Archive for September, 2010

Last week we talked about an excellent radio program on NPR that highlighted  how families with special needs children have developed ideas for planning to provide the resources that their adult children will need, when the parents are gone.

In thia week’s post I share an example from Texas about what can happen all too often without a well thought-out plan that ensures the right people are in control to carry out your goals and objectives!

When Doris Preston died, the former schoolteacher left behind a small estate, no will and a single heir: her adopted son, Deartis, a mentally disabled 52-year-old she’d raised in her Denton home.  

Doris’ close-knit siblings say they rallied around their nephew like they had for a lifetime, bringing him to Bay City to live with the family and using part of the inheritance to purchase a house for him two blocks away. But when they went to probate court to iron out the details of the estate, their plans disintegrated.

A Denton County probate judge determined Deartis needed a court-appointed guardian and attorney to advocate for his interests. Those appointees argued that the money left in the names of Doris’ siblings should rightfully belong to Deartis, and that her siblings were making poor financial decisions on his behalf.

In the five years of legal wrangling since Doris’ death, the court has approved payments of nearly $450,000 to these appointed officials, private attorneys for the family say, depleting the amount of money left to care for Deartis.

When Doris Preston died, the former schoolteacher left behind a small estate, no will and a single heir: her adopted son, Deartis, a mentally disabled 52-year-old she’d raised in her Denton home.  

Doris’ close-knit siblings say they rallied around their nephew like they had for a lifetime, bringing him to Bay City to live with the family and using part of the inheritance to purchase a house for him two blocks away. But when they went to probate court to iron out the details of the estate, their plans disintegrated.

A Denton County probate judge determined Deartis needed a court-appointed guardian and attorney to advocate for his interests. The people appointed by the Court said that the money left in the names of Doris’ siblings should rightfully belong to Deartis, and that her siblings were making poor financial decisions on his behalf. With a carefully thought out plan and guidance to the family, these problems could have been predicted and avoided.

In the five years of legal wrangling since Doris’ death, the court has approved payments of nearly $450,000 to these appointed officials, private attorneys for the family say, depleting the amount of money left to care for Deartis.

 Read more of the article at Families Lose Estates in Guardianship Battles

The Boston Globe recently published an alert that could be very  important to anyone who inherited an IRA last year – or even this year.

If you inherited an IRA from somebody who died in 2009, there is an important deadline coming up at the end of the month.  Not taking action can cost lots of unnecessary taxes and eliminate your chance to let the account grow tax free.  You can read the Boston Globe article here 

Inherited IRA’s

By September 30th of this year, the beneficiaries of  an IRA owned by someone who died in 2009 must be  fixed and be “qualified beneficiaries” in order to be able to stretch out distributions and allow the IRA to continue to grow tax-free.

 This is important from a tax perspective because if any of the beneficiaries of the IRA are non-qualified trusts or charities,  for example, all of the beneficiaries have to take full distributions within five years. Having to take the distributions over five years (instead of over the life expectancies of the beneficiaries) can result in the loss of perhaps decades of tax deferral.

This situation is most often encountered when a parent lists their children and a college or charity as the beneficiaries of an IRA. For example, if there were four children, it is not uncommon to see the kids and a college each having a 20 percent share of the IRA. In this case, if the college or charity is not removed as a beneficiary, the children lose the ability to take withdrawals over their life expectancy.

Luckily there are ways built into the law to to prevent this problem. A qualified financial or estate planner can help you come up with a strategy that’s right for you.

Lately it seems  there have are more scary  food borne illnesses in the news.  This summer, even eggs created nation-wide alarm about how safe our food supply is.

For the most part, the recent  huge egg recall didn’t affect New Englanders but it served as a reminder that we  no longer can take the quality of our food supply for granted.  E. coli and salmonella  poisoning is a very real threat in our kitchens every day.  What can be done to avoid these dangerous illnesses?

There is good reason to be scared into action. Every year, 76 million cases of foodborne illness occur, leading to about 300,000 hospitalizations and 5,000 deaths.

After a recall makes headlines, it is not unusual for consumers to flock to higher-priced organic and locally grown meats, poultry, eggs and produce that can cost two or three times as much as conventional food. And expensive antibacterial soaps and washes, cutting boards and meat thermometers are promoted as tools of the trade for a germ-free kitchen.

A recent article in the New York Times gives some  practical solutions and tips on how we can  prepare our food more safely without spending an arm and a leg for it. You can read the full article  here in the New York Times online at

Food Safety Tips For the Budget-Conscious

 It’s back to school time. The neighborhoods near Boston’s many colleges and universities are filled with students and their families moving in for another school year. In my last post  “The Empty Nest Might Not Be So Empty After All”  I emphasized the  importance of  having a health care proxy for anyone over the age of 18.

Recently, the Boston Globe featured an article on important, related topic – financial planning for young adults - including college-age kids.

Even though people usually think of  financial planning as being for older adults who already have built up considerable savings, there are some great reasons why a visit with a financial planner is important for  young adults. They might not  have much yet in a savings account there are some important ways that getting financial advice will help them get a good start.

 The first  benefit is learning  how to budget. This may be the most important lesson of all for a young adult who will be living on their own and paying their own bills for the first time. For many college students, it will be tempting to use the new credit cards they’ve received in the mail, without really tracking their expenses. One of the basic steps in developing money skills is to know where your money is going.

Another important skill is  learning how to plan for and save for special  purchases  like buying a car and traveling.  Learning  about interest rates and how they work, whether they are for credit cards, auto loans, student loan or other borrowing will be very helpful.

Getting help in starting contributions to an IRA or other retirement plan will go a long way to getting off to a good start.  In fact, contributing in your twenties to Roth IRA is one of the smartest decisions you can  make Thanks to compound interest and tax-deferred growth, contributing as little as $2, 000 a year  for three years, to a Roth IRA  could grow to $642,000 in 50 years!

You can read the article here:  Young Adults Get A Boost With Planning