5 Financial Things to Review Annually

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A lot can change in one year. To help ensure that your financial documents and plans stay in sync with what’s going on in your life, it’s a good idea to review the following documents at least once a year.

1. Estate Planning Documents 

To help ensure that your property and money ends up where you want it, look over your will, trusts, and other estate planning documents at least once a year to see if there is anything you’d like changed.

For example, you may want to make a change if you’re recently married or divorced, added a new child to the family, received an inheritance, or experienced any number of other major life events. Or you may simply want to make a change because you’ve changed your mind about some part of your estate plan. Be sure to review the people you selected to manage your finances and health care if you ever become incapacitated. Are you still satisfied with your choices?

We can update your documents for you, as well as review them to see if adjustments are needed due to any changes in the tax laws.

2. Life Insurance Policies 

Things can change quickly in life, and the life insurance coverage that was sufficient to protect your family five or ten years ago may not be enough in your current financial situation. To help ensure that your life insurance coverage keeps pace with changes in your life (marriages, new children, new home, new business, pay increases, etc.), it’s a good idea to review your coverage at least once a year.

3. Beneficiary Designations 

Reviewing your beneficiary designations annually and when major life events (marriages, births, deaths, etc.) occur is just as important. Accounts and life insurance policies will generally inherit those assets regardless of any instructions to the contrary in your will. Assets that you may have named a beneficiary for include checking and savings accounts, annuities, medical and health savings accounts, life insurance policies, real estate deeds, and vehicle registrations.

4. Credit Reports

Not checking your credit report regularly may cost you. Errors that creep into your credit report and that are not caught may result in you being denied credit or paying higher interest rates than necessary or new credit cards or loans. It could also keep you from you from getting a new job, and cost you more for your car insurance.

To protect yourself, check your credit reports for errors at least once a year and before applying for a new loan or job. And while you are looking for errors, also look for signs of potential fraud such as accounts you did not open. You are entitled to a free credit report once every twelve months from each of the three major credit reporting agencies. You can order your free reports online at www.AnnualCreditReport.com or by calling 1-877-322-8228.

5. Social Security Statement 

Even if you are a long time away from retirement, it is important to review your Social Security Statement annually to make sure that your earnings for the prior year have been accurately recorded. That is because your earnings record determines the amount of your monthly Social Security benefit in retirement. If there are any earnings missing from your record, you may receive lower benefits in retirement than you deserve. You can review your statement online at www.ssa.gov/myaccount.

 

This article is a service of the Law Firm of Myrna Serrano Setty, P.A. We don’t just draft documents, we help you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a Planning Session. Mention this article to learn how to get this $500 session at no charge. 

Call us at (813) 902-3189.

Life Insurance Mistakes That Can Hurt Your Family

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Life insurance is an important part of estate planning and taking care of the people you love after you pass away. Make sure you don’t make these mistakes.

1. Not naming a beneficiary

Too many people forget to name a beneficiary or backup beneficiaries. Those mistakes can result in your life insurance proceeds having to go through the probate court process. That can tie up your money for months and even open up the life insurance proceeds to your creditors. And that can wipe out your funds.

2. Naming an individual as beneficiary to take care of that money for someone else

You might be tempted to list someone you know and trust as beneficiary of your life insurance, with the understanding that he or she would use that money to take care of another person that you have in mind. This could result in a number of problems. For example, you list your sister as beneficiary of your life insurance so that she can take care of your daughter. There is a difference between a legal obligation and a moral obligation. Morally your sister should use that money to take care of your daughter, but legally, it would be your sister’s money. Moreover, what if your sister passes away after she receives the life insurance proceeds? Then that money would be lost to your sister’s estate and your wishes may never be carried out. Or what if your sister had issues with creditors? Those life insurance proceeds could be at risk as soon as she commingles those funds with her own.

3. Not keeping your beneficiaries up to date

Too many people forget to update their beneficiary designations.  You should review your beneficiary designations at least once a year so that you can make sure you update them upon events like divorce, deaths, and births.

4. Naming a minor as beneficiary

We see this ALOT. And it can result in expensive and time consuming complications for your family. That is because in Florida, minor children can’t directly inherit assets over $15,000. If a minor is listed as the beneficiary, the proceeds of your insurance will be distributed to a court-appointed custodian (guardian of the property), who will be in charge of managing the funds (often for a fee) until the age of majority, at which point all benefits are distributed to the beneficiary outright.

This is true even if the minor has a living parent! That child’s living parent would need to petition the court to be appointed custodian (guardian of the property).

Instead of naming a minor as beneficiary, consider setting up a trust to receive the insurance proceeds, and name a trustee to hold and distribute the funds to a minor child you would want to benefit from your insurance proceeds. By doing so, you get to choose not only who would manage your child’s money, but also how and when the funds are distributed and used.

5. Naming an individual with special needs as beneficiary

If a loved one has special needs, chances are you want to help provide for a lifetime of care and protection. But if you leave the money directly to someone with special needs, it could disqualify that individual from receiving much-needed government benefits. Consider creating a “special needs trust” to receive the insurance proceeds. That way the money won’t go directly to the beneficiary upon your death, but it would be managed by the trustee you name and dispersed according to the trust’s terms, without affecting benefit eligibility.

You owe it to your loved ones to get this right.

Naming life insurance beneficiaries might seem pretty straight forward. But if you mess this up, you can create pretty big problems for the people you love.  But don’t worry, we can support you in planning for the people you love, whether it’s through life insurance or other tools such as wills or trusts.  Schedule an estate Planning Session to get started.

This article is a service of the Law Firm of Myrna Serrano Setty, P.A. We don’t just draft documents, we help you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a Planning Session. Mention this article to learn how to get this $500 session at no charge. 

Call us at (813) 902-3189.