SHOW NOTES: 2019-01-03 MiM

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Last Week’s Question of the Week: What is the average length of retirement in the United States? Is it 15 years, 18 years or 22 years?

ANSWER: Today, the average person retires at age 63 and enjoys on average an 18-year retirement.

HOST: Tell us what important things we should be doing with regards to our estate plans in the New Year.

KLAAS FINANCIAL: First of all, estate planning is an area that people overlook.
Here’s an interesting fact about estate planning: According to a recent Harris Poll, 64 percent of Americans have not made a will.

The top reasons cited:

  1. I haven’t gotten around to it yet
  2. It will be difficult and expensive
  3. I don’t want to think about death

It’s very important to have a good estate plan and attorney, AND to make sure your estate plans are funded and carried out.

HOST: What about the need for updating beneficiaries?

KLAAS FINANCIAL: Yes, we really want to focus on beneficiaries today. When is the last time you updated your beneficiary designations? This is one of the most common and potentially costly retirement and estate planning errors that people make. There is a large amount of people who have prior spouses or deceased relatives still named as a beneficiary on a retirement account at a former employer, or on a life insurance policy purchased long ago.

It is so important that after marriages, divorces, births, deaths and other major life events, account-holders need to check and, if necessary, update beneficiary statements. You might be wishing to have changed your will to leave everything to the kids or to another relative or charity.

In addition to thinking a will outweighs a beneficiary form, many people fail to check and change beneficiary forms because they regard it as the job of plan custodians or administrators. In fact, plan documents may have the name of a spouse or dependent already filled out as beneficiary. But custodians can make mistakes.

CAUTION: Do not depend on your will or living trust document to override outdated beneficiary designations. As a general rule, whoever is named on the most-recent beneficiary form will get the money automatically if you die — regardless of what your will or living trust papers might say.

HOST: So, does everyone need a will and Power of Attorney documents?

KLAAS FINANCIAL:  Yes, yes, and one more time… YES!
Here’s the critical difference between being a beneficiary and POA: the beneficiary only comes into effect at the death of someone, whereas the POA document comes into effect while the person is still living, typically incapacitated. Which is more likely, incapacitation or early death? That remains to be seen, but review your beneficiaries regularly.

HOST: Can our listeners do this on their own, or should they seek an attorney?

KLAAS FINANCIAL:  We would prefer an attorney to make sure things are done properly. You can do it on your own, but we would want you to take very special care that everything is signed and accurate. Lawyers and financial advisors recommend people write wills to ensure their wishes for transferring their property and assets are followed and to avoid protracted legal proceedings over the distribution of those assets. FACT: the death rate is a 100%. Everyone will die, so getting these items in order sooner than later, and during your retirement planning can make a lot of sense.

HOST: Isn’t life insurance part of estate planning too?

KLAAS FINANCIAL:  Yes, utilizing existing life insurance may be part of the entire estate plan for potential taxes or for beneficiaries. Again, these are important items that all of our listeners should make sure they have in place. Once you have your ducks in a row for retirement planning, making sure you have the proper estate planning documents very important.

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Catch C.J. Klaas and Maleeah Cuevas on Money in Motion every Thursday on Madison's 1310 WIBA from 8:05-8:35am.