Yes, It’s Tax Time Again, But That Can Be A Good Thing.

Okay, I don’t mean that preparing your tax returns and paying taxes is the good thing, though as is often heard around tax time, the old chestnut from U.S. Supreme Court Justice Oliver Wendell Holmes, Jr., “Taxes are what we pay for civilized society” does ring true.

The good thing I am referring to really is only tangentially related to taxes. Since you have to pull all of your financial information together for tax return preparation this is a great time to review your investments, both retirement and non-retirement accounts, to assess not only how well they are performing but how they are doing with respect to your investment objectives and asset allocation plan. If that last part of the sentence leaves you scratching your head then you definitely need to undertake this review. Investing for retirement and other goals should not be a random process. Similar to a football team’s approach to a game or a season, your investment plan should have a goal, a playbook geared to reaching that goal, execution of that playbook, and a periodic review to assess how the playbook is working during the season and making adjustments as necessary.

Putting this in investment terms you should have an asset allocation plan, perhaps even an investment plan (often called an investment policy statement by financial advisors), that factors in your risk tolerance, investment timeline, and other resources such as a guaranteed pension or an expected inheritance, among other factors. Your investments should match up to this asset allocation plan to give you appropriate portfolio diversification.

But this is not a one-time proposition. Over time market factors will cause changes in the asset allocation percentages of the various investments in the portfolio due to differing levels of growth (or loss). While the overall value of your portfolio may have increased in the past 6 months or year, the original asset allocation percentages you selected for your personal goals and risk tolerance likely have changed, sometimes dramatically.

For example, let’s say your portfolio asset allocation originally was 25% each in U.S. stocks (or stock mutual funds or ETFs), international stocks, bonds, and money market (cash). [FYI–This is not necessarily a good mix!]. A year later the changes due to market forces results in an increase in the portfolio value (a good thing), but a new asset allocation percentage of 32% U.S. stocks, 20% international stocks, 30% bonds, and 18% money market cash (not such a good thing). If you don’t rebalance this portfolio it likely will continue this disparate growth and move further away from your investment game plan. As described by one financial services company, the “objective of rebalancing is to retain your preferred level of risk by maintaining your account’s original asset allocation over time.”

In addition to being a good time to review your investment portfolios and do your rebalancing, it is also a good time to ensure that your beneficiary designations on retirement accounts and insurance policies are up to date to avoid any unpleasant surprises if something unexpected should happen.

Reilly Law, PLC and our affiliated fee-only financial planning firm, Safe Harbor Financial Advisors, LLC (www.SafeHarborFinancialAdvisors.com) can help you with these timely projects, oh, and your tax returns too!

Casey Kasem’s final sendoff not what he would have wanted.

The recent death of legendary DJ and host of American Top 40 (and the voice of Shaggy on Scooby-Doo,a personal favorite!) Casey Kasem came at the end of a public spectacle of family infighting and legal action that undoubtedly Mr. Kasem would not have wanted. Disputes between his current wife and children from a former marriage about the care of Mr. Kasem, who suffered from Parkinson’s disease and dementia, led to a very public feud between the family members, filing of a missing persons report after he was removed from a California facility and allegedly moved to Washington State, and a court action where his children requested a conservatorship over their father’s health care.

This tragic tale played out in tabloids, TV, and the internet, could have been easily avoided with the right legal paperwork in place. While I don’t know specifically if Mr. Kasem had signed these documents before he became incompetent, he should have had a Durable General Power of Attorney for financial matters, a Durable Health Care Power of Attorney, and an Advance Medical Directive/Living Will.

While these documents are important for everyone, they are particularly critical for someone in the early stages of dementia since it is only a matter of time until they will no longer be legally competent to act for themselves or sign new legal documents. In such cases where it is probable that the legal documents will be needed, and potentially be in place for a number of years, they can and should be customized to address the issues that arose in Mr. Kasem’s case—who is in charge of his care, the nature of that care, any wishes regarding visitation with his family members, particularly the children of his first marriage who already had a strained relationship with his current wife, and other specific matters.

No one likes to think about the depressing and difficult issues of disability, incapacity, and death, but not thinking about it, and not making any plans for such events, does not mean that they will not happen. The essential elements of a Peace of Mind plan, the Durable General Power of Attorney (financial and health care), Living Will, and Will or Trust, give you the opportunity to make those difficult decision now, while you can, appoint the people you want to act for you, and give them guidance about the way you would like to be cared for should something unfortunate happen to you. While your case may never make the tabloids or TV, in the absence of appropriate guidance your loved ones may struggle with understanding (or agreeing upon) your intentions and who should do what, and an already difficult and emotional time can become that much more difficult for them, possibly leading to irreconcilable rifts in the family. A very public figure like Casey Kasem would not have wanted his last news stories to be about family strife rather than about his remarkable career. You have the ability to make your final “news story” one of celebrating a life well lived rather than a fight over your unspoken intentions. A Peace of Mind plan can provide this guidance and keep the peace!

Your Loved Ones Need a Roadmap (and why a GPS won’t work!)

Easter egg hunts. Games of hide and go seek. Scavenger hunts. All of these can be fun activities for children of any age. But there are some critical times when the need to find things is not fun. Among these are when a family member has become disabled or dies unexpectedly and you need to find out important information about their financial activities, what they own and who they owe, and what they would want you to do now that you are responsible for taking care of these things for them. For our example we will assume your widowed father has suffered a stroke and is in the hospital and not currently able to communicate with you.

As an initial matter, you have to determine if indeed you are the person entrusted with these responsibilities and if you have the legal authority to act for your father. In previous columns I discussed the essential legal readiness documents — a Durable General Power of Attorney, a Living Will or Advance Medical Directive, and a Will or Revocable Living Trust. (For more information on these you can visit www.MyPeaceOfMindPlan.com). We will assume your father had dutifully kept his legal readiness documents up to date and appointed you the Agent to act under his Durable General Power of Attorney which continues to be effective even if he is incapacitated.

So you are the right person with the right legal document to act. What now? You need to find out about your father’s personal finances—his sources of income, his monthly bills, his other bills such as property taxes, insurance, etc., and you have to make arrangements to continue to pay his bills. Do you even know where your father keeps this information? Do you have access to it? Do you know where he banks or which brokerage houses he uses? Do you know where his checkbook might be? Some people are very organized and they have detailed records in file cabinets, desk drawers, expandable folders, fireproof boxes, or some other location readily accessible. Others are a lot less organized and you may have to go on your own scavenger hunt to find everything you need.

But what if your father had become technologically comfortable and did his banking, investing, and bill paying online? What if he electronically filed his taxes every year? What if he kept all of his records on his computer? Do you know his account information, his passwords, or even if he did online transactions? The increasing use of paperless transactions means that you may have a difficult time in your “scavenger hunt” in finding the critical information you need.

If your father recovers presumably he can help you work through the many issues involved here. But what if he dies from his condition? Then you have an even more pressing need to determine what he had, who he owed, who owed him, what accounts need to be turned on or off, which government agencies need to be notified, etc.

While there is no simple solution to the problems of stepping into the life of someone else and taking over their personal finances for them, good organization and good communications in advance can be invaluable to all parties. One way to do that is to use an organizer such as the Peace of Mind Roadmap that we provide to our clients at Reilly Law, PLC. This Roadmap concept may seem like a throwback in a GPS era but we take the view that a map can always be used but a GPS relies on electricity/batteries and a good satellite connection which may not always be present. This is similar to having all of your critical information on a password-protected computer. You might be able to eventually access it, but it might be too late for some important transaction. Now think about your own situation. Would your family know what to do if something should happen to you?

You can get your complimentary Peace of Mind Roadmap by contacting Reilly Law, PLC at Roadmap@reillylawplc.com (please use “Roadmap” in the subject line) or by phone at 703-579-1936703-579-1936. You can also learn more about Peace of Mind planning at www.MyPeaceOfMindPlan.com or at www.ReillyLawPLC.com. Reilly Law, PLC specializes in comprehensive Peace of Mind planning. We offer free initial consultations and special rates for military, veterans, and civil servants, as well as young family specials intended to get you on the right path.

Reilly Law, PLC is located at 300 Ellicott Street, Suite B, in Historic Occoquan. Our phone number is 703-579-1936703-579-1936. We know you are busy so we offer evening and weekend appointments. For convenience we accept major credit cards. As one client put it recently, not only did he get his legal affairs in order, he earned miles towards their next family vacation!

A Dozen Difficult Questions

Ask yourself the following questions:

If I were to become disabled tomorrow:

1. Who would pay my bills?

2. Who would be able to make medical decisions for me if I cannot?

3. Would the family business continue?

4. Would my end of life care decisions be known and honored?

If I were to die tomorrow:

5. Who would get my property?

6. Who would care for minor children, parents, and/ or a spouse?

7. What happens to the family business?

8. Would the estate be settled according to my wishes?

9. Would taxes, fees, and costs be held to a minimum?

10. Would a trust have been appropriate for me?

11. Would my estate be settled in an appropriate and timely manner?

12. Will my family bicker and fracture based on the outcome of my estate distributions?

Failure To Create A Personalized Estate Or Peace Of Mind Plan Can Impact Your Financial Security!

Legal issues that impact financial security include topics such as: property ownership, estate planning, advance directives for health care, and guardianship for minor children.

You don’t NEED a Will—but here are 5 reasons why you might want one!

With a Will:

1.You choose your legal representative, not a judge;

2.You choose your intended guardian for your children;

3.You decide who receives an inheritance, what they receive, and when (or if) they get it;

4.You can provide for children of a previous marriage, elderly parents, or disabled family members; and

5.You can save your loved ones from needless expenses and additional time needed to settle your legal matters.

Without a Will:

State law takes over and directs a result you may not like. Learn more about Wills and other legal readiness issues at or visit www.ReillyLawPLC.com or contact attorney George Reilly at 703-579-1936703-579-1936

Peace of Mind Planning–The Top 10 List

Fans of David Letterman know that he regularly uses Top 10 lists for comic effect. But these lists can also serve a less humorous purpose–to give us easy to follow bullet points on important topics.

Today’s topic is 10 Reasons For You To Develop Your Own Peace of Mind Plan:

1. Provides resources and guidance for your family.

2. Allows you to establish a plan for disability or incapacity.

3. Provides a means to get your property to beneficiaries quickly (possibly without court involvement).

4. Provides opportunities to minimize expenses.

5. Allows you to choose trusted agents to act for you, to care for your children, and to serve as executors/ trustees for your estate.

6. Enables you to give guidance to your family on your desired end of life care.

7. Provides a way to care for other relatives who need help and guidance.

8. Gives you ways to help a favorite cause.

9. Can allow you to reduce taxes on your estate.

10. Peace of mind plans can ease the strain on your family at times of great emotional distress. Okay, so admittedly not as fun as Mr. Letterman’s lists, but far more important for you and your family.

Having the (Difficult) Conversation With Your Parents

“It’s not easy to talk about dying, but it’s vitally important.”

Whether we like it or not, and whether we talk about it or not, it is inevitable that our parents and other older relatives (and don’t forget, us too!) will face the consequences of aging. An elder law attorney said recently that in past decades we didn’t really worry about the issues of getting older since “we drank, we smoked, and we died shortly after we retired.” While clearly this was a humorous exaggeration, it is not exaggerating to say that we do have an aging population in the US and people are living longer. But this also means that more people are facing disability, dementia, and debilitating illnesses long before they die.

The question for you is, what if one of these people is your parent or another loved one? Have you ever discussed these critical matters with your loved ones—namely what happens in the event of disability or death; who takes care of what; a parent’s (or grandparent’s, or your own) wishes on end of life medical care and funeral/burial/cremation choices; your wishes on guardians for minor children; and other critical, but admittedly sensitive and gloomy topics?

In other words, did your family engage in “the Conversation” as it is called by a growing movement called the Conversation Project. The intent of this Project is to encourage families to have these important discussions before it is too late, and to provide them with the tools to make having this conversation a bit easier—using what they call the “Conversation Starter Kit.”

Why is this conversation so important? Consider these statistics:

60% of people say that making sure their family is not burdened by tough decisions is “extremely important.”

Yet 56% have not communicated their end-of-life wishes.

70% of people say they prefer to die at home.

Yet 70% die in a hospital, nursing home, or long-term care facility.

82% of people say it’s important to put their wishes in writing.

Yet 23% have actually done so.

You are starting to see the reason for the Conversation Project—providing families with the tools they need to help them change these statistics and give all of the family the peace of mind of knowing that there is a plan, that everyone knows it (and knows where the legal documents are located), and that they will be ready and able to carry out the wishes of their loved ones when necessary.

I recently wrote an article on the Conversation Project which you can read HERE. The Conversation Project starter kit and other information is available at www.TheConversationProject.org.

Learn more about Peace of Mind planning at www.MyPeaceOfMindPlan.com or at www.ReillyLawPLC.com.

Having this difficult but essential Conversation before it is too late can provide both you and your loved ones with peace of mind.