Tag: estate planning

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Inheriting Money Kevin Video

Inheriting Money: IRS Rules You Need to Know

In this video, Kevin Gormley and Travis Reader, both CERTIFIED FINANCIAL PLANNERs® from Leading Edge Financial Planning, dive into what you need to consider when you inherit money. Whether it’s a taxable brokerage, IRA, or Roth IRA, understanding the tax implications and required distributions is crucial. Kevin and Travis explain the three most common types of accounts you may inherit and walk you through the key steps to take when you’re a beneficiary. From determining the account type to understanding designations like eligible or non-eligible beneficiaries, they simplify what can be a complex process.

Kevin and Travis also discuss important terms like RMD (Required Minimum Distribution) and RBD (Required Beginning Date), and share strategies for handling inherited accounts based on your relationship to the deceased. This video is a must-watch if you’re dealing with an inherited account and want to ensure you’re making the best decisions for your financial future.


Watch now to learn:

○ The 3 most common types of inherited accounts: taxable, IRA, and Roth IRA.

○ What it means to be an eligible or non-eligible beneficiary.

○ Options to handle manage required distributions and tax considerations.

○ Key insights on how to minimize taxes and maximize the potential of your inheritance.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Pilot Money Guys Pilots

Why Estate Planning is Essential for Pilots

Professional pilots are economically valuable and worth every penny earned not just because they can fly safely from Chicago to LAX.  The real reason pilots are so valuable to their airlines and the flying public is that they are prepared to navigate dangerous weather, handle in-flight emergencies, and make difficult decisions. In other words, pilots are trained to get their passengers safely where they want to go regardless of what happens along the way. 

One of the most difficult things pilots do is prepare for an event that will most likely never happen in your flying career.  In almost 25 years of flying, I never lost an engine.  Which is great because one of my airplanes only had one engine!  I never lost a hydraulic system or experienced a dual-engine flameout, Sully-style.  However, I did (and you continue to) prepare for these events as if they are common occurrences.  This requires tremendous discipline, preparation and intense attention to detail.

The financial equivalent of preparing for life’s catastrophes is what financial nerds call estate planning.  I explain the gist of estate planning with a question to our pilot clients; will your spouse and children be okay if the unthinkable happens to you on your next trip?  It takes a lot of planning and preparation to answer this question with a confident “yes!” 

In this article I will explain the action steps and resources to help you confidently answer “yes” and have peace of mind knowing you’ve done everything you can to take care of your loved ones in case of a catastrophic life emergency.

Preparing for our own disabilities or death is akin to preparing for an engine loss right at rotation. It’s very unlikely that it will happen to you during your airline career. However, many pilots experience premature death and disability every year. But like the catastrophic emergency in the airplane, it’s hard to fully comprehend that it might happen to you at any moment. 

I recently returned from a family vacation in Edisto Beach, SC. The water was very rough with strong winds and currents. I shared with my kids about rip currents and what to do in case they thought they were in one. Tragically, when we returned from our trip, I noticed an article about two parents drowning in a rip tide while their six children were on the beach in Stuart Beach, FL.  Sadly, their children tried to yell instructions to the parents while dialing 911 from the beach.  It’s hard to comprehend this devastating family tragedy. I’m sure the parents woke up that morning and thought, like the rest of us, those tragic things only happen to other people. Therefore they may not have been fully prepared for this unimaginable scenario. 

Can you imagine the estate planning that needs to be considered when both parents with six children pass away? Who will take care of the children- aka guardianship? Who will take care of the financial needs of the children? Especially if they are minors. These are questions many of us need to address and prepare for. 

While we can rationally acknowledge that we will all die someday, we can’t imagine our own deaths.  In fact, it may be our brain’s biological tendency to protect us. In a research study conducted by Bar Ilan University in Israel, Yair Dor-Ziderman explains; “The brain does not accept that death is related to us…We have this primal mechanism that means when the brain gets information that links self to death, something tells us it’s not reliable, so we shouldn’t believe it.”

“…The moment you have this ability to look into your own future, you realize that at some point you’re going to die and there’s nothing you can do about it,” said Dor-Ziderman. “That goes against the grain of our whole biology, which is helping us to stay alive.”

I probably should have prefaced that section with the same warning in the article I quoted; “Warning: this story is about death.  You may want to click away now.” 

However, as I mentioned in the first sentence of this article, the very reason you are so valuable as a professional pilot is because it is your job to prepare for scenarios that we believe probably will not happen to us. And in the airplane, the chances are in our favor that they never will happen. On the other hand, we’re all gonna die…someday! I know you’re inspired now, right? 

Now that you know why it’s so difficult to get around to accomplishing estate planning for your family, it’s time to do some of that pilot stuff and get it done! Let’s start with the question:

Will your spouse and children be okay if the unthinkable happens to you on your next trip?

Here are the essential steps to prepare for your potential disability and/or untimely death:  

1. Do you have the essential estate planning legal documents?

Estate planning attorneys recommend that we all have the following documents at the ready:

  • Power of attorney; financial and healthcare
  • Last Will and Testament
  • Beneficiary designations
  • Living Will
  • Life insurance policies
  • Titles and property deeds
  • Living Trust – may or may not be required, depending on circumstances. 

2. Ensure the loss of your income will be replaced by savings and life insurance.

3. Does your spouse know where to find essential documents listed above?

  • Take inventory and make sure everyone knows where to find these documents and passwords.  Review the contents and location occasionally.

4. Does your spouse have access to cash, funding to pay bills in your absence?

  • Our experience was that financial account transfers and life insurance payouts can take some time.  Be sure to have access to several months of cash to keep the household going while waiting for access to other assets.

5. Digital logins and passwords

  • This deserves its own category now.  Consider using a password manager for information security of passwords plus the ease of sharing with your spouse. 

Click here for a PDF version of an estate planning checklist from Freewill.com.

Great resources to help get with estate planning

•    Great website: Getyourshittogether.org:  https://getyourshittogether.org/

I almost always refer to this website to help people.  Not just because the name of the website is awesome! Founder and author of “What Matters Most”, Chanel Reynolds, experienced the premature death of her husband at a very young age.

From her website, “I am immensely proud of the book and grateful for the opportunity to tell the whole story of what happened, what I wish I’d done and what you can do when life goes sideways and what can help before and after the shit hits the fan…”

Another excerpt from the website: “Will you be prepared if life knocks you sideways?

Get your family protected with the critical ‘What-if’ answers like wills, power of attorney, healthcare directives, digital details and legal documents you need today and someday…”

•    Online website, TrustandWills.com, for great information and getting your estate documents completed:

There is still much debate about getting estate planning legal documents accomplished online.  I can’t give advice in this format, but I will say the online resources have vastly improved over recent years.  Using TrustandWills.com you can accomplish estate planning and get the support of an estate planning attorney in your state. 

From their website:   “Just like estate planning isn’t a one size fits all deal, neither is the help that our clients need. That’s why we’re giving our members access to one-on-one time with licensed estate planning attorneys in their state. We want to offer products and estate planning tools that are inclusive for everyone, whether you have a multi-million dollar estate, or you’re just starting out planning for the future. Learn more about the benefits of Attorney Support.”

I have not personally used TrustandWills.com for my own estate planning documents, but I refer to this website regularly for great information, resources and learning. 

•    Workbook – “I’m Dead Now What?”

We often give this book as a gift for those who prefer a physical document(s) to refer to in case of emergencies.  This book, if completed correctly, covers all the nitty gritty details that a loved one will need to know in case of the unexpected death of a spouse.  The circumstances will be more difficult than we can comprehend, I believe we should not make it worse by not being organized. 

•    Airline specific financial podcast (and shameless plug), Pilot Money Guys Flight #12: I’m Dead, Now What?

This is part 2 of the Estate Planning Series “I’m Dead, Now What?” Three steps to make sure your estate is prepared. If you are unsure whether you have a good plan for the unexpected, this is the podcast for you…documents you need to have in place, why getting organized is important, and how beneficiaries and trusts go together to protect your family. Also see, Pilot Money Guys Flight #13: I’m Disabled, Now What?

 

Charles Mattingly, MBA, CFP®

CEO, Leading Edge Financial Planning

Hopefully, you found this article interesting and helpful. If you have any questions, I can be reached at 865-240-2292 or charlie@leadingedgeplanning.com. 

Also, please tell us if we can help you on your journey to financial peace and prosperity! Click here to sign up for our newsletter or click here to schedule some time to chat about your circumstances in more detail.  Also, check out our Pilot Money Guys podcast where we regularly discuss these types of financial topics along with some fun airline news updates and interesting guest interviews.  Even the editor and founder of Aero Crew News – Craig Pieper!


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this video will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning and are subject to change at any time due to the changes in market or economic conditions.

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Charlie Education Kevin

Post-Death Planning

Last week was National Estate Planning Awareness Week.  We are sharing a few articles on how to make sure your estate is in order.  Read on…

Post-Death Planning

Have you ever wondered what happens to your unpaid bills after you die? You might be surprised to know that it depends on what kind of debt is still outstanding…

 

In most cases, your estate will have enough assets to pay off all bills—assuming you have a positive net worth at the time of death. But understand that life insurance proceeds, retirement and annuity accounts and brokerage accounts are left outside the estate — and therefore cannot be forced to pay off debts. Your estate’s actual net worth may not be as great as you think it is.

 

Your executor will review the assets and debts in your estate and prioritize the debts according to some fairly straightforward rules. Certain creditors, like those who issue medical or mortgage bills, must be paid first. A probate court will decide which remaining debts go in which priority, unless there are clear directions in your will.

 

🏠 Mortgage debt normally passes to the spouse or partner whose name is also on the loan documents, but if there is no joint mortgage holder, and the estate has insufficient funds to pay the mortgage, whoever inherits the home can usually move in and resume making the mortgage payments. The rules are different with home equity loans; with these, the bank can demand that whoever inherits the home (and the loan) immediately repay the outstanding balance. However, this is not required of the lender; in many cases, the bank will agree to let the heir continue to make the loan repayments on schedule.

 

🚘 Auto loans work similarly to mortgages; the estate handles payments if the money is available. If not, whoever inherits the car has the option to continue making payments or selling the vehicle to cover the cost of the auto loan.

 

💳 What about credit cards? Any joint account holder is liable for the debts after the co-account holder dies. But if you’re the sole account holder, the credit card cannot go after any unpaid debts from your estate when you die. Spouses who live in community property states may or may not be liable for the outstanding debt.

 

👩🏽‍🎓 Student loans are typically paid out of the estate, but if those funds are not available, the loan provider cannot force anyone to pay off the loans, since they are unsecured. However, if there is a co-signer for the loan, that person is liable for repaying the debt. Once again, however, a spouse in a community property estate may be liable for student loans incurred during the marriage.

 

Many financial planners will recommend a term life insurance policy for a specified time for people who are still building their financial lives, to avoid burdening the family with debt in the event of a premature death. And of course everybody should have a will, and the will should clarify where the existing financial accounts reside, and how to access them. A little upfront planning can save having to deal with a mess later on.

October 22, 2022

Source:  TheStreet

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this article will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for your portfolio. Moreover, you should not assume that any information or any corresponding discussions serves as the receipt of, or as a substitute for, personalized investment advice from Leading Edge Financial Planning personnel. The opinions expressed are those of Leading Edge Financial Planning as of 10/26/2019 and are subject to change at any time due to the changes in market or economic conditions.  This article was written by an guest author.