Frequently Asked Questions

Estate Planning

investment fear

The short answer is yes.  Although a will is not a panacea for always getting your assets to your loved ones, it’s a great start.  If nothing else, it provides a starting roadmap as to what your intentions are.  A will, by itself does not avoid probate.

A Durable Power of Attorney assigns an individual of their choice, the legal authority to make decisions on behalf in the event they are not able to make a decision on their own.  The decision can involve legal, financial or health matters.

A trust holds assets and gives very specific instructions.  This includes distribution of assets upon death, or while the donor is living.  Special family circumstances can be addressed.  For instance, divorces, disabled children or grandchildren, spendthrift clauses, or other family dynamics can be dealt with.

Nursing homes can get very expensive.  The average cost in the Boston area in 2017 is between $12,000-$14,000 per month.  The planning of protecting assets is called Medicaid planning.  Medicaid is the governmental program that under certain circumstances can pay for long term care.  Medicaid is a means tested program and if you have control over your assets, you must spend them.  Single people can only have $2,000; married couples can have $120,000.  In addition, if you have gifted assets away there is a five year look-back penalty.

A Revocable Trust is a legal instrument whereby the donor has complete control or discretion over the assets in the Trust.  The Trust can be amended or revoked; assets can be taken out or put in.  Control is the key issue here.  An Irrevocable Trust the donor has no control.  He or she relies on a hand-picked Trustee(s) to exercise complete control.  The Trust usually has its own tax entity, its own tax id number and files a separate tax return.

Probate is a carry-over from British Colonial times.  It is a mechanism by which a (probate) court determines the distribution of your assets.  People or creditors laying claim to your assets can petition the probate court.  To avoid probate, assets must have beneficiary designations, i.e., IRAs, life insurance, bank accounts, or be jointly owned.  Probatable assets can be tied up for months or years and can be very expensive through court costs and legal fees.


family financial planning

This is one of the most frequently asked.  The answer depends on many factors, such as single situation vs. spousal situation, life expectancy, other assets available.  Nowadays, there are software programs that can make it easier to analyze.

For most people, it would behoove them to rollover their employee sponsored pension plan, i.e., 401(k), to their own self directed IRA.  This is because you will have more options than would be available and would be better able to customize a plan.

Bonds have a fixed interest rate.  However, their principal can quickly be eroded by rising interest rates environment.  This includes bonds mutual funds or mutual funds that hold bonds as well as stock.

Bad News:  Without proper planning, far too many people may run out of money in “their golden years”.  For instances, unexpected health care expenses can accelerate this.
Good News:  With proper planning, many people can avoid this.

It all depends on various factors, most notably your time horizon and risk tolerance.  If you may not need the money for a number of years then you may feel more comfortable allocating a higher percentage of your monies, thus being more aggressive.  However, a shorter time horizon or an aversion to risk would dictate a more conservative approach.

There are different types of annuities, i.e. fixed, variable, immediate.  Annuities can play a crucial role in ones financial plan.  The ability to receive a life-time income stream and the conservative nature of annuities, and their guarantees, mitigating volatility, makes them very attractive.