Estate planning

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in the Journal of the American Medical Association cautions that early signs of inability to manage finances are an inability to count money, trouble paying bills, concerns about stolen or missing money, calls from financial institutions about problems with accounts and financial abuse.Advance planning is critical to avoid the dire consequences of cognitive impairment. Since every situation is different, you need to discuss this issue with your attorney. A common recommendation is a durable power of attorney that names a designated agent who is authorized to take over your finances if you become incapacitated. If the power of attorney is not “durable,” it will automatically terminate once you become impaired, which defeats its purpose.

Another option is a “springing” power of attorney, which becomes effective only once a determination of impairment has been made. Usually the diagnosis has to be from one or two qualified physicians. The problems with these requirements are that the diagnosis can be difficult and doctors are often reluctant to make it. For these reasons, many attorneys prefer a durable power of attorney that does not require the satisfaction of these conditions.

If you have significant assets, you should consider appointing a trust company to manage your assets in the event of impairment. Your attorney should consult with the legal department of the trust company to be sure the power of attorney you execute is in a form acceptable to them.

You worked your entire life to save for retirement and to leave a legacy to your loved ones. With a little advance planning, you can protect your assets from the hidden danger of cognitive impairment.

via huffingtonpost.com

This is an issue that needs to be addressed sooner rather later. Seek the advice of a trusted financial professional.

Please comment or call to discuss how this affects you and your family.

Posted via email from Curated 401k Plan Content

Why do individuals forget about their financial planning? Will it magically fix itself? Don’t let this happen to you and your family.

English: Seal of the United States Court of Ap... — English: Seal of the United States Court of Appeal for the Fifth Circuit. As indicated below, this image is a work of the United States Government and under copyright protection is not available for any work of the U.S. government. Image available here on the United States Court of Appeals for the Fifth Circuit website. (Photo credit: Wikipedia)

A retirement plan participant can designate a beneficiary other than a spouse, but a waiver is required. Many plans have specific provisions that provide for the order in which distributions will be made in the event a specific beneficiary is not designated. For plan administrators, the rules about beneficiary designations require strict adherence to the plan documents, which can mean that those who think they have a right to benefits may not in fact have those rights and that leads to litigation.Such was the case in Herring v. Campbell, a recent case decided by the Fifth Circuit Court of Appeals. In this case, a plan participant designated his wife as his primary beneficiary with no secondary beneficiary. His wife died before he did, but he made no other beneficiary designation. When he died, the plan distributed his account balance in accordance with the plan rules, to his surviving siblings. Of course, he happened to have step-children, who sued the plan administrator for not giving them the money. The plan rules provided that in the absence of a beneficiary designation, surviving children get a the distribution before the deceased participant’s siblings.

The Court upheld the plan administrator’s interpretation of the definition of “children” to mean biological or legally adopted children. Step-children did not meet this definition so they were not entitled to the benefits. The step-children argued that they had been “equitably adopted” but the Court found that this concept applies only to those seeking to require a parent to recognize a child, not a benefit plan making distributions. So in the end, the Court decided that the plan had properly distributed the benefits to the siblings and excluded the step-children.

So when considering the distribution of benefits from a participant’s account, the participant certainly can designate step-children as beneficiaries by an affirmative designation. And step-children can become “children” through adoption, which would give them “child” status when considering plan distribution rules. But, as we see in this case, unless a “child” clearly satisfies the plan’s definition of beneficiary (that is if they are in fact children under the definition of the plan), they will not be entitled to a distribution as a beneficiary.

via employeebenefits.foxrothschild.com

Just a reminder to everyone to review beneficiary designations often.

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Posted via email from Curated 401k Plan Content