What your New Year's resolution?

As a New Year rolls around, you, like many people, may take this new beginning as an opportunity to reflect on changes that you want or need to make in your life. Popular resolutions include making a commitment to lose weight, get fit, eat healthier, manage stress, save more money, and get more organized. Do any of these sound familiar?

It’s no surprise that many New Year’s resolutions focus on health and well-being. As you think about ways to improve your life over the coming year, your thoughts may naturally turn to the health and well-being of your family. Now is a good time to think about their future, as well as your own. If you haven’t already done so, let this be the year that you put a plan in place about the future long term care needs of you and your loved ones.

Although it’s not easy to think about the possibility of your own failing health or that of someone you love, avoiding the topic isn’t the answer. It’s important to have a long term care plan in place before you need it.

Long term care (LTC) refers to the range of medical, non-medical, social, and personal care services that can help someone cope with a reduced level of functioning due to injury, aging, or illness. LTC insurance (LTCI) can help cover expenses for the services provided by nurses, home health aides, occupational and physical therapists, and social workers among others. Although policies vary, they provide a set amount of coverage that can be used to help pay the costs of nursing homes, assisted living facilities, or home health care.

No one knows what the New Year may bring. But, by planning for the future, you can help to preserve your family’s assets, have more long term care options, and enjoy a happier New Year, knowing that you have a plan in place. And, that’s something to be excited about.

Estate planning is important for everyone, regardless of income level or net worth. Planning for the disposition of assets upon your death can provide benefits to all the parties involved.

The greatest benefit may be in the knowledge that your wishes will be fulfilled. Naming your heirs, and relieving them of unnecessary expenses and stress by designating which assets they will receive, is preferable to having a court make such decisions for you.

In addition to designating your heirs, the estate planning process may include developing strategies to protect your assets, such as establishing a trust. Proper planning can help ensure that your assets go to the people you choose, and in some cases, it can help minimize taxes. An estate plan can also include advance directives to be carried out during your lifetime. For example, a durable power of attorney grants authority to another person to make legal and financial decisions on your behalf, in the event of your mental incapacity; a health care proxy grants authority to a person you choose to make health care decisions for you if you become unable to express your wishes; and a living will generally allows you to state your preferences regarding the giving or withholding of life-sustaining medical treatment.

Put It in Writing

A will is the basis of any estate plan. In drawing up your will, obtain the guidance of a qualified professional. Although you may think you can do it yourself, an estate planning professional has the experience to ask questions you may not have considered. For instance, would your minor children or grandchildren be able to manage an inheritance? Would you want your children’s spouses included in your estate? If your estate were affected by a divorce or the death of a child, how might your wishes for the distribution of your assets change?

Name Names

The first name to settle on is that of your executor, who will be appointed to administer your estate. Next, consider the beneficiary or beneficiaries of your insurance policies. Beneficiaries and contingent beneficiaries of assets in retirement accounts such as pensions, 401(k) plans, and Individual Retirement Accounts (IRAs), are kept on record with the retirement plan administrator, and these nominations take precedence over your will. Retirement assets pass directly to the beneficiaries, bypassing probate court, unless the executor of the estate is named.

What about Estate Taxes?

Assets transferred to a spouse will not be subject to estate taxes, regardless of value. However, transfers to other beneficiaries, such as children, may be subject to Federal estate taxes if they exceed the applicable exclusion amount.

Certain vehicles can be used to fund the payment of estate taxes, such as life insurance policies and trusts. For high-value estates, a gifting program is often used to reduce the value of the estate, thereby minimizing taxes. For specific guidance, be sure to consult your financial advisor.

Regardless of your net worth, take steps now to help ensure that your intentions will be followed as directed, and that provisions will be made for your loved ones.

If advertisements and commercials are beginning to feature scenes of happy families, clad in brightly colored sweaters, gathered by a fire, surrounded by an assortment of presents, then the countdown to the holidays has begun.

Although it may be a joyous time that reunites old friends and distant family members, one dilemma you may face is how can you avoid the pressure to overspend, yet still have the pleasure of buying presents for your family and friends?

The key strategy is to plan ahead. Begin by writing down the names of those you plan to buy for – at least one gift idea for each person on your list – including a general idea of where you might find his or her gift. If you don’t know what type of gift you would like to give, browse through mail order catalogs, TV advertisements, and newspaper flyers for some ideas. This could help you avoid the trap of making your decision while in the store – when impulse buying may cost you more than you wish to spend.  

Setting a limit on the number – and cost – of the gifts you plan to buy can help you stay within your budget and allow you to purchase appropriate gifts for the special people in your life. Once you have your list, and estimate the cost of your proposed purchases, you can adjust it so the total expenditures fit into your holiday budget.

Shopping Strategy

To prevent overextending yourself, keep the following principles in mind:

• Shopping early and using the layaway plans offered by many stores might help you complete your shopping before the “holiday rush” begins. However, you may want to remember that some of the better sales come closer to the holidays.
• Whenever possible, pay by cash or check, rather than by credit cards. High interest rates and the enticement to “pay later” may lead to a larger debt than you can afford.
• Consider exchanging names among a group of friends or family with a set dollar limit to purchase a gift for one person. Remember, it’s quality, not quantity that matters when giving.
• Think about pooling your resources with other family members to buy gifts for individuals, particularly if it involves a rather expensive present.
• When in doubt, purchase a gift certificate from a person’s favorite store. With this type of gift you avoid overspending because you are purchasing a pre-determined amount. Chances are, your loved one will have some fun picking out the item they desire.
• Look to purchase “stocking stuffers” at a discount store all in one trip. This will help you avoid impulse buys.
• Prevent the “return blues” by saving all your receipts for gifts in one envelope. Label each slip with the items you purchased, where you purchased them, and for whom.
• Handmade gifts and cards are sometimes the best gifts received. Use your creativity and talent to give the gift of yourself, it’s often a personal touch that is greatly appreciated!

Taking an organized approach to holiday shopping can make the experience enjoyable for many reasons. First, you will be getting the most value for your dollar. Second, you will now have the time to really relax and enjoy the holidays, knowing your preparations are complete.