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Estate Planning: What will your legacy be?

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You don’t have to be a millionaire to set up an estate plan. Have you thought about passing down a family heirloom to one of your children? Maybe you’ve considered leaving money to a charity that benefits public arts funding. When you’ve spent your life acquiring assets and building wealth through hard work, it’s only natural to want some control over what happens to them after you’re gone. The best way do this is to have a sound estate plan.

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As you form your estate plan, keep in mind several key ideas.

  • Pick your heirs

    Whether you want to pay for your grandchildren’s college education or give a ring that’s been in your family for generations to your oldest daughter, decide who you want to provide for and how.

  • Provide direction

    If you have specific ideas about how you want your assets to be used when you’re gone, make sure that those ideas are clear in your estate plan. You may want to start a family foundation that supports children’s literacy or structure a trust that holds money you’ve left for your children until they reach a certain age. Whatever special objectives you have, clearly outline them in your estate plan to ensure they’re accomplished.

  • Protect your children

    If you have young children, it’s important to select a guardian to care for them and include this in your will. This may seem like an impossible task, but only you should decide who is best suited for the job. Be sure to talk to them about it before you put them in your will. Having a conversation with them ahead of time will prevent surprises and ensure they are up to the responsibility. Once they agree, make sure it’s documented. If you name a guardian in your will, the probate court will be more likely to honor your wishes. If you don’t list a guardian in your will, the court will select one without guidance.

  • Prevent legal hiccups

    Generally, assets owned by one person are subject to probate after they have passed. Probate is a name for the legal process conducted to determine the authenticity of a will and to distribute the assets of an estate. Probate involves legal costs and causes delays in the distribution process.

To avoid probate and minimize taxes on your assets, you can place part or all of them in a trust. One option is a “self declaration of trust,” where you are responsible for the assets while you are still alive (initial trustee) and a professional third party is responsible for distributing the assets after you are gone (successor trustee). Another option is to name the professional third-party as the trustee while you are still alive.

Many people tend to put off estate planning. But it is an important process for you to consider. It’s an opportunity to take control of future planning for yourself and your beneficiaries. It can be a difficult, but if successfully completed, this seemingly impossible task becomes an efficient and well-executed plan.

 

Content is for informational purposes only and should not be taken as legal advice.  Please consult an attorney for assistance related to estate plans and your particular situation.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Tjaden serves as executive vice president and chief fiduciary officer. He is responsible for supervising all fiduciary activities and staff for UMB, including offices in Kansas City, St. Louis, Denver, Phoenix and Salina, as well as the Trust Company in South Dakota. Mr. Tjaden oversees Personal Trust, Custody, Foundations, Trust Legal and Business Support Services within the Private Wealth Management division. He joined UMB in 1977. Mr. Tjaden earned a bachelor’s degree in business administration and political science from Kansas State University. He also earned a Juris Doctor and a master’s in business administration from the University of Kansas. Additionally, Mr. Tjaden is a Certified Trust and Financial Advisor and a member of the Estate Planning Society, the Johnson County Bar Association and the Kansas Bar Association.



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A smooth road to retirement

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Are you ready to begin the next stage of your life? Retirement is still an option despite the current slow-growth economy. If you’re considering or approaching retirement, there are several items to keep in mind when nearing this important milestone. If you are planning to leave the working world in the next 18 to 24 months, here are a few considerations in the current economy:

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  • Understand your actual timeline.

    Your “time horizon” may be longer than you realize. Life expectancy is also a big factor. A retirement date is an initial benchmark, but you need to keep in mind that your money can still “work for you” while you are enjoying your newly discovered free time.

  • Make sure to have a cash reserve.

    You should build up a reserve large enough to carry you through six to 12 months of retirement expenses. This can provide a cushion in case of an unexpected downturn or a major unplanned expense.

As markets can vary year to year, those with more than two years until retirement can plan for either situation in the following ways:

  • Increase contributions.

    Invest extra cash. Consistent dollar-cost averaging can help reduce the worry of when and how much to invest. You may also want to direct some of those extra contributions into a cash reserve, just in case of unexpected declines.

  • Diversify, diversify, diversify.

    Don’t put all your eggs in one basket. Throughout market cycles, different classes, styles and assets with diverse market capitalizations perform differently. Actively managing your portfolio diversification can have a greater impact on performance than individual investments.

Most of all, flexibility and patience are virtues in the world of portfolio management.  Don’t fall in love with a retirement date, and don’t be frustrated with market activity. If you have questions or concerns, it may be advantageous to seek the advice of an experienced professional.

Professional advisors can offer objective, educated and customized guidance. They are also an objective and knowledgeable resource that can provide a valuable perspective. While an advisor may not be able to provide every person with the news they want to hear, a good financial advisor can help maximize and leverage the assets individuals have against their personal timelines, risk tolerance and goals.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Diederich serves as managing director of portfolio management. He is responsible for managing the portfolios of high net worth clients and select institutional relationships. He joined UMB in 2003. Mr. Diederich earned a Bachelor of Science in Finance from Missouri State University in Springfield, Mo., and a Master of Business Administration from the University of Missouri – Kansas City. He is a Certified Financial Planner®, a member of the Financial Planning Association and has more than 15 years of experience in the financial services industry.



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How to generate income during retirement

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Senior Couple WalkingWith the baby boomer generation already in or quickly approaching retirement age, it is important for current and soon-to-be retirees to determine the best approach to collecting the money from their 401(k), IRA, Roth IRA, pension plan, 403(b)  or social security.

You don’t want to spend your retirement years worrying about money. You should spend the time enjoying your family and hobbies or traveling! Planning ahead and working with a professional can help alleviate your anxiety.

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Here are some important things to remember about saving and spending during retirement:

  • Generate income using assets and investments

    Discuss with your financial planner how to generate income during retirement with the money you’ve set aside for this time in your life. Your planner can help you separate your assets into three groups: taxable, tax-favored and tax-free. If you take a blended approach to meeting your required minimum distributions, your money can last significantly longer.

  • Diversify your portfolio

    It is always recommended to have a portfolio of assorted investments. You don’t necessarily have to rely completely on safe, income-producing investments. Adjust your rate to your needs when necessary and don’t be afraid to spend capital from your retirement portfolio. Traditional IRAs, 401(k)s, 403(b)s, and self-employed plans are structured for you to withdraw from it over your lifetime. You might be nervous spending down these accounts, but a financial advisor can help you distribute these funds appropriately over the course of your retirement so that you can live comfortably.

  • Remember: taxes, timing, spending

    These three items are the most important factors to creating income during your retirement. You should understand your tax obligations because tax rates could help determine acceptable savings withdrawals.It’s also important to carefully time your retirement. The point at which you begin taking money from your retirement accounts can make a significant difference in the amount that is available several years into your retirement. Remember that some retirement funds charge a penalty if you withdraw before a certain age.Finally, it’s vital to spend wisely during this time in your life to ensure that you will have enough funds to last throughout your retirement. Do you want to splurge on a Hawaiian vacation during your retirement? If so, this is something you should plan for in advance. Talk to your advisor about any major spending you would like to do in your retirement. You might not be on a completely fixed income, but you need to be mindful of how much money you have to spend.

  • Educate

    Take the time to educate yourself before and during your retirement. Start planning early so you can enjoy this time in your life. Do your best to educate your children about saving for retirement and encourage them to start saving at an early age.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a diversified financial holding company headquartered in Kansas City, Mo., offering complete banking services, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska, Arizona and Texas, as well as two national specialty-lending businesses. Subsidiaries of the holding company include companies that offer services to mutual funds and alternative-investment entities and registered investment advisors that offer equity and fixed income strategies to institutions and individual investors.



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Financial planning is a marathon, not a sprint

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Whether you have just started the race and you are at the beginning of your career, or you are closing in on the finish line of retirement, you should stay on track with your financial planning. Much like running a marathon is different than a sprint, planning long-term financial goals is different than simply paying your bills every month. A knowledgeable financial partner can coach you through this and make the process seem less daunting. Similar to a mile marker showing you what point you are at in a marathon, certain life events signal when and how you should financially prepare.

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  • Just starting out

    Start saving as soon as possible to set the pace for this long-distance run. Consider opening a savings account and set aside whatever you can from each paycheck. With most banks, you can set up an automatic transfer from your checking account to a savings account so you won’t even have to think about it. Also consider a retirement fund—either a 401(k) or similar employer-sponsored plan, or an Individual Retirement Account (IRA) separate from your current job.

  • Planning for a family

    Thinking about starting a family? This is an important decision and one that you must be prepared for financially. Much like training before you run a marathon, adjusting your budget and saving for having kids is important. Paying for medical bills when the baby is born or financing adoption fees is no simple task. Not to mention childcare and other expenses related to children once you have them. Bottles, diapers, clothes, toys, it all starts to add up quickly!

  • Children’s education

    If your children plan to pursue higher education after high school, you will need to save for that expense. A four-year degree is estimated to cost $442,697.85 for students enrolling in 2031 if tuition increases seven percent per year. Does that number make you nervous? Planning ahead and starting to save when your children are born will help with some of that anxiety.

  • Pre-retirement

    As you see the retirement finish line in the distance, it is important to meet with your financial partner(s) to understand when you can retire and feel comfortable with your finances at that time. Ask how your retirement fund(s) is/are performing and whether or not you need to increase/decrease your contributions. Want to spend your retirement vacationing at that lake house you have always dreamed of? It doesn’t have to be a dream if you start budgeting now.

  • Post-retirement

    Now it’s time for the post-run cool down and stretch. After you retire, it is more important than ever to monitor your finances. You aren’t contributing to a retirement fund or planning to pay for your children’s college; instead you are now working on a fixed income and have to ensure that it will last for the rest of your life.

Marathon runners train very hard for a long time to prepare for those 26.2 miles. Often they don’t do it alone and will work with a trainer who helps them through the preparation. Utilize the expertise available at your bank and start preparing for the long-term so you can reach the finish line when and how you want.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Miles serves as assistant vice president and banking center manager in Denver. He is also a member of the UMB Consumer Advocate Team. He joined UMB in October of 2007. He is currently studying Organizational Leadership at Colorado State University.



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