Category Archives: Financial Planning

Retirement medical costs…

Fidelity Investments recently released a report heralding an 8% drop in medical expenses that a couple retiring in 2011 would expect to pay.  See Full Report.  That’s good news, the bad news is that this is still expected to top $230,000 and that’s a number that’s likely to grow.   A visit to your retirement planner is in order if you aren’t factoring this into your savings.  If you need names of reputable financial advisors who specialize in retirement planning, I’m happy to share the names of those I work with here on the North Shore.  Call or e-mail if you need a referral.

And all my contact info can be found at


Estate Administration

Probate is the process by which a deceased person’s property, known as the "estate," is passed to his or her heirs and legatees (people named in the will). The entire process, supervised by the probate court, usually takes about a year. However, substantial distributions from the estate can be made in the interim.

The emotional trauma brought on by the death of a close family member often is accompanied by bewilderment about the financial and legal steps the survivors must take. The spouse who passed away may have handled all of the couple’s finances. Or perhaps a child must begin taking care of probating an estate about which he or she knows little. And this task may come on top of commitments to family and work that can’t be set aside. Finally, the estate itself may be in disarray or scattered among many accounts, which is not unusual with a generation that saw banks collapse during the Depression.

Here we set out the steps the surviving family members should take. These responsibilities ultimately fall on whoever was appointed executor or personal representative in the deceased family member’s will. Matters can be a bit more complicated in the absence of a will, because it may not be clear who has the responsibility of carrying out these steps.

First, secure the tangible property. This means anything you can touch, such as silverware, dishes, furniture, or artwork. You will need to determine accurate values of each piece of property, which may require appraisals, and then distribute the property as the deceased directed. If property is passed around to family members before you have the opportunity to take an inventory, this will become a difficult, if not impossible, task. Of course, this does not apply to gifts the deceased may have made during life, which will not be part of his or her estate.

Second, take your time. You do not need to take any other steps immediately. While bills do need to be paid, they can wait a month or two without adverse repercussions. It’s more important that you and your family have time to grieve. Financial matters can wait. (One exception: Social Security should be notified within a month of death. If checks are issued following death, you could be in for a battle. For more on Social Security’s death procedures, click on

When you’re ready, but not a day sooner, meet with an attorney to review the steps necessary to administer the deceased’s estate. Bring as much information as possible about finances, taxes and debts. Don’t worry about putting the papers in order first; the lawyer will have experience in organizing and understanding confusing financial statements.

Below are some of the steps in probate:

1. Filing the will and petition at the probate court in order to be appointed executor or personal representative. In the absence of a will, heirs must petition the court to be appointed "administrator" of the estate.

2. Marshaling, or collecting, the assets. This means that you have to find out everything the deceased owned. You need to file a list, known as an "inventory," with the probate court. It’s generally best to consolidate all the estate funds to the extent possible. Bills and bequests should be paid from a single checking account, either one you establish or one set up by your attorney, so that you can keep track of all expenditures.

3. Paying bills and taxes. If an estate tax return is needed—generally if the estate exceeds $1 million in value—it must be filed within nine months of the date of death. If you miss this deadline and the estate is taxable, severe penalties and interest may apply. If you do not have all the information available in time, you can file for an extension and pay your best estimate of the tax due.

4. Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate. If the estate does earn income during the administration process, it will have to obtain its own tax identification number in order to keep track of such earnings.

5. Distributing property to the heirs and legatees. Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which is a year after the date of death. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and the costs of closing out the estate.

6. Filing a final account. The executor must file an account with the probate court listing any income to the estate since the date of death and all expenses and estate distributions. Once the court approves this final account, the executor can distribute whatever is left in the closing reserve, and finish his or her work.

Some of these steps can be eliminated by avoiding probate through joint ownership or trusts. But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs. You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process and reduce the legal bill.


Durable Powers of Attorney–What?

A durable power of attorney gives another person (agent or attorney in fact)the right to make financial decisions on your behalf.  (It’s “durable” if it still works when you are incapacitated).  A power of attorney is useful if you’re closing a real estate deal when  you’re in China, someone else can sign the paperwork for you.  It’s also a basic estate planning tool that allows your agent to pay your bills and handle your financial matters if you’re incapacitated. 

A power of attorney can be very narrow in time (only effective on the closing date) or broad (starts now and is in effect until I die).  It can also be broad or narrow in its powers.  It is a very powerful tool, so be sure that the person, time period and powers are those you’re comfortable entrusting to your agent.  In general, financial institutions prefer original DPOAs, so when you’re at your attorney’s office, you might execute several originals. 

Much like other estate planning documents, it’s important that you communicate your wishes to your agent, so they will act in a way that you would approve of.  A final note, this document terminates on death, so your agent will not be able to access your safety deposit box if you die with your will there, so DON’T PUT YOUR WILL IN YOUR SAFETY DEPOSIT BOX.


What’s in a “Basic Estate Plan”

I know that lawyers hate to admit that there is any such thing as a basic, vanilla estate plan.  The truth is, there is such a plan and some people have a need for one.  Equally true, however, is that you should probably have some good advice before you decide that you are one of those people.  When I talk about “basic”, I’m talking about the following items (this is somewhat specific to Massachusetts residents).  In later posts, I’ll describe each in some detail and give tips for getting organized to create one.

— Will

— Trust (maybe)

— Health Care Proxy

— Power of Attorney

— Emergency Guardianship Proxy (if you have minor children)

— A complete review beneficiary forms


Getting Organized

Are you the kind of person that makes New Year’s resolutions?  If so,  getting your finances and planning organized is a great goal for 2011.  I often provide clients with a “document organizer” which is essentially a list of your various important papers and where you store them.  This is useful when you re-finance your house, when you prepare taxes, meet with your financial planner, or if someone should need to step in and find something on your behalf.  Feel free to contact me if you’d like to receive one.  (; put “document organizer” in the subject line.)

Below is a list of other action steps to take as you think about getting your estate plan in order for the New Year.  (I once met a woman who spent every New Year’s Day putting together her filing system for the coming year, I can’t personally claim to do that, but she WAS one of the most organized people I had ever met…)

1.  Get organized! Put your papers somewhere all together, label as appropriate, and then tell someone where they are.

2.  Communicate! If you have special wishes, let your family, or loved ones know what they are; if you plan to treat children differently, let them hear about it from you, along with your reasons, to prevent resentment later.

3.  Plan! The best way to create a legacy, to be assured that your wishes are followed out, and that your family is cared for as you want is to make sure all this information is known, communicated, and executable.

Best wishes for happiness, peace and prosperity in 2011.


Dennis Hopper – words really do matter

It was reported in the New York Post that the discord over Dennis Hopper’s estate plan has already begun.  The crux of the matter is that Mr. Hopper did not want his wife to inherit from him if they were divorced or no longer living together.  Now, that seems reasonable, and in fact, a will is often drafted in a way that a divorce (or legal separation) will disinherit the former spouse.  However, Ms. Duffy (wife) was living on the property, but in a separate house.  So, is this “living together” or not?  Lawyers get a bad name for dragging out seemingly clear things, for being verbose, floundering in legal-ese, and generally seeming to obfuscate the obvious.  However, language defining what we think we already know can sometimes avoid confusion (and hefty legal fees).  When you are reviewing or working on any legal document, it pays to think about the “what ifs” during the drafting stage, and not at the litigation stage.  If your attorney asks you seemingly endless questions (“What if the guardians get divorced –who should care for your children”; “What if Jim isn’t avaliable?”; “What if everyone you’ve named dies before you do?”), be patient, think the questions through, and realize that your attorney really does have your best interest at heart, and is not just deliberately annoying you…


A few of my favorite causes – why Planned Giving

Do you have a favorite charity or non-profit? A cause that touches you in a special way?  Each day, charities do great work with scarce resources.  They house our homeless children, feed our poor, provide legal resources to our veterans and to impoverished grandparents, work to preserve our environment, and nurture our faith and spirituality.  My favorite causes include the Fund to Prevent Homelessness, First Parish Church, and the North Shore YMCA.  Each works in my community to improve all of our lives, but each works in a really different way.

Planned Giving is a way to think about YOUR resources, and to include important groups in your giving both while you’re alive, AND after you pass away.  Many families sit down together and draw up a plan, thinking about the causes that are important, and talking about how they want to support them.  This is more about planning than about great wealth – many people with limited means contribute every year to churches and community groups.  Americans are generous, giving more than $307 BILLLION in 2008, mostly from individuals.  One report estimates that 67% of American households make charitable contributions, while only 8% leave gifts in their wills (Fundraising Research).  What organization do YOU love, that maybe gives your life a special sense of hope or comfort?  Consider adding it to your estate plan, by will, by apportioning a percentage of an insurance policy or by making it a beneficiary on an investment account.  And of course, as you do this, talk to your attorney or tax advisor about the best way for your wishes to be drafted and integrated into your overall planning!


What’s the difference between a will and a trust?

I recently conducted an estate planning seminar, and one of the most confusing subjects was “what, exactly, is a trust, and what does it do?” (followed closely by “do I need one?”)  The reason this is so hard to understand has to do with the abstract nature of a trust.  When you own something, you usually have both “title”– that is you say “it’s mine”, and the use or benefit of the item.  If it’s your bicycle, for example, the “title” is in your name, and you get to ride it.  Generally, this is what we mean when we talk about owning something. 

A trust effectively splits the title from the beneficial interest. So the trustees hold title to the asset, for the benefit of someone else.  The trustee is given responsibility (or duty)for managing the property, in the manner specified by the trust document, while honoring both the donor’s intentions and the interest of the beneficiary.  So for example, if you were leaving $100,000 of life insurance money to your children, you might want someone else to manage this money for them until they reached a certain age.  The manager would be the trustee, while the children would be the beneficiaries. 

Trusts come in many many varieties, depending on the type of asset that is in them (for example, real estate trust or insurance trust), whether or not they can be changed (revocable vs. irrevocable), and when they come into effect (inter vivos is during lifetime, testamentary is upon death).

A will, on the other hand, is simply a document that disposes of your assets upon death.  A will can create a trust, or put assets into a trust.  And that final question, “do I NEED a trust?” depends on the type of assets you have, and what you want to do with them.  This is the kind of question you’d want to discuss with your estate planning attorney….


Divorce De-Mystified – Free Seminar

April 29, 2010 7:00-8:30 pm at the Beverly Farms Public Library.

Join us for a conversation on how to prepare for divorce from legal, financial and emotional perspectives.  Family law attorney Kate Barnes will address issues to consider before a divorce, how the process works, and legal standards in child custody, support, and alimony.  Psychotherapist Leah Alexander will talk about the emotional realities of divorce, while I’ll go through some of the financial questions and estate planning changes that a divorcing person might consider.