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Your Year-End Estate Planning Guide: An 8-Step Checklist

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When it comes to your estate plan, you don’t just have it drafted and put away until it is time for your loved ones to manage your lifetime of affairs. As your world changes year by year, it is critical that you review your estate plan and update it to stay aligned with your long-term financial goals. Here is an eight-step year-end estate planning checklist to help you organize and prioritize your estate planning strategy.

 

1.      Have you reviewed your will?

Reviewing your will as part of your year-end estate planning checkup is essential. As each year comes to a close, our life changes. These changes may impact your future financial plans and goals regarding your estate management should you die or become incapacitated. There are generally four types of wills that people choose from:

 

  • Attested Written Will – This is the most common type of will. It is typed, printed, and signed by the testator and two witnesses.
  • Holographic (Handwritten) Will – This will is handwritten and signed by the testator, and witnesses are recommended.
  • Nuncupative (Oral) Will – Typically, these are instructions by someone too sick to create a written will on how they want their personal property distributed. Nuncupative wills are not legal in most jurisdictions. However, in those which they are legal, a set number of witnesses must write down the wishes of the incapacitated individual as soon as possible.
  • Joint Will – A type of the last will and testament where two (or more) people, generally a married couple, transfer the entire estate to a surviving spouse when the first spouse dies. Upon the death of the second spouse, the children inherit everything.

 

2.      Have you met your financial gift limit?

In 2023, the annual gift tax exclusion (or gift tax limit) is $17,000 per recipient without having to pay taxes on those gifts. Any gifts above that amount must be reported to the IRS on your 2024 tax return (form 709). There are exceptions to this rule, and a financial professional can help you learn how it could impact your financial strategy.

 

3.      Have you reviewed your retirement and life insurance beneficiaries?

Reviewing your retirement and life insurance beneficiaries is important as people may get married or divorced, they may die, or a child or sibling may suddenly become a risk through addiction or an inability to manage money properly. In these or other relevant circumstances, you may want to modify the beneficiaries in your accounts. Beneficiaries typically don’t need to pay taxes on the life insurance death benefit they receive, especially if they receive it as a lump sum. If the beneficiary chooses to receive their payout as an annuity instead, any interest accrued may be subject to taxes.

 

4.      Are your HCP and POA documents up-to-date and in a safe place?

A health care proxy (HCP) is a document that names someone to express your desires and make health care decisions should you become incapacitated. Examples include medical directives, living wills, or advance health care directives. Some states provide a statutory or standardized form, while others allow you to draft your own. A durable power of attorney (POA) for your finances names an individual who can make financial decisions should you become incapacitated. If you don’t have one it may be necessary for the court to appoint one. Only about one-third of adults 55 and older have a power of attorney.

 

5.      Have you reviewed and revised (if necessary) an inventory of your assets?

It’s essential to keep an up-to-date inventory list, for example, the value of your home, other real estate interests, cars, jewelry, and other physical assets. You should also consider reviewing your recent financial statements, including your bank, retirement and brokerage accounts, and any safety deposit boxes.

 

6.      If you own any trusts, are they accurate and up-to-date?

The creation of trusts helps to preserve wealth, alleviate some of the tax burden, avoid probate, and provide your family and beneficiaries a less stressful way to access your estate after you are gone.

 

7.      Have you talked with your family about changes to your estate plan?

Establishing lines of communication regarding your estate plan and financial goals is an often overlooked strategy that can help preserve your wealth. According to NASDAQ, 70% of families lose their wealth by the 2nd generation and 90% by the third. These are overwhelming statistics driven in part by a lack of communication.

 

8.      Have you reviewed your estate plan with your financial professional?

The details of your estate plan and any modifications can fundamentally impact your financial strategy and end-of-life goals. As the year is winding to a close, schedule an appointment with your financial professional to review all the numbers, beneficiaries, potential tax consequences, and any needed updates.

 

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

 

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

 

This article was prepared by LPL Marketing Solutions

 

Sources:

Generational Wealth: Why do 70% of Families Lose Their Wealth in the 2nd Generation? | Nasdaq

The Ultimate Guide to Financial Power of Attorney | Take Care (getcarefull.com)

Living Wills, Health Care Proxies, & Advance Health Care Directives (americanbar.org)

Is Life Insurance Taxable? | Progressive

 

LPL Tracking # 492091

 

Scrooge and the Ghosts of Financial Planning

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In Charles Dickens’s timeless classic, “A Christmas Carol,” Ebenezer Scrooge transforms from a miserly old man to a generous and empathetic soul. Along the way, he encounters the Ghosts of Christmas Past, Present, and Yet to Come, who reveal important lessons about life and, surprisingly, financial planning. Join us on a journey through Scrooge’s experiences to learn valuable financial lessons regarding the past, present, and future.

The Past: “Financial Regret and Missed Opportunities”

In the first part of Scrooge’s journey, the Ghost of Christmas Past shows him scenes from his earlier years. Scrooge witnesses moments of missed opportunities and poor financial decisions, like turning down his nephew’s invitation to celebrate Christmas or neglecting to help those in need. These glimpses from his past remind us of essential financial planning lessons.

Opportunity Cost
Scrooge’s obsession with money causes him to miss life’s most precious moments. The lesson is that financial planning should balance saving/investing for the future with enjoying the present.

Generosity Pays Off

Scrooge’s transformation began when he realized the joy of giving. Charitable giving may benefit others but also bring personal fulfillment.

The Present: “Finding Joy in Financial Balance”

In the second part of his journey, Scrooge is visited by the Ghost of Christmas Present, who shows him the joyous celebrations of others, including the Cratchit family. Despite their meager means, the Cratchits find happiness in their modest Christmas feast and love for one another. From the present, we may learn these lessons.

Family and Relationships Matter

Money should not be the sole focus of our lives. Building and nurturing relationships with loved ones can bring lasting happiness that no amount of wealth can replace.

Living Within Your Means

The Cratchits make the most of what they have. Living within your means and budgeting wisely is crucial for financial stability.

The Future: “Consequences of Neglected Financial Planning”

Finally, Scrooge is confronted by the foreboding Ghost of Christmas Yet to Come, who shows him a future where his death is met with indifference and scorn. This bleak vision is a stark reminder of the importance of long-term financial planning.

Estate Planning

Scrooge’s neglect of estate planning led to a chaotic distribution of his wealth. Proper estate planning ensures that your assets are passed on to your chosen beneficiaries as you wish.

Preparing for the Unexpected

The future is uncertain, but investing wisely, having insurance coverage, and saving for retirement may help you prepare for life’s twists and turns.

Just as Scrooge’s journey led to his character’s transformation, it also offers valuable financial planning lessons. From the past, we learn to seize opportunities and embrace generosity. In the present, we find the importance of balancing economic goals with life’s joys. And in the future, we are reminded of the need for careful planning and preparation.

Let’s take a page from Scrooge’s book this holiday season and consider the financial lessons that Dickens cleverly wove into his tale. May your financial journey be balanced, generous, and prepared, ensuring a brighter future for you and those you care about.

 

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

This article was prepared by WriterAccess.

LPL Tracking #490820-02

Protect Financial Information from Prying Eyes on the Web

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As more and more consumers search for financial information on the Internet, they may inadvertently leave themselves open to being “tracked” by certain companies and individuals. Visitors to financial websites have created a large mass of information that is, in some cases, hardly private. Many marketing companies routinely employ software programs designed to identify you and your “surfing” habits on financial websites. Some are basic and some can be very invasive.

 

Individual investors are now faced with growing concerns about keeping their financial matters private. Here are several ideas to help you maintain confidentiality and keep your private matters truly private:

 

o Understand privacy policies. The first thing you should do is read and understand the “privacy policies” of the financial institutions you are dealing with. This is especially important if you are conducting financial transactions. Ask questions about how the financial institution intends to maintain and secure your financial information. Often, the legal jargon and descriptive material may be difficult to understand and wade through, but you can email a financial institution and request a complete explanation of its privacy policy.

 

o Exercise diligence. Be extremely careful about providing financial information to websites that are not well known. Larger financial institutions are developing policies to protect the rights and financial information of their customers and they get high marks for doing the job well.

 

o Guard personal information. As with any financial information, when providing certain financial websites with information, such as your phone number, you create a whole new world of opportunities for “cold calling” financial organizations. So, resist the temptation of providing personal information to companies who are unfamiliar to you.

 

o Check Website ratings. You have another valuable opportunity to discover whether your financial information is as private as you’d like. Several rating organizations now rate websites based on privacy. There are, however, few standards that guide these organizations in their rating policies. This being the case, it might be wise to check several rating organizations to see if, and how, they rank the sites you intend to explore. When online, check out a site through any of these groups:  TRUSTe at www.trustarc.com, CPA WebTrust at www.cpawebtrust.org/, and Better Business Bureau Online at www.bbbonline.org/.

 

You should understand that these organizations cannot punish or penalize financial websites for lack of privacy. Thus, it is up to the individual to choose the sites that will provide the most confidentiality.

 

o Reduce or eliminate cookies. You can, in fact, take some measures to help safeguard certain financial information. Start by telling your browser not to accept cookies. The result may make surfing the net a little more difficult. On the other hand, you could choose to limit cookies or to be alerted when a cookie is set. As a third alternative, you could simply delete any cookies from your hard drive after each online session.

 

While maintaining anonymity on the Web is difficult, it’s important to protect your financial privacy and any financial information about your family. As time goes by, more and more protective measures can be put in place so your financial records and information will be better protected from the prying eyes of unknown third parties.

 

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This article was prepared by Liberty Publishing, Inc.

LPL Tracking #1-05233550

 

 

 

6 Scary Money Mistakes and How to Avoid Becoming a Financial Horror Story

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Managing money may seem stressful at times. Unexpected expenses, changes in employment, and changes in family or lifestyle may all lead to money issues. Making sure you have money saved up for the unexpected is crucial. Here are some other scary money mistakes that you may want to avoid.

1. Keeping a Balance on Your Credit Card

Credit cards are necessary for building a healthy credit score, but they may quickly damage your financial health if you aren’t careful. Credit cards may be used for convenience since paying by cash and check is becoming less and less common. However, spending more than you are able to afford paying off each month might quickly derail your financial plans and cost you a significant amount in interest.1

2. Paying Your Bills Late

One of the quickest ways to damage your credit score and limit your borrowing power is by paying bills late. Payment history is one of the most significant factors in your credit score; even missing one or two payments may cause a score drop. On top of the hit to your credit score, you may also have to pay late fees or additional interest if you don’t pay your bills on time.2

3. Waiting Too Long To Save for Retirement

Everyone hopes to have an enjoyable retirement after years of hard work. Unfortunately, you may be under financial strain with rising costs if you don’t save early. Saving for retirement early may help you to grow your money faster and better prepare for a more comfortable retirement.1

4. Buying Things You Are Unable To Afford

Large purchases are a part of life, such as buying a car, a house, or even a boat. While it is important to enjoy your money by spending it on the things you want, it is crucial only to buy what you are able to afford comfortably. Before you decide to buy something, consider the payments required for any large purchase, the interest expense, and the associated costs of maintaining what you buy.2

5. Not Prioritizing Debt Repayment

Staying on top of your debt is critical. Failing to plan to pay it off may result in financial struggles down the road. Whether your debt includes student loans, personal loans, or credit card debt, you want to set aside enough money each month to pay the debt down. This helps manage the interest you pay and strengthen your debt-to-income ratio.2

6. Not Having Enough in Your Emergency Fund

Emergency funds are essential to take care of unexpected expenses and provide needed funds if your money source or income suddenly changes. A good rule of thumb is to put three to six months of income away to take care of emergencies. Always remember to replace the funds if you need to use them.1

 

Important Disclosures:

Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking # 1-05376138

Transformative Tech – Will AI Upend the American Workforce?

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A chatbot with uncanny human-like writing abilities has become the poster child for artificial intelligence (AI) since it was released in late 2022, inspiring new levels of attention, excitement, and concern about recent advances in this life-changing technology.

As the race among tech companies to monetize AI picks up speed, it’s worth considering how widespread adoption of AI-enabled technologies might affect the economic prospects of workers and businesses.

How AI changes the game

Artificial intelligence uses complex algorithms to sort through data to detect and react to patterns. This allows AI-enabled applications to “learn” from experience. As artificial intelligence has advanced and joined robots, sensors, and other technologies, many tasks have already been automated in ways that were once unimaginable. Smartphone apps map out the fastest routes from place to place and connect drivers-for-hire to people who need a ride. In some cities, driverless cars are being tested on the roads.

Generative AI is powered by large language models, which are deep learning algorithms trained with immense data sets to recognize, summarize, translate, and generate text. These models can create original content in response to questions posed by users, and millions of people are already using them to help write essays, articles, and business communications, code software applications, conduct scientific research, and even craft works of art such as illustrations, graphic designs, and music.1

A known flaw of generative AI systems is that they sometimes “hallucinate,” or make up facts, when they can’t find enough relevant data to inform a reasonable response. They can also perpetuate the biases of their human developers. But experts say performance can improve as software is “trained” over time.2

Productivity gains and job losses

Advances in technology and automation have been displacing workers for a long time, but the capabilities of generative AI suggest that many more human jobs — including those for skilled professionals — could be eliminated. And the people who still have their jobs will likely be expected to use AI-enabled tools to work faster and more efficiently.

When researchers used AI-powered models to assess the potential effects of generative AI on the workforce, they concluded that 80% of human workers would have at least 10% of their tasks affected, and 19% would have more than half of their tasks affected, which puts them at greater risk of being replaced.3 The long list of occupations that are most exposed to advances in AI includes many types of knowledge workers, such as postsecondary teachers, analysts, lawyers, mathematicians, accountants, human resources specialists, sales representatives, journalists, and other communications professionals.4

By one estimate, generative AI could complement two-thirds of jobs by helping workers complete tasks in less time. Over the next decade, AI adoption could boost labor productivity by about 1.5% per year in the United States (to roughly double the current rate) and 1.4% globally. Productivity, or output per hour of work, is a good indicator of society’s prosperity and economic well-being. A surge in productivity of this magnitude would also improve employers’ profit margins and raise the world’s gross domestic product by 7%, or about $7 trillion.5

However, if large-scale deployment of AI forces too many displaced workers into lower-paying jobs or out of the workforce completely, it could cause a downward spiral of reduced consumer spending that stifles economic growth.

It’s also possible that obsolete jobs will be replaced with different types of work, similar to the way agricultural workers shifted into manufacturing and other new industries in the past. If productivity gains bring widespread prosperity, it could raise living standards for society overall. Workers would have more free time and money to spend on leisure pursuits.

Implications for investors

The expected cost savings and higher profit margins to be unlocked by productivity gains is one reason global corporate investment in AI was up from about $80 billion in 2018 to nearly $190 billion in 2022, even before generative AI burst onto the scene in 2023. Large tech companies are investing billions in their quest to integrate AI-enabled features into their existing products (such as social media platforms and search engines). Smaller start-ups are raising money from venture capitalists and working quickly to develop new business models.6

Speedy and successful implementation of AI systems could deliver a competitive advantage, and the prospects of companies that fail to deliver could suffer. Financial markets are likely to reward the winners and punish losers much like they did when other transformative technologies (such as personal computers, the internet, and smartphones) were invented.

Investors have been pouring money into the stocks of companies that they expect to profit from AI, which has helped drive the recent performance surge of large tech stocks.7 But even if the hype around AI turns out to be warranted, investors should keep in mind that new technology ventures tend to be risky. Some AI projects may turn out to be viable and profitable, but many others could fail.

How dangerous could it be?

Some believe the rise of artificial intelligence will make it harder for people to make a living, leading to greater inequality and social unrest. But workforce disruption is not the only threat posed by AI. Another major concern is that bad actors could use deceptive images and video altered by AI (called deepfakes) to cause harm and/or spread misinformation, making it harder for the public to tell the difference between falsehoods and the truth. Even worse is the fear that AI might be used to design deadly weapons that fall into the wrong hands.

Industry leaders have testified before Congress about the potential benefits and dangers of AI, and lawmakers are currently discussing a framework for regulation, including the possibility of a new agency to monitor the industry, set up guardrails, and issue licenses for new AI platforms.8 With AI advancing at a dizzying pace, policymakers may need to act quickly to keep up. And tomorrow’s human workers may need to learn new skills more often — and be capable of adapting to change more quickly — than previous generations.

The return and principal value of stocks fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost.

1, 7) The Wall Street Journal, May 9, 2023

  • Axios, May 22, 2023
  • University of Pennsylvania, March 2023
  • Princeton, University of Pennsylvania, and New York University, March 18, 2023
  • Bloomberg, March 27, 2023
  • Artificial Intelligence Index Report, Stanford University, 2023

8) The Wall Street Journal, May 18, 2023

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

This article was prepared by Broadridge.

LPL Tracking #1-05373204

 

 

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