In financial planning, there’s a lot to do, like balancing your portfolio, checking your insurance deductibles, reviewing your spending receipts, setting up revocable trusts, and more.
There are a few things that absolutely must be done. Let’s talk about them.
I need health care instructions. One thing that has been consistently emphasized throughout our years of customer service is that we are not invincible. The Minnesota Medical Directive allows medical decisions to be made for you if you are unable to make them or simply want someone other than yourself to make them. I am appointing an agent.
The order can detail your wishes for life support, pain management, and where care is needed. Without properly executed medical orders, your health care provider may end up fighting over your family’s opinion and ultimately making decisions on your behalf that they believe are in your best interests. but may not match what you wanted.
Once completed, pass it on to others in your care to help implement it.
A power of attorney must be established. We also have clients who have suffered cerebral aneurysms or strokes and have become financially incapable of coping. But the bill still has to be paid. A power of attorney ensures that someone you trust can take over your general finances if you are unable to do so.
If you have minor children, you need a will so you can decide who will be responsible for them if you and your spouse die in a common accident. Many of our clients struggle with this decision. That struggle is okay.
You will need to confirm the designation of the beneficiary of your retirement plan or life insurance. Unless your estate planning makes a trust a better solution, you will generally want the designation to be individual.
Many of our clients prefer using retirement plans to fund charity after death because if they want to change their philanthropy, they can easily do so by simply changing the beneficiary.
Also, the stretch IRA rule has been curtailed, making retirement assets less attractive for individuals to inherit (losses being the exception). You can easily designate who receives your retirement assets by designating the appropriate beneficiaries.
Your spouse should have easy access to your password if something happens to you. I use her LastPass for all my stored passwords and my wife has my girlfriend’s LastPass password.
To facilitate the transfer of funds from a Roth 401(k) to a Roth IRA, a smaller Roth IRA must be established or a small amount of an existing IRA converted to Roth (just as a placeholder).
The SECURE Act means more people will be forced to donate to Roth on a 401(k).
Roth contributions may not be optimal for those in the highest tax brackets, but new rules next year will allow some higher-paid individuals to use Roth for catch-up contributions. would be
If you leave your employer and have no existing Roth outside of your job and want to roll over your Roth 401(k) to a Roth IRA, there is a five-year time limit to withdrawing your tax-exempt funds. Beyond your contribution.
On the other hand, you can also roll over money from your 401(k) to your old Roth, and the 5-year rule starts when this account is first set up. This is cheap liquidity insurance.
Levin is the founder of Accredited Investors Wealth Management in Edina. He can be reached at ross@accredited.com.
