planning when minor children are involved is setting up a trust to receive the funds that is compatible with distribution rules for retirement plans/IRAs. So if you have significant assets in IRAS, you might need to use an attorney and be sure to get the proper beneficiary designation for the IRAs (the spouse is usually the primary beneficiary and such a trust would be the contingent beneficiary)
Next up, we have a couple of questions about rental properties.
And another one from Livia.
The recent rate hikes for LTC policy holders were expected (at least by me) but troubling. I'm thinking about using 10 year fixed pay policies rather than annual premiums. Are the other advisors thinking about doing this? You might pay and not need it or even die early but I just KNOW that clients will hate if if, after paying in for decade(s) the rates go through the roof.
Rental properties can be great assets for retirements. Even if you have a mortgage, the payment is fixed while the rent will inflate with time. Do you have a gain even in this real estate market? Know that if yiou have been depreciating these properties for years, you will have to "recapture" (fancy work for paying tax on" that money at the time of the sale to some extent
The Kiplinger Retirement Report recently published an extensive article about the current long-term care market: www.kiplinger.com/features/archives/krr-navigate-a-course-for-long-term-care.html
@Livia: There isn't much you can do about the capital gains owed when you sell a house which was not your primary residence. It isn't a great time to sell property, but it is getting better slowly. It is still a good time to buy or hold rental property.
Livia, since you are only a few years from retirement and very little savings, I'm going to be the mean guy and tell you have no business selling an income producing rental property (first assumption) and keeping your vacation home which is a drain on your current and future investments (second assumption).
I would rather see you keep the income producing properties and give up one of the personal homes if you hav e to sell anything, especially since you say that tyou don't have a lot of cash/investments on hand and a bit of credit card debt. Think of life with only one cable bill, one electric bill, etc.
I guess I'm not the only mean one. Bobbie, we call this "Dutch Uncle Advice". ;-)
Bobbie, since you've been talking about long-term care, do you want to take Janet's question? I'll post it in just a second. David and Matt can tackle this next one from Jim S.
Not mean. I want Livvie to have a fine life and a bountiful retirement. And I believe that the advice we have given will help her get there. I is such good advice that I just took it myself:-) Sometimes we all need a visit with reality.
You probably make too much to contribute to a traditional IRA but you can contribute to a ROTH. Do it! And then make it the last thing you spend. I often suggest that clients use their youngest relatives as the beneficiaries for ROTHS to get the longest tax FREE growth.
Jim, 401k and 403b contributions
do not limit your ability to save in IRAs.
While Bobbie tackles Janet's long-term care questions, here's our next question from Steve.
David and Matt, of course feel free to answer any of Janet's questions as well. Just trying to get through as many questions as possible in the 10 minutes we have left!
Steve, your brokerage or investment company will have a "journal" form which will allow you to use the CASH in the account (you can't contribute securities) to make a Roth IRA contribution.
Thanks, Matt. Here's a quick question from Steven.
I would love some other input on the LTC question as it is definitely not my specialty. Can one of the other advisors give their opinion? I do not use it for clients who don't have anything or who have a lot. But those who have, say, 500K going into retirement definitely need to take a look at protection.
@Steve: The question to ask is: Can your wife simply distribute money from the trust to herself, or are there provisions on the trust which restrict how much she can distribute to herself. If she can, simply inform the trust's brokerage to sell (liquidated) enough of one of the mutual funds (there may be capital gains tax) and send her the cash. She can then put that money into the Roth. There may be a simple journal to do the equivalent. But the trust provisions are what is important.
No problem, Bobbie. David, Matt?
@Janet Kittlaus: Long Term Care Insurance (LTCI) is constantly changing. They don't make the policy I would want, which is a waiting period of two years and then infinite benefits from that point forward. Most policies are the exact opposite, covering benefits quickly and then having a maximum. As a result, many of our clients choose to self-insure. It is also difficult to find a LTCI expert who isn't making their living selling LTCI. Perhaps some of the other advisors have sources they trust.
Steve, cashing in the policy will probably be your best bet but I would want to ask for an "inforce policy illustration" and see what type of growth you can expect. 6% is about the best return that I've seen from older whole life policies and if this is the case you have some tax benefits for keeping the money invested in the life insurance policy.
Janet, our Ask Kim columnist is very well-versed in long-term care. Feel free to e-mail her some of your questions, and she may just answer them in a column! You can email her directly at email@example.com.
Thanks for the insight, David.