Tax and Finance Tips for Seniors

The first tip is to always question where you are planning to get your advice from when it comes to tax and finance tips for seniors. There are a lot of scams out there — from incompetent and so-called experts to downright crooked “professionals.” So says Julian Block, an attorney and former IRS special agent.

Be especially suspicious of invitations to free lunch seminars geared toward seniors. They’re continuously pitched in creative ways by retirement planning services and estate counselors, though they’re not always in the best interest of the seniors.

In fact, AARP conducted a survey of more than 1,000 people aged 55 and over, all of whom attended seminars on retirement and estate planning. The survey’s unsurprising disclosure was that the attendees were “pitched investments that were unsuitable for them or were asked for information that could expose them to financial fraud.”

The invitations consistently offer the same enticements, including “a free gourmet meal” and tips on how to “earn excellent returns on your investments,” “eliminate market risk” and “grow your retirement funds.” Plus, spouses are often urged to attend as well.

“These words should be red flags for investors,” cautions the North American Securities Administrators Association, an international organization devoted to investor protection, on its website.

Will provisions and beneficiary designations 

Discuss your will provisions and beneficiary designations with experienced advisers. Together, you can figure out whether they need updating. Review your overall estate plans. Tax laws and other laws relating to property are subject to change, as are circumstances and beneficiaries, so it’s important to keep these potential adjustments in mind.

How long has it been since you last checked your will?

Are all the beneficiaries and executors whom you’ve named in your will still living? Make sure you name contingent beneficiaries so that your property doesn’t wind up with people you aren’t particularly interested in being associated with your assets.

Also, make it a point to name alternative executors. Why run the risk that a court might have to name a substitute if your executors die, become disabled or are no longer willing to serve for another unmentioned reason?

Update beneficiary designations

Beneficiary designations are included with assets such as insurance policies, IRAs, 401(k)s, 403(b)s and various other kinds of retirement plans. Make sure you update these details on a consistent basis. Otherwise, things could go badly. But how spectacularly badly?

Well, the proceeds might wind up with former spouses or others whom you would now consider to be unworthy or unfavorable. Another drawback is that there can be later problems in the event that named beneficiaries have predeceased owners.

Final letter of instructions

Seniors should assemble the information for nonbinding documents in a final letter of instructions, which is a known legal term. This type of letter is designed to act as an informal inventory of financial records.

Key parts of said inventory include names, numbers and locations of insurance policies and bank accounts, information used to prepare tax returns, and various other paperwork. The lists help heirs locate assets and sidestep substantial amounts of otherwise-avoidable administrative expenses, provided the letter remains up to date and accessible.

Living trusts

For many seniors, it’s worthwhile to consider whether they should avail themselves of living trusts. The best way to make a decision one way or another is to discuss them with their estate planning attorneys.

Also known as grantor or revocable trusts, with these types of trusts, it’s possible to transfer assets in simple and relatively painless ways that avoid some of the headaches of probate. Unlike other types of trusts that are designed primarily to save income or estate taxes, living trusts don’t provide income or estate tax advantages.

But assets channeled into a living trust go directly to the heirs. Thus, those assets usually escape what can be lengthy and costly proceedings.

As always, work closely with qualified tax and financial professionals who are familiar with your needs and your current circumstances.

Reach out to Roz Carothers and her team at Triplett & Carothers to learn more.