How to Be Financially Prepared for Widowhood

Finance | Provided by Cornerstone
Recorded Session Led by Cornerstone Advisors

To continue our dedication to our community, we will be hosting a series of virtual sessions around financial education. The first event is about being financially prepared for the unexpected.

 

Widowhood, the loss couples rarely plan for – but should.
This Session Covers:

– Why you need to be prepared for the unexpected.
– How to get financially organized.
– What is a will and what does it cover?
– How assets transfer.
– Will you be okay if something happens to your family income?
– Understanding your expenses.

Sue Peterson

Resources:

Click Here to Download the Copy of The Checklist for Life
Password Manager: https://www.lastpass.com/

Q&A From the Session:

Q: Where should I keep the checklist for life?
Store the non confidential part in an easy to find location like a top drawer in your kitchen or your desk at home.

Store  the confidential part it in a secure place like a password manager (lastpass.com or a similar provider), a password secured folder on your desktop, or you can ask your attorney to keep it with your original documents. If you are storing it in a location that is password protected, be sure key individuals know the password.

Q: What do I need to look for when I review my estate documents?
Here are the 4 things to review:
1. Durable power of attorney for financial decisions
2. Durable power of attorney for health care decisions
3. Health care directive
4. Your will or revocable trust

When you review these items, ask yourself are the key individuals that I have named still appropriate and are the bequests correct? If it has been several years since your last review, check with your attorney if there are changes to tax law that would dictate a reason to update your documents.

Q: What common budget categories do people use?
Fixed Expenses
1. Housing (Mortgage, Rent, Utilities, Property Tax, Maintenance, Insurance)
2. Food (Groceries/Dining)
3. Kid or Dependent Parent Expenses
4. Education (Tuition & Related Expenses)
5. Auto/Transportation

Discretionary Expenses
1. Travel
2. Entertainment/Hobbies
3. Gifts

Q: What is the difference between a revocable and irrevocable trust?
The biggest difference between these trusts is the ability to change them. A revocable trust has flexibility in adding or changing heirs, bequests or trustee, basically every detail. It is most often used like a will. An irrevocable trust cannot be changed once created.

From a tax standpoint, a revocable trust is taxed to the individual that created it. From a tax standpoint, irrevocable trusts are their own tax-paying entities. Trusts pay tax on all income earned by the trust and retained there. If the trustee distributes income to beneficiaries, then the beneficiaries (not the trust) will pay tax on that income. Trust tax rates are graduated, steeply. They reach the highest bracket (37%) at $12,950 of taxable income.

Q: What is probate?
Probate is the process of transferring assets from you to your loved ones. It is merely a formal title transfer ceremony down at the county courthouse. If your executor shows up with your will and a valid ID, they will issue Letters Testamentary, a document that grants them the authority to change title on your assets according to your wishes.

Looking Forward: Financial Education Webinar Series

Preparing for the Unexpected
Investments 101
Estate Planning 101
Advanced Estate Planning

 

Have a question or interested in continuing the conversation? Send us a note to info@buildbeyond.com.

Please see important legal disclaimers pertaining to this post by clicking here.



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