I received this reader question recently and wanted to respond publicly:

“I would like to no more about this programs and does it really works? I have made a few investments on the stock exchange through information that i got from Penny Stocks newsletters but was unsuccessful. I want  more wealth but dont no how to start or what to begin with.”

This program is not something I made up or just discovered on my own. It is a well researched and verified process that Certified Financial Planner Licensees use if they practice comprehensive financial planning (which many do not). I have used it personally and in my financial planning practice and found that it works ALL the time if followed correctly. The problem is that many of you will not follow it. Why? Because it isn’t fast, it isn’t sexy, there are NO get rich quick schemes and NO, your life is going to change forever moments.  What it does is give you a road map to arrange your finances to support your current lifestyle and your projected lifestyle (and that means different things to different people). It means taking into consideration how you live, play, what your risk tolerance is, what your tax bracket is and a host of other details.

Where do you start? You start with a strong money foundation and that is following Step 1. to Step 3.

Step 1. Cash and Credit. Cash flow and credit is the life blood of your financial plan. Understanding how much you take in and how much you spend shouldn’t be a painful exercise but a motivator to work with what you got in the best way possible.

Step 2. Risk Management. Everything you acquire can be taken away in one full sweep (and I know you have seen it happen) without the proper insurance.  Getting the right insurance that fits your needs and your budget is a strong step in preserving what you are building on.

Step 3. Estate Planning. You are not building wealth just for you but for your family. A few easy legal documents can insure that they get what you have worked so hard to build and get it easily and without taxation. I have seen so much grief and family burden due to lack of a few simple estate planning documents.

Step 4 is Identify Goals. There is a saying that if you reach for nothing, that is what you will get. What does the future hold for you? Do you see yourself working part-time at age 50? Or would you like to not work at all at age 60? Or maybe you want to change careers or open up a small business? Maybe you would like to send your kids to a private college? Maybe you want to go back to school to learn a new trade? Perhaps you just want to get out of debt and start an investment plan? Whatever you want, that will cost money and you can figure out how to afford those things by goal setting. Unfortunately, it isn’t going to just happen one day. You are going to make it happen by planning for it. Now that you have a solid wealth foundation, you can begin to invest.

Step 5 Investment Planning.  There is nothing complex here.  You pick out (a process called asset allocation)  no-load mutual funds with a variety of asset classes and asset styles based on the return you want, the risk you are willing to take, and the taxes you are willing to pay. Once you have your allocation, it is set it and forget it time. Sorry, I just haven’t seen the research that market timing (darting in and out of investments) works but asset allocation does. You revisit this asset allocation once a year.

Step 6 Retirement Planning. Retirement planning is all about using  these wonderful tax deferred retirement plans (401K,403b,457,etc.) to help us build wealth to meet our goals. Let’s face reality folks. Even if you loved your job and will work everyday until you drop, there will be days,  months, or years during your lifetime that you cannot work. Then you should have your investments replace your earned income.

Step 7 Tax Planning.  I am all for getting the most bang for your buck and tax planning provides that in your wealth building program. For every dollar that you invest, if you can get ten cents to fifty cents back from the government, well why not do that?  That is why so many deferred compensation plans, IRAs, SEPS , etc.  are so popular. They provide a lot of bang for the buck. Don’t get greedy by wanting tax free everything but do take tax implications into every investment decision you do. The difference between 5% taxable and 5% tax free is huge if you are in a high tax bracket.

Those are the 7 steps to build wealth and I go into detail for each one. I have also given you  resources that I value to help you even more. There are links to get a free credit report, and links to fee-only Financial Advisors, and links to financial calculators.  If you aren’t the do-it-yourself type, I am always available to help mentor you through the steps. What is different about me, Wealth Coach Fern, is that I empower you with the information and the tools to build your own wealth program.

Why is that so important? Because studies have shown that most of you will follow through on a comprehensive financial plan if you “own” it. That is what attracted me so much to the coaching model. I want you to be successful and I can coach you through a complete personal financial plan. I have 30 years (gulp! I am old) experience in this field and very passionate about it. If there is any way I can make it easy or if you need more info on a topic, let me know. I want you to build wealth and wealth beyond money!

The post Does this Wealth Program Really Work? first appeared on Whole Hearted Way.

IRAs (Individual Retirement Account) are great investment vehicles for tax deferred growth and estate planning. An IRA has a designated beneficiary when the account is set up that makes it easy to determine who should inherit the money. Usually the beneficiary is a spouse but sometimes it is a minor or a non-spouse. It gets tricky when the beneficiary is a non-spouse. Let’s look at your options if you are a non-spouse beneficiary of an IRA.

Your first option and my personal favorite is called the Stretch IRA which means you start taking the required distributions which are based on your single life expectancy (which is a factor in a table published by the IRS) using your age at the end of the year. You must begin taking the first distribution in the year after the death of the IRA account owner. There is no penalty for taking the distributions regardless of your age but your distributions are taxable. The money in the IRA account is left to grow tax deferred throughout the beneficiary’s lifetime. That’s a great feature that is too good to pass up. Think about it. You are taking a little bit of money over a long period of time so the lump sum keeps growing without any tax on the earnings. What a deal!

Your other option is to use the 5 year rule. This rule says that all of the funds must be distributed by the end of the fifth year after the account holder’s death. You can take the money out whenever you would like and there is no penalty but again, you would have to pay tax on the distribution. This obviously is better for very small amounts of money or perhaps minors that may need the funds for education or other purposes.

Be careful when transferring title from an IRA to an inherited IRA. There are strict rules about that, and if the bank or brokerage firm does it incorrectly (and believe me, I have seen it happen), you could incur taxes and penalties.

Be careful with your beneficiary designations. It is prudent to review them every couple of years. A large Individual Retirement Account can be a wonderful inheritance that can last a lifetime. See your Financial Advisor or a Wealth Coach to help you grow your money.

The post You Inherited an IRA- Now What? first appeared on Whole Hearted Way.

I wanted to share with you a couple of key points about estate planning that you should know. One is about unfunded living trusts. What is that? You go to the attorney who sets up this document called a revocable living trust. You can access the money and it avoids probate. Sounds good, right? Well, if there is nothing in the trust, then it doesn’t work and your estate can go into probate which is a lengthy and expensive process. So how do you put assets in a trust? You title them correctly. For example, you wanted your savings account in a trust. The title on the savings account would say Fern Alix LaRocca, trustee for the LaRocca Revocable Living Trust. That way the bank knows that the savings account is part of a trust. Every asset that you want in the trust should have special titling that says so. If not, then it isn’t in the trust and if it isn’t in the trust, then that portion goes into probate if it exceeds $100,000.

There are many “trust mills” that were out there promoting these revocable living trust documents. They meant well but they didn’t do the dirty work of going through every asset and changing the title. They expected the clients to do that. They used boiler plate documents that you filled in the blanks.

Now is the time to pull out those documents and see what is in your trust and what isn’t, and make the corrections. Why now? Because right now you need an estate worth $5,000,000 to be subject to estate tax but that will be expiring at the end of 2012 and then it is reduced to $1,000,000 unless it is repealed by the end of this year.

Of course if you have a simple estate that is less than a million, you can get by these:

Simple Will

Beneficiary designations on all accounts

Powers of Attorney

Durable power of attorney for financial care

Advanced Medical Directive

Joint Tenancy with rights of Survivorship titling (JTWROS)

Check your parents estate plan while they still have their wits about them and yours at the same time. You will be glad you did. Don’t make me drag out horror stories of what can go wrong when you don’t do this simple thing. It ain’t pretty.

The post Unfunded Living Trusts-Don’t Let It Happen To You first appeared on Whole Hearted Way.

I just got back from a memorial service for a good friend of mine that I had known since high school. Unfortunately he left behind an estate planning nightmare. I gave my friend many financial planning tips over the years and he did everything I suggested so he could to make sure his business, and finances would be in order in case something happened to him.

So- what went wrong if he did everything right?

Our culture supports us working with family and friends and those that we trust when we are put in positions of having to make important decisions about things that we don’t know anything about.  We have our cousin help us buy a car (since he works at the dealership) or the aunt that does our taxes (since she works at an accounting firm) or our brother-in-law that will refinance our home at a good rate (since he is a mortgage broker).

In this case, a family friend who is a retired attorney had set up the estate plan.  There was just a will and nothing else. Now the estate has to go through probate and the heirs are watching their inheritance go down the drain since they are helpless to keep his business running until it could be sold. No one has the power to pay the bills on his home and no one can pay his employees. Everything freezes until the estate settles.

Can you imagine the shock and grief that his adult children are going through? Not just mourning a death but watching a man’s legacy go down in value right before their eyes and there is nothing they can do.

Now the attorney is a good man and has had a good legal career; but if you look at his credentials, he did very few estate plans and was mainly a personal injury attorney. He gave my friend a “good deal” on the estate plan just like many of your family friends will give you a “good deal” but sometimes it is better to pay full price with a stranger who has the expertise that you need. It will cost you a lot less in the long run.

Treat your well meaning family and friends like you would when you are scrutinizing other professionals. Check out their background and credentials to see if they really have the expertise to help you with your particular problem.  It is a complex world out there and everyone cannot know everything so you really need someone with a particular skill set that suits your needs.

I remember when I needed a skin graft and I asked my orthopedic surgeon who saved my life and with whom I trusted, to do the surgery. He replied, “Well, Fern, I can do it, but I haven’t  done one since med school. I think you would be better off with a surgeon that does a lot of these types of surgeries.” Enough said. I got it, and you should too.

Get your estate plan done right by an estate planning attorney who specializes in estate and elder law.

The post A Sad Tale of Good Estate Planning Advice Gone Wrong first appeared on Whole Hearted Way.

The third step in your do it yourself financial plan is estate planning. Estate planning is thought about as wills, trusts, and gifts, etc. Not anymore. No one wants to think of sickness, old age, and death, yet all of us will experience that at some point, and the most important element of a person’s legacy is not money but passing along values and life lessons. Yes, the basic documents of an estate plan which are needed to build wealth are a will, durable power of attorney for financial care and durable power of attorney for health care. But now people want so much more. They want to know how the final wishes and preserved memories of the individual will be left behind. Here is the new softer side of estate planning:

Ethical Wills-more people are using this type of will not just to distribute assets but to also put their values and beliefs on paper. Even if you are not the best writer, you can find outlines and examples on the web to get you started on what memories, beliefs, values, or life lessons you would like to leave behind.

Durable Power of Attorney for Financial Care is a document that gives someone the authority to take over your financial matters upon your disability or incapacity. Make sure that the individual you choose is aware of his or her duties. I have found too often that one child who is not financially savvy is given the responsibility that he or she did not want. Don’t surprise people with this responsibility. Talk to them first to see if they are open to being appointed for these duties.

Durable Power of Attorney for Health Care is a document that gives someone the authority to make medical decisions for you upon your disability or incapacity. 85% of most DNRs (do not resuscitate) are not honored. Again, make sure the individual you choose knows of his/her obligation to see that your wishes are honored.

Some of the new advanced medical directives like the Five Wishes available at Aging with Dignity offer a more detailed medical directive which is easy to understand and use.

Passing along “values and life lessons” was overwhelmingly considered (by over 75 percent) the most important element of a person’s legacy according to a recent study. Don’t wait to execute these documents under duress. Plan your legacy today for the protection of your assets and your family.

The post Legacy Planning – The Basic Documents of Estate Planning and Beyond first appeared on Whole Hearted Way.

Don’t even get me started on what will happen to your investments without an estate plan.  Kiss that investment plan goodbye.

At the very least, you and your spouse should have written wills. If you can’t afford an attorney, look through my resources for do-it-yourself options. Beware though that each state has unique twists so make sure your will is federal and state compliant.

Estate planning isn’t for the dying. It is for the living. It is part of a firm financial foundation that is a necessity before you start to invest. Secure your foundation with steps #1-3.

The post Do-It-Yourself Financial Plan Step #3 Estate Planning first appeared on Whole Hearted Way.

If you could look 50 years into the future and visualize a gathering of your family, what would you like to see going on and what would you like to hear them talking about? Most people say they would like to see their loved ones healthy, successful, in good relationships, among family and living a life that reflects the values they instilled in them throughout their lifetime. Ironically, people who share this belief rarely, if ever make provisions in their estate plan to support these outcomes. The absence of addressing this desired outcome is a major flaw in planning.

Traditional estate planning, while a critical component to any comprehensive financial plan to build wealth, only addresses your material assets, possessions of financial value, and your wishes for how they will be disbursed in the event you pass away or cannot communicate for yourself. Clearly we amass more in life than material possessions. And the legacy we leave would be incomplete if these are all we’ve made provisions for. While the efficient distribution of material possessions and the common understanding of one’s preferred medical orders is incredibly important, there is still a huge void if you have not shared information to support your desire to leave a meaningful legacy — to assure your loved ones will enjoy the experiences you envision for them in fifty years. Simply put, the absence of a “personal legacy plan” is a critical flaw in most estate plans.

There are two explanations for the irrational disconnect between such universal desires and the absence of common sense provisions in so many estate plans:
First, in our culture it’s hard for people to think about, let alone talk about, their family going on without them. It’s also hard for people to talk about their deepest emotions, core beliefs and personal values. And these are all essential components of a meaningful legacy plan.

Second, while the legal and financial services industries have developed strategies and products to address much of this first hurdle in terms of financial planning, they have never possessed the training and tools required to assist them in the delivery of such a service in regard to non-material assets.

The good news is that the landscape is changing. Having survived the tragedies of 911, Katrina, modern warfare and even the recent stock market crash, America’s awareness of life’s preciousness has increased.

Even President Obama spoke to it last year in his opening remarks to the Business Council at the White House the morning after a tragic airplane crash in Buffalo, NY that killed 50 people. “Tragic events such as these remind us of the fragility of life and the value of every single day,” the president said.

At the same time, the financial services industry, and to a smaller extent the legal community, are also evolving in response to an aging baby boomer population. Specialized legacy planning services are emerging that ensure one’s personal beliefs and values will be clearly left to those we care about. Through these programs financial and legal professionals can offer their clients the peace of mind that goes far beyond
traditional financial and estate planning.

The time for needed change in estate planning has arrived. The public is ready to talk about the issues that matter to them. The critical tools for professionals to have meaningful conversations about legacy plans have arrived. It’s thankfully only a matter of time before “let’s review the legacy plan” becomes as common an expression after someone’s passing as, “we’re going to read the will” and “what does it say in then estate
plan.” That time could be today. You can help ensure the vision you have for your family fifty years from now actually comes true. You have a way to influence more than just the financial future of those you care about. Review your own estate plan and make sure it includes the complete legacy you want to leave behind.

By Mark Colgan, CFP http://www.planyourlegacy.com

The post Most Estate Plans Possess a Major Flaw first appeared on Whole Hearted Way.