Come join Catholic United Financial’s most experienced educator, John Tetzloff, to learn how Estate Planning works and why it is important for everyone. Local Catholic United Representative Dave Stang will join Tetzloff at two free educational seminars scheduled for 6:30 p.m. Monday, Dec. 2, at St. Frances de Sales Parish Center in Belgrade; and at 6:30 p.m. Thursday, Dec. 5, at the St. Anthony Parish Center Dining Hall in Watkins. Refreshments will be provided along with education about passing your assets to your intended heirs. Learn a little about Estate Planning in the following column, by John Tetzloff, and join us for free Dec. 2, or Dec. 5, to have all your questions answered.
What might surprise you is that it doesn’t matter if you’re scraping by, paycheck-to-paycheck or running a thriving family business, we all have an “estate.” The question you have to ask yourself is whether you want to decide how those assets are distributed when you’re gone, or whether you want to let someone who has never met you handle it.
I’ve been helping people understand and pass down their assets for more than 20 years now, through my radio show and regular column in Our Catholic Journey magazine. This is the first and most common misconception I come across: that because a person isn’t wealthy, they don’t have an estate to plan. I believe it’s even more important for people of average means to protect their estates from unnecessary taxation and family drama. The less you have, the more important it is that it ends up with the people and causes you love most. That says nothing of providing for yourself in the interval between leaving the workforce and leaving this earth.
When I meet with a client, one of my goals is to help them “understand their assets.” What that means is having a discussion to explain the different types of assets a person has, the tax rules of each asset, and how these assets will ultimately pass to their loved ones upon death.
For this article, let’s start with the first step in “Understanding our Assets.” What assets do I have in my estate? This may seem like a simple statement, but many people don’t have a good understanding of the makeup of their estate assets. For that matter, many folks haven’t taken the time to get a “big picture” view of their estate to fully realize what they have and the effect each asset has in their planning.
The first thing you probably think of is your bank account. Savings or checking, these are considered liquid assets. They’re very useful in a short term, but if you tend to hold money in liquid form, you ought to consider a longer-term solution that pays an interest rate.
The other thing immediately associated with estates is property. This includes real estate, of course, but also covers stocks and mutual funds. When you make your plan, you need to consider the risk vs. reward of holding these types of assets. The tax implications of inheriting large acreages of arable land that can drive grieving families from generational farmsteads. But there are several ways laid out by the government for people to avoid this situation.
Then there are retirement accounts like IRAs, Roth IRAs, pensions and 401(k)s. Each of these help to provide income in retirement, but the way they handle taxes now and when they distribute is very different. It’s extremely important to balance taxed and non-taxed assets when planning your retirement. Finally, there are annuities and life insurance contracts. These are a special class of asset that can provide for both retirement and estate planning needs. They are inheritable, so they provide for the next generation, but they can also provide income in retirement. Not only can annuities pay out a steady income, they typically have higher interest rate than bank products, and can be inherited by your heirs.
Life insurance can also be a vital piece of a person’s asset mix. We know that life insurance provides the protection for our loved, by replacing lost income, paying debts (including estate taxes), and maintaining our family’s lifestyle when a death occurs. But there are also many living benefits to life insurance. Tax-advantaged cash values, potential dividends and long-term-care/accelerated benefits can make a huge difference in the way we plan and live out our retirements.
The most important thing about all of this, is helping people to understand what they have, and to create a plan that will help each individual provide for themselves and their family.
One of the most valuable services a financial partner like Catholic United Financial can provide is a comprehensive overview of a person’s estate. In other words, helping that person understand “what they’ve got” and how it all fits together for a prosperous future.
Contact Dave Stang, FIC at (320) 469-4735, or dstang@catholic
united.org, to reserve a spot at one of the upcoming free seminars.