Where to keep your estate planning documents?


Dear Liz: What do you do with your will or living trust once it’s created? Do you put the document in your home safe or in a bank safe? Leave it to a friend or relative? What is preventing someone who has access to your property from destroying this document? I heard of a case where the will was never found and the wrong parent took it all.

I imagine you could leave it to your lawyer with instructions to make sure it is followed upon your death. But who will contact the lawyer after your death to make sure your wishes are met? I know the coroner won’t, and neither will a funeral home.

Reply: Do not put the original document in a safe. Once notified of your death, your bank will usually seal the box until your executor can prove they have a legal right to get it back – and this will be complicated if the document naming them as executor is in the box. box.

Keeping the original in your own safe is better than leaving it in the bank, but it’s still not ideal if you’re worried that a bad guy might gain access to it. For most people, the best option is to leave the original with their lawyer. You can provide copies to your executor and other people you trust, and give them contact details for your lawyer.

Beware of the motivations of advisers

Dear Liz: In a recent column, you discussed the difference between paid financial planners and paid financial planners. Most of my retirement dollars are in an IRA with one of the better known investment companies. One of the advisers at this company argued for an annuity from a well-known insurance company as part of my portfolio. So does this affect the status of the fee-only advisor versus the fee, or does that person have to be on the fee-only side of the equation? Or am I just confused?

Reply: You’re confused because it’s confusing – on purpose. Many investment firms, including the best known, don’t make it clear that their advisers don’t have to put your interests first. Most are subject to a lower “suitability” standard that allows them to recommend an investment that is not as good as the alternatives, simply because it pays them a higher commission.

If you want an advisor who puts your interests ahead of theirs, look for a fee-only financial planner – one who only accepts fees paid by clients rather than commissions and other incentives. This advisor must be a trustee, which means that he or she is required to put your best interests first. The advisor should be prepared to state, in writing, that they will put your best interests ahead of theirs.

It is especially important to check with such a fiduciary advisor before purchasing an annuity, as these are complex products with potentially significant drawbacks that could be overlooked by someone who is paid to sell you one. An annuity could be the right solution for you, or it could be a costly mistake. Get an objective review from a trustee before purchasing one.

Deal elimination provision explained

Dear Liz: I understand your explanation of the windfall elimination provision that reduces Social Security benefits if someone receives a pension from a job that has not contributed to Social Security. I am a teacher with such a pension who also worked more than 10 years in the private sector. I would accept the explanation and the reduction if WEP was applied in all 50 states. As you know, this is not the case. How is this reduction justifiable in any way?

Reply: The idea that WEP does not apply in all states is a myth. WEP applies regardless of where you live. What matters is whether you are receiving a pension from a job that has not contributed to social security. Some states offer such pensions while others do not.

“If a state does not pay its workers its own pension and enroll them in social security, then exempting them from the windfall elimination provision is very appropriate,” says economist Laurence Kotlikoff, president of Economic Security Planning Inc., which offers Social Security Reporting Software at MaximizeMySocialSecurity.com.

As mentioned earlier, WEP is not designed to give you a benefit that others get. On the contrary, the provision is designed to prevent those who receive employment pensions who have not contributed to social security from obtaining significantly higher benefits than workers who have contributed to the system their entire working life.

This can happen due to the progressive nature of Social Security benefits, which are supposed to replace a higher percentage of income from lower income than from higher income.

People who do not contribute to the system for many years may appear to earn much less than they actually are. Without adjustments, they would get bigger benefit checks than people in the private sector with the same income who would pay significantly more Social Security taxes.

Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions can be sent to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.


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