Retirement Insights

News and information for current and future retirees.

How To Keep Your Adult Kids From Fighting About Their Inheritance

Probate courts are full of family fights about money and property. These battles can go on for years and can easily wipe out substantial sums you may have worked hard to create as your legacy. 

Where the Problems Start

Some problems are created by the aging persons who do not communicate with their heirs. Rather than keeping the inheritance equal among all, they favor one or the other. They say nothing. The shock on the ones who don’t get as much turns to anger. While anyone who is clear of mind has the right to do anything they want with their money, disgruntled heirs get incensed at what they see as unequal treatment. They find lawyers who are happy to get paid for litigating for them and the fight is on.

The Cost

Filing a case in the state probate court and pursuing whatever theory comes up gets very expensive. When one heir, usually a sibling of someone who got more than they did gets going, the other who perceives an attack fights back. Another lawyer gets into the picture and soon matters escalate. They delve into the will and/or trust, allege fraud, undue influence and other theories designed to overcome the wording in the estate plan in question. Experts are hired. Attorneys must get paid. Estate assets are spent for all these costs. That’s the financial part of the picture.

The other part is the emotional toll. Family members legally pitted against each other are a destructive force on family relationships. Sometimes a party comes away with more money or property as a result of the fight but they never speak to the relatives on the other side of the case for the rest of their lives. This can damage younger generations too. That’s a high price to pay for “winning”.

The Prevention

At AgingParents.com where we consult with aging parents and their families, we think preventive steps can help avoid some of these nasty probate court battles.

Here are some tips:

  1. If you or someone you love wants to change a long-standing estate plan from equal for all to something else, be sure the one who wants this change is not impaired for decision-making. Before changing or creating any will or trust that does not equally distribute the money and property to heirs who may expect it, see at least the elder’s treating doctor for an evaluation. Courts look at what is called “testamentary capacity.” Lawyers and sometimes courts determine that. They rely on medical doctors and psychologists to evaluate testamentary capacity, which is the ability to make a will or estate plan.
  2. Get written records showing that the elder is not cognitively impaired to as interfere with their legal, testamentary capacity . That means doctor’s reports, capacity evaluation and testing, and other records that demonstrate the person’s state of mind. With that, it is much harder for a disgruntled person to claim later that the elder didn’t know what he or she was doing in changing the will or trust.
  3. In my state, the law suggests that if someone wants to give an unusual gift, which can mean unequal distribution among one’s offspring, an independent lawyer should assess whether the elder is being pushed to do it. They call that pushing “undue influence”. The lawyer interviews and assesses the elder, counsels them as to risks and benefits of making this gift or change and fills out a form with the independent lawyer’s conclusions. The review typically concludes that the gift proposed is not because of fraud or undue influence. That can help but does not necessarily prevent every probate fight.
The Cure

What the law does not require is a family meeting in which the elder who wants to make or change an estate plan that is not equal speaks about it in advance to those involved. We at AgingParents.com believe that transparency about one’s intention to give or not give gifts via inheritance can do a lot to prevent those nasty and destructive probate fights. Having mediated these family fights, I can say from personal experience that sometimes things can be worked out without going to court. It’s the best shot everyone has to salvage fraught relationships or at least create rules for civil communication in families of all kinds.

Even when an elder who wants to distribute gifts among adult children unequally, a family mediation facilitated by expert mediators does not altogether eliminate anger. It does, however, allow the one who wants to make gifts an opportunity to explain why they did what they did in an estate plan. It also allows a forum for any participant to express what they want to express to the gift-giver. Since mediators know that emotion is what drives these conflicts, we see the benefit of creating a space and opportunity to air those emotions. It’s decidedly cheaper than a drawn out probate fight.

Nowhere is it written that anyone has to give an inheritance to anyone else nor that heirs must be treated equally. We all have freedom to choose for ourselves as gift-givers who gets what, if anything. But entitled adults may wrongly see an inheritance as a right. If you see any of these looming issues in your own family, consider the possibility of preventing them from escalating. Some disputes really can be resolved.

READ MORE @FORBES.COM

How Will Mortgage Rates Impact The Real Estate Market And Your Retirement Accounts?

How will rising mortgage rates impact you?

Historical Mortgage Rates

A 5.25% mortgage rate might sound outlandish right now, as we’ve been used to hearing rates that have been historically low in recent history. However, in the past 40 years we’ve seen rates as high as 16% and as low as 3%, which is quite the spread. Since 1971, the historical average mortgage rate has been just under 8% for a 30-year fixed mortgage, which means our more recent lows, and even our current “feels high” rate of 5.25% are still well under that historical average since 1971. Even when we look at more recent memory, say from 2006-2008, the average mortgage rates were around the 6% range.

This is all good reason to remember that mortgage rates do fluctuate, and they’ve been much higher than they currently are now. Even if rates creep up another few percentages, we’d still be below historical averages, which is something to keep in mind.

How High Will Mortgage Rates Go

Ultimately, no one can predict just how the market will play out and where mortgage rates will land. When we think about how much worse rates may get in the near term, many real estate experts seem to think we’d end up around 5.5% by year end. With inflation still sticking around, the Fed will continue to keep ratcheting up rates until they get it back under control. While this doesn’t correlate to mortgage rates exactly, it can be a leading indicator. It may not be out of the realm of possibility to see rates around 6%, or even 6.5% by year-end, due to the rising interest rates necessary to combat inflation. These rates, while higher than we’re used to, are still historically below average.

What Do High Mortgage Rates Mean For The Real Estate Market

With higher mortgage rates, we’d expect to see a hot real estate market cool slightly. Initially, the buyer pool purchasing homes would get smaller as rates increase, since fewer people are able to afford a home at the current asking price due to the increased payment and rate.

This would also result in housing prices to cool slightly as a lagging factor. In the short term, we might see it take slightly longer to sell a home than it has been recently. Longer term, we’d start to see housing prices fall a little. Is this an absolute? No – especially as buyers are resilient, and if unemployment remains low with wage growth on the rise, we may not see as much of an impact.

What Rising Mortgage Rates Mean For Your Investments

What do rising mortgage rates mean for your investments and your retirement accounts? First, if you’re getting a mortgage be aware of the timing. A 5/1 or 7/1 AR AR M (adjustable-rate mortgage) may be a good option as it can provide lower comparable rates to existing mortgages for a fixed period of time, then rates become adjustable. Should you overpay your mortgage if your rates are creeping up? That’s a discussion that you’ll need to have with a financial planner, as it depends on your personal situation, the amount of debt you have, and the amount you have in your retirement accounts.

Overall, with mortgage rates rising, now is the right time to talk with both a financial planner and a mortgage professional to ensure you’ve got a plan in place to ensure your housing and financial needs are both met for the future.

READ @FORBES.COM

Taking My Time Is One of the Pleasures of Retirement

Of all the advice I keep getting on how to navigate retirement, one suggestion is especially persistent: Spend my time more efficiently and productively so I don’t waste the years I have left.

More specifically, take advantage of recommended shortcuts in what are seen as time-intensive pursuits—exercise, meal preparation, trips, online messaging, even naps.

It sounds good on the surface. After all, I have fewer days ahead of me than behind me, fewer hours to meet goals I set for myself over the past decades. The long game gets increasingly shorter.

I’m ignoring the advice. Plotting each day with razor-like efficiency made sense when I was working full time and raising a family. It doesn’t now. One of the major joys of retirement has been the luxury of spending more time on those things I look forward to doing, with no deadlines to rein me in, no obligations that require me to make those hard choices about how to spend each day. What continues to surprise me is how many of those activities turn out to be exactly the ones I have been advised to cut back.

Consider exercise. Taking short walks as a way for older people to get in some exercise is high on the list of advice columnists, even as the time commitment they suggest for these walks trends lower and lower. My understanding of physical activity is different. While grinding away on an exercise bike or in a gym is always an option, hourlong walks up and down the hills in my neighborhood is my favorite go-to exertion. They stimulate new ways of looking at a particular challenge, including something as simple as coming up with the words to help reconnect with a long-lost friend.

Alternatively, long walks with other people mean an uninterrupted opportunity to share my perspective, and learn theirs, on subjects I might not have tackled in less intimate moments. Sweating it out for an hour up and down hills inspires immediate bonding. It’s the thoughts-provoking journey, as much as the fitness, that motivates me.

Dicing and mixing

Meal preparation is another area ripe for shortcuts. Given the number of timesaving kitchen gadgets on the market, along with an abundant array of the latest ready-to-eat meal packages, I could assemble a dinner with almost no prep work to be ready at whatever hour I punch in. It’s easy, but it defeats one of the most enjoyable aspects of cooking—preparing meals with implements that might have been used hundreds of years ago whose sturdiness and texture I can feel as I begin dicing, grating and mixing. There is satisfaction in assembling the colorful raw ingredients and watching my efforts turn them into a glorious finale, messy and imperfect as it may be.

Another benefit: The hum of a kitchen in the throes of meal prep encourages conversation with others, including friends and relatives who don’t live near enough for frequent contact. Over the past year, I have tried out new recipes with my daughter-in-law—a cook who is more skilled and adventurous in the kitchen than I am. On her visits, the kitchen becomes a warm and welcoming place—the traditional hearth that was the focal point for earlier cultures.

As for naps, the short 20-minute version recommended as a way to avoid grogginess can also mean I don’t get the pleasure of an unregulated, truly refreshing time out. I look forward to the sensation of lying semi-awake after an hourlong sleep, sinking into the feeling of relaxation in a quiet space with no jolting, beeping sound to break the silence. When I was working, a weekend nap was functional, measured off in stolen minutes designed to get me through the day, even if it meant feeling guilty for ignoring the chores that were piling up. My longer naps in retirement are a preference, not a quick fix.

Trains and automobiles

I see these shortcuts, this drive for greater efficiency, everywhere I turn. And some of them make sense, for some people. But they often come at a cost that in retirement, I no longer have to pay. Interstate highways pushed out the longer scenic routes that took us meandering through small towns with their slightly rundown main streets, down-home diners, churches and the ubiquitous country store advertising “antiques for sale.” These days, in no hurry, I can take those scenic routes.

Planes have trumped trains, even though train rides allow us to see parts of the country not visible from 35,000 feet. Trains “are a step to the next step,” a then 90-year-old acquaintance once told me. She had already visited 49 national parks, traveling alone on sleeper trains that took her from one end of America to the other and up into Canada. Some of the biggest payoffs were the unexpected adventures and the kind people who watched out for her along the way.

Similarly, letter writing gave way to email gave way to texting. Texts summon us; they demand a quick response. If I were working, I would no doubt use texts a lot more than I do now. By contrast, emails offer breathing room. I enjoy crafting long messages that allow me to think more carefully about what I write and to whom. We know that emails can be a lifeline for older people who are isolated or have few social outlets. I doubt that texts can offer the same sense of friendly outreach, the feeling that there is a real person at the other end rather than a few auto-spelled words and a bunch of emojis.

It comes down to making our own choices about how we want to live and who we want to listen to (including ourselves).

The perception of time is elastic, not restrictive. It can be stretched out in ways that empower us to set our own pace. So when I see experts recommending shortcuts for some of the activities I enjoy the most, I think about time management in a different way: Take more time, not less. Avoid the rush, and enjoy the ride.

READ @WSJ.COM

Best Places to retire in 2022

Forbes compared more than 800 locales in America on everything from housing costs and taxes to healthcare, air quality, crime and climate change and natural hazard risk. These are the top 25 cities for retirees.

Athens, Georgia

Classic college town (University of Georgia) of 130,000, 70 miles east of Atlanta.

PROS: Median home price of $289,000 is 23% below national median. Big culture scene. Good climate and air quality. Social Security benefits plus up to $65,000 per person of other retirement income exempt from state income tax. No state estate tax.

CONS: Doctors per capita below national average. Not very walkable. Serious crime slightly above average. So-so economy.


Charlotte, North Carolina

Thriving banking and business center of 899,000 in the Piedmont Plateau center of the Carolinas.

PROS: High number of doctors per capita. Good climate and air quality. Strong economy. No state estate tax or income tax on Social Security.

CONS: Median home price of $378,000, 1% above national median. Serious crime rate above national average. Not very walkable.


College Station, Texas

Home of Texas A&M University and a population of 124,000, 85 miles northwest of Houston.

PROS: Median home price of $304,000, 19% below national median. Abundant doctors. Good air quality, relatively low natural hazard risk. Low crime rate. Very bikeable. No state income or estate tax. Good economy.

CON: Not very walkable


Columbia, Missouri

Multiple college town (University of Missouri, Stephens College, Columbia College) of 125,000, midway between St. Louis and Kansas City.

PROS : Median home price of $259,000, 31% below national median. Lots of doctors. Comfortable climate, good air quality, low natural hazard risk. Good economy. No state estate tax.

CONS: State income tax on Social Security. Higher than average crime rate. Not very walkable.


Fargo, North Dakota

North Dakota’s largest city, population 126,000, adjoining Minnesota on the Red River of the North.

PROS: Median home price of $271,000, 28% below national median. Plenty of doctors. Good air quality. Very bikeable. No state estate tax. Relatively low natural hazard risk.

CONS: Cold winters. State income tax on Social Security. Serious crime slightly above national average for city.


 Greenville, South Carolina

Blue Ridge Mountains foothill city of 76,000 in South Carolina’s Upstate region, midway between Atlanta and Charlotte.

PROS: Median home price of $281,000, 25% below national median. High number of doctors per capita. Good climate and air quality. Strong economy. No state estate tax. Social Security, plus $25,000 per person of other retirement income exempt from state income tax.

CON: Serious crime rate above national average.


Iowa City, Iowa

Famous college town (University of Iowa) of 76,000 in southeastern Iowa.

PROS: Median home price of $260,000, 31% below national average. Lots of physicians. Comfortable climate, good air quality. Very bikeable. Low serious crime rate. Good economy. No state income tax on Social Security.

CONS: Cold winters. State inheritance tax.


Jacksonville, Florida

With a population of 939,000, Florida’s largest city, sitting in northeastern corner on Atlantic Ocean.

PROS: Median home price of $288,000, 23% below national median. Somewhat less prone to hurricanes than most coastal Florida cities. Plenty of doctors. Lots of parks. Good air quality No state income or estate tax.

CONS: Serious crime above national average. Not very walkable.


Knoxville, Tennessee

Vibrant college town (University of Tennessee) and navigable river city of 193,000 in scenic eastern Tennessee.

PROS: Median home price of $308,000, 18% below national average. Abundant doctors. Comfortable climate. Good air quality. Strong economy. No state income or estate tax.

CONS : City’s serious crime rate is above national average.


Lawrence, Kansas

Classic college town (University of Kansas) of 101,000, 40 miles west of Kansas City.

PROS: Median home price of $279,000, 26% below national median. Good ratio of physicians per capita. Good air quality and comfortable climate. Very bikeable. Good economy. No state estate tax. Relatively low risk for natural hazards.

CONS: Serious crime above national average. Social Security benefits taxed for those earning above $75,000.


Lexington, Kentucky

Self-styled “Horse Capital of the World” and college town (University of Kentucky, Transylvania University) of 325,000, in central Kentucky.

PROS: Median home price of $273,000, 27% below national median. Excellent ratio of physicians per capita. Low serious crime rate. Social Security, plus up to $31,100 per person of retirement income, exempt from state income

CONS: So-so economy. State inheritance tax.


Lincoln, Nebraska

Double-duty state capital and college town (University of Nebraska) of 298,000, 50 miles southwest of Omaha.

PROS: Median home price of $259,000, 31% below national median. Good air quality, comfortable climate. Very bikeable. Strong economy. No state estate tax.

CONS: State income tax on Social Security. Serious crime rate slightly above national average.


Madison, Wisconsin

Lake-festooned state capital and college town (University of Wisconsin) of 278,000, 150 miles northwest of Chicago.

PROS: Median home price of $365,000, 3% below national median. Lots of doctors. Good air quality. Very walkable and bikeable. Low serious crime rate. Strong economy. No state tax on estates or Social Security. Low risk of natural hazards.

CONS: Cold winters.


Pittsburgh, Pennsylvania

River and college city (Carnegie Mellon University, University of Pittsburgh, Duquesne University, Chatham University) of 299,000.

PROS: Median home price of $234,000, 38% below national median. Lots of doctors. Very bikeable and walkable. Comfortable climate (despite cold winters). No state income tax on Social Security or most retirement income.

CONS: Serious crime rate above national average. State inheritance tax. So-so economy. Air quality issues.


Roanoke, Virginia

Scenic Blue Ridge Mountains city of 100,000, 240 miles southwest of Washington, D.C.

PROS: Median home price of $225,000, 40% below national median. High number of doctors. Good air quality. Comfortably mild climate. Somewhat walkable and bikeable. No state tax on estates or Social Security. Relatively low natural hazard risk.

CONS: So-so economy. Serious crime rate above national average.


Rochester, Minnesota

River city home of famed Mayo Clinic and 125,000 people, 85 miles southeast of Minneapolis.

PROS: Median home price of $316,000, 16% below national median. Extremely high ratio of doctors per capita. Good air quality. Low serious crime rate. Very bikeable. Strong economy. Relatively low natural hazard risks.

CONS: Cold winters. Not very walkable. Income tax on Social Security benefits. State estate tax.


San Antonio, Texas

Vibrant South Texas city of 1.6 million people, making it country’s seventh-most populous city.

PROS: Median home price $287,000, 24% below national median. Good air quality. Strong economy. No state income or estate tax. Very bikeable.

CONS : Serious crime rate above national average. Relatively high natural hazard risk. Not very walkable.


Savannah, Georgia

Graceful river city of 162,000, 30 miles inland from Atlantic Ocean.

PROS: Median home price of $260,000, 31% below national median. Good air quality, comfortable climate. Very bikeable. Good economy. Social Security benefits plus up to $65,000 per person of other retirement income exempt from state income tax. No state estate tax. Relatively moderate natural hazard risk.

CON : Serious crime rate slightly above national average.


Sioux Falls, South Dakota

Rolling river town of 201,000 in southeastern South Dakota, 240 miles southwest of Minneapolis.

PROS: Median home price of $296,000, 21% below national median. Excellent ratio of physicians per capita. Good air quality. Very bikeable. Very strong economy. No state income or estate tax. Relatively low risk of natural hazards.

CONS: Cold winters. Serious crime rate above national average. Not very walkable.


Spokane, Washington

Scenic river city of 232,000, 280 miles east of Seattle.

PROS: Good ratio of physicians per capita. Good air quality. Very bikeable and pretty walkable. Strong economy. No state income tax. Relatively low national hazard risk.

CONS: Median home price of $411,000, 10% above national median. Cold winters. Serious crime rate above national average. State estate tax.


Sun City, Arizona

Age-restricted Phoenix suburb of 43,000 aimed at physically active retirees.

PROS: Median home price of $303,000, 17% below national median. Strong economy. No state estate tax or income tax on Social Security. Adequate doctors.

CONS: Hot summers. Poor air quality. Relatively high natural hazard risk. Not very walkable.


Tucson, Arizona

Sonoran Desert city of 558,000 with major college (University of Arizona), 65 miles north of Mexican border.

PROS: Median home price of $312,000, 17% below national median. High number of doctors per capita. Very bikeable, somewhat walkable. Strong economy. No state estate tax, or income tax on Social Security earnings.

CONS: Poor air quality. Serious crime above national average. Relatively high vulnerability to natural hazards.


The Villages, Florida

Fast-growing senior-citizen-oriented town of 132,000, 50 miles northwest of Orlando.

PROS: Mild winters. Good air quality. Low serious crime rate. No state income or estate tax. Relatively moderate national hazard risk. Strong economy. Somewhat bikeable.

CONS : Median home price of $388,000, 3% above national median. Not very walkable. Physicians per capita below national average.


Virginia Beach, Virginia

Beach-lined city of 460,000, Virginia’s largest, 200 miles south of Washington, D.C.

PROS: Median home price of $363,000, 3% below national median. Adequate ratio of doctors per population. Good air quality, comfortable climate. Somewhat bikeable. Very low serious crime rate. No state estate tax or tax on Social Security income.

CONS: So-so economy. Not very walkable.

READ @FORBES.COM

Some large employers suspended matching contributions to retirement plans last year, but this was only temporary for many of them. Studying 260 such companies, consulting firm Towers Watson reports that 75% have already restored employer matches, with 74% matching at the same level they did before the arrival of the pandemic.*

Source: MarketWatch, December , 2020

Did you know?

Looking for the tallest mountain on earth? Try Hawaii.

Mt. Everest, at the border of Nepal and Tibet, is generally ranked as the world’s highest peak, towering more than 29,000′ above sea level. Hawaii’s Mauna Kea volcano, however, is in one sense even grander. While Mauna Kea rises 13,796′ from the shoreline, it actually measures 32,808′ from its base on the floor of the Pacific Ocean.*

Source: FarandWide.com, December 15, 2020

On the Bright Side

Investment Advisory Services offered through Trek Financial LLC., a (SEC) Registered Investment Adviser. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein. DISCLOSURES