Friday, August 19, 2022

Important First Steps for End-of-Life Planning


Of all the difficult discussions about money, perhaps none is as difficult to have as the one about end-of-life planning.  Talking to your adult children about your eventual death (or to your aging parents about their eventual death) is likely painful for all parties to the conversation.  According to one study, only 46% of adult Americans have a will; and I suspect even fewer have had an adequate discussion with their family about their wishes for after they die.

I’m not going to dwell on the very good reasons that most every adult should have a will.  Crafting that document might be an emotionally trying experience for many.  So let me aim at something simpler: updating your beneficiaries and the titles to your property.

While a will is typically the document that spells out the final wishes of an individual for the distribution of his estate, it is not the only such document or even the most important one in many cases.  Did you know, for example, that the beneficiaries you have named for your 401(k) account will get that money after you die, regardless of what your will might stipulate?   In other words, a beneficiary designation trumps the will.  This is true for other assets, too, such as an insurance policy.

This surprises many people, but there are some huge advantages to this.  Perhaps the biggest is the fact that this allows the 401(k) account to escape going through the probate process.  That legal process can take a year or longer, preventing timely distribution of the estate assets to the surviving family or other persons named in the will as beneficiaries.  Moreover, by falling outside probate, the money is not usually subject to any probate taxes the state may assess.

If you are put off by the thought of end-of-life planning, then just take the first baby steps and make sure you have up to date beneficiary designations for your retirement accounts.

And retirement accounts are not the only assets you can keep out of probate and still leave for the person or person you want to have them.  In Virginia where I reside, as well as in many other states, you can also:

·         Make a bank account payable on death to a named individual(s).  The person has no access or right to the account until all regular owners of the account have died.  This might be especially useful for a family member who will be your executor and responsible for paying off any creditors.

·         Have a transfer-on-death title for a motor vehicle.  It entails a small fee to issue a new title, and the vehicle cannot have a lien on it.

·         Have a transfer-on-death deed for your home.  Again, it requires a modest fee to issue a new deed.

·         Transfer ownership of securities to a survivor upon your death.  Check with your broker on how to do this.

·         Insurance policies: don’t make your estate the beneficiary of your life insurance policy.  That ties the money up in probate.  Make it payable instead to the people who will have to cover your funeral expenses (just a suggestion).

So for a typical boomer like myself, his assets are largely bank accounts, retirement accounts, vehicles, and a home; and he can keep all of them out of the probate process (in Virginia and many other states), saving hassle and money for those left behind.

Just updating a will after a major life event (e.g. a divorce) is not enough.  I’ve seen the very sad results of someone dying without having updated titles to property and beneficiaries, leaving a current spouse without a home or retirement funds while an ex-spouse got it all. 

A few simple steps for those who don’t want to think about their own mortality, but so important.  Now get to it.

Until next time,


“It is better to go to a house of mourning than to go to a house of feasting, for death is the destiny of everyone; the living should take this to heart.” Ecclesiastes 7:2 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™  Used by permission.  All rights reserved worldwide.

Monday, August 8, 2022

A Look Back at What I Wrote


As I look back over the (far too few) posts I’ve put up on this blog over the last year, I thought this might be a good time to give some updates on subjects I wrote about.  So…..

In “Used Car, New Car, or Same Car” I contemplated whether it was time to replace my 1999 Toyota Solara that at the time had logged 325,330 miles.  The check engine light had come on permanently and the air conditioner was blowing warm air in August.  I opted to tough it out and keep driving it through the last few weeks of hot weather last summer and maybe replace it this summer.   To my shock, when I tried the air conditioner this spring, it blew frigid air, as if it had just rolled out of the factory.  And the engine light is off.  Needless to say, I’m sticking with my beloved Solara.  Four hundred thousand miles, anyone?  Two miracles for one car is not too much to ask, right?

But that does raise once again the whole question of when to replace a car.  Should you trade it in while it’s still a reliable drive and has lower mileage or wait until it’s falling apart?  Ordinarily I’d say the latter; but as you probably realize, the market for new and used cars is going crazy, and the conventional wisdom may not hold true.  For example, my wife’s car—the “family car”—could bring us in trade-in value the full amount we paid for it 40,000 miles ago.  Essentially, we drove the car for free all that time (save for the gas and minor repairs and upkeep).  Should we take advantage of that high-value trade?  There’s an emotional appeal to that.  It’s a tough decision; and I’m sure we’ll be paying a steep price for the replacement ride.  But there might be a deal to be made—assuming I move quickly.  I have a feeling a recession is coming and this car market can invert again really fast.

In “A Safe Way to Earn 7% on Your Savings” I sang the praises of Series I savings bonds and their 7.12% interest rate.  I explained the advantages and disadvantages of a savings bond, but I still think it’s a solid investment.  Only now the interest rate is 9.62% ((It is adjusted every six months for the inflation rate.)  You may purchase bonds with that rate through October 2022, after which it will be firm for six months.  A new rate will be set on November 1, and at the current pace of inflation I suspect the rate will climb again at that time.

In “SCOTUS Got it Wrong”, I lamented what I considered a poor, anti-freedom decision by the Supreme Court that would likely limit the variety of investment options for patrons of company 401(k) retirement savings accounts by making companies liable for offering too many investment choices or needlessly expensive options.  Just a few short weeks later Fidelity started marketing a cryptocurrency mutual fund to 401(k) managers.  Fidelity claimed that they were doing so in response to high demand for such an option in retirement plans.  Does anyone besides me see a disconnect here?  Expensive?  High risk?  This is just the kind of fund the Court was aiming at.  If any companies added that mutual fund to their retirement plans, I’ve got to believe they are experiencing buyer’s remorse about now.  If they don’t get sued by disgruntled (and now much poorer) crypto investors, then I’m sure there’ll be a government bailout down the road.

And finally, speaking of cryptocurrencies, I railed against them in “My Non-cryptic Thoughts About Cryptocurrencies” in May.  I may still be proven wrong and they turn out to be a good investment, but I’m sticking to my guns on this one.  Crypto has been a disaster scene since I wrote that post, and the minor and short-lived recoveries of some cryptocurrencies has been due to panicked purveyors of the investments trying to prop up their shares; or worse, uninformed investors throwing good money after bad thinking that they are buying while the price is low and their shares will only go up from here.  Maybe.  Maybe not.  Still sounds like a Ponzi scheme to me, and even some major media voices have said the same.  Steer clear, is my advice.  And by the way, just because Fidelity is offering a crypto mutual fund doesn’t mean it’s a good investment.  Remember, it’s YOUR money they are investing.  They make money off your investment whether it goes up or down.

Until next time,


“If any of you lacks wisdom, he should ask God, who gives generously to all without finding fault, and it will be given to you.” James 1:5 NIV*

*Scripture quotations taken from the Holy Bible, New International Version® NIV® Copyright © 1973,   1978, 1984, 2011 by Biblica, Inc.™  Used by permission.  All rights reserved worldwide