Preventing Expensive Mistakes with Creative Estate Planning

We highly recommend that all clients do their Estate Planning. In fact, sometimes we are fanatics about it. That is because over the years we have seen a lack of documents, insufficient planning, or the wrong arrangements cause huge expenses, legal hassles, and family issues.

For married couples in a first marriage, the process seems simple. He leaves his stuff to her, she leaves her stuff to him. If they have children, the stuff is divided equally among the children if something happens to both parents.

But what if this is a second marriage or a blended family? What if the children are young? (Children under the age of 18 cannot inherit in most states.) What if there are dependent parents, children or siblings with a disability, or a charity they want to contribute to?

What if you were single always, or single once again? What if you are fearful of leaving an inheritance to children who are not responsible with money or have a drug or gambling problem?

Creative Estate Planning can be the solution in all of these situations.

Sound expensive? Not really. Many people try to avoid the cost of doing Estate Planning, but after their death their heirs spend thousands and thousands on unwinding a poorly planned estate.

Sound complicated? Doesn’t need to be. We have plenty of clients who have used creative arrangements to see their wishes for heirs are followed.

Consider these Creative Estate Plan possibilities:

• A trust that holds assets for children until they have accumulated a specified net worth of assets on their own, inspiring them to work hard like their parents did to create the estate they are passing on.

• A plan where a child gets income instead of assets, so he doesn’t treat the inheritance like he hit the lottery. (This also keeps him from being the “bank” for his friends who want to borrow money.)

• A program that requires heirs use some of the inheritance to hire a financial consultant and a CPA to make sure that money is invested and used wisely.

• A plan to provide income for an elderly parent, so that grandchildren will not need to be concerned with their financial or Long Term Care needs.

• A trust designed for a blended family to see that the assets of the husband go to his children and the assets of the wife go to her children.

• A program to arrange for money for an adult child to put towards health costs, education funding, or starting a business. If not used for these purposes, the child will get the balance at retirement. 

• An Estate Plan in which money goes to the Pittsburgh Foundation to be used for a music scholarship in honor of a deceased sister who taught music.

These are just a few options. You can create your own legacy. It does not need to be expensive, and it does not require having a large estate to start with. Whatever money you have that may be passed on can be arranged whatever way you want. Today, home ownership and a 401k can rank you up there with those who have significant assets.

But even if your assets are just your iPhone, car and dog, you have an estate. And you want to be sure it gets to the right people, in the right way, at the right time, for the least cost and taxes.

Let’s get started on your Estate Planning. Call us today at 412-341-2888 to schedule a time to chat about your options. And if you have other ideas for Creative Estate Planning, we’d love to hear them!

 

 DON’T FORGET…

• If you think putting assets in someone else’s name, or adding their name to your accounts, is the way to avoid doing Estate Planning, please know: This often causes more potential problems than it solves.
• If you are passing money by beneficiary (an IRA, 401k, life insurance) this money does not pass through your will. So if your spouse is your beneficiary, but you plan in your will for some money to go to a child or parent, it may not get there.

 

 

 

This information should not be considered as tax or legal advice. You should consult your tax or legal advisor regarding your own tax or legal situation.

 

 

Mary Grace Musuneggi Featured Speaker at Power of South Hills Women Event

On August 16, Mary Grace will be speaking to Power of South Hills (POSH) Women and signing copies of her new book, A Man is Not a Plan.

POSH Women is committed to fostering connections with local business women in the South Hills of Pittsburgh. Their goal is to provide a networking opportunity for women without a high cost or commitment requirement.

The luncheon begins at 11:30 AM at Houlihan’s in the Galleria. There is no cost to attend, but registration is required.

They Call it “Silver Divorce”…

By: Mary Grace Musuneggi, CLU, ChFC, CFS, RFC

They call it “silver” divorce because the picture it invokes is one of a silver-haired granny finding out that her husband is leaving her for a younger woman. Or of a silver-haired man in his 80’s or 90’s whose wife decides she just doesn’t want to spend her remaining years with him.

But the fact is “silver” divorce relates to anyone over the age of 50 who finds they are sitting at the table with attorneys trying to work out a settlement. It may be a settlement for assets, a house, retirement plans, income or even children.

Since 1990, the divorce rate for couples aged 50 or above has doubled (Bowling Green State University Center for Family & Marriage Research). At age 50, a couple could have been married 25 to 30 years. Now assume they are in their 60’s, 70’s, 80’s–or even 90’s–and they could have been married 40, 50, 60 years. Why is this so important to understand? Because during those many years, their financial success, or lack thereof, has been building. At this point, their work history is pretty much a done deal, and their income sources are set in stone.

When faced with the impending divorce, or making the decision to ask for the divorce, emotions often precede logic. Panic can set in. Although the financial issues are complex and should be addressed logically, that is often harder to manage than it sounds.

So what should you do if you find yourself part of a “silver” divorce?

Seek counsel. That means counsel from a therapist, an attorney, and a financial advisor. Let them bring logic to the situation when emotions are running high.

Bypass bitter. Decide that from this point on you will try to be better and not bitter. Bringing anger, resentment, and bitterness to decisions will not benefit you now or later.

Be realistic. Understand that if you did not work outside the home during your marriage, or if you had a job that was just “for the extras,” your financial situation could be bleaker. Your Social Security, for example, could be significantly less. As a result, you may need to work far beyond the normal retirement age of 65 to 67.

Don’t trade away retirement assets to have the “security” of the home. Often the house is seen as a safe haven, and that can be emotionally appealing. But maintaining it after the divorce could be a financial burden.

Make wise decisions. Don’t agree to decisions until you know and feel comfortable with the consequences. Consider that 19 percent of people who divorce after age 50 are poor, and 27 percent of women who divorce after 50 are poor (Bowling Green Study).

$50,000 is not always $50,000. If you are offered an asset, be sure you know what you are actually getting. Getting $50,000 from a 401k, which will be income taxable when you use it, is not the same as $50,000 from a Roth or $50,000 worth of cash that will not be taxable when you receive or use it.

Divorce at any time is a difficult and challenging life event. But after a long marriage and an expectation that the relationship will go on forever, divorce can feel even more daunting. With the right advice, the right financial decisions, the right attitude and the right life choices, your “silver” divorce can become an opportunity to close a window to the past and open a door to a brighter future.

Pre-nup? Never! After All, We Are In Love.

By: Mary Grace Musuneggi, CLU, ChFC, CFS, RFC

He loves me, I love him. I trust her, she trusts me. She can have her stuff, I will have mine. He doesn’t have much money, I don’t either.

Why would we ever need a pre-nup?

The answer to this could be…you don’t. But then again, maybe you do? And even if you don’t need an actual pre-nuptial agreement, you should still have the “pre-nuptial talk.”

Two major causes of divorce are money issues and lack of communication. If you and your spouse can’t talk about money, what else will there be that you can’t talk about? Some professionals believe the way people handle money may be indicative of how they will handle other things in life like relationships, business decisions, and parenting. So even if a formal pre-nuptial agreement seems out of the question, you still need to have the “pre-nup talk.” After all, as the saying goes, “Money makes people funny.”

Wondering what you should talk about? Here are a few ideas to get you started.

1. Review Your Credit Scores

You each should set up a Credit Karma account to check your scores. If your future spouse has a score of less than 700, you need to know what caused it. Late payments? Too much debt? Whatever the cause, you need to devise a plan to fix it.

Low credit scores can impact a lot of the things you do in the future. If you decide to buy a house, a low credit score can impact your ability to get a loan. If you are looking to buy a car, your interest rate could be higher than someone with a better score. And even employers may ask to see your credit history before they consider hiring or promoting you; many businesses don’t want employees they feel are irresponsible with money.

2. Discuss Your Health Insurance Plans/Other Employee Benefits

Even if you have your own plans, you need to know what your partner’s plan covers. What are the fees/deductibles? If you are planning on taking a leave from work to raise a family, what kind of maternity/paternity benefits will you have? What kind of insurance is available for a family? What if you choose to adopt—are there benefits or family leave time?

You also need to consider what will happen if one of you loses a job or gets disabled. Where will your income come from in that scenario? Can one of you be completely responsible for all of the bills and debt?

3. Share Your Last Two Years of Tax Returns

It is important to see if there are any significant losses. If so, what were they and why did they happen? Is there any chance of an IRS lien? Do you think too much money was withheld…or not enough? (And are you happy with either arrangement?)

Remember, once you file a joint return you are seen as one entity in the eyes of the IRS. If issues arise in the future, what is your plan for approaching and fixing them?

4. Previously Divorced? Share a Copy of Your Divorce Decree

If either partner has been divorced, the spouse-to-be needs to know the financial arrangements of that divorce. Is there alimony, child support, or other future financial obligations? If children are involved, is there life insurance for their care? Does the ex-spouse have any rights to pension benefits? Who is the beneficiary of benefits or investments? How should your own assets be designated? What kind of planning do you need to do for a blended family?

5. Arrange Your Bank Accounts

It’s important to decide if you will keep separate or joint bank accounts…or have both. If you have an inheritance, be careful about moving it into a joint account. It’s important to know how and when to keep pre-marriage assets in your own name.

These questions are a good start to your “pre-nup talk,” but don’t stop the conversation there. Keep talking about finances. There are very few things in your marital life that will not be affected by money. Your financial situation relates to where you live, how you vacation, where the kids go to school, when you retire, how you help your community or favorite charities, and so much more.

Having the “pre-nup talk” is essential. And even if you decide to live together instead of marry, are already living together, or were married without ever having the talk—the “pre-nup” discussion is important for you, too. It’s never too soon to get comfortable talking about finances with your partner.

He loves me, I love him. She trusts me, I trust her. These are the very reasons you need to have the “pre-nup talk.”

Test Your Financial Literacy!

Presented by The Musuneggi Financial Group

Here’s a quick quiz to test your Financial Literacy! Click the “Quiz Time” photo to the right to access the quiz. 

… how did you do? Did you get all six right? We’re proud of you! If you missed some questions, though, it’s probably time to brush up on your financial know-how. Reach out to us if you’d like to talk through any of these topics – 412-341-2888 or info@mfgplanners.com.

And if you’re just starting out or hitting the reset button, our new “Starting Out/Starting Over” program could be a great fit for you. We’ve designed “Starting Out/Starting Over” to be affordable for anyone. This coaching program provides assistance with budgeting, financial literacy, debt management, and investing 101, and connects you to an advisor who is available to help you make wise financial decisions.

One year of “Starting Out/Starting Over” can make an excellent graduation or wedding gift, too!

_{Securities offered through Grove Point Investments, LLC, member FINRA/SIPC. Investment Advisory Services offered through Grove Point Advisors, LLC. Grove Point Investments, LLC & Grove Point Advisors, LLC are subsidiaries of Grove Point Financial, LLC. The Musuneggi Financial Group, LLC is not affiliated with Grove Point Financial, LLC or its subsidiaries.}

Join us at the Heinz History Center!

Our annual Friends Helping Friends Gala is one way we say “thank you!” to everyone who helps The Musuneggi Financial Group to thrive and grow.

This year’s Friends Helping Friends Gala, Making History!, will be held on Wednesday, October 25. It’s going to be an evening to remember, and we don’t want you to miss it!

Here’s what you do!

Step 1: Think about all the people in your life: family, friends, neighbors, & colleagues.

Step 2: Choose 1 or 2 who could benefit from the same great service we’ve provided to you. (Need a “cheat sheet” of all the services we provide? Look below!)

Step 3: Ask them if they’re interested in having a quick 15-minute introduction call with Mary Grace or Christopher.

Step 4: If we are able to work together, you and the person you referred (and your guests!) will be invited to this year’s Friends Helping Friends Gala!

Did you know we offer all of these services?

FOR INDIVIDUALS/FAMILIES

• Starting Out/Starting Over Coaching
• Financial Planning
• Investment Management
• Asset Protection
• Estate & Philanthropic Planning
• College Funding Service
• Divorce Planning
• Senior Lifestyle Planning
• Life & Career Planning

FOR BUSINESS OWNERS

• Succession Planning
• Business Retirement Plan Consulting
• Business Protection

Mary Grace Musuneggi Publishes Second Book

We are excited to announce the publication of Mary Grace Musuneggi’s second book, A Man is Not a Plan: Success Strategies for Independent Women, which gives women a map for living life to its fullest.

At the age of 25, as a widow with a nine-month old son, Mary Grace became keenly aware that Cinderella was a fairy tale and that her salary as a parochial school teacher would never be enough to realize her goal of owning a home. Mary Grace decided to take charge of her own situation and carve out the abundant life she wanted for herself and her son.

The story of her journey to become the first female agent in an insurance firm, to that firm’s first female financial planner, to Chairman and CEO of her own successful firm is filled with anecdotes, humor, and practical advice.

In her role as a financial planner, Mary Grace meets women of all ages who rely on a man as a financial plan with disastrous results. But you won’t find detailed instructions about how to make a budget here because this book is about more than money. It is about finding the courage to be CEO of your own life, whether a man is in it or not.

This book will inspire you to examine your own dreams and goals and get on the path of achieving them one step at a time. Grab a cup of coffee or a glass of wine and start reading. A Man is Not a Plan will change the way you think and the way you live.

Mary Grace Musuneggi to Speak at Chatham University Center for Women’s Entreprenuership

Beyond Market Risk: Financial Risks Everyone Should Know

By: Mary Grace Musuneggi, CLU, ChFC, CFS, RFC

When new clients come to our firm, they sometimes begin by saying, “I just don’t want to lose my money.” I normally laugh and say it’s the first time I’ve ever heard that, as most people who come here hope they will…and then I get a laugh from the client. No one ever wants to lose money. Even losing $5 on the lottery or $100 at the casino can be painful for some of us. But the thought of losing your retirement money is a nightmare.

So one part of our job is to assess the amount of risk a client is willing to take to meet their financial goals. For a few, the amount of risk they are willing to take is zero. These clients are typically referring to market risk, or risking their assets in the stock market.

In the financial world, though, this represents only one of many risks associated with money. Besides market risk, there is interest rate risk. Some people believe only investing in bonds will eliminate some of the market risk, but bonds face interest rate risk. When interest rates go up, the value of a bond can go down. We are facing that risk currently as interest rates were at a historic low and now they are rising.

Having a Power of Attorney: A Requirement for Good Financial Planning

As you have probably noticed, everything we do in the world of business and finance seems to require more and more paperwork. New consumer information laws require disclosure forms; there are forms to comply with the Patriot Act and the Privacy Act; we have forms to protect you from not getting the right information and forms to protect those who give you the information. All in all, everything requires a document or form of some sort.

If you are a client of The Musuneggi Financial Group, you’ve heard us talk about the need to have an updated will, beneficiary forms, powers of attorney, living will and family letter. Although having these documents was always important, in today’s world they are critical. Over the years, our firm has too often been party to situations where not having these documents cost our clients time and money; put strains on their businesses; and complicated relationships with spouses and family members.

And with so many changes in federal, state and local laws, even if you do have these documents, you need to be sure they are not outdated.

We encourage you to meet with your attorney to be sure your documents are up-to-date. If you do not have the proper documents, we encourage you to get them as soon as possible. If you don’t know an attorney, we will be glad to introduce you to one who is a specialist in the areas of estate and business planning. Once you update your documents, be sure to contact us so we can help coordinate your beneficiaries with your updated wills.

The way your assets are titled is also extremely important in case of a life-changing situation, including divorce or death. Be sure all of your investments, savings and bank accounts are titled correctly.

If you have accounts titled in your name only, you need to have a Power of Attorney who can act on these accounts if/when you are unable to do so. The solution may not be to add someone else’s name to the account. This could cause a gifting issue or other serious problems. Many married couples believe that because all of their accounts are held jointly, they do not need a Power of Attorney. But IRA’s are owned individually, and if you are disabled your spouse cannot automatically act on your behalf for these accounts.

And if you are the person who normally handles an account for another, such as a parent or even a spouse, there may be times that you need to act on their behalf when they are not here to sign or give consent. A Power of Attorney can help to resolve this issue. Note, too, that in accordance with privacy laws, our firm is not permitted to give a child, sibling, or even a spouse information on another individual’s account without written permission.

Therefore, we are now requiring all of our clients to provide us with a copy of their Power of Attorney. Please fax (412-341-0725) or mail this to our office, or bring it to your next appointment. If you do not have one, contact your attorney. We also have a Release of Information form that you can complete; this gives us written permission to reach out to your support person if needed, but it is not a replacement for properly executed POA documents. To request a Release of Information form, please call our offices.

Also know that if you have a child over the age of 18 in Pennsylvania, you are no longer the default person for handling your child’s affairs. In many cases you will need to provide a Power of Attorney to show that you can act on your child’s behalf.

As your financial consultants, we feel it is part of our responsibility to help you survive any unexpected life situations that happen, and to help you prepare for those who may survive you. This is one way we hope to accomplish this goal.