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Darrell Financial Services,LLCEmily Darrell Mascio, CFPMark J. Darrell, CFP2200 Baltimore BoulevardFinksburg, MD [email protected]
March - April 2018Four Tips for Downsizing in Retirement
Don't Wait to Ask Aging Parents TheseImportant Questions
How does working affect Social Securityretirement benefits?
How can I lower my auto insurancepremiums?
Money Matters NewsletterA Solid Foundation For Your Financial Future
Settling an Estate: Executors Inherit Important Title
See disclaimer on final page
Hi Everyone,
With winter winding down, and tax seasonupon us, this would be a great time tore-evaluate your financial plan. If you wouldlike to schedule some time for a review,please call us. Also, please save the datefor our annual Spring Shred Event !Saturday, April 14th , from 8:30am to11am . This will be held at our office: 2200Baltimore Blvd (Rt. 140), Finksburg, MD.Complimentary coffee, juice, and donutswill be available. Please feel free to invite afriend or family member to come with you!
We've prepared a great line-up of articlesfor you here. If they spark any questions orconcerns, give us a call. We stand ready toserve. Also, please consider forwarding thisnewsletter to any of your friends and familywho might be interested in our services.We would certainly welcome theintroduction!
Until next time, take care.
Mark
Being named as theexecutor of a familymember's estate isgenerally an honor. Itmeans that person hasbeen chosen to handlethe financial affairs ofthe deceasedindividual and istrusted to help carry
out his or her wishes.
Settling an estate, however, can be a difficultand time-consuming job that could take severalmonths to more than a year to complete. Eachstate has specific laws detailing an executor'sresponsibilities and timetables for theperformance of certain duties.
If you are asked to serve as an executor, youmay want to do some research regarding thelegal requirements, the complexity of theparticular estate, and the potential timecommitment. You should also consider seekingthe counsel of experienced legal and taxadvisors.
Documents and detailsA thoughtfully crafted estate plan withup-to-date documents tends to make the jobeasier for whoever fills this important position. Ifthe deceased created a letter of instruction, itshould include much of the information neededto close out an estate, such as a list ofdocuments and their locations, contacts forlegal and financial professionals, a list of billsand creditors, login information for importantonline sites, and final wishes for burial orcremation and funeral or memorial services.
An executor is responsible for communicatingwith financial institutions, beneficiaries,government agencies, employers, and serviceproviders. You may be asked for a copy of thewill or court-certified documentation that provesyou are authorized to conduct business onbehalf of the estate. Here are some of thespecific duties that often fall on the executor.
Arrange for funeral and burial costs to bepaid from the estate. Collect multiple copies ofthe death certificate from the funeral home orcoroner. They may be needed to fulfill various
official obligations, such as presenting the willto the court for probate, claiming life insuranceproceeds, reporting the death to governmentagencies, and transferring ownership offinancial accounts or property to thebeneficiaries.
Notify agencies such as Social Security andthe Veterans Administration as soon aspossible. Federal benefits received after thedate of death must be returned. You shouldalso file a final income tax return with the IRS,as well as estate and gift tax returns (ifapplicable).
Protect assets while the estate is beingclosed out. This might involve tasks such assecuring a vacant property; paying themortgage, utility, and maintenance costs;changing the name of the insured on home andauto policies to the estate; and trackinginvestments.
Inventory, appraise, and liquidate valuableproperty. You may need to sort through alifetime's worth of personal belongings and list ahome for sale.
Pay any debts or taxes. Medical bills, creditcard debt, and taxes due should be paid out ofthe estate. The executor and/or heirs are notpersonally responsible for the debts of thedeceased that exceed the value of the estate.
Distribute remaining assets according to theestate documents. Trust assets can typicallybe disbursed right away and without courtapproval. With a will, you typically must waituntil the end of the probate process.
The executor has a fiduciary duty — that is, aheightened responsibility to be honest,impartial, and financially responsible. Thismeans you could be held liable if estate fundsare mismanaged and the beneficiaries sufferlosses.
If for any reason you are not willing or able toperform the executor's duties, you have a rightto refuse the position. If no alternate is namedin the will, an administrator will be appointed bythe courts.
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Four Tips for Downsizing in RetirementGoing through years of accumulatedpossessions and memories is probably not howyou envisioned spending part of yourretirement. It may sound like a daunting andemotionally draining task, but downsizing couldbe a savvy financial move, especially if youhaven't reached your retirement savings goals.
1. Set goals for downsizingBefore you make any decisions, think aboutwhy you might want to downsize in the firstplace. Is it because you want to save onmortgage payments or other monthlyexpenses? Or are you looking to free up somecash to help pursue your lifestyle goals inretirement?
No matter what your specific goals may be,understanding the connection between themand downsizing can help motivate you to followthrough with it.
2. Determine the best time to downsizeIt's said that timing is everything, so choosingwhen to downsize will be an important decisionto make. One benefit of downsizing early inretirement is that mortgage payments and otherrelated expenses (such as utilities and realestate taxes) could decrease, presuming thatyou are downsizing to a less expensiveresidence. This could mean you have extrafunds to pursue new hobbies and activities rightaway in retirement. You might even befortunate enough to have sufficient funds fromthe sale of a larger home to pay for a smallerhome with cash, thus eliminating or decreasingyour mortgage payment, or significantlyincreasing cash flow.
But there may be advantages to delayingdownsizing. If you wait to do it later inretirement, you might have a better sense ofjust how much you need to downsize to supportyour current lifestyle. Plus, timing yourdownsizing plans with a stronger real estatemarket could mean that you sell and/orpurchase a new home at a more opportunetime.
3. Be realistic about costsThere are several costs to think about if you aredownsizing your home: the worth of yourcurrent home, the cost of a new home, and thefees and expenses associated with relocating.Before you start boxing up your belongings, runthe numbers. Start by contacting local realestate agents to receive estimates of yourhome's value. Compare the estimates so youcan develop an idea of how much you might beable to get for your home. Research online tosee what homes in your neighborhood have
sold for recently — this can also help youdetermine your home's potential selling price.
Take similar steps when you look for your newhome. One option that might be available is torent a new house or apartment for a length oftime before buying it. That way, you'll learnwhether the home and the location suit you,helping you avoid buyer's remorse.
If you're buying a new home, don't forget toaccount for the down payment, homeinspection, closing costs, and other associatedcharges. Factoring all of the numbers into theequation may reveal whether downsizingmakes the most sense for you and yourfinancial situation.
4. Consider downsizing yourbelongings, not just your homeFor some people, downsizing might simplymean cutting down on clutter rather thanrelocating. It's easier said than done,particularly if you've amassed many belongingsover time. When purging your home, considerthe following:
• Take your time. Don't feel pressured to clearout your entire home in one fell swoop.Instead, make a plan to do one room orsection of your home at a time.
• Involve your children. If you have kids,consider asking them for their help. Manyhands make light work, and your childrenmay end up expressing interest in items theywould like to have.
• Sell valuables. Maybe you can't find a newhome for that antique necklace you neverwear or the rare baseball cards collectingdust in your attic. Consider having thoseitems appraised and selling them to anauction house or online. Depending on howmany items you're selling and their worth, youcould wind up with quite a bit of money thatyou can use to help cushion your retirementfund.
• Donate gently used items. Find out if thereare any local organizations in your communitythat could benefit from furniture, clothing, orany other possessions in good condition thatyou want to get rid of. Some donation outletsmay even offer free pickup of certain items,saving you time and hassle.
• Clear out junk. Chances are you'veaccumulated items that you simply won't beable to give away or sell. Discard belongingsthat serve no purpose other than taking upspace in your home. You might be surprisedby how much room you could free up.
Have you considereddownsizing in retirement?
Page 2 of 4, see disclaimer on final page
Don't Wait to Ask Aging Parents These Important QuestionsIt's human nature to put off complicated oremotionally heavy tasks. Talking with agingparents about their finances, health, and overallwell-being might fall in this category. Manyadult children would rather avoid this task, as itcan create feelings of fear and loss on bothsides. But this conversation — what could be thefirst of many — is too important to put off for long.The best time to start is when your parents arerelatively healthy. Otherwise, you may findyourself making critical decisions on their behalfin the midst of a crisis without a roadmap.
Here are some questions to ask them thatmight help you get started.
Finances• What institutions hold your financial assets?
Ask your parents to create a list of their bank,brokerage, and retirement accounts, includingaccount numbers, name(s) on accounts, andonline user names and passwords, if any.You should also know where to find theirinsurance policies (life, home, auto, disability,long-term care), Social Security cards, titlesto their house and vehicles, outstanding loandocuments, and past tax returns. If yourparents have a safe-deposit box or homesafe, make sure you can access the key orcombination.
• Do you need help paying monthly bills orreviewing items like credit card statements,medical receipts, or property tax bills? Do youuse online bill pay for any accounts?
• Do you currently work with any financial,legal, or tax professionals? If so, ask yourparents if they want to share contactinformation and whether they would find ithelpful if you attended meetings with them.
• Do you have a durable power of attorney? Adurable power of attorney is a legal documentthat allows a named individual (such as anadult child) to manage all aspects of aparent's financial life if the parent becomesdisabled or incompetent.
• Do you have a will? If so, find out where it isand who is named as executor. If the will ismore than five years old, your parents maywant to review it to make sure their currentwishes are represented. Ask if they have anyspecific personal property dispositionrequests that they want to discuss now.
• Are your beneficiary designations up-to-date?Beneficiary designations on your parents'insurance policies, pensions, IRAs, andinvestment accounts will trump anyinstructions in their will.
• Do you have an overall estate plan? A trust?A living trust can be used to help manage an
estate while your parents are still living. Ifyou'd like to learn more, consult an estateplanning attorney.
Health• What doctors do you currently see? Are you
happy with the care you're getting? If yourparents begin to need multiple medicalspecialists and/or home health services, youmight consider hiring a geriatric caremanager, especially if you don't live close by.
• What medications are you currently taking?Are you able to manage various dosageinstructions? Do you have any notable sideeffects? At what pharmacy do you get yourprescriptions filled?
• What health insurance do you have? Inaddition to Medicare, which starts at age 65,find out if your parents have or shouldconsider Medigap insurance — a private policythat covers many costs not covered byMedicare. You may also want to discuss theneed for long-term care insurance, whichhelps pay for extended custodial or nursinghome care.
• Do you have an advance medical directive?This document expresses your parents'wishes regarding life-support measures, ifneeded, and designates someone who willcommunicate with health-care professionalson their behalf. If your parents do not wantheroic life-saving measures to be undertakenfor them, this document is a must.
Living situation• Do you plan to stay in your current home for
the foreseeable future, or are you consideringdownsizing?
• Is there anything I can do now to make yourhome more comfortable and safe? This mightinclude smaller projects such as installinghand rails and night lights in the bathroom, tolarger projects such as moving the washingmachine out of the basement, installing astair lift, or moving a bedroom to the firstfloor.
• Could you benefit from a weekly or monthlycleaning service?
• Do you employ certain people or companiesfor home maintenance projects (e.g., heatingcontractor, plumber, electrician, fall cleanup)?
Memorial wishes• Do you want to be buried or cremated? Do
you have a burial plot picked out?• Do you have any specific requests or wishes
for your memorial service?
The best time to start aconversation with yourparents about their futureneeds and wishes is whenthey are still relativelyhealthy. Otherwise, you mayfind yourself making criticaldecisions on their behalfwithout a roadmap.
Note: There are costs andongoing expensesassociated with the creationof trusts.
Note: A complete statementof long-term care insurancecoverage, includingexclusions, exceptions, andlimitations, is found only inthe long-term care insurancepolicy. It should be notedthat carriers have thediscretion to raise theirrates and remove theirproducts from themarketplace.
Page 3 of 4, see disclaimer on final page
Darrell FinancialServices, LLCEmily Darrell Mascio, CFPMark J. Darrell, CFP2200 Baltimore BoulevardFinksburg, MD [email protected]
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018
Securities offered throughFounders Financial Securities LLC
Member FINRA/SIPC andRegistered Investment Advisor
How can I lower my auto insurance premiums?More and more, it's harder tokeep up with the rising cost ofauto insurance. According toone estimate, the average costof auto insurance in 2017 for
lower-risk drivers with good driving records was$1,178.1
Although the criteria vary from state to state,insurance companies may base auto insurancerates on a variety of factors, such as: yourdriving record, credit history, age, and gender;type of vehicle; number of miles driven; whereyou live/park your car; and number of claimsfiled. While the types and level of autoinsurance coverage that you have (over andabove your state's required minimum liabilityamounts) will primarily influence your premiumcosts, auto insurance premiums can varywidely. That's because premiums arecustomized for each policyholder usingmathematical formulas that reflect theperceived level of risk.
Fortunately, there are things you can do if youthink that your auto insurance costs are higherthan normal. The following are some ways tohelp lower your premiums.
Raise your deductible. For the most part, thehigher your deductible, the lower yourpremiums. Before you raise your deductible,though, you'll want to be sure you can cover theout-of-pocket expense should an accidentoccur.
Forgo any unnecessary coverage. If youhave an older car with limited value, it maymake sense to drop your collision andcomprehensive coverage, because a claim paidby your insurance company may be minimaland might not exceed what you'd pay inpremiums and deductibles. But keep in mindthat this coverage may be required by a lenderif you took out a loan to purchase the vehicle.
Take advantage of discounts. Depending onyour circumstances, you may be eligible for oneor more auto insurance discounts. For example,your insurer might provide discounts to thosewith a safe driving record or who insure morethan one car with the company.
Shop around. Auto insurance rates vary fromcompany to company, sometimes significantly.Compare the various rates offered by differentinsurers.1 AAA, Your Driving Costs, 2017
How does working affect Social Security retirementbenefits?If you're thinking aboutworking as long as possible toincrease your retirementsavings, you may be
wondering whether you can receive SocialSecurity retirement benefits while you're stillemployed. The answer is yes. But dependingon your age, earnings from work may affect theamount of your Social Security benefit.
If you're younger than full retirement age andmake more than the annual earnings limit($17,040 in 2018), part of your benefits will bewithheld, reducing the amount you receive fromSocial Security. If you're under full retirementage for the entire year, $1 is deducted fromyour benefit for every $2 you earn above theannual limit.
In the year you reach full retirement age, $1 isdeducted from your benefit for every $3 youearn above a different limit ($45,360 in 2018).
Starting with the month you reach fullretirement age, your benefit won't be reduced,no matter how much you earn.
Earnings that count toward these limits arewages from a job or net earnings from
self-employment. Pensions, annuities,investment income, interest, and veterans orother government benefits do not count.Employee contributions to a pension or aretirement plan do count if the amount isincluded in your gross wages.
The Social Security Administration (SSA) maybegin to withhold the required amount, up toyour whole monthly benefit, as soon as itdetermines you are on track to surpass theannual limit. However, even if your benefits arereduced, you'll receive a higher monthly benefitat full retirement age, because the SSA willrecalculate your benefit and give you credit forany earnings withheld earlier. So the effect thatworking has on your benefits is only temporary,and your earnings may actually increase yourbenefit later.
These are just the basics, and other rules mayapply. The Retirement Earnings TestCalculator, available at the Social Securitywebsite, ssa.gov, can help you estimate howearnings before full retirement age might affectyour benefit.
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