Sarah Stewart Legal Group, PLLC

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Category: Oklahoma Families (Page 1 of 3)

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.

 

 

 

3 Steps to Add a Charity to Your Estate Plan

By: Sarah Stewart Legal Group, PLLC

As you consider the legacy you want to leave behind through estate planning, charitable giving may blip on your radar.  Many of us have causes and organizations we want to support and impact.  If you are one of those people, the good news is incorporating charitable giving into your estate plan can be an easy process.

(1) Pick Your Charity

Think of the causes and organizations that are important to you.  Where have you donated time, money, or materials?  Are there causes that have impacted the people you love personally? What do you want your gift to contribute to the community?

Charitable giving is immensely personal.  There are a myriad of questions to consider for yourself before making a decision.  But, rest assured, you can plan for any and all organizations you want in your estate plan.

(2) Pick Your Gift

After you’ve decided where you want to donate and the goals you wish to accomplish, you can move on to deciding what you need to donate to meet those goals. If you wish to donate anything other than cash, be sure to reach out to the organization to be sure they accept that kind of donation.

Though many large charities have the means to accept property, stocks, bonds, and other personal assets for donations, many small or medium-sized charities may not have the ability to manage and/or sell those assets.  A simple phone call can help you determine the best assets for you to donate that will best benefit the organization.

(3) Pick How to Give Your Gift

Now that we’ve decided who and what, we have to decide how. Most estate planning documents allow you to designate a charity as a recipient of any or all of your assets.  But, your goals will help you determine the best vehicle to leave your assets to charity.

If you are looking for tax benefits, there are ways to accomplish that.  If you want more say over how your donation is used, there are ways to structure your planning to ensure your goals are met. Professionals can help you meet your goals.

Do you have a charity you want to support after your death?  Reach out to trusted estate and tax planning professionals to help you organize and achieve your goals for your cause.

Planning for 4 Important Life Stages

By Sarah Stewart Legal Group, PLLC

Generally, people will experience 4 different stages through their lives. Estate and financial planning are important for every stage of our lives.  But, certain aspects of planning are more crucial during different stages. Learning what to focus on and when can help you make the best plans possible for your life.

(1) Starter Stage

Budgeting is the most important skill to learn when we are just starting out. A well-planned budget allows individuals to live within their means and avoid getting trapped by credit cards and other debts.

Once the budget is mastered, plan for savings.  Start with emergency savings.  Inevitably, something important will break. Your car will need new brakes.  The hot water heater will go out.  The washing machine will flood.

Having an emergency savings of at least $1,000 can stop an emergency from derailing your budget and financial plan.

It is also wise to start putting away some money for retirement.  Compounding interest helps early investors get the most bang for their buck.  The more you can save the earlier, the better your outcome when you want to retire.

Unless you already have a family, life insurance is not as important at this stage of your life.  Put that money to better use elsewhere, like a good health insurance policy. Figure out a basic estate plan in case something were to happen to you.

(2) Family Stage

Once you have a family, in addition to budgeting, saving, and investing, you’ll want to ensure you have a good life insurance policy to cover them if something happens to you. Term life insurance gives you the most coverage for the lowest rates. Add you family to your health coverage.

Start to revise your budget as income and expenses increase.  Plan for short-term, mid-range, and long-term financial and personal goals. Find a financial advisor to help you focus on greater retirement investments.  If you don’t have an estate plan in place, get one.  Your family will be grateful if they need it.

(3) Growth Stage

During this stage of life, your income will increase and your costs will stabilize. Plan to maximize saving and investing during this stage of life. Restructure your retirement plan based on the extra money you can devote to your investments.

Update your insurance policies based on your current needs. Update your estate plan, taking into account marriages, divorces, deaths, births, and other life changes.  Consider new estate planning vehicles based on the amount of wealth you have accumulated.

As with all other stages, try to keep your debts as low as possible.

(4) Retirement Stage

The focus of your retirement years will be budgeting. You know how much is available to you and you will have to stay within that range to retire successfully.

Healthcare costs will increase, so invest in a good health insurance option.  Debt should be minimal and life insurance will only be critical to protect a spouse or live-in child.

Update your estate planning and financial documents and simplify your finances.  Consolidate accounts and organize your financial portfolio.

The best way to plan for each stage of life is to focus on the most crucial financial components during each stage of life.  Having a thorough financial and estate plan can help minimize costs and risks for you and your family.

Reach out to professionals today to start your financial and estate plans!

 

How Famous Rapper Mac Miller Planned for His Death

Picture by Clarke Tolton for RollingStone.com

By Sarah Stewart Legal Group, PLLC

Malcolm James McCormick, the rapper and music producer known as Mac Miller, died on September 7 in California.  He was only 26 years old.

The rapper began his career at 14 under the name EZ Mac. In 2010, he signed with Rostrum Records and released his first album, Blue Slide Park in 2011. He went on to create several more albums over the span of his short career and became a highly-sought-after collaborator.  By the time of his death, he amassed more than $9 million in net worth.

Mac Miller was single and had no children, yet despite his youth, he learned from the errors other famous musicians made in their estate planning.  Mac Miller helped his family by pre-planning. He planned for his family after his death with a Will that left everything to a Trust.

Other famous musicians, including Prince and Aretha Franklin, did not properly plan for their assets after their deaths.  Prince died in 2016.  His family is still going through the court process of probate to try to distribute his assets. The process has been stressful, and no doubt, costly.  Aretha Franklin died in August 2018.  Her estate is currently going through the probate process as well.

When estates go through probate, it can take a long time.  Also, the public nature of the proceedings allow family members and sometimes even strangers, to make claims on the estate and delay the process even more.

Mac Miller’s estate will not have to go through the probate process, thanks to his advanced planning.  That means a Court will not have to oversee the division of the assets and notices will not be sent out that allow people to try to stake their claim to his estate.

Another benefit of Mac Miller using a Trust is that his wishes will remain private.  His family will not have to file documents that inventory his assets and who receives them in the court-which makes matters of the estate a public record.

Of course, a Trust is only as good as what you put in it.  When creating a trust, the person making the Trust must change the title of assets into the Trust’s name. Should an asset be missed, most Trust plans will include a Pour-Over Will.  The Will would be probated, but the assets would go straight into a Trust, keeping the assets and distributions private from the public eye.

If you haven’t created a plan for your family after your death, there is no better time than now!  Reach out to an estate planning professional today to get started!

 

 

6 Things You Can Do Now To Reduce Your Risk of Alzheimer’s and Dementia When You’re Older

By Sarah Stewart Legal Group, PLLC

Alzheimer’s and dementia affect the families of many of our clients.  In the later stages, these debilitating diseases often lead to complete physical dependency and lack of awareness of surroundings. The dependency caused by the disease requires families to step in and take over for their ailing loved one.

Alzheimer’s and other forms of dementia are on the rise in the U.S. The Alzheimer’s organization reports there are currently 5.7 million people suffering from these illnesses. They estimate that by 2050, more than 14 million people will suffer from these diseases.

There is no cure for Alzheimer’s and it is hitting more people earlier and earlier in their lives and causing more and more families to devote their time and resources to caring for people suffering.

Luckily, studies are helping doctors understand behaviors that increase the risk of dementia.  With this knowledge, we can make choices in our own lives that will reduce our risk of developing the disease later in life.

(1) Control Blood Pressure

The World Alzheimer Report from 2014 discussed several studies that found people with high blood pressure had an increased risk of dementia. People with high blood pressure are also at an increased risk for stroke. Strokes cause the death of brain cells, which can also lead to Alzheimer’s.

How does this happen?  High blood pressure strains your arteries.  This makes the arteries’ walls stiffer and the passage for blood to flow through narrower. The stiffer, narrower walls restrict the amount of oxygen and essential nutrients that flow to your brain and damages your brain cells.

You may not notice if you have high blood pressure because it will not necessarily affect your day-to-day life.  Get your blood pressure checked every 5 years to make sure you are still on the right track.

Indicators for high blood pressure include being overweight, diets high in salt, excessive alcohol consumption, and smoking.

(2) Kick Those Butts

Smoking increases problems with your heart and blood vessels, which are linked to Alzheimer’s. Also, the toxins in cigarette smoke cause inflammation and oxidative stress, additional factors in Alzheimer’s.  According to the Alzheimer’s Society, smokers are 30 – 50% more likely to develop Alzheimer’s disease than non-smokers.

Luckily, when smokers kick the habit, the increased risk factors are gone.

(3) Cut the Sugar

Columbia University studied the affects of sugar on dementia.  They found that people who used more than 2 1/2 teaspoons per day in their foods or drinks were 54% more likely to get dementia than those who didn’t.

For those who enjoyed more than half a can of soda each day, there was a 47% increase in the risk of developing dementia.

The study concluded that adding more than 30 grams (the equivalent of one can of soda) of sugar to your diet daily increases your risk of dementia by 33%.

When you increase your blood sugar, you are also increasing your risk for diabetes. Changes in glucose metabolism affect both diabetes and Alzheimer’s and can cause changes to your brain. Any excess sugar, whether from soda or fruit juice, can have the same affect.

(4) Protect Your Head

When people get hit in the head constantly, it can cause mini strokes, and strokes increase your risk of dementia. Repeated hits to the head can cause the central nervous system to become inflamed and lead to tau buildup- a protein that can cause memory loss, aggressive behavior, confusion, depression, and dementia.

Keep your head protected if you do contact sports.  If you do get a severe hit to the head, seek medical attention.  Follow your doctor’s advice about when to return to the sport.

(5) Exercise

A Cardiff University study found that exercising greatly reduces the risk of dementia. The study found that participants who developed 4 out of 5 healthy behaviors- exercising regularly, quitting smoking, keeping a healthy weight, and drinking little alcohol- reduced their risk of developing dementia by 60%.

As a bonus, adopting the healthier lifestyle reduced the risk of diabetes, heart disease, and stroke by 70% over those who did not have any of the studied healthy behaviors.

Exercise caused a greater reduction of health risks than any other single factor. When reviewing clinical trials, the Alzheimer’s Society found one month of regular exercise- just 20 – 30 minutes, several times per week- improved processing speed, attention, and memory in participants.

(6) Exercise Your Brain

Keeping you brain active regularly increases your brain health.  Studies found bi-lingual people developed dementia more than 4 years later than people who only knew one language. In addition, playing an instrument lowers your risk of dementia by 36%.

If language or music aren’t your forte, doctors suggest counting backward from 100 in 2s,3s, or 4s, while doing something else, such as tapping your hand on your thigh. You can also exercise your brain with problems at work or crossword puzzles.

 

7 Tips to Plan for a Spouse’s Death

By Sarah Stewart Legal Group, PLLC

There are more than 20 million widowers currently living in the U.S.  That number grows each year by about 1.4 million, with women being 3 times more likely to lose their husbands than husbands are to lose their wives.

More than 75% of married retirees interviewed in a Merrill Lynch study admitted that they would not be financially prepared for retirement if they lost their spouse.  And more than 50% of people interviewed who lost their spouse said they did not have a plan in place for their spouse’s death.

Losing a spouse is not only emotionally difficult, there are financial burdens as well.  Most couples are two-earner families.  The death of a spouse immediately turns your family into a single-income family. Planning for the probability that one spouse will outlive the other is crucial to providing your family with security and comfort during an already heart-wrenching time.

How to Plan

(1) Know What Your Spouse Owns

Keep a list of all the assets you own jointly and individually.  For anything not owned jointly, explore the possibility of naming a beneficiary or “payable on death”  on the asset or placing the asset into a Trust that allows ownership to pass directly to your spouse after your death without needing to go to court for a probate.

(2) Have Cash Available

You need to have a plan in place that allows your partner to access money quickly to help keep the family afloat if something happens to you. Build up a savings account for emergencies, put life insurance policies and other accounts into place, and name your spouse jointly or as a beneficiary.

(3) Own Separate Credit Cards

This may help you deduct some debt when a spouse dies.  It will also help you more easily attribute debt to the right spouse.

 

When you are nearing retirement age, there are additional steps you can take:

(4) Social Security

Claim your benefits.  They have the potential to increase a surviving spouse’s own benefit.

(5) Joint and Survivor Annuities

If you choose to have an annuity, or have a pension, in your plan, consider a joint and survivor annuity. These kinds of annuities will provide income to a surviving spouse when the other spouse dies.

(6) Long-term Care

Consider purchasing long-term care insurance and making other plans for long-term care.  With the average costs of assisted living in the U.S. running about $4,000 per month and the average costs of nursing care running about $7,000 per month, long-term care needs can quickly drain your retirement savings. Without proper planning, a spouse can be left broke while struggling with their grief.

(7) Relationships

Stay in contact with family and friends.  When something happens to one of you, you or your spouse will need and want their emotional support.

The best way to show your love for your partner is to make a solid plan for your death.  Planning allows the partner to move forward with their emotional healing without the stress and complication of financial burdens.

Reach out to your team of trusted advisors today to start your financial and estate plan for your family!

7 Considerations for 529 Accounts for Multiple Children

By Sarah Stewart Legal Group, PLLC

A 529 Plan is a savings plan for families’ future educational expenses. There are limitations to the plan, as the money can only go to qualified educational expenses.

The plan allows parents who contribute to the plan to have tax benefits for their contributions.  The extent of the tax benefit depends on the state in which the family resides. Any funds contributed to the account can be taken out, tax-free, for qualified educational expenses for the child named as the beneficiary of the account.

Though historically, the disbursements were used for post K – 12 education, recently, tax laws were changed to allow states to permit use of the funds for K – 12 education.

The earlier families begin to contribute to their 529 plans, the greater the growth over their child’s childhood. If you haven’t established a plan for your children, and want your children to attend college, or fund other qualified educational experiences, start your plan today to take advantage of compounding interest.

But what if you have two children? Should you have a plan for each child? Here are some considerations to help you make that decision.

(1)  529 Plans Only Have One Beneficiary

The 529 plan is structured in such a way that you can only use the account for one person’s educational experiences at a time.  If you have children far enough apart in age that they won’t be using the fund at the same time, one fund may work.  However, if you have two or more children who would need to access funds during the same time period, you will want to have more than one account.

(2) Investment Options Based on Age

Many plans offer investment options that change as the child ages (generally becoming more conservative).  If you have more than one child you hope to use your plan for, you may need to reconsider this type of investment approach as it may not allow you the flexibility you need for two or more children of differing ages.

(3) Gift Contributions

529 plans allow friends and family members to contribute to the fund as a holiday or birthday gift for the child.  Having one account for more than one child can make gifting difficult.

(4) Children’s Contributions

As children age, they may decide to work to add to their fund.  If there is more than one child on the account, tracking contributions will be difficult.

(5) Gift Tax

Any contributions to a 529 plan are subject to the gift tax exemption.  Each year every individual has up to $15,000 they can gift to others without having to deduct that amount from their overall estate tax exemption. If there are two 529 accounts, with two beneficiaries, family and friends can count $30,000 in the exclusion instead of only $15,000 for one account. If you have wealthy family or friends who would like to contribute, consider how their contributions could fit into their estate plans.

(6) State Taxes

Many states allow a deduction for their 529 plans.  Some states even allow that deduction per each account.  Check your state’s laws to see if you can receive a tax break for having more than one 529 account.

(7) Life Changes

Life happens.  If you become divorced or die, the successor may not know the account was intended for more than one beneficiary. Additionally, when you go through a divorce, the Orders may state that the account can only be used for a named beneficiary.

If you started one account and want to break it up, don’t fret.  Open another account for the other beneficiary and rollover the funds. Rollovers for the same beneficiary or a qualified family member are not taxable.

Shop around to look for the state benefits that fit your situation best.  If you are looking to use the funds for K – 12 education, find a plan in a state that best suits your needs and consider having another account for education after 12th grade.

Easing the Financial Strain of Caregiving

By: Sarah Stewart Legal Group

Caregiving can be a thankless job.  As the U.S. Baby Boomer populations ages, more and more people are becoming caregivers for their aging family members.  According to the AARP and the National Alliance for Caregiving, in 2015, about 13% of the population were caregivers for adults or children within the previous 12 months of the survey.

Caregivers often work full-time jobs and struggle to balance their own lives and families with the often additional full-time job of caring for their family member.  They usually receive little or no compensation for their time, and often pay out of their own pockets for their loved one’s needs.

If you are a caregiver, how can you ease the financial burdens that come with the territory of caring for your loved one?

An option for those who care for adults who receive some sort of benefits or income may be a caregiver agreement where a caregiver can be reimbursed for time and money spent caring for their family member. If these agreements are properly drafted, they can be used to “spend down” funds to qualify for Medicaid when the person receiving the care needs to.

If there is no agreement, any payments made to the caregiver may be seen as a “gift.”  In Oklahoma, the Medicaid “look-back period” is 5 years.  That means if any money or items were given to someone in that time period that are not subject to an exemption defined by the state, it could be counted against the individual trying to qualify for Medicaid or other benefits as a current asset.  That means the person seeking funding will have to wait until that money is “spent” down to the Medicaid qualification level to qualify.

Requirements for Caregiver Agreements

The agreement must be in writing and must be specific about the types of work the caregiver will do.  Will the caregiver be running errands? What kinds of errands?  Where is the loved one needing care living?  If with the caregiver, is the caregiver charging rent to the loved one?

What other, additional services will the caregiver provide?  Is the caregiver paying the bills for the family member?  Are they maintaining or repairing the house the loved one lives in?

Log Your Time and Expenses

Once you have the agreement in place, be sure to keep a detailed log of the time you spend providing the services.  If you pay for something out of pocket and want to be reimbursed, keep receipts. Keep records of the income you receive.  Payments to caregivers are generally counted as taxable income for tax purposes.

When caregivers assist their elderly family members, they are providing a benefit to the family member and the government by allowing that person to stay in their home for a longer period of time and decreasing the amount of care the government will have to pay for for the elderly loved one.

If you are in a situation where you can benefit from a caregiver agreement, reach out to a professional today!

These documents have strict requirements that must be met to ensure your loved one can qualify for government benefits when they need them. Do not try to do this on your own!

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