Michigan Estate Planning Blog

Why Does Everyone Need an Estate Plan?

Twenty and thirty-year olds are busy building their lives, starting or growing careers, exploring personal goals, repaying student loans and maybe starting a family. They’re young and healthy and think nothing can happen to them—but that’s not true. A recent article from Kiplinger titled “You’re Not Too Young for an Estate Plan: 7 Essentials for Your 20s and 30s” explains why even a twenty-year old with student loans needs an estate plan.

Student loans. Federal student loans discharge upon death, so no further payments are needed, including any federal Parent PLUS loans parents may have taken out. However, for private student loans, the decision is up to the lender. If the private loan was taken out by the student, the institution may forgive the loan. However, if a parent or another adult co-signed the loan, they might be responsible for paying the entire loan. The exception: if the loan was made after November 20, 2018, the co-signer may be protected by the Economic Growth, Regulatory Relief and Consumer Protection Act. If you took out loans after getting married, the surviving spouse is likely to be required to pay the loan if they co-signed the loan or if you live in a community property state.

 

Health Care Directive and Health Care Power of Attorney. The Health Care Directive is used to tell your family what you would want if you were near death, whether by injury or illness. Healthcare providers are obligated to follow your directions if they are stated in this document. Without it, you could be kept on life support for many years, regardless of what your family wants.

 

A Health Care Power of Attorney is used to name someone you trust to act as your “agent,” if you become incapacitated. This document is focused on your care and medical treatments. It also lets your agent speak with your health insurance company, obtain access to medical records and discuss your care with healthcare providers.

 

Last Will and Testament. This document isn’t just for people with homes, families, and retirement accounts. Young people have property too—your car, your personal possessions, and whatever financial resources you may have accumulated. If you have a will, you can direct who you want to receive what you own. Without one, the court will decide who gets your possessions and your family won’t have any say about it. With a will, you can determine who receives your property, including your digital assets. You’ll also name an executor in the will—the person who is in charge of distributing your property. An estate planning attorney will create a document to comply with your state’s laws. It doesn’t have to be a complicated document, but it is a good way to ensure your loved ones know your wishes.

 

Retirement Accounts and Beneficiaries. These accounts may not be as robust as they will be later in your life. However, they are still yours. Make sure that you have named beneficiaries who you want to receive them if you die. Singles may name a sibling, parents, partner, or another family member to receive these assets.

 

Digital Assets. A digital life means you need a digital estate plan. Creating an inventory list of all of your digital accounts, usernames and passwords. If an account has two-factor authentication, indicate how another person might gain access to the account. Don’t include any of this information in your will, as it becomes a public document after being submitted to the court for probate. Tell a trusted family member where the inventory is located. If you own cryptocurrency, research how crypto assets are passed if the original owner dies.

 

Guardianship. Your will is used to name a guardian for minor children. Without it, the court will appoint a guardian, and it may not be the family member you wish it would be.

 

Don’t Forget Your Furry Friends. You can add a pet guardianship clause to a will to ensure that your pet stays with a trusted friend or family member who has agreed to care for your pet. You can also set up a pet trust to set aside funds for your pet’s care, including food, veterinary visits, toys, training and treats.

 

Reference: Kiplinger (Aug. 22, 2022) “You’re Not Too Young for an Estate Plan: 7 Essentials for Your 20s and 30s”

When Should I Think About Business Succession?

 

The pandemic has made many business owners rethink their business succession and retirement planning. Insurance News Net’s recent article entitled “Succession Planning For Business Owners: More Important Than Ever” reports that according to PwC’s 2021 US Family Business Survey, only a third of US family businesses have a robust, documented and communicated succession plan in place.
If you wait too long, you may not have the right people in place to run the business. It also restricts the tax planning options for the business and your personal estate. Either error can cause a business to fail, when it passes from one generation to the next.
An exit that is too sudden or without direction can leave a vacuum at the top and damage relationships with existing clients and customers. With clear objectives, a sense of urgency and an experienced estate planning attorney, you can help ensure that your business, and your future, are secure.
There are a number of areas of transition that should be addressed:
Founder Transition: Determine how long you plan to stay with the business, and what your retirement plans are;
Family Transition: If you plan to leave your business to your children, determine the way in which the roles and power relationships will change;
Business Transition: How will the company’s operations and customer relations be maintained through other transitions;
Management Transition: Decide who will make up the new management team, such as family, non-family, or both, and how new leadership will be evaluated. You should also map out the schedule for transferring control of day to day decisions;
Ownership Transition: Determine how ownership is to be transferred; and
Estate Transition: see how you will coordinate your estate plan to ensure that the other transitions above occur as planned.
Many of these transitions will be accomplished through formal documentation, such as an operating agreement, buy-sell agreements and trusts. Sit down with an attorney soon rather than later to sort this out.
Reference: Insurance News Net (December 30, 2021) “Succession Planning For Business Owners: More Important Than Ever”

How to Protect Valuable Assets in Estate Planning

 

If you fail to take the necessary measures, you can lose your property, which might cause financial challenges when you will not be working in retirement.
Legal Reader’s recent article entitled “How to Legally Protect Your Assets” says there are different strategies you can use to protect your personal assets.
This will help you to prepare for any eventuality. Let’s look at some of them:
A Family Trust. This may be one of the best strategies to protect your personal assets. A trust will help protect your assets when you lose all your money. A family trust can also provide tax benefits to family members in lower tax brackets. However, talk to an experienced estate planning attorney before setting up the trust to make the right decisions.
Start a Company. This may be an alternative to setting up a family trust, since your property will be more secure than when operating a sole proprietorship or a partnership business. This gives you a more secure future, even when you face financial challenges. However, there are many legalities in starting a company, so talk to an attorney.
Register Your Most Valuable Assets in the Name of the Low-risk Spouse. This tactic will make it difficult for a trustee or liquidator to gain access to the property in case of bankruptcy. However, ask an attorney to help you to structure the purchase to make certain that the low-risk partner’s name appears on the legal documents. An experienced estate planning attorney can also help you access benefits, such as Social Security and Medicaid.
These laws keep changing. You might miss an opportunity of getting long-term care planning, if you keep postponing a review with an experienced estate planning attorney.
As you spend your hard-earned cash, take some time to learn how to protect what you buy. You should also use the legal strategies above to keep your property secure.
Reference: Legal Reader Jan. 26, 2022) “How to Legally Protect Your Assets”

How to Avoid a Family Fight over Company

A comprehensive succession plan is a set of legal guidelines to ensure an orderly transfer of financial control and executive responsibilities to a new generation of leaders. Index Fund Advisors’ recent article entitled “How to Avoid a Messy Succession Battle” suggests that you take a multi-prong approach to succession planning.
A business owner must identify the individual who has the skills to run a business. A succession plan can sometimes divide the leadership roles, with one person running the business and another in a senior role overseeing long-term development and planning.
Business owners also must consider their personal estate plans when devising a succession plan. Business owners need to be proactive about estate planning and succession planning. Ask an experienced estate planning attorney about both processes as ongoing strategies. That means you don't create an estate plan or a succession plan and file it away until you want to retire. Circumstances can change, so you'll probably periodically need to review it and make sure everything is up-to-date.
When multiple owners are involved, a succession plan should create rules and procedures for other owners who might want to hire friends and relatives for key positions. The company's founders must consider what happens if an owner gets a divorce, suffers a disability, or declares personal bankruptcy. These types of situations can change the rules within a buy-sell agreement—the master document that details the rules between who gets what and how a company is organized in the future.
A succession plan can also state the rules for issues involving transferring of equity and/or shares of a company to family members. In addition to putting into writing exactly who can be a transferee and the amount of equity they're allowed, business owners should use the succession planning process to address issues related to voting rights. A succession plan should also specify the financial terms at the time of an owner's death or sudden exit.
While avoiding such a decision-making process might appeal to younger executives, delaying these decisions and processes creates more uncertainty in a company's ongoing success.
Whatever the size of a business, any business owner needs to create a succession plan sooner rather than later. If you don’t, you may leave a mess for the next generation of owners and employees.
Reference: Index Fund Advisors (Nov. 22, 2021) “How to Avoid a Messy Succession Battle”

What Should Small Business Owners Know about Estate Planning?

Not having an estate plan can place business owners and entrepreneurs in jeopardy because they may face difficulties in keeping the business running, if they have to withdraw from the business at any point in time.
Legal Reader’s recent article entitled “What Small Business Owners Should Know about Doing Estate Planning” explains that estate planning is necessary to ensure business continuity. Think about who can take control when you’re no longer around to have the business continue according to your wishes contained in your estate plan. An experienced estate planning attorney can help business owners create a comprehensive estate plan, so things do not become chaotic for their family in the event of premature death or any permanent disability. Consider these steps when it comes to good estate planning for business owners.
Create an estate plan if you haven’t got one. A will is designed to detail your wishes about how you want the business to run and the manner of sharing your property at your death. A power of attorney allows an entrusted individual to undertake your business transactions and manage your finances, if you are incapacitated by injury or illness. A healthcare directive permits a trusted agent to make medical decisions on your behalf when you can’t do so yourself.
Plan for taxes. Tax planning is a major component of estate planning. Our tax laws keep changing frequently, so you have to stay in constant touch with your attorney to develop strategies for decreasing your tax liability, as well as creating a strategy for minimizing inheritance/estate taxes.
Buy life and disability insurance. Small business owners should think about purchasing life insurance, so their families can have a source of income after their death.
Create a succession plan. In addition to estate planning, a business owner should have a succession plan that specifies exactly how your company, and your family will prepare for a transition of ownership. The purpose of a well thought out succession plan is to keep the business operating or to take steps to sell it. This plan also includes the organizational structure of the business in case of maintaining business continuity.
Finally, you should keep everyone impacted by your decisions apprised of your estate plan and your business succession plan.
Reference: Legal Reader (Aug. 26, 2021) “What Small Business Owners Should Know about Doing Estate Planning”

Why Is a Trust Smart Estate Planning for Farmers?

 

A will gives people the basic assurance of where farm and personal assets will go at an owner’s death. However, a trust can give you added detail and instruction, plus flexibility to transition your farm in the manner you intend.

The LeMars Daily Sentinel’s recent article entitled “Trusts can serve as important estate planning tool for farm families” says that a trust is a very useful and flexible tool for estate planning. However, it’s most likely the most underused estate management technique.

A trust is essentially the creation of another entity to hold title to assets and then writing the rules as to what should happen with those assets, while so held.

An experienced estate planning attorney will help you decide if a trust is necessary in your specific family situation. More complicated situations with multiple generations and rights of ownership and management can make a trust a wise choice.

Some of the common mistakes people make with trusts include forgetting to retitle assets into the trust now or by beneficiary designation, so they will become part of the trust at death, and making certain the parties comprehend the types of tax liabilities based on the type of trust that is created. There are two main types of trusts—living and testamentary trusts. A living trust is established by a living person, as opposed to a testamentary trust that is created in a will and goes into effect at the time of death. Living trusts can be revocable or irrevocable. Every trust has different stipulations on what the grantor can and can’t control, as well as different types of tax liability.

With the help of an experienced estate planning attorney, a trust can help keep a family member in farming and let the other family members receive ownership in the farm, land, money, or whatever assets the grantor chooses. Due to the fact that farm operations have so many moving parts and expenses, a trust can help make the transition as easy as possible and can accomplish the goals of the grantor.

You should be transparent with family members and tell each one where they stand concerning the estate. Sharing documents and holding family discussions can also help keep everyone on the same page.

Everyone should have a copy of these documents, including a will, power of attorney, or a trust because everyone in the family should know what is going on.

Reference: LeMars (IA) Daily Sentinel (Dec. 29, 2020) “Trusts can serve as important estate planning tool for farm families”

Why Is a Trust Smart Estate Planning for Farmers?

 

A will gives people the basic assurance of where farm and personal assets will go at an owner’s death. However, a trust can give you added detail and instruction, plus flexibility to transition your farm in the manner you intend.

The LeMars Daily Sentinel’s recent article entitled “Trusts can serve as important estate planning tool for farm families” says that a trust is a very useful and flexible tool for estate planning. However, it’s most likely the most underused estate management technique.

A trust is essentially the creation of another entity to hold title to assets and then writing the rules as to what should happen with those assets, while so held.

An experienced estate planning attorney will help you decide if a trust is necessary in your specific family situation. More complicated situations with multiple generations and rights of ownership and management can make a trust a wise choice.

Some of the common mistakes people make with trusts include forgetting to retitle assets into the trust now or by beneficiary designation, so they will become part of the trust at death, and making certain the parties comprehend the types of tax liabilities based on the type of trust that is created. There are two main types of trusts—living and testamentary trusts. A living trust is established by a living person, as opposed to a testamentary trust that is created in a will and goes into effect at the time of death. Living trusts can be revocable or irrevocable. Every trust has different stipulations on what the grantor can and can’t control, as well as different types of tax liability.

With the help of an experienced estate planning attorney, a trust can help keep a family member in farming and let the other family members receive ownership in the farm, land, money, or whatever assets the grantor chooses. Due to the fact that farm operations have so many moving parts and expenses, a trust can help make the transition as easy as possible and can accomplish the goals of the grantor.

You should be transparent with family members and tell each one where they stand concerning the estate. Sharing documents and holding family discussions can also help keep everyone on the same page.

Everyone should have a copy of these documents, including a will, power of attorney, or a trust because everyone in the family should know what is going on.

Reference: LeMars (IA) Daily Sentinel (Dec. 29, 2020) “Trusts can serve as important estate planning tool for farm families”

Retirement Strategies for Younger Workers

(Note: Parents, here is a great article to share with your twenty-something adult children!) If you are a twenty-something, you have plenty of time to think about investing, right? Even so, a recent article from U.S. News & World Report, titled "10 retirement moves for your 20s," confirms that this is your decade to create the financial habits that will work for you and help you have a comfortable retirement. The original article details some retirement strategies you can start now to develop those crucial financial habits. Here is an overview before you click over to read the article yourself: • Pay yourself first. This old adage is vital to be successful in your savings mentality, especially when you are a twenty-something. Opening a 401k through your employer is a great way to save. The nice thing about this is most everyone now has a payroll deduction option, so you can set aside a dollar amount or a percentage of your income straight to your retirement account every time you get paid. Since it is an automatic deposit of a relatively small amount, you likely will not miss it. • Control spending. The less you spend, the more you can save. Makes sense, right? Now this does not mean you have to live like a starving artist (unless you are, indeed, an artist who is starving!), but you should be in the habit of spending less than you earn each month. An easy way to do this is to pay with cash! Credit cards are convenient, but they come with heavy interest charges and fees — as well as a relaxed, "No worries, I can pay later" attitude. Perhaps keep a card for emergencies, but know what you have in your wallet and in the bank. • Eliminate debt. Did you know non-mortgage debt is one of the greatest impediments to retirement? Paying yourself first is hard to do if also have to pay credit cards, student loans, and your monthly car loan installment. Work on eliminating that debt now and focus on avoiding debt altogether. Organizing your finances need not be complicated or time-consuming. Adopt a system for organizing digital and hard copies of financial information—there are plenty of software programs and applications on the web. These will save you time and help you analyze your spending habits. Read more about these tips and others in the original article. Call your estate planning attorney with any questions. What estate planning attorney, you ask? Now is the time to talk to one. He or she will have the resources and relationships to help you get … and stay on track.

Reference: U.S. News & World Report (November 20, 2013) "10 retirement moves for your 20s"

For more information, see www.jerryreiflawyer.com

The Great Retirement and Estate Planning Balance, and the Great Roth IRA

Estate planning is a balancing act between yourself and your heirs. After all, even if you plan to leave it all to your heirs, you still need to be sure you can take care of yourself to the end. Because you want the best for both sides of the equation, it is well worth a measured touch. What assets should you spend down first and how should you do so to maximize both end-of-life comfort and the inheritance to leave behind? The Wall Street Journal pegs the solution in an article titled “The Most Valuable Assets to Leave for Your Heirs.” In the article there’s a strong case for the Roth IRA, and you may have heard the fanfare already. These accounts have been around for a while, but it has only been in the past few years, with the modification of a few laws, that they have become available to just about everyone. In fact, even traditional IRAs can be converted to one. IRAs are statistically both the most common bequest and the largest in all but the uppermost levels of net worth. They are double-duty assets that can provide for retirement and, if efficiently managed, can provide for loved ones thereafter. Roth IRAs are especially powerful to leave behind for tax reasons, because you pay taxes when you put the assets into the account rather than upon their distribution. The net effect of the distinctive tax treatment of Roth IRAs is tax free distributions during retirement and a bequest to leave behind that is not its own tax burden. Estate planning is a balancing act. Done right with IRAs, proper planning can be quite the boon for you and your loved ones. What other assets do you possess and how do these figure into the balance?

Reference: The Wall Street Journal (June 2, 2014) “The Most Valuable Assets to Leave for Your Heirs”

Will The Charitable Rollover Rollover?

We are well into 2014. Consequently, that also means we are well into the 2013 tax season and planning for the upcoming year. As many retirees and their advisors review changes in the tax laws and begin their planning, they have one important question in common: “Will Congress revive the IRA charity rollover?” Coincidentally, these taxpayers and advisors will be interested in a recent article in The Wall Street Journal titled “Will Congress Revive the IRA Charity Rollover?” Why all the buzz? The IRA charity rollover is a well-loved tool that creates a win-win for retired taxpayers and the charities they support. Unfortunately, it has never been a permanent part of the tax code and was just one those many provisions of the tax code that bit the dust at the end of last year. What is an IRA charity rollover? It allows a taxpayer who is already required to take “Required Minimum Distributions” to direct their required distribution directly into the hands of charity. As a result, the taxpayer pays no income taxes on the distribution and the charity enjoys 100% of the distribution tax-free. What is not to like about that? With the IRA charity rollover gone, retirees and their advisors now have to shift their priorities and tools to minimize the tax bite and still accomplish all of their financial goals. Alternatively, you take the author’s lead and try waiting to see if Congress reinstates this beloved option. Will Congress revive the IRA charity rollover? That is the question.

Reference: The Wall Street Journal (January 25, 2014) “Will Congress Revive the IRA Charity Rollover?”

 For more information, see www.jerryreiflawyer.com

Retirement Planning: Five Mistakes to Avoid Saginaw, Michigan

While planning for retirement isn’t an exact science, financial experts agree on a few hard-and-fast rules for what you shouldn’t do, according to a recent NBC News article: 1. Don’t be overly optimistic While optimism is usually a welcomed attribute, when it comes to retirement, a more pessimistic view may be more appropriate. According to Tami Simpson, CFP and president of Wealth Financial Group West, a retirement management services and financial consulting firm in Southern California, “too much positive thinking isn’t the best recipe for saving…a healthy dose of pessimism is actually a good thing for your retirement planning.” plagiarize Simpson says that some people put off saving money because they “hope” things will simply fall into place down the road. People imagine the best case scenarios and don’t account for unexpected events that could occur. 2. Don’t underestimate your spending Many people underestimate how much they’ll be spending once they hit retirement. Wells Fargo financial adviser Fay Sheppard reminds her clients that “retirees often take more vacations, make more home improvements, and dine out more frequently than they did before they left the workforce.” When planning for retirement, people need to be realistic and look at income, inflation, long-term care needs and emergencies. 3. Don’t focus only on investments According to Jeff Yeager, author of How To Retire The Cheapskate Way: The Ultimate Cheapskate’s Guide to a Better, Earlier, Happier Retirement, “paying off all of your debt before you retire is as central to a good long-term plan as the size of your retirement fund.” He believes that the greatest retirement asset is something you don’t have: debt. 4. Don’t worry about being “selfish” When it comes to preparing for retirement, experts says we must concentrate on our own financial well-being. This means that we stop paying for our children or helping friends or relatives. “It’s important to leave your retirement funds intact for yourself, no matter how hard it may seem to turn somebody down if they ask for money.” 5. Don’t put off your financial physical Similar to our yearly health physical, Jack Keeter, CFS, and president of Jack Keeter and Associates, advises that a periodic “financial physical” is the key to a healthy retirement. He insists that everyone meet with a financial professional before there’s a problem and review your financial health.

References: NBC News (December 6, 2012) “5 retirement-planning mistakes to avoid”

For more information, see www.jerryreiflawyer.com

Extreme Home Makeover: Retirement Style Saginaw, Michigan

When we plan for retirement, we typically plan for financial stability, adequate health insurance, and safeguarding our estate. We may even plan for assisted living costs on down the road. But that doesn’t always mean planning for a move to an assisted living community. Some would rather stay in their own home. Enter a new retirement plan – home renovation. As a recent article in Bloomberg highlights, assisted living costs are on the rise. Consequently, many individuals nearing retirement are opting to renovate their homes to avoid increased assisted-care costs. If you are heading towards retirement, it is vital to your financial health and the stability of your estate that you consider “Remodeling as Retirement Planning.” Substantially remodeling your home to further accommodate an aging body may cost a pretty-penny up front, but it may pale in comparison to the yearly cost of a nursing home. According to a MetLife Mature Market Institute study, the US National Average for yearly nursing home costs is just over $75,000. Accordingly, a relatively simple $10,000 renovation to your home might provide you with extra years of independent living, and save you thousands in assisted living costs along the way. Think remodeling your whole home could cost too much? Consider simple changes like removing area rugs to reduce the risk of tripping. Or even simply rearranging your kitchen can help you avoid falls due to grabbing items from hard-to-reach areas. Whether you are looking to do a complete renovation or basic changes, consult the aforementioned article for more renovation tips and tricks.

Reference: Bloomberg (November 29, 2012) “Remodeling as Retirement Planning

For more information, see www.jerryreiflawyer.com

 

Retirement Planning: Five Mistakes to Avoid Mid-Michigan

While planning for retirement isn’t an exact science, financial experts agree on a few hard-and-fast rules for what you shouldn’t do, according to a recent NBC News article: 1. Don’t be overly optimistic While optimism is usually a welcomed attribute, when it comes to retirement, a more pessimistic view may be more appropriate. According to Tami Simpson, CFP and president of Wealth Financial Group West, a retirement management services and financial consulting firm in Southern California, “too much positive thinking isn’t the best recipe for saving…a healthy dose of pessimism is actually a good thing for your retirement planning.” plagiarize Simpson says that some people put off saving money because they “hope” things will simply fall into place down the road. People imagine the best case scenarios and don’t account for unexpected events that could occur. 2. Don’t underestimate your spending Many people underestimate how much they’ll be spending once they hit retirement. Wells Fargo financial adviser Fay Sheppard reminds her clients that “retirees often take more vacations, make more home improvements, and dine out more frequently than they did before they left the workforce.” When planning for retirement, people need to be realistic and look at income, inflation, long-term care needs and emergencies. 3. Don’t focus only on investments According to Jeff Yeager, author of How To Retire The Cheapskate Way: The Ultimate Cheapskate’s Guide to a Better, Earlier, Happier Retirement, “paying off all of your debt before you retire is as central to a good long-term plan as the size of your retirement fund.” He believes that the greatest retirement asset is something you don’t have: debt. 4. Don’t worry about being “selfish” When it comes to preparing for retirement, experts says we must concentrate on our own financial well-being. This means that we stop paying for our children or helping friends or relatives. “It’s important to leave your retirement funds intact for yourself, no matter how hard it may seem to turn somebody down if they ask for money.” 5. Don’t put off your financial physical Similar to our yearly health physical, Jack Keeter, CFS, and president of Jack Keeter and Associates, advises that a periodic “financial physical” is the key to a healthy retirement. He insists that everyone meet with a financial professional before there’s a problem and review your financial health.

References: NBC News (December 6, 2012) “5 retirement-planning mistakes to avoid”

For more information, see www.jerryreiflawyer.com

Extreme Home Makeover: Retirement Style Mid-Michigan

When we plan for retirement, we typically plan for financial stability, adequate health insurance, and safeguarding our estate. We may even plan for assisted living costs on down the road. But that doesn’t always mean planning for a move to an assisted living community. Some would rather stay in their own home. Enter a new retirement plan – home renovation. As a recent article in Bloomberg highlights, assisted living costs are on the rise. Consequently, many individuals nearing retirement are opting to renovate their homes to avoid increased assisted-care costs. If you are heading towards retirement, it is vital to your financial health and the stability of your estate that you consider “Remodeling as Retirement Planning.” Substantially remodeling your home to further accommodate an aging body may cost a pretty-penny up front, but it may pale in comparison to the yearly cost of a nursing home. According to a MetLife Mature Market Institute study, the US National Average for yearly nursing home costs is just over $75,000. Accordingly, a relatively simple $10,000 renovation to your home might provide you with extra years of independent living, and save you thousands in assisted living costs along the way. Think remodeling your whole home could cost too much? Consider simple changes like removing area rugs to reduce the risk of tripping. Or even simply rearranging your kitchen can help you avoid falls due to grabbing items from hard-to-reach areas. Whether you are looking to do a complete renovation or basic changes, consult the aforementioned article for more renovation tips and tricks.Reference:

Bloomberg (November 29, 2012) “Remodeling as Retirement Planning

For more information, see www.jerryreiflawyer.com

 

Roth IRA Power Saginaw, MI

For the uninitiated, the Roth IRA can be a rather strange creature when it comes to retirement accounts. On the other hand, even the initiated might benefit from a brief refresher on all the perks of the venerable Roth IRA. A recent Kiplinger’s article, titled “Why You Should Open a Roth IRA,” makes the case for understanding this savvy retirement tool. Essentially, the Roth IRA is the inverse of the regular, plain-vanilla IRA. The latter is all about taxation, which is deferred until the time you take distributions voluntarily or involuntarily when you are required to take “Required Minimum Distributions” (RMDs). Conversely, Roth IRAs make you pay the tax upfront, but then let them grow without taxation thereafter. In fact, after this upfront tax on the initial investment, no income taxes will be owed thereafter. Roth IRAs offer a very specific benefit when it comes to estate planning. Clearly, eliminating those pesky RMDs and future income taxation altogether can help you preserve assets for yourself now and your heirs later.

Reference: Kiplinger (September edition, 2013) “Why You Should Open a Roth IRA

For more information, see www.jerryreiflawyer.com

 

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Roth IRA - An Estate Planning Tool? Saginaw, Michigan

Foreign Retirements Attract FATCA Scrutiny

Some retirees are happy to grow old in place and in their family homes. Other retirees, however, seek to a change of scenery, exotic climates, and living out their days in foreign countries. Unfortunately, a “foreign” retirement may attract troubling scrutiny from the IRS, and its vice grips are certain to dig deeper with the implementation of FATCA. According to a recent Bloomberg article titled “Foreign Retirement Plans Seen Scrutinized in U.S. Effort: Taxes,” FATCA, or the Foreign Account Tax Compliance Act, is a 2010 law set to crack down on foreign accounts held either intentionally or otherwise to elude U.S. taxation. While it has been a surprisingly effective initiative, FATCA also has caused some unintentional headaches for some unintentional targets. Banking in various parts of the world has already felt some sting. Foreign banks (notably Swiss banks) have been bogged down with FATCA regulations and some have taken it out on Americans abroad. If you have been thinking of retiring to foreign shores for some time, then you might be familiar with FATCA. However, as the Bloomberg article notes, the scrutiny attending FATCA is about to reach out into retirement accounts. Retirement accounts are, generally, designed to be exempt. Nevertheless, the problem is intervening international laws, government-to-government agreements, and ensuring that your foreign retirement does not fall within the sights of FATCA. Instead, you need to ensure that your retirement finds its rightful exemption. This is a developing issue. If you are or may be affected, then it is essential that you stay informed.

Reference: Bloomberg (August 28, 2013) “Foreign Retirement Plans Seen Scrutinized in U.S. Effort: Taxes”

For more information, see www.jerryreiflawyer.com

 

Successful Successions Require Planning Saginaw, MI

It was the best of business successions; it was the worst of business successions. There is a right way to sell the business to your own managers or your own family members, and then there is a wrong way. Since you cannot live long enough to make all of life’s mistakes, then it is wise to learn from the mistakes of others. In this spirit, consider a recent article in The New York Times titled “The Wrong Way to Sell a Business.” Essentially, there are two types of owners when it comes to the sale or succession of their business. First, there is the one who knows they will sell the business, but procrastinates all the way up to the bitter end. This is not the owner/manager to emulate, and the article showcases a proof-positive example. While you might think your managers are ready and willing to buy your business, they may have other ideas. Regardless, they likely will need time to acquire the capital and then structure their affairs accordingly. If nothing else, managers are not owners until they start thinking of themselves as such, and a bit of lead time can instill such a feeling. But what about the other type of owner? Again, the article provides an example of an owner/manager who has a very decided life-goal in place and can therefore work to instill life-goals in his managers. Accordingly, if you plan for yourself, and allow your managers to plan for themselves, then you can train managers who can transition into becoming owners. When the succession planning is successful, the transition is almost nothing more than economics. True, sometimes these transitions just do not work out, but it is rarely out of an abundance of planning or understanding. Instead, more than a few deals fall apart simply because they are all too sudden and unplanned.

Reference: The New York Time (August 29, 2013) “The Wrong Way to Sell a Business”

For more information, see www.jerryreiflawyer.com

 

Successful Successions Require Planning Mid-Michigan

It was the best of business successions; it was the worst of business successions. There is a right way to sell the business to your own managers or your own family members, and then there is a wrong way. Since you cannot live long enough to make all of life’s mistakes, then it is wise to learn from the mistakes of others. In this spirit, consider a recent article in The New York Times titled “The Wrong Way to Sell a Business.” Essentially, there are two types of owners when it comes to the sale or succession of their business. First, there is the one who knows they will sell the business, but procrastinates all the way up to the bitter end. This is not the owner/manager to emulate, and the article showcases a proof-positive example. While you might think your managers are ready and willing to buy your business, they may have other ideas. Regardless, they likely will need time to acquire the capital and then structure their affairs accordingly. If nothing else, managers are not owners until they start thinking of themselves as such, and a bit of lead time can instill such a feeling. But what about the other type of owner? Again, the article provides an example of an owner/manager who has a very decided life-goal in place and can therefore work to instill life-goals in his managers. Accordingly, if you plan for yourself, and allow your managers to plan for themselves, then you can train managers who can transition into becoming owners. When the succession planning is successful, the transition is almost nothing more than economics. True, sometimes these transitions just do not work out, but it is rarely out of an abundance of planning or understanding. Instead, more than a few deals fall apart simply because they are all too sudden and unplanned.

Reference: The New York Time (August 29, 2013) “The Wrong Way to Sell a Business”

For more information, see www.jerryreiflawyer.com

 

 

Is Your Business Your Retirement Nest Egg, Too? Saginaw, MI

As a business owner, your business and your life are pretty hard to separate. Your business partner or right-hand employee may be a spouse, a sibling or that college roommate. Chances are your assets are entirely bound up in the company, and you might even intend to sell the business to fund your entire retirement. Not so fast! This was the advice given in a recent New York Times article titled “Sell a Business to Cover Retirement? Don’t Count on It.” When it comes to your business, you might be OK with the idea that it is empowering your financial life (or is it your life that is empowering the business itself?). Regardless, there will come a time when you and the business must part. This will be one of the most important events in your life and in the life of your business. Question: will this even be planned or just happen? If the business is your greatest asset, you are just going to sell it and live comfortably in retirement, right? Perhaps. What if it is not worth as much in the market as it is in your mind? If the business is your principal retirement asset, then knowing its value and preparing it for the transition is of utmost importance. This transaction will determine your future well-being, and perhaps the future well-being of your entire family for a long time. Accordingly, this transition will take structuring and forethought. Will your business be your retirement? If yes, then it is never too early to structure the transaction.

Reference: The New York Times (July 24, 2013) “Sell a Business to Cover Retirement? Don’t Count on It”

For more information, see www.jerryreiflawyer.com

 

Long-Term Care Insurance – Protection From Living Too Long Saginaw, MI

Planning for the golden years is about a lot of things, many of them being important “finally I get to …” moments. However, before you tackle that “bucket list,” be sure to nail down some important financial considerations. For example, how would you pay for long-term care if needed? Increasingly, one of the most important considerations is planning for the possibility and costs of long-term care. It is becoming the cornerstone of new later-in-life financial plans for many retiring and retired Americans. MarketWatch recently surveyed this concern in a article titled “Long-term care planning [is] too vital to ignore.” You see, the math is fairly simple. People are living longer and, therefore, so are their financial needs later-in-life. Meanwhile, healthcare is still disastrously expensive, especially at that life stage. As a result, if you only plan for your retirement and for your estate, but not also for your later-in-life and potentially long-term care needs, then you find yourself in financial jeopardy later. You could have more life left at the end of your money, to be blunt. As the title of the original article notes, including long-term care planning as part of your retirement planning is simply “too vital to ignore.”

Reference: MarketWatch (July 15, 2013) “Long-term care planning too vital to ignore”

For more information, see  www.jerryreiflawyer.com

 

Long-Term Care Insurance – Protection From Living Too Long Saginaw, MI

Planning for the golden years is about a lot of things, many of them being important “finally I get to …” moments. However, before you tackle that “bucket list,” be sure to nail down some important financial considerations. For example, how would you pay for long-term care if needed? Increasingly, one of the most important considerations is planning for the possibility and costs of long-term care. It is becoming the cornerstone of new later-in-life financial plans for many retiring and retired Americans. MarketWatch recently surveyed this concern in a article titled “Long-term care planning [is] too vital to ignore.” You see, the math is fairly simple. People are living longer and, therefore, so are their financial needs later-in-life. Meanwhile, healthcare is still disastrously expensive, especially at that life stage. As a result, if you only plan for your retirement and for your estate, but not also for your later-in-life and potentially long-term care needs, then you find yourself in financial jeopardy later. You could have more life left at the end of your money, to be blunt. As the title of the original article notes, including long-term care planning as part of your retirement planning is simply “too vital to ignore.”

Reference: MarketWatch (July 15, 2013) “Long-term care planning too vital to ignore”

For more information, see www.jerryreiflawyer.com

 

Income, Not Assets, Determine Obamacare Subsidies Great Lakes Bay Region, MI

The Affordable Care Act (ACA), also known as Obamacare, is now just beginning to take effect. If you have not heard, there still are many questions to ask and problems to resolve. The states have their own part to play under the ACA (and may delay putting certain changes into effect until 2015). Closer to home, there is still the matter of how it affects you, the individual, and how you and your family can plan for your health insurance under the law. Kaiser Health News provided some important insights as part of a Q&A entitled, importantly, “Income -- Not Assets -- Will Determine Subsidies In Online Insurance Marketplaces.” Indeed, the perennial problem many retirees and elderly Americans face is having more assets “on paper” than they do in terms of spendable income. That only makes sense because you planned to have a nest egg sustain your retirement. Now that you have that nest egg, you draw from it only what you need. As far as ACA is concerned, it is important to know that ACA requires health insurance and will soften the blow with subsidized insurances (when purchased via a health insurance exchange). The government subsidies are not based on your assets, but only on your income. As a result, anything you earn from the stocks you own, for example, is still income. However, assets in IRAs or plain old bank accounts will not count against you in terms of insurance. In other words, the nest egg is not meant to be threatened by the health insurance requirement.

Reference: Kaiser Health News (July 2, 2013) “Income -- Not Assets -- Will Determine Subsidies In Online Insurance Marketplaces”

For more information, see www.jerryreiflawyer.com

 

Investment Properties in Your IRA Saginaw, MI

IRAs are a very specific kind of asset. In fact, most taxpayers do not know that IRAs can be used to own other types of assets at some great tax advantages. For those looking to leverage their IRAs just a bit more and maybe transfer the ownership of some investment assets with greater ease, it is worth your while to consider your options to own investment properties inside of your IRA. A recent Bloomberg article is worth reading as it asks the question “Can You Use Your IRA to Buy Investment Property?” In short, yes. However, there are certain conditions that render it an unavailable option. For starters, you need a self-directed IRA. Second, the property must be acquired directly by the IRA itself. In other words, there would need to have been enough funds in the IRA to begin with to purchase the investment property. Even if your IRA would be eligible to own investment property, you must evaluate how investment property fits into your overall estate plan as far as the IRA is concerned. Obviously, it is rather attractive to grow your IRA on a tax-deferred or tax-free basis. On the other hand, what kind of additional complexities lie in wait upon the eventual sale and perhaps even the transfer to the eventual beneficiary at death? IRAs have a tendency to live on after their owners. Just like any other financial planning decision, it is essential to consider the tax and estate planning consequences downstream.

Reference: Bloomberg (June 10, 2013) “Can You Use Your IRA to Buy Investment Property?”

Fior more information, see www.jerryreiflawyer.com

 

IRAs Targeted in Obama Budget Saginaw, Michigan

Three budget plans are winding their way around the capitol, to include President Obama’s. While the details are thin and the pundits are still weighing in, self-employed professionals need to take heed. They are tax targets when it comes to their retirement savings. For retirement savers and those making powerful use of an IRA, here’s at least one tidbit the rumor mill has been circulating well before the budget’s release. If enacted, “wealthy” individuals would be pinched with a $3 million cap on their IRA holdings. Several sources have reported on this, to include Time Magazine in an article titled “Obama’s Budget Would Cap Tax-Advantaged Savings.” Although $3 million may sound like a lot, it may end up affecting more savers who otherwise might not be considered traditional tax targets: self-employed individuals like doctors, lawyers, and entrepreneurs. The self-employed all have unique abilities (and needs) to contribute large amounts to their IRAs. So, who is the intended target of this kind of a cap? One name keeps surfacing: Mitt Romney. Remember that fabled $100+ million IRA, as pointed out by the Boston Globe in an article titled “Obama budget would pinch IRAs of wealthy with $3m cap.” The analyses of the proposal are still being churned out, and there are some important details to be hammered out as well. At present, this cap is no more than a proposal and part of a budget plan none-too-well-liked by either side. Nevertheless, this kind of cap and its prying look at tax-advantaged plans is worth watching.

Time Magazine (April 10, 2013) “Obama’s Budget Would Cap Tax-Advantaged
Savings”

The Boston
Globe (April 10, 2013) “Obama budget would pinch IRAs of wealthy
with $3m cap”

For more information, see www.jerryreiflawyer.com

 

Roth IRA – An Estate Planning Tool? Saginaw, Michigan

Sometimes the most effective tool is the simplest, even when not a tool originally designed for the job at hand. In the world of estate planning, one such powerful tool is the Roth IRA. As with an IRA of any stripe, the Roth IRA is a retirement account. Unlike its plain vanilla IRA cousin, however, the Roth IRA offers significant estate planning opportunities. When it comes to retirement and estate planning, wouldn’t it be nice to kill two birds with one stone? A recent SmartMoney article titled “Estate Planning With a Roth IRA” tackles the salient differences between a plain vanilla IRA and a Roth IRA, noting that a fundamental distinction is when the income tax is paid. Is it upon deposit or at withdrawal? The article also explores other important distinctions. You pay taxes only upon withdrawal from a plain vanilla IRA, not upfront upon contribution. Result: every cent can appreciate safely without taxation until the day that you (and the IRS) can start drawing from the account. In addition, shortly after you reach age 70 ½ annual withdrawals become mandatory. These are known as Required Minimum Distributions (RMDs). On the other hand, a Roth IRA is a plain vanilla IRA in reverse. You pay income taxes upfront at deposit. Result: every cent post-contribution appreciates safely without taxation thereafter. Period. Obviously, this tax-free feature can come in handy for retirement, but consider its inheritance benefit too. What if you were to leave a Roth IRA to an heir by listing them as a beneficiary? First, there is no income taxation burden that accompanies the Roth IRA when withdrawn by your heir. Second, the heir can elect to receive it as a tax-free lump sum or, what is often more useful, take scheduled RMDs over their lifetime much like an annuity (but without any income taxes due). There are many options when it comes to IRAs, Roth IRAs, and inheriting such accounts. Be sure to consult with qualified legal and financial counsel to evaluate how to leverage a Roth IRA for yourself and your loved ones.

Reference: SmartMoney (February 5, 2013) “Estate Planning With a Roth IRA”

For more information, see www.jerryreiflawyer.com

 

Roth IRA – An Estate Planning Tool? Saginaw, Michigan

Sometimes the most effective tool is the simplest, even when not a tool originally designed for the job at hand. In the world of estate planning, one such powerful tool is the Roth IRA. As with an IRA of any stripe, the Roth IRA is a retirement account. Unlike its plain vanilla IRA cousin, however, the Roth IRA offers significant estate planning opportunities. When it comes to retirement and estate planning, wouldn’t it be nice to kill two birds with one stone? A recent SmartMoney article titled “Estate Planning With a Roth IRA” tackles the salient differences between a plain vanilla IRA and a Roth IRA, noting that a fundamental distinction is when the income tax is paid. Is it upon deposit or at withdrawal? The article also explores other important distinctions. You pay taxes only upon withdrawal from a plain vanilla IRA, not upfront upon contribution. Result: every cent can appreciate safely without taxation until the day that you (and the IRS) can start drawing from the account. In addition, shortly after you reach age 70 ½ annual withdrawals become mandatory. These are known as Required Minimum Distributions (RMDs). On the other hand, a Roth IRA is a plain vanilla IRA in reverse. You pay income taxes upfront at deposit. Result: every cent post-contribution appreciates safely without taxation thereafter. Period. Obviously, this tax-free feature can come in handy for retirement, but consider its inheritance benefit too. What if you were to leave a Roth IRA to an heir by listing them as a beneficiary? First, there is no income taxation burden that accompanies the Roth IRA when withdrawn by your heir. Second, the heir can elect to receive it as a tax-free lump sum or, what is often more useful, take scheduled RMDs over their lifetime much like an annuity (but without any income taxes due). There are many options when it comes to IRAs, Roth IRAs, and inheriting such accounts. Be sure to consult with qualified legal and financial counsel to evaluate how to leverage a Roth IRA for yourself and your loved ones.

Reference: SmartMoney (February 5, 2013) “Estate Planning With a Roth IRA”

For more information, see www.jerryreiflawyer.com

 

Roth IRA – An Estate Planning Tool? Saginaw, Michigan

Sometimes the most effective tool is the simplest, even when not a tool originally designed for the job at hand. In the world of estate planning, one such powerful tool is the Roth IRA. As with an IRA of any stripe, the Roth IRA is a retirement account. Unlike its plain vanilla IRA cousin, however, the Roth IRA offers significant estate planning opportunities. When it comes to retirement and estate planning, wouldn’t it be nice to kill two birds with one stone? A recent SmartMoney article titled “Estate Planning With a Roth IRA” tackles the salient differences between a plain vanilla IRA and a Roth IRA, noting that a fundamental distinction is when the income tax is paid. Is it upon deposit or at withdrawal? The article also explores other important distinctions. You pay taxes only upon withdrawal from a plain vanilla IRA, not upfront upon contribution. Result: every cent can appreciate safely without taxation until the day that you (and the IRS) can start drawing from the account. In addition, shortly after you reach age 70 ½ annual withdrawals become mandatory. These are known as Required Minimum Distributions (RMDs). On the other hand, a Roth IRA is a plain vanilla IRA in reverse. You pay income taxes upfront at deposit. Result: every cent post-contribution appreciates safely without taxation thereafter. Period. Obviously, this tax-free feature can come in handy for retirement, but consider its inheritance benefit too. What if you were to leave a Roth IRA to an heir by listing them as a beneficiary? First, there is no income taxation burden that accompanies the Roth IRA when withdrawn by your heir. Second, the heir can elect to receive it as a tax-free lump sum or, what is often more useful, take scheduled RMDs over their lifetime much like an annuity (but without any income taxes due). There are many options when it comes to IRAs, Roth IRAs, and inheriting such accounts. Be sure to consult with qualified legal and financial counsel to evaluate how to leverage a Roth IRA for yourself and your loved ones.

Reference: SmartMoney (February 5, 2013) “Estate Planning With a Roth IRA”

For more information, see www.jerryreiflawyer.com

 

Roth IRA – An Estate Planning Tool? Saginaw, Michigan

Sometimes the most effective tool is the simplest, even when not a tool originally designed for the job at hand. In the world of estate planning, one such powerful tool is the Roth IRA. As with an IRA of any stripe, the Roth IRA is a retirement account. Unlike its plain vanilla IRA cousin, however, the Roth IRA offers significant estate planning opportunities. When it comes to retirement and estate planning, wouldn’t it be nice to kill two birds with one stone? A recent SmartMoney article titled “Estate Planning With a Roth IRA” tackles the salient differences between a plain vanilla IRA and a Roth IRA, noting that a fundamental distinction is when the income tax is paid. Is it upon deposit or at withdrawal? The article also explores other important distinctions. You pay taxes only upon withdrawal from a plain vanilla IRA, not upfront upon contribution. Result: every cent can appreciate safely without taxation until the day that you (and the IRS) can start drawing from the account. In addition, shortly after you reach age 70 ½ annual withdrawals become mandatory. These are known as Required Minimum Distributions (RMDs). On the other hand, a Roth IRA is a plain vanilla IRA in reverse. You pay income taxes upfront at deposit. Result: every cent post-contribution appreciates safely without taxation thereafter. Period. Obviously, this tax-free feature can come in handy for retirement, but consider its inheritance benefit too. What if you were to leave a Roth IRA to an heir by listing them as a beneficiary? First, there is no income taxation burden that accompanies the Roth IRA when withdrawn by your heir. Second, the heir can elect to receive it as a tax-free lump sum or, what is often more useful, take scheduled RMDs over their lifetime much like an annuity (but without any income taxes due). There are many options when it comes to IRAs, Roth IRAs, and inheriting such accounts. Be sure to consult with qualified legal and financial counsel to evaluate how to leverage a Roth IRA for yourself and your loved ones.

Reference: SmartMoney (February 5, 2013) “Estate Planning With a Roth IRA”

For more information, see www.jerryreiflawyer.com

 

Roth IRA Planning Easier After the Fiscal Cliff Saginaw, Michigan

After the fiscal cliff deal, the Roth IRA just keeps getting better and better for more and more people. First, however, you need to understand what the Roth IRA is, how to use it, and most important, how to know if it is right for you. A recent CNN Money article titled “More savers can convert to Roth 401(k)s under fiscal cliff deal” says it all. Nevertheless, there is more to a Roth IRA than meets the unaided eye. Essentially, the Roth IRA reverses the normal IRA by requiring that you pay the income taxes on money deposited in the account up front when you deposit them instead of when you withdraw the money later. Also, in addition to no income taxes when withdrawn, with a Roth IRA you have no Required Minimum Distributions (RMDs) later on. The fiscal cliff deal lets more people, and those of lower incomes, convert their IRAs into Roth IRAs if they settle the tax burden up front. This can help with estate planning for their loved ones, too. According to experts, however, a Roth IRA may not be right for some folks. A recent MarketWatch article titled “Roth conversions easier, but are they right?” addresses this concern. As with all things financial, as well as legal …look before you leap. This is especially true when it comes to tax law changes brought by the fiscal cliff deal.

Reference: CNN Money (January8, 2013) “More savers can convert to Roth 401(k)s under fiscal cliff deal ” MarketWatch (January 3, 2013) “Roth conversions easier, but are they right?”

For more information, see www.jerryreiflawyer.com

 

Keeping Up With The Joneses …By Comparing Retirement Savings Saginaw, Michigan

Competing with our peers is instinctive. If the neighbors have an expensive car, we want a more expensive car. If the neighbors just went on a luxurious vacation, we want to go on a more luxurious vacation. And, according to a new survey from ING Retirement Research Institute, if the neighbors have a healthy retirement savings, we want a healthier retirement savings. This new survey shows people not only upgrade cars and vacations to keep up with peers, they also increase retirement savings to compete with their peers’ savings. In fact, more than half of the survey participants said they would save more for retirement if their current savings wasn’t on par with their peers’. What’s more, the survey showed people used the size of their retirement savings more so than material possessions and salary when gauging themselves against others. Because it’s not exactly polite to ask your neighbor how much he has saved for retirement, websites like INGCompareMe.com and ING State of Savings Map offer interactive tools that let consumers compare their retirement savings, debt levels and spending habits to their peers to gauge where they stand.

For a more detailed analysis of the survey, see “ING U.S. Study Sheds Light on Peer Comparison and the Retirement ‘State of Savings’ in America” or review the “Shedding Light on Retirement” White Paper released by the ING Retirement Research Institute here.

Reference:  ING (December 5, 2012) “ING U.S. Study Sheds Light on Peer Comparison and the Retirement ‘State of Savings’ in America.

For more information, go to www.jerryreiflawyer.com

 

Related articles

Savings2Income Releases a Statement in Response to How People Compare Retirement Savings to Their Peers

Tough Retirement Decisions for Small Business Owners

Talk about being kicked when you’re already down. That’s the feeling many small business owners have as they ponder retirement in these tough financial times. Surviving the recession is one thing, but retiring in one seems next to impossible. The Wall Street Journal considered this topic in a recent article aptly titled “'The Economy Stole My Retirement.'” If you are a small business owner on the one hand – a role that requires flexibility and ingenuity – and a baby-boomer on the other, then this recession has been more than a case of terrible timing. No, it’s thrust you into “business purgatory.” Do you find yourself with one foot in management and the other foot (or maybe just that big toe) in the golden sands of retirement? A baby boomer who is a small business owner faces a very tough call right now. Should he or she sell for the best offer today, which is generally the low-ball offer, or hold out for some future value which more accurately reflects what the business is truly worth? A tough call, indeed. For the owners of small businesses and the heads of family businesses, make no mistake about the difficulty of your position. It’s impossible to foretell the future, but since you already know what is most valuable to you (your family and your business), take the time to carefully weigh your options and seek appropriate professional counsel.

Reference: The Wall Street
Journal (September 12, 2012) “'The Economy Stole My Retirement'”

For more information, see www.jerryreiflawyer.com

 

Tough Retirement Decisions for Small Business Owners

Talk about being kicked when you’re already down. That’s the feeling many small business owners have as they ponder retirement in these tough financial times. Surviving the recession is one thing, but retiring in one seems next to impossible. The Wall Street Journal considered this topic in a recent article aptly titled “'The Economy Stole My Retirement.'” If you are a small business owner on the one hand – a role that requires flexibility and ingenuity – and a baby-boomer on the other, then this recession has been more than a case of terrible timing. No, it’s thrust you into “business purgatory.” Do you find yourself with one foot in management and the other foot (or maybe just that big toe) in the golden sands of retirement? A baby boomer who is a small business owner faces a very tough call right now. Should he or she sell for the best offer today, which is generally the low-ball offer, or hold out for some future value which more accurately reflects what the business is truly worth? A tough call, indeed. For the owners of small businesses and the heads of family businesses, make no mistake about the difficulty of your position. It’s impossible to foretell the future, but since you already know what is most valuable to you (your family and your business), take the time to carefully weigh your options and seek appropriate professional counsel.

Reference: The Wall Street
Journal (September 12, 2012) “'The Economy Stole My Retirement'”

 

Tough Retirement Decisions for Small Business Owners

Talk about being kicked when you’re already down. That’s the feeling many small business owners have as they ponder retirement in these tough financial times. Surviving the recession is one thing, but retiring in one seems next to impossible. The Wall Street Journal considered this topic in a recent article aptly titled “'The Economy Stole My Retirement.'” If you are a small business owner on the one hand – a role that requires flexibility and ingenuity – and a baby-boomer on the other, then this recession has been more than a case of terrible timing. No, it’s thrust you into “business purgatory.” Do you find yourself with one foot in management and the other foot (or maybe just that big toe) in the golden sands of retirement? A baby boomer who is a small business owner faces a very tough call right now. Should he or she sell for the best offer today, which is generally the low-ball offer, or hold out for some future value which more accurately reflects what the business is truly worth? A tough call, indeed. For the owners of small businesses and the heads of family businesses, make no mistake about the difficulty of your position. It’s impossible to foretell the future, but since you already know what is most valuable to you (your family and your business), take the time to carefully weigh your options and seek appropriate professional counsel.

Reference: The Wall Street
Journal (September 12, 2012) “'The Economy Stole My Retirement'”

For more information, see www.jerryreiflawyer.com

 

Tough Retirement Decisions for Small Business Owners

Talk about being kicked when you’re already down. That’s the feeling many small business owners have as they ponder retirement in these tough financial times. Surviving the recession is one thing, but retiring in one seems next to impossible. The Wall Street Journal considered this topic in a recent article aptly titled “'The Economy Stole My Retirement.'” If you are a small business owner on the one hand – a role that requires flexibility and ingenuity – and a baby-boomer on the other, then this recession has been more than a case of terrible timing. No, it’s thrust you into “business purgatory.” Do you find yourself with one foot in management and the other foot (or maybe just that big toe) in the golden sands of retirement? A baby boomer who is a small business owner faces a very tough call right now. Should he or she sell for the best offer today, which is generally the low-ball offer, or hold out for some future value which more accurately reflects what the business is truly worth? A tough call, indeed. For the owners of small businesses and the heads of family businesses, make no mistake about the difficulty of your position. It’s impossible to foretell the future, but since you already know what is most valuable to you (your family and your business), take the time to carefully weigh your options and seek appropriate professional counsel.

Reference: The Wall Street
Journal (September 12, 2012) “'The Economy Stole My Retirement'”

For more information, see www.jerryreiflawyer.com

 

Tough Retirement Decisions for Small Business Owners

Talk about being kicked when you’re already down. That’s the feeling many small business owners have as they ponder retirement in these tough financial times. Surviving the recession is one thing, but retiring in one seems next to impossible. The Wall Street Journal considered this topic in a recent article aptly titled “'The Economy Stole My Retirement.'” If you are a small business owner on the one hand – a role that requires flexibility and ingenuity – and a baby-boomer on the other, then this recession has been more than a case of terrible timing. No, it’s thrust you into “business purgatory.” Do you find yourself with one foot in management and the other foot (or maybe just that big toe) in the golden sands of retirement? A baby boomer who is a small business owner faces a very tough call right now. Should he or she sell for the best offer today, which is generally the low-ball offer, or hold out for some future value which more accurately reflects what the business is truly worth? A tough call, indeed. For the owners of small businesses and the heads of family businesses, make no mistake about the difficulty of your position. It’s impossible to foretell the future, but since you already know what is most valuable to you (your family and your business), take the time to carefully weigh your options and seek appropriate professional counsel.

Reference: The Wall Street
Journal (September 12, 2012) “'The Economy Stole My Retirement'”

For more information, see www.jerryreiflawyer.com

 

Tough Retirement Decisions for Small Business Owners

Talk about being kicked when you’re already down. That’s the feeling many small business owners have as they ponder retirement in these tough financial times. Surviving the recession is one thing, but retiring in one seems next to impossible. The Wall Street Journal considered this topic in a recent article aptly titled “'The Economy Stole My Retirement.'” If you are a small business owner on the one hand – a role that requires flexibility and ingenuity – and a baby-boomer on the other, then this recession has been more than a case of terrible timing. No, it’s thrust you into “business purgatory.” Do you find yourself with one foot in management and the other foot (or maybe just that big toe) in the golden sands of retirement? A baby boomer who is a small business owner faces a very tough call right now. Should he or she sell for the best offer today, which is generally the low-ball offer, or hold out for some future value which more accurately reflects what the business is truly worth? A tough call, indeed. For the owners of small businesses and the heads of family businesses, make no mistake about the difficulty of your position. It’s impossible to foretell the future, but since you already know what is most valuable to you (your family and your business), take the time to carefully weigh your options and seek appropriate professional counsel.

Reference: The Wall Street
Journal (September 12, 2012) “'The Economy Stole My Retirement'”

For more information, see www.jerryreiflawyer.com

 

Tough Retirement Decisions for Small Business Owners

Talk about being kicked when you’re already down. That’s the feeling many small business owners have as they ponder retirement in these tough financial times. Surviving the recession is one thing, but retiring in one seems next to impossible. The Wall Street Journal considered this topic in a recent article aptly titled “'The Economy Stole My Retirement.'” If you are a small business owner on the one hand – a role that requires flexibility and ingenuity – and a baby-boomer on the other, then this recession has been more than a case of terrible timing. No, it’s thrust you into “business purgatory.” Do you find yourself with one foot in management and the other foot (or maybe just that big toe) in the golden sands of retirement? A baby boomer who is a small business owner faces a very tough call right now. Should he or she sell for the best offer today, which is generally the low-ball offer, or hold out for some future value which more accurately reflects what the business is truly worth? A tough call, indeed. For the owners of small businesses and the heads of family businesses, make no mistake about the difficulty of your position. It’s impossible to foretell the future, but since you already know what is most valuable to you (your family and your business), take the time to carefully weigh your options and seek appropriate professional counsel.

Reference: The Wall Street
Journal (September 12, 2012) “'The Economy Stole My Retirement'”

Couples Over 60: Marriage or Cohabitation?

More seniors today are choosing to cohabitate instead of walking down the aisle, and the consensus is not that the institution of marriage is lost as we age – it’s more of a financial decision to protect one’s retirement income. Regardless, whether you (or a loved one) elect to marry or to cohabitate, you really ought to carefully weigh the consequences and seek appropriate counsel. The dilemma between marriage and simple cohabitation (truthfully, it’s not so simple) was explored in a recent Yahoo! article by way of Bankrate.com. The article, titled “Financial pros and cons of shacking up after 60,” illustrates that there is much to think about, breaking many of the most important financial decisions into stages. Essentially, there are important ramifications either way when it comes to retirement income, social security, and the medical care available through Medicare or Medicaid. And then there are the greater concerns of what is to happen to your respective families: whether they remain separate or have become joined, what inheritances to leave, or even how to ensure the well-being of the survivor. Whether or not you choose to marry at an older age, make sure you have carefully considered the consequences of your decisions and then plan accordingly.

Reference: Bankrate, Inc. via Yahoo! Finance (August 17, 2012) “Financial pros and cons of shacking up after 60”

Retirement Cash Flow and Retirement Planning

Most married couples want to ensure that all of their resources are available to provide for the surviving spouse, upon the first death. However, without careful retirement planning now, surviving spouses could find themselves in a “cash flow” pinch just when they need income most. Estate planning is a process with many moving parts. While much focus is given to saving estate taxes, avoiding probate, and transferring wealth between generations, failing to incorporate retirement planning can be hazardous to your wealth. This estate-planning dilemma was the centerpiece of a Kiplinger’s study recently featured in the Chicago Tribune. The article, titled “Retirement: An estate-planning pitfall,” brought to light the difficulty of lost income to surviving spouses. The first spouse’s passing often disrupts what the couple had always taken for granted financially – predictable cash flow. The article reviews sources of income impacted by this first death, including social security and pensions. As with all aspects of estate planning, it is crucial to understand the importance of getting competent counsel in advance. In fact, couples should investigate the impact of death on cash flow while both are alive in order to avoid unpleasant surprises later.

Reference: The Chicago Tribune (July 17, 2012) “Retirement: An estate-planning pitfall”

Expatriates Get A Tax Swat Upon Exit

As far as the IRS is concerned, permanently leaving the country is something on the order of dying, because the tax burden is the same. Here’s the deal: When you expatriate and renounce your US Citizenship, the IRS will treat you as though you sold all of your worldly assets at their fair market value the day before leaving. Consequence: The IRS will tax all such worldly assets as a “capital gain.” Accordingly, this tax event is known as the “exit tax.” There are certain exclusions, to include the cases involving dual-citizenship or expatriation before age 18.5. Why? Because in either case you wouldn’t qualify as a “covered expatriate.” Additionally, you can escape this taxation if you have an overall value of less than $651,000 of (supposed) income. Still, if you’re hoping to spend your golden years abroad, then it’s unlikely you will escape the grasp of the IRS by the above exclusions. Nevertheless, planning just might limit how much the IRS can take. If nothing else, this kind of complete appraisal of your property is consistent with your overall estate planning. So, for those considering expatriation even remotely, why not kill two birds with one stone and make a full inventory of your assets right now. In addition, some strategic gifting may help lower the amount of your assets subject to the “exit tax” should you elect to pull the proverbial trigger. For more background reading on this subject, consult a recent article in Forbes titled Tax Expatriates: We'll Always Have Paris.

Reference: Forbes (May 1, 2012) “Tax Expatriates: We'll Always Have Paris”

Small Business Owner Retirement Perspectives

traditional 401(k)s. They think they are saving taxes. Small business owners, by and large, have a hard time thinking beyond their business. It is a significant part of their very lives. If you are a small business owner, now may be the time to start thinking of your business as its own retirement vehicle, at least according to a recent guest columnist over at Forbes. For retirement planning, a business owner typically has to take out of the business what would otherwise be capital for growth. You’re taking it out to put into a tax advantaged plan like a 401k, hoping it will grow there enough to make up for the taxes to be paid later. In addition, you are doing so in the belief that you’ll be in a lower tax bracket when you call upon those funds later on. But what are the returns on that account? It may be that a properly capitalized company will give far greater returns. According to the Forbes article, a small business owner has to exist in a couple capacities, and the self that is an “individual” cannot be eclipsed by the self that is the “business owner,” nor the other way around. Ideally, perhaps, they can work in a synergy. It is a risky strategy, especially for those nearing retirement, but it may be worth looking into the original article’s numbers.

Reference: Forbes (January 25, 2012) “Fund Your Business Before You Stuff  Retirement Accounts”

ESTATE PLANNING / SPECIAL NEEDS

Coping with the physical, emotional or developmental disabilities of a special needs child is part of the daily life of many parents. Then there is the added financial burden of providing care and security for all family members, both today and in the future. Parents are encouraged to call upon the trained expertise of financial and legal advisors. Last week, The Times Herald ran an excellent brief article highlighting some of the important aspects of Special Needs Planning, to include: • Retirement and Estate Planning for the parents. • Reviewing any beneficiary designations for life insurance, qualified retirement plans or annuities to ensure any inherited assets will not disqualify your special needs child from receiving vital federal benefits. • Consideration of establishing a Special Needs Trust to accumulate mange and disburse monies for any child with a disability. • Protecting the financial security of other family members – including college funds for other children in the family. If you are the parent of a special needs child, or know someone who is, I encourage you to visit the Special Needs Practice Center on our website. There you will find an abundance of information and resources, including our Free Report: Special People…Special Plans.

 

ELDER LAW / RETIREMENT CAREERS

In today’s economy, it seems that everything old is new again … albeit with a bit of a twist. Years ago, it was common for older couples – and frequently widows – to rent out rooms for extra income. Taking in boarders was a viable way to supplement income. Well, the idea is back, with a bit of a twist. As Baby Boomers face the cold, hard facts of retirement, they are increasingly changing the definition of the term to include at least some form of work. While you may not be ready to hang out a shingle on the front gate, “Rooms for Rent,” you might consider becoming a landlord. In fact, the venerable Wall Street Journal writes that it may be just the ticket, especially given the uncertain prospects for stocks and bonds and the meager interest rates on savings accounts. Think about it. It’s a buyer’s market now, so purchasing a multi-family home is more financially feasible. And, the trend toward the renter’s lifestyle is picking up steam. All this means you have a low cost of entry into a market that is expected to expand. Starting to make investment sense? Sure, it’s a career of sorts, but you also need to think of it as an investment. Weigh everything in the short term, including start-up and maintenance costs, as well as the marketability of the location you’re considering. But then also keep your long-term goals in mind, including appreciation and eventual sale. Buying in a depressed market, after all, is only a steal if that market bounces back. Finally, don’t overlook the possible danger of having all your eggs in one basket since being a live-in landlord will unite your home, equity, and employment, into one potentially risky asset. Like any retirement move, don’t make this one too quickly. Discuss your plans with a professional who can help you sort out the details, including how an investment rental property could affect your Social Security benefits. Remember, too, that this lifestyle may not suit you. In which case, you would be wise to explore other, more enjoyable options.

Reference: The Wall Street Journal Online (June19, 2011) “Want a job? Become a landlord.”

ELDER LAW / RETIREMENT CAREERS

In today’s economy, it seems that everything old is new again … albeit with a bit of a twist. Years ago, it was common for older couples – and frequently widows – to rent out rooms for extra income. Taking in boarders was a viable way to supplement income. Well, the idea is back, with a bit of a twist. As Baby Boomers face the cold, hard facts of retirement, they are increasingly changing the definition of the term to include at least some form of work. While you may not be ready to hang out a shingle on the front gate, “Rooms for Rent,” you might consider becoming a landlord. In fact, the venerable Wall Street Journal writes that it may be just the ticket, especially given the uncertain prospects for stocks and bonds and the meager interest rates on savings accounts. Think about it. It’s a buyer’s market now, so purchasing a multi-family home is more financially feasible. And, the trend toward the renter’s lifestyle is picking up steam. All this means you have a low cost of entry into a market that is expected to expand. Starting to make investment sense? Sure, it’s a career of sorts, but you also need to think of it as an investment. Weigh everything in the short term, including start-up and maintenance costs, as well as the marketability of the location you’re considering. But then also keep your long-term goals in mind, including appreciation and eventual sale. Buying in a depressed market, after all, is only a steal if that market bounces back. Finally, don’t overlook the possible danger of having all your eggs in one basket since being a live-in landlord will unite your home, equity, and employment, into one potentially risky asset. Like any retirement move, don’t make this one too quickly. Discuss your plans with a professional who can help you sort out the details, including how an investment rental property could affect your Social Security benefits. Remember, too, that this lifestyle may not suit you. In which case, you would be wise to explore other, more enjoyable options.

Reference: The Wall Street Journal Online (June19, 2011) “Want a job? Become a landlord.”

ELDER LAW / RETIREMENT CAREERS

If you are a Baby Boomer nearing retirement, you probably have a different concept of retirement than your parents. Retirement for you may not mean an extended vacation on some sunny shore, but rather a new phase of your working career. A phase that may, perhaps, bring more than just another paycheck, but a new sense of meaning to your life. Morningstar recently referred to this career transformation as the “encore career.” Of course, it’s not just the search for meaning that motivates Baby Boomers to pursue an encore career. As Morningstar points out, tough new economic realities have transformed career reinvention from a virtue into a necessity for millions of older Americans who aren’t ready to retire or simply can’t afford to quit working. Interestingly, though the job market looks fairly bleak today, some economists predict labor shortages in key social sector jobs. Barry Bluestone, an economist at Northeastern University in Boston, predicts that within the next eight years, there could be at least five million job vacancies in the U.S., nearly half of them in social sector jobs in education, health care, government and non-profit organization. Bluestone also predicts that Baby Boomers are going to be filling those jobs, "We're going to see a remarkable reshaping of our labor force. The rate of labor force participation by the 55-plus population is going to be much higher, and older workers will represent a much higher percentage of the overall workforce." The Morningstar article includes a table ranking Projected Encore Career Growth 2008-2018. You might want to check it out. I note that job growth is predicted to be particularly strong for teachers, nurses and other health care providers … and not so much for lawyers. Reference: Morningstar Advisors (June 6, 2011): Making Working Longer Worth It

ESTATE PLANNING / RETIREMENT

In this article, SmartMoney’s Catey Hill takes a look into the increasing trend of mobile retirements and luxury RV’s. The article briefly examines the market, citing increased sales in Class A gas motor homes (the luxury models) and industry analysts are explaining it by looking to the recently retiring generations who have the resources and inclination (they are the generation that grew up with “On The Road.”) Indeed, the median age for RV owners is 54. The article then explores the idea and motivations of those retirees, explaining all the amenities of a luxury RV – hardwood floors, brushed steel appliances, flat-screen TV’s, etc. – as well as the freedom of living on the road and possibilities like “glamping” (the unfortunate title for “glamorous camping”.) Link: http://www.smartmoney.com/retirement/planning/luxury-retirement-on-wheels-1306263018641/?link=SM_hp_ls4e From SmartMoney (May 24, 2011) “Luxury Retirement On Wheels”

ESTATE PLANNING / RETIREMENT PLANNING

If you were counting on tapping the equity in your home to help finance your retirement, you may have reason to worry. A recent issue of SmartMoney points out, “With home prices falling for nearly five years, many American must consider what to do with their homes should prices continue to collapse and the equity in their homes, if they are still lucky enough to have any, disappears completely.” If you are a Baby Boomer with an eye toward retirement, your plans may be taking quite a beating right now. Warnings about shortfalls in social security and Medicare, rising health care costs, and the prospect of higher taxes now combine with disappearing home equity. No wonder so many Boomers say they plan to work through their “retirement.” So, what do the experts say you should do with your home? Should you stay put and wait it out, hoping that home prices will eventually recover? Or should you bail out now, before you lose even more, and downsize? “The answer is that it depends on the individual situation,” says Nicholas Paleveda, an adjunct professor at the graduate tax program at Northeastern University. “If you have plenty of assets for retirement, there may be no reason to downsize. If you do not have sufficient assets for retirement, then selling your home to live in a smaller home may be appropriate.” Some options to consider include: • Multi-Generational Living. Think of The Waltons, with three generations living in one house. Multi-generational living was commonplace years ago, and is growing in popularity now. In fact the number of household comprising multiple generations jumped to 7.1 million, or 6.1% of all US households in 2010. Of course, things worked out well for The Waltons, but remember that was television … and even John Boy eventually moved out! • Pay Down the Mortgage. Depending upon your circumstances, it may be wise to pay down, or pay off, your mortgage before retirement to reduce your monthly expenses. • Downsize. In today’s market, it may actually make sense to sell your house, even if it is underwater, if you can purchase a smaller home at a particularly good price and low interest rate. The cost of paying off your current mortgage would effectively be added to the purchase price of your new, smaller home. In some instances, after the dust settles, you could still be money ahead in the long run. • Buy a Second Home Now. That may seem counter-intuitive, but if you have the means and can find a good price on a second or vacation home that will mesh well with your retirement needs, then you could basically lock in that price (and interest rate) now, and sell your primary home when the market recovers. Retirement planning has never been simple, and is even more complex in today’s economy. You are well-advised to seek qualified counsel before making any major moves involving your home Link: http://www.smartmoney.com/retirement/planning/realestate-nightmare-looms-for-retirees-1305648626178/ From Robert Powell via SmartMoney (May 17, 2010) “For Retirees, a Real Estate Nightmare Looms”

ESTATE PLANNING / RETIREMENT PLANNING

There are a number of good reasons that you might be eying your IRA as it sits there with years to go before you turn age 59-1/2. You could see it as potential, as rescue capital, or if you’re in a really good place you could see it as the start of an early retirement. Of course, there are a few good reasons for leaving it alone – heavy tax hits and penalties – and for that Forbes has recently offered some uncommon advice for withdrawing from your IRA early and penalty free. The general wisdom is to leave your IRA alone until age 59-1/2 or else pay a 10 percent penalty on withdrawals. But there are allowances for penalty-free distribution in the case of serious financial hardship, higher educational expenses, or the cost of a first home. What is far less known is the 72(t) exception for Substantially Equal Periodic Payments (SEPP). Essentially, the IRS regulations allow annuitization of your IRA, so you can receive distributions straight from your IRA by taking them as a series of “substantially equal periodic payments.” The payments, once initiated, act much like required minimum distributions in that you must take out an amount determined by your life expectancy (or the joint life expectancy of you and your beneficiary) and at regular intervals, at least annually. Once initiated, you must take these distributions for 5 years or until age 59-1/2. You can then reorganize your distribution pattern or hold off entirely until the actual required minimum distributions set in at age 70-1/2. The process, as you would imagine, is fairly complicated and that probably accounts for its relative under-use. To see it in action you can consult the original Forbes article, but even they found it simpler to reiterate the examples and information from the IRS’s FAQ. It is tricky, and perhaps a little risky, but it is at least an interesting tactic to bring to light, and may be a practical solution to your early-retirement plans.

Link: http://blogs.forbes.com/thebogleheadsview/2011/04/14/how-to-take-money-from-your-ira-early-without-a-penalty/

 From Forbes.com (April 14, 2011) “How to take money from your IRA early – without a penalty”

SMALL BUSINESS / RETIREMENT

If you’re over age 50, have substantial assets in your qualified retirement plan, and always dreamed of being your own boss, you are not alone. In fact, you may decide to join the growing number of baby boomers who are tapping their retirement savings for start-up capital on a new business. The Wall Street Journal, along with SmartMoney, recently discussed the trend, the possibilities, and the potentially dangerous risks involved. Here is the strategy, which the IRS called a Roll Over as Business Startup (ROBS). First, you create a legal corporation with its own 401(k) plan into which you can transfer all of your funds from a previous employer-held plan. With those funds, you can then invest the 401(k) into your new corporation in exchange for shares. What once was simply retirement money has thus become start-up capital. The problems with this approach are probably obvious: most start-ups fail, but if you fund your start-up with your retirement money then your retirement also goes down the drain. That is probably the biggest risk, but don’t discount the IRS. While this move is legal (if done properly), it does invite IRS scrutiny. This financing move has become popular enough to draw the attention o f the IRS, which has suggested that these kinds of rollovers “seek to exploit the generous tax benefits enjoyed by qualified retirement plans.” The agency has called for added scrutiny on firms that use them. Still, some financing firms like Guidant Financial have seen increases in this method (a 30% increase in the case of Guidant Financial, for example). David Nilssen, co-founder of Guidant Financial Group, Inc., says the IRS has never called thse kinds of rollovers non-compliant, only that it would watch firms funded by 401(k) rollovers more closely. To be sure, there are risks involved. But the profile of an entrepreneur is one of a risk-taker. And then there are other risks at play. Many baby boomers facing retirement simply are not prepared to stop working. That retirement nest egg may not be enough to finance a comfortable retirement, but it just might be enough to finance a second career as an entrepreneur, providing income that could make an eventual retirement that much happier. Link: http://blogs.wsj.com/in-charge/2011/04/06/tapping-retirement-savings-for-a-start-up/ From The Wall Street Journal Online – WSJ Blogs (April 6, 2011) “Tapping Retirement Savings for a Start-up”

ELDER LAW / RETIREMENT PLANNING

It’s no secret that “retirement” is a touchy subject nowadays. Costs are up, savings are down, and the public is generally pessimistic according to the 2011 Retirement Confidence Survey. As a recent SmartMoney article relates, one increasingly popular solution, although it might not be an easy one, is to escape domestic problems and costs by going global and retiring abroad. It’s hard to say just how many retirees are living offshore. They aren’t counted in the census, and many go to great pains to fly below the radar, but according to the Social Security Administration the number of retirees taking benefits overseas has risen 32% since 2002. Some end up in small French villages or other cultured corners, many more retire to exotic regions like Thailand, while still others fly south to warmer climes in South America, happy to endure the rainy seasons to live where they can stretch out their dollar in style. The potential pay-off is great, especially if you have a taste for tropical drinks, but there are a number of concerns too. Simply put, it’s an entirely different place. Moving out of the way of rising costs in the US may mean moving into the path of hurricanes, into entirely different cultural waters with conflicts you don’t understand, and a potential web of paperwork and legal technicalities. Be cautious of scams, particularly the yet-to-be-completed “development.” Investors have been known to abandon such projects, leaving an incomplete, insolvent, or undersold development that may not fulfill the promises of the pamphlet. The Smart Money article is quite lengthy and detailed. If an off-shore retirement destination is enticing you, I suggest reading this – and many others. Due diligence is the key to a successful off-shore transition. Link: http://www.smartmoney.com/personal-finance/retirement/retire-abroad-golden-years-go-global-1299780968587/ From SmartMoney (March 13, 2011) “Retire Abroad: Golden Years Go Global”