Sarah Stewart Legal Group, PLLC

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Month: November 2018

4 Ways to Reduce Financial Stress

By Sarah Stewart Legal Group, PLLC

Though money matters are a constant area of concern for many, with the Holidays quickly approaching, more people are finding themselves stressed out about their finances. Decorating for the Holidays, buying gifts for loved ones, and financing Holiday travel and plans can burden your checkbook.

Once the storm of the Holiday season passes, the beginning of the new year brings optimism and a chance to set out your financial goals and plans for yourself and your family.

Here are 4 ways to relieve financial stress and set your goals for the new year:

(1) Build Your Foundation

Decide what you value and need most.  Prioritize these financial goals.  Remember to focus on your most important numbers:  (1) what you earn, (2) what you spend, and (3) what you owe, when making your budget.  Your budget will center around these numbers.

Once you have your budget lined out, you need to follow up with

(a) an emergency fund,

(b) a plan to reduce your debt,

(c) deciding how much insurance protection you need to protect your family, and

(d) getting an estate plan in place.

After your foundation is in place, you can confidently move forward with your goals.

(2) Take Action

Planning is wonderful start, but in the end, a plan is only as good as the steps you take to see it through. Once you have your goals and plan in place, take steps to automate your actions and make following through as easy as possible for you.

Many banks allow you to set up automatic payments and withdrawals to savings.  Set these up for your specific goals and watch your dreams come true!

(3) Review Your Progress

It can be easy to make a plan, set things on autopilot, and then forget about it.  But, forgetting about your financial and estate plans can cause you trouble in the long run.

Make a point to review your goals and progress annually with your trusted advisors.  They can help you decide if important life changes have happened that require fine-tuning or if more money can be put toward a specific financial goal.

And, let’s be honest, sometimes we change our minds.  Annual reviews allow us to be sure we are still focusing on what is most important to us.

(4) Don’t Forget Life’s Transitions

Life is full of ups and downs.  The joy of retirement, a new marriage, or birth. The sadness of job loss, a divorce, or death.

Transitions are rarely easy, but if you plan for them, it makes them easier. Your trusted advisors can help you manage your plans during life’s transitions.

Planning can be complicated.  It takes time, thought, and effort.  Many of us do not want to think about it, or think we have all the time in the world.  And we do have all the time in the world, until, all of a sudden, we don’t.

We all know the days are short but the years are long.  The sooner you can plan for your family and future, the sooner you can spend your time enjoying the most important things in your life- the people and the experiences- and spend less time worrying and wondering about where you’re going or if your family will be taken care of when something happens to you.

Reach out to your trusted attorneys and financial planners today and start your plan!

Estate Planning to Protect Your Children’s Inheritance from Divorce

By Sarah Stewart Legal Group, PLLC

When we make our estate plans, most of us plan for what we hope, or expect, to happen.  We plan as though everything will march along merrily as it has until this point.  Our marriages will last and our children’s marriages will last.

The reality is, about 50% of American marriages end in divorce.  If you want to leave a significant amount of wealth to your children, you need to plan for the chance your child’s marriage will end.

If you have a trust, a strategy that can keep your children’s inheritance out of the hand of creditors and ex spouses is to give Trustees full discretion over distributions.  This way, heirs don’t receive one, lump sum that spouses can seek in a divorce.

Though issues can come from giving Trustees so much discretion, there are ways to structure a trust to allow for a Trustee’s removal if the Trustee acts unreasonably and to allow beneficiaries to request assets as needed from the Trustee.

Many Baby Boomer clients may find this type of planning beneficial for their goals.  Many Boomer clients have children in their 30s or 40s who are married, have been married, or will soon be married and must plan realistically for the possibility of divorce.  Also, Boomers have started a trend of delaying distributions to their children until the children are in their 30s or 40s, later than the usual age of 25.

Boomers tend to see younger generations as more entitled and lazier than their own.  Because of this, they want to protect their children from themselves by holding back distributions and ensuring distributions can be lost in a divorce.

Even with this level of planning, the children need to be educated on how to keep their separate assets separate.  If distributions are made from the Trust to the children, children should keep these distributions separate and not deposit them in a joint account with a spouse or significant other.

3 Planning Options to Fund Education

By Sarah Stewart Legal Group

When planning to help fund family members’ educations, you must be clear on your goals and purposes. Though setting up educational funding can be a simple process, your goals will determine what planning documents you should use.

Although a Will is an option to leave money to your loved ones, you cannot restrict the use of those funds in the same way you can with a trust.  So, if your goal is educational funding, you will want to focus on using trusts and other planning options.

(1) Pot Trusts

If you only want to have one trust with more than one beneficiary, a pot trust is an option.  The trust is set up so your beneficiaries can request money from the trust for certain, predetermined reasons, such as education.

The problem with this kind of trust is that beneficiaries can end up receiving unequal amounts of money from the trust. For instance, one beneficiary may go to a state school and receive scholarships for education, while another may go to a private school without any scholarships.

Though it may not be your intent, the beneficiary receiving the private school education, without help from scholarships, would receive far more money from the trust than the state school beneficiary.

Another important factor can be age gaps between beneficiaries. If the age gap is great enough, the youngest beneficiary may not have any money left from the trust to fund his or her education.

If equality among beneficiaries is not your greatest goal, a pot trust could be a good option for you.

But, if equality is a goal, another option is Separate Trusts for your intended beneficiaries.

(2) Separate Trusts

The benefit of using separate trusts for each beneficiary is the equality you can establish.  Each trust for each beneficiary can receive the exact same amount of money, to be used as you instruct. Of course, you could allot different amounts for each trust if you have reasons to do that as well.

The downfall of separate trusts is your private school student from the example above may not have all the money he or she needs to be able to fund his or her education fully. Separate trusts are better if your goal is equal treatment.  If your goal is fully funding educational endeavors, a pot trust may be a better fit.

(3) State 529 Plans

More than 30 states in the U.S. offer tax incentives for establishing 529 education savings plans in their states.  Some states even offer incentives for establishing a 529 plan in any state.

State 529 plans allow you to place money into an investment account for a beneficiary.  These plans will not allow you to restrict fund usage as much as you may like, but they are geared toward education and have flexibility regarding changing beneficiaries and the kinds of education for which the funds can be used.

If you want to fund your loved ones’ educations, you will need to plan to reach your goals.  Reach out to experienced professionals to help you decide what planning options best fit your situation.




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