The art of leaving a legible financial footprint

Most people know they are worth more dead than alive. But many — including those who survive them — don’t know how much more. Or where the treasure (if any) is buried. And how you want it to be handled.

Many federal workers and retirees, especially if they own property or have TSP accounts and life insurance, are easily worth a million dollars or more. Deciding who gets it (Uncle Sam, the state, your children) isn’t easy but it isn’t rocket science either. And you doing it now can save lots of grief, ill will and money down the road. Might help keep an otherwise tight-knit family from falling apart.

So we asked estate and tax attorney Tom O’Rourke what he tells his clients. Most of them are current or former feds. Tom will be my guest this morning at 10 a.m. EST on Your Turn. You can stream it live here, or listen on the radio in the greater D.C. area on 1500 AM. If you have questions for Tom, email me them before the show airs. To help prep you for the show, and setting up your own financial plan, here’s his checklist:

In my 30 + years in helping individuals meet their estate planning goals I have encountered a number of misconceptions people may have about estate planning. Some of the most common are the following:

  1. I am not rich so I don’t need an estate plan.

If you have anything, you have an estate. While it may be quite modest, it is nevertheless yours to do with as you please.

  1. Everybody knows what I want, so why do I need a will?

The person who says this typically wishes to leave everything to a spouse and when the spouse dies to the children in equal shares. If the person is willing to engage in a discussion about estate planning, this discussion typically leads to the conclusion that even the person making the statement does not really know what he/she wants without giving it more thought.

  1. Minimizing taxes is one of the most important goals in developing an estate plan.

For many individuals, taxes play a very limited and possibly no role in the estate planning process. There have been major changes in estate and inheritance tax laws in recent years that completely eliminate estate or inheritance taxes for most individuals.

  1. I should leave everything to my children in equal shares.

While many do divide their assets equally among their children, this is not required by law. A plan about how to divide assets at your death should be based on your goals and not on any preconceived notion.

  1. My spouse and I have been separated for many years, but haven’t bothered to get a divorce. I am not going to leave him/her anything.

Virtually all states have spousal inheritance laws that may prevent you from disinheriting a spouse – even one you have been separated from for years.

  1. My significant other and I have been living together for years and I want him/her to inherit everything I have.

You certainly can accomplish this goal, but you need either a will or a trust to make sure it happens.

  1. I have a simple will that takes care of all my concerns and that is all I need.

A will does specify how your assets will be distributed after your death and who will oversee this process. It only becomes effective when you die. A comprehensive estate plan needs to deal with events that occur while you are alive – such as your inability to act on your own behalf.

  1. I have got a trust and that takes care of everything.

While a trust can be a very valuable estate planning tool, it needs to be properly funded and updated on a periodic basis.

An Estate Planning Checklist In The Time of the Pandemic:

  1. Review your will or trust to make sure it remains consistent with your wishes.
  2. Check your medical directive and financial powers of attorney to insure that they remain consistent with your wishes.
  3. Review your beneficiary designations.
  4. What about your pets?
  5. Do you have specific wishes for a funeral and burial?”

If you want to contact Tom, you can do so here.

Nearly Useless Factoid

By Alazar Moges

A 2006 report from the National Academies of Science’s Institute of Medicine (IOM) claimed sloppy handwriting from doctors killed over 7,000 people annually. Many preventable medication mistakes also injure more than 1.5 million Americans annually. Many errors resulting from illegible writing on prescriptions.

Source: TIME

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THRIFT SAVINGS PLAN TICKER

Oct 23, 2020 Close Change YTD*
L Income 21.6745 0.0225 1.59%
L 2025 10.5342 0.0235 -
L 2030 36.1351 0.0989 1.76%
L 2035 10.7083 0.0322 -
L 2040 39.9820 0.1307 1.73%
L 2045 10.8273 0.0379 -
L 2050 23.4480 0.0875 1.64%
L 2055 11.0692 0.0494 -
L 2060 11.0692 0.0494 -
L 2065 11.0693 0.0494 -
G Fund 16.4825 0.0004 0.76%
F Fund 20.9674 0.0125 6.75%
C Fund 51.4193 0.1769 5.50%
S Fund 62.4007 0.3642 3.45%
I Fund 30.9743 0.1672 -6.83%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.