The Inside Press

Magazines serving the communities of Northern Westchester

financial advice

Top 10 Financial Tidbits

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BY SCOTT M. KAHAN CFP®

  1. Join your company’s retirement plan and try to contribute as much as you can. Make sure you are contributing enough funds to get the maximum matching contribution from your employer.
  2. One of the greatest gifts you can give is to help pay the education costs for your grandchildren. Any gifts, regardless of how large, made to anyone for the purpose of funding education, do not incur gift taxes as long as the payment is made directly to the educational institution.
  3. Update your estate planning documents. Protect your health and your wealth with a health care proxy and durable power of attorney. Make sure your will and trusts leave money to the correct people.
  4. Maximize your tax deductions. Donate items you don’t need to charity. If you expect a large income tax refund, change your withholding tax so you get more per month in your paycheck and less of a refund.
  5. Buying low and selling high is a lot easier said than done. Have a solid rebalancing strategy in place that helps take the emotions out of investing.
  6. A shorter mortgage isn’t always better. Consider taking a long-term mortgage, and then make additional payments when you can. If things become financially “tight,” you can stop making additional payments.
  7. Protect tangible assets with the right amount of homeowners, automobile and liability insurance for liability and disasters.
  8. Withdrawing retirement plan assets before age 59½ may lead to a 10% penalty; not withdrawing enough after age 70½ may lead to a 50% penalty. Moral of the story? Know when to make withdrawals.
  9. Pay yourself first. As you set your budget each month, set aside money for savings and fixed expenses first. What’s left over can be used for other purposes.
  10. Like regular checkups with your physician, regular reviews with a Certified Financial Planner professional are important to your financial “health.”

Scott M. Kahan, is a Certified Financial Planner® professional and President of Financial Asset Management Corporation, a fee-only wealth management firm located at 26 South Greeley Avenue in Chappaqua. Call Scott Kahan at 914-238-8900.

Heir Atlas- Safeguarding Your Financial Intentions

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heir-LesterHimelBy Lester Himel

Sometimes there is a difference between what’s supposed to happen in life, and what really happens…

Staggering, preventable losses of assets or property…that’s what sparked the idea for Heir Atlas.

A group of financial advisors were discussing real losses to real people due to simple, common things: a beneficiary was never updated, a Will was lost, a bank account misplaced, a policy was terminated as premiums were forgotten.  Potential caregivers or heirs were unaware of what to look for or where.  Executors were left wondering if there was more.  Where was the transfer of information?

An example:  “John, your mother had a stroke last night.  She’s going to need a lot of care, bathing, dressing, even walking.  Do you know if she has a Long Term Care policy?  Do you have an idea as to where to look?”  Are you able to handle her expenses as she recovers?

Another example:  “My mother died about a year ago.  I thought I knew what she had but I’m still searching for bank accounts. As she aged, she became increasingly reluctant to open up about her finances. Her attorney had a Will but that only mentioned who got what.  It did not tell me where to look for everything.  I’m really not sure if I’m wasting my time.

So, the advisors asked what if there was a simple way to organize your estate from one central, accessible location; a single place to integrate all estate categories and manage updating details?  With technology experts, they designed a new and dynamic engine to help clients protect their vital estate intentions: Introducing Heir Atlas.

What are we addressing? 

When we use a bank, invest, buy an insurance policy, we have expectations.  If we have an accident or become ill, we expect our money or proceeds (on a policy) will be used for our benefit. If more serious, we expect someone to inherit it.  Surprising to many, it’s not that easy.   An insurance policy only pays if a valid claim is made; if no one is aware of the policy, there will be no claim and no payment.  If you have investments, bank accounts, IRA’s, etc. and care-givers are unaware, it may not be used to cover your needs while you recover.  In a more serious event, if beneficiaries are unaware, the money may eventually go to the state; there is currently almost $42 billion in unclaimed funds nationwide (see NAUPA for unclaimed property: www.naupa.org).

The “evaporating policy” problem is real.  If you own Term Life, Disability or Long-Term-Care (LTC) insurance, you realize that if you miss premium payments, the policy will “evaporate”.  You can envision an elderly relative forgetting to pay premiums on that LTC; years of premium payments and no policy?  It happens, and happens easily, when those who might be a help (family, care-givers) are not aware of what and where.

An increasingly important problem we call “Mom’s in Florida”.  When we have aging or Special Needs relatives, there is a heightened desire to record and maintain the information for their well-being, and to ensure the eventual transfer without omission.  Heir Atlas can help.

How do people typically deal with all of this? 

Most people use a “shoebox” or file at home for documents.  Many use a safe-deposit box.  Almost everyone assumes that their nearest relative (spouse, kids, etc.) will know where to look or what to look for.  We know from experience that these are poor assumptions.  Even in those situations where we have someone who is disciplined and diligent in updating the list, the diligence fades over the years.  Someone who is diligent at 52 is rarely as diligent at 82.

To list items is good, but incomplete.  The key to success is updating and locating.   As our lives change (marriage, children, divorce, deaths, and change in charity) we need to update the beneficiaries, just as we do change-of-address when we move.  When we change employer, bank, investment firm, and advisor we must update the list.  We sometimes forget.  And we need to ensure the right people will know where to look when the time comes.

How does Heir Atlas help?

Heir Atlas is a “directional hub”.  The service is web-based and carries the same security as used by banks.  Heir Atlas does not require account numbers!  A client catalogues the bank and investment accounts (without account numbers), policies (without policy numbers), locations, instructions and key information.  The client also lists those “trusted” individuals who are to receive the information if events in the client’s life require it.  Additionally, there is room for a list of advisors (attorney, accountant, whatever…) for the trusted individual to lean on if necessary.

A crucial part of the program is the regularly scheduled communication for updates.  Heir Atlas is unique in this respect.

The idea of a central hub for your relations to call is important.  This can’t be stressed enough: updating and central location is essential. If you have a family, if you want to ensure everything you’ve worked for is used as you planned, Heir Atlas deserves your consideration.  Please go to www.heiratlas.com. We welcome your suggestions for improvement.