Estate Planning / Part 2: Avoiding Financial Regrets

One of the most touted benefits of a reverse mortgage is the peace of mind that comes from knowing that as a senior ages, they’ll have the funds they need to remain in their beloved home, pay the property taxes and upkeep, and still have enough left over to be able to afford necessities and niceties such as food, utilities, clothing, and whatever forms of entertainment they most enjoy.

Financial Planning For Seniors

In addition, many seniors have put away a nest egg over the course of their working life. But substantial savings may not be enough to ensure that their descendants receive an inheritance. Though filling out beneficiary forms can be tedious, and some well-intentioned people might opt to skip all that paperwork in lieu of a will, incorrectly completed retirement account forms can invalidate the forms and leave potential heirs without recourse, as one group of siblings discovered to their financial chagrin when nearly half a million dollars from their father’s IRA went to his next of kin — a wife of two months — rather than to his children as he’d planned.

A surefire way to avoid such unfortunate outcomes is for a senior to keep all accounts up to date, especially when there is any change in status such as a marriage, divorce, death, birth, adoption, etc., in the family.

It would be prudent for seniors, as well as any family members with dependents, to take these five steps to keep financial missteps at bay:

  1. Update beneficiary forms at least annually. This is crucial, because contrary to what most people believe, in 99 percent of the cases beneficiary forms override a will.
  1. Designate percentages next to the names of beneficiaries, or write “in equal shares” if the assets are to be distributed equally.
  1. If your bank or other financial institution changes its name or merges with another bank, fill out a new form. It goes without saying: old forms with obsolete names or outdated information may not be recognized as valid when the time comes.
  2. Keep hard copies of everything on file. This is especially important if you fill out forms online. Keeping a copy in your bank’s safe deposit box is a good idea, as is keeping a copy in a secure place at home. What to keep: beneficiary forms, including “payable on death” forms and “transfer on death” forms.
  3. Hire a professional. An attorney or financial planner who specializes in estate planning, or a certified estate planner licensed in your state, will know the laws for properly setting up and maintaining your accounts. A professional can also help you consolidate accounts and update your financial plan so that you are retirement ready. The best way to enjoy your reverse mortgage and later life is to know at the outset that all your assets are protected, both for you and for those you love.

 

4 comments

Dick Diamond September 9, 2014 at 2:28 pm

A help to some may be the AARP attorney network available in most cities. These participating attorneys will review an AARP member’s papers, such as a will, power of attorney, etc., at no charge and will make appropriate changes or create new work at a discount.

Also suggest older Seniors advise someone close to them where they keep their valuable papers in the event of their death so that bills can be paid and the estate settled.

Reply
James E. Veale, CPA, MBT September 9, 2014 at 10:59 pm

Ms. Rose has once again addressed an important subject where errors are sufficiently frequent to warrant that the IRS, the CFPB, the DOL, and financial institutions should be informing seniors at regular intervals that all significant assets need to be checked annually to ensure that assets will pass to the intended parties.

However, Certified Estate Planners (CEPs) are not required to be licensed in any state; CEPs simply hold a certificate as Certified Financial Planners (CFPs) do. The CEP required coursework is less extensive than that for a CFP; however, CEP education is solely focused on estate matters rather being a segment of a much broader program as is the case with the CFP education requirements.

Reply
Amara Rose September 10, 2014 at 8:24 am

Hello Dick and James ~

Thank you both for adding valuable information that helps your fellow reverse mortgage professionals expand their client service. The distinction between Certified Estate Planner and Certified Financial Planner education is especially important.

Reply
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