Learn the basics to avoid cell phone surprises

(BPT) – It’s easy to be overwhelmed when it comes to choosing a cellphone provider. Everyone claims to offer the best, cheapest and most comprehensive service. It can be especially baffling for seniors who, despite boundless wisdom elsewhere, may be newcomers to this technology.

When you boil it down, it’s actually fairly simple. You need two things: a device that does what you need it to do, and a way to connect that device to a reliable wireless network. And there’s no reason you shouldn’t get it all at a price you can afford.

It’s all about the phone.

The type of phone you choose will determine everything else you need. Will you use it primarily to make and receive calls? Do you want to send and receive text messages? Will you be searching the internet or using social media?

Familiarize yourself with the types of phones on the market, and decide which is the best fit. Cellphones range from simple models offering basic call-and-text functions to sophisticated smartphones, capable of performing a mind-boggling array of tasks. Make sure you’re getting what you really need, and don’t tie yourself to something you’ll quickly outgrow.

Coverage is key.

Your cellphone is only as good as the network it connects to. Before you sign up for service, you’ll want to be sure a provider can deliver coverage to the places you’ll be using your phone the most.

While most providers display general coverage maps in their retail stores or on their website, distinctively local things can impact cellphone reception. Your home’s building materials may create interference, or tall buildings standing between your neighborhood and the nearest cellphone tower could disrupt the signal.

Rather than relying solely on a map, ask around. Check if your neighbors are happy with the quality of their cellular service. Or have friends make calls from your house to hear what the reception and sound quality are like. This could go a long way toward narrowing your choices.

Minutes, texts and data: Solving the plan puzzle.

The last piece of the puzzle will be deciding what type of monthly service to sign up for. Cellphone plans are packaged in a dizzying array of formats, but there are three basic types.

Contract plans bound you to a carrier for a fixed term, usually two years. This means if you’re dissatisfied, there’s no opportunity to change until the contract expires without paying a significant penalty. Prepaid plans allow you to buy a fixed amount of minutes, texts and data, and use them until they run out. At that point you’ll have no service until you purchase more.

No contract, post-paid plans offer a nice mix of both. There’s no long-term agreement, so you can make changes without penalties. Unless you cancel, your plan renews month-to-month, so there’s no worry about running out of minutes and losing your service. There are even special rates just for seniors: Consumer Cellular, who specialize in wireless service for users over 50, offers exclusive discounts to AARP members.

Avoid surprises on your bill.

Before you sign up, ask about any penalties or hidden fees that may apply. Some carriers charge a fee just to activate your service. On contract plans, you’re required to pay a hefty “early termination fee” if you cancel your service early. Find out up front to avoid being ambushed later on.

Whatever you choose, your monthly bill should be straightforward and understandable. You should be able to tell at a glance what period of time the bill covers, what your monthly charge is for accessing the carriers network, the cost of your monthly plan (and what it includes), plus any applicable taxes or fees.

Put yourself in charge.

Shopping for the best deal on your cellphone service is no different than shopping for a dishwasher or an automobile. No one knows better than you do what your needs are.

Just remember: there’s no shortage of wireless carriers in the market, and they’re all vying for your business. Use this advantage wisely — do your homework, ask questions and don’t be afraid to walk away if you don’t get the answers you want.

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Security in an insecure world

(BPT) – The year 2016 was devastating for some safe deposit box holders. In New York, thieves cut holes in the roofs of three banks and brazenly emptied hundreds of safe deposit boxes, leaving the victims’ pillaged boxes on the roof and strewn around the vault.

A stealthier thief in Florida picked safe deposit boxes in several banks, emptying the contents without damaging the box or leaving any visible sign of the theft.

These are not isolated incidents. On average, there are between 15-18 robberies or burglaries involving bank vaults every year according to the FBI. Millions of dollars of jewelry, cash, gold and family heirlooms are stolen, leaving devastated box holders dealing with unrecoverable losses.

Still the safest

Despite these occurrences, law enforcement agencies, FEMA, the American Red Cross and AARP all recommend safe deposit boxes to store valuable items, heirlooms and documents. A safe deposit box in a vault is superior to home storage even with a safe. Why? Because a residence is almost 20 times more likely to be robbed than a safe deposit box in a bank. And with rental costs starting at around $30 a year, safe deposit boxes remain one of the best values offered by a financial institution.

Required step

Today, most people who rent a safe deposit box assume the bank or a federal agency insures the contents. This is not true, and unfortunately, too many people learn this the hard way.

A standard homeowners policy provides limited coverage for some items in a box, but excludes losses from flood and other risks. They may also have a high deductible.

Specialty insurance designed to cover and protect everything inside of a safe deposit box — including cash, gold and important papers such as wills, titles, deeds, photos and digital backups, is now available. There is no deductible, and risks such as terrorist attacks, hurricanes and earthquakes are covered.

And because you do not need to identify what is stored inside the box to obtain coverage, you can maintain your privacy.

Protect yourself

Clearly, there are events that no vault or safe deposit box can protect against. However, there are steps you should take. Safe Deposit Box Insurance, LLC (SDBIC), the leader in protecting valuable assets in secure boxes, has developed a secure storage quiz on secure storage options.

So, despite there being some high-profile break-ins, a safe deposit box is still the best place to store your documents, family heirlooms and other valuables. But because nothing is 100 percent foolproof, it’s important to do your research, select the right bank and insure the contents of your box through SDBIC.

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What you should know about rising interest rates

(BPT) – Homeowners planning to refinance and buyers searching for a home may have an idea of what’s in store for them with regards to interest rates, but they never really know until they lock in a rate. This is in part because rates can change direction fast, and when they rise—as they have been recently—it can cost borrowers a great deal of money and time.

The effect of rising interest rates on your home purchase

Today, the median existing home price in the United States is around $235,000, and the average mortgage interest rate is near 4 percent. If you were to buy a home at that price, an interest rate increase of half a percent would cost you an additional $70 per month on your loan payment. And that assumes you’ll put the standard 20 percent down in advance. A more dramatic rate increase—say from 4 percent to 6 percent, even over time, would increase your monthly payment by almost $300.

Home price gains

For homebuyers, it’s not just rising interest rates that can increase your payment, but so can home price appreciation. In fact, in most markets, housing prices have increased past highs previously set before the financial crisis in 2007/2008. For example, in citing this recovery, the Federal Housing Finance Agency recently increased the maximum loan amount for mortgages that meet Fannie Mae and Freddie Mac guidelines for the first time in more than a decade.

The new conforming loan limits increased only slightly, to $424,100 in most parts of the country. This will enable home buyers in higher-cost areas to access larger home loan amounts and more affordable loan products, in line with local housing prices.

The home buying season may start early this year

Spring/summer is traditionally the busiest home buying time of the year as many sellers wait to list their homes after the cold winter weather is over and to coincide with the summer school break. However, with both home prices and interest rates on the rise, more buyers are expected to enter the home buying market earlier this year, making for a more competitive home buying season. Potential buyers will need to be aggressive to find the home they want at a rate they can afford.

Starting your loan search today

If you’re in the market but haven’t found the home of your dreams yet, there are tools available to guard against increasing mortgage rates. Lenders like loanDepot help customers save by giving them the opportunity to lock a quoted rate and hold (lock in) that rate for 45 to 60 days, protecting them from potential fluctuations in the market. And with rates rising, now is a great time to lock your loan at a more favorable interest rate.

If you do choose to lock your loan, you’ll need to provide an appraisal deposit which can range from $450 to $750. This is not a fee, and is returned when working with loanDepot if there is no appraisal performed on a home.

Navigating your options can seem confusing at first, but a loanDepot licensed lending officer can help. You can learn more by visiting loandepot.com or by calling (888) 983-3240 today for more information.

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Debt poses risks to financial security for Americans reaching their golden years

(BPT) – Americans now retire with far more debt than previous generations. This can pose a significant risk to retirees’ income, and may result in them not having enough. It also means that when a spouse dies, there could be little left over as creditors deplete an estate’s assets — forcing survivors to make difficult decisions and risking grim circumstances for surviving spouses who may struggle to pay off mortgages.

In fact, among baby boomers, 80 percent carry some form of debt in retirement, and 47 percent are still paying on their homes, according to a 2015 Pew Charitable Trusts report. And a Dec. 20 Government Accounting Office report said the government took $171 million out of Social Security paychecks from those over the age of 50 to cover unpaid student debt. Many planning for retirement are struggling to pay off debt, especially since Americans increasingly borrow to address life’s challenges, including taking home equity loans to pay for their children’s college education.

“With retirement debt so high, households must take steps to help mitigate the risk of financial insecurity in their golden years — and leaving debt behind for family members to absorb,” says Jill Perlin, a vice president, Advanced Marketing, Prudential Individual Life Insurance.

“In the past many financial experts have recommended that retired couples don’t need life insurance, since lost earnings from work no longer need to be replaced if a spouse dies,” said Perlin. “But retirees now face a whole new set of circumstances, especially given current debt levels. In retirement, the debt lives on for the surviving spouse, while income drops.”

In the last few decades, almost everything has changed for Americans planning for retirement. Many retirees no longer reap the benefits of employer-sponsored pension and health insurance plans. With both spouses working, Social Security tends to replace less of the household income in retirement. Workers in previous generations often drew two, even though one spouse often stayed home — the worker’s direct benefit and a spousal benefit based on the breadwinner’s work record. Notably, most Americans paid off their mortgage before retiring.

Today, while some retirees still collect income from defined benefit pension plans, most private sector employees are largely responsible for their own retirement savings. Retiree health care benefits are also increasingly rare, requiring households to fund their own health care costs beyond Medicare’s limited coverage.

While borrowing money can prove to be a helpful financial strategy for families in many stages of life, including incurring debt to fund children’s education, Perlin says, Americans’ cozy relationship with debt creates financial demands in retirement that threaten financial security, including:

* Higher monthly payments that stretch over longer terms.
* The need to save money just to pay off debt instead of saving enough to fund retirement through a 401(k) plan or other savings vehicle, with Americans saving an average of just $111,000 to be spread over the course of retirement.

But retirement debt poses perhaps the most frightening risk when one spouse passes away.

“Life insurance death benefits can help provide income for the surviving spouse,” Perlin said, “providing a family with meaningful choices to navigate the unknowns of life in retirement, and perhaps even enabling the surviving spouse to remain in the home.”

This, in turn, can also provide surviving children some peace of mind.

“The convenient access to credit carries risks as individuals borrow more over their lifetimes through student debt, credit cards, mortgages, home equity loans, lines of credit and reverse mortgages — with much of that going with them into retirement,” Perlin said. “Debt has rewritten the rules of retirement planning and has given insurance protection an important new role when it comes to securing a stable financial future.”

Life insurance is issued by The Prudential Insurance Company of America, Newark, New Jersey, and its affiliates.

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Paying for college: Options reduce need for student loans

(BPT) – While only a fortunate few students can expect a free college education by winning full academic or athletic scholarships, everyone can take advantage of a combination of academic aid, grants, fellowships, work-study and student loans to pay for a four-year degree, says Peter Gayle, a vice president for Prudential Advisors. Unfortunately, many prospective students and their families often don’t know where to look.

With student debt increasingly becoming a long-term burden on graduates and families, adds Gayle, it’s never been more important to minimize the out-of-pocket expenses to put a student through college — and reduce reliance on student loans.

To put the weight of student debt in perspective, The Federal Reserve Bank of New York noted that in 1995, 54 percent of graduates had loans averaging $11,491. It’s more recent data in 2015 showed 71 percent of graduates joined the workforce with student debt averaging slightly more than $35,000. What’s more, the Federal Reserve Bank of New York estimates 25 percent of those who owe federal student loans are delinquent or in default.

The good news is that anyone willing to put in the time can likely find programs that help foot the bill — helping to reduce the need to take out loans — so a student’s education won’t break the budget or jeopardize a financial future. According to Gayle, families can take a few initial steps before choosing a school:

* Learn how the financial aid process works and get the most out of options that don’t need to be repaid.
* Understand each school’s actual net price — after financial aid — and set realistic expectations, choosing from the most affordable institutions.
* Explore types of financial aid, including grants, work study programs and scholarships; examine the specific types of aid available per school and find out how much of a family’s demonstrated financial need each school will cover.
* Understand the kinds of loans available, including a variety of federal loans and private loans, which may be used to fill any financing gaps after exhausting other options.
* Understand how parents’ “available income” is used to calculate how much parents are expected to contribute to their child’s education, especially for federal financial aid purposes.

Several guides, including Prudential Financial’s www.prudential.com/payingforcollege, can help families take a carefully considered approach to financing a college education while safeguarding a student’s long-term financial future, including the ability to save for retirement.

For families that must use student loans, the federal government is making it easier to understand how to borrow, process applications and repay loans through new online tools. Since 2010, all new federal loans, except Federal Perkins Loans, have been issued through the U.S. Department of Education, which offers information about borrowing and repaying loans.

There are multiple options to repay federally funded student loans, which generally require repayments to start six or nine months after a student graduates, leaves school or drops to half-time enrollment. A few popular choices for repayment include types of income-driven plans, which calculate payments based on a borrower’s ability to repay. One catch: It’s critical to re-certify income and family size annually to avoid huge monthly payment increases.

When debt becomes too burdensome, some loan programs offer forgiveness through public service, federal government employment, and options like teaching in underserved school districts.

Private loans are trickier since there is no standard: Interest rates and repayment terms vary from lender to lender. It’s also worth considering the need for life insurance to cover the full loan balance to aid co-signers or beneficiaries in the event of the borrower’s death, says Gayle. Financial advisors would be well-equipped to help explore this and other options, Gayle notes.

Employers are also beginning to offer employee student debt benefits to put their employees on a course for financial security. At Prudential Financial, for example, new employees hired through the company’s campus recruitment program beginning in January 2017 could earn an incentive of up to $5,000 toward paying off student loans after one year of service. Other companies match student debt payments with contributions to employee retirement savings plans.

Studies show college education can be worth the price. The U.S. Census Bureau estimates that students who attend college can earn nearly twice as much over their lifetimes as those with only a high school diploma. But with college tuitions continuing to rise, families must find the most effective way to finance a child’s college education to avoid jeopardizing their ability to save for retirement.

“Prudential Advisors” is a brand name of The Prudential Insurance Company of America and its subsidiaries located in Newark, NJ.

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Two out of Three middle-income Americans lack a financial plan. Do you?

(BPT) – As the holidays (and all the extra spending that goes with them) wind down and the new year ramps up, many people turn their attention to their finances. While New Year’s resolutions to spend less and save more come with the best intentions, when it comes to your financial future, you need more than a resolution. You need a plan.

Don’t have a plan? Don’t worry, you’re not alone. Just one-third of middle-income Americans, or those making between $35,000-$100,000 per year, has a comprehensive financial plan, according to a recent study, Beyond Retirement Advice, by Financial Engines, America’s largest independent investment advisor.

To start taking control of your financial future in 2017, Financial Engines offers the following tips:

1. Look at the big picture. The study found financial plans for middle-income workers are significantly less likely to address saving for a child’s college education, purchasing life or disability insurance or estate planning than plans of higher-income workers. However, regardless of income, most people’s plans failed to address important topics, such as making sure they’re saving enough to reach retirement goals or strategies to maximize Social Security benefits. As you develop a financial plan, be sure to address short-term goals, such as setting a weekly or monthly budget, but don’t overlook long-term goals. To test your knowledge about what should go into a financial plan, try this quiz.

2. Increase your savings rate. While it may come as no surprise that people who have a financial plan tend to save more for retirement, it’s eye-opening how saving just a little more today can have a big impact in the long-run. The study found that regardless of their incomes, people who had a financial plan reported saving around 10 percent of their salaries toward retirement, compared to those without a plan who reported saving just 6 percent. Consider this: a person starting with retirement savings of $50,000 who earns an annual salary of $100,000 and saved 6 percent toward retirement could have as much as $890,000 after 25 years. But if the same person saved 10 percent of their salary, they could have as much as $1.13 million after 25 years, or $240,000 (26 percent) more.

The moral of the story? If you haven’t been saving for retirement, make this the year you start. If you have been saving, consider increasing your savings rate – just one or two percent more can make a big difference.

3. Ask your employer for help. We don’t mean ask your boss for a raise (though that’s not a bad idea!), but rather ask about financial wellness and education resources that may be available to employees. Some employers offer financial planning services covering budgeting, college savings, insurance and more through the workplace, with more employers planning to in 2017. In fact, Aon Hewitt’s 2016 Hot Topics in Retirement and Financial Well-Being report found that 89 percent of employers are likely to add or expand the financial well-being tools and services offered to employees this year. The Financial Engines study found the majority of workers (57 percent) are “very or extremely interested” in accessing financial help via the workplace.

When faced with financial obligations like rent or a mortgage, groceries and other bills, it’s easy to let today to get in the way of planning – and saving – for tomorrow. But as the new year begins, it’s a perfect time to hit the reset button and make 2017 the year you invest in your financial future. One of the best ways to do this is with a comprehensive financial plan. If you’re not sure how to get started, consider setting up a meeting with a financial advisor who is a fiduciary, or one that puts your best interests first. Doing so can help set you up for a happy and financially healthy new year.

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No will? Haven’t documented financial information? Now’s the time to do something about it

(BPT) – Do you want to be remembered for being a great mom, dad, daughter or son? Do you believe you’re taking the necessary steps to leave this legacy?

More than half (53 percent) of respondents in a recent survey commissioned by MassMutual indicated they want to be remembered for being a great mom, dad, daughter or son. However, three out of five (60 percent) indicated that they do not have a will, and two out of five (40 percent) have not documented their financial information.

MassMutual offers the following tips to help plan for your financial future and legacy:

1. Start today by documenting financial information in the “What my loved ones need to know” guide to ease unnecessary burden and help family members and friends carry out your final wishes. Also, tell someone you trust where the information is. Respondents to MassMutual’s survey were most likely to trust their spouse or significant other (58 percent) with access to this information in the event of an emergency, while about one in five (19 perfect) trust their children with this information.

2. Draft a will. The consequences of not having a will could become troubling, time consuming and costly for loved ones.

3. Update beneficiary information and review it annually for necessary updates. For example, many may not know that it is not sufficient to simply change your will after a divorce, as the beneficiary forms for your life insurance policy and retirement accounts trump whatever is stated in your will.

4. As retirement nears, get up to speed on Social Security. In a separate survey commissioned by MassMutual last year, more than half (62 percent percent) of Americans over the age of 50 failed a true/false quiz when asked basic questions about Social Security retirement benefits.

“MassMutual honors its commitments, and at the forefront is helping people secure their future and protect the ones they love,” says Roger Putnam, head of MassMutual U.S. insurance operations. “By taking the time now to plan for the future, you can enjoy financial well-being, appreciate life’s most important moments, build a positive legacy and be more confident in the future of your loved ones and the memories you leave.”

To learn more about preparing for your financial future or to connect with a financial professional, visit massmutual.com.

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Get ready for summer and warm up with hot deals at your local boat show

(BPT) – Stop dreaming about summer boating and make it a reality by finding the best deals this winter. Starting in January, boat shows take place across the country. They offer some of the best pricing and incentives of the year — a major draw for the millions of Americans who take to the water each year on more than 12 million boats in the U.S. , according to the National Marine Manufacturers Association. For those ready to plan their summer fun, boat shows are often the place to start.

Whether it’s fishing, sailing, cruising, riding personal watercraft, wakesurfing or tubing — boat shows have it all and create a unique shopping experience with hundreds of boats are under one roof to board, browse and buy. However, most people don’t know about the special pricing, incentives and perks these events offer.

Discover Boating, the national awareness program to help get people on the water, offers five tips to find the best deal at your local boat show.

* Find your virtual dreamboat. Before visiting a boat show, you’ll want to know which boats to shop. Start your search online with DiscoverBoating.com’s Boat Selector to identify which boat types fit your lifestyle, interests, and budget. Plug in your preferences for on-water activities, number of passengers, boat length, price range and propulsion, to narrow down boat options before heading to your local boat show.

* Warm up with hot deals. Unlike auto shows, boat shows are the place to buy. Hundreds of new-year models are available to buy right at the show, often at some of the best prices of the year as exhibitors generally offer special show pricing or other incentives. Plus, it’s the perfect time to order a new boat to ensure it arrives ready to launch in spring.

*Make the most of show pricing. It helps to know what fits in your budget before shopping a show. Use this boat loan calculator on DiscoverBoating.com to estimate monthly payments, which can be as low as $250 a month or less.

* Try out the boating lifestyle. Boat shows are a great place for beginners to learn about boating and for more experienced captains to hone their skills, plus they offer lots of fun and interactive activities for the whole family. Look for boat shows that offer knot-tying, DIY boat maintenance, a sailing simulator, remote control docking ponds, virtual boating simulators, paddlesports pools, fishing for kids and much more. It’s not only fun to learn new skills, but smart to take advantage of the onsite training boat shows offer usually at little to no cost. Plus, it’s a great place to meet other boaters as many make their local boat show a winter rendezvous.

* Look for the seal of approval. When shopping for a boat at a show, online or at a dealership, always check to make sure it is certified by the National Marine Manufacturers Association. An “NMMA Certified” seal means a boat has met strict industry standards for safety, construction and federal regulations, ensuring the best quality to the buyer. Look for the NMMA certified sticker near the helm.

Boat shows not only offer the best deals of the year, but they are also a way to learn how to get on the water, while enjoying a taste of summer boating during the off season. Visit DiscoverBoating.com to find a boat show near you, a list of certified dealers and manufacturers, and unbiased advice for getting started in boating.

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5 steps toward improving financial well-being in the new year

(BPT) – With the start of a new year comes New Year’s resolutions. Many will focus on physical wellness, some on organization. Now is a perfect time to take stock of your financial house and work on financial wellness, which will take off a level of stress that can immediately have an effect on your physical well-being.

In fact, seven out of 10 American workers say financial concerns are their most common cause of stress; nearly half say they find dealing with their financial situation stressful.

MassMutual suggests taking five steps toward improving financial well-being which, in turn, will support your physical well-being in the new year:

1. Make a will. A MassMutual survey of Americans between ages 45 and 60 revealed three out of five respondents do not have a will. If you are one of those people, make it a priority in the new year to create a will to ensure your loved ones are protected. It is also important to update beneficiary information and review it annually.

2. Improve your credit score. Boosting your credit score is a lot like going to the gym — it can be painful at first, but is ultimately worth the (financial) effort. Late payments — one of the top “credit busters” — can impact your credit score, so make sure you pay your bills on time each month and pay off balances as quickly as possible (especially on ones with high interest rates).

3. Save more than you spend. Saving money is a time-tested way to improve your financial situation over time. A good rule-of-thumb is to save at least 10 percent of your net income each year.

4. Don’t leave your 401(k) behind. The growing use of automatic enrollment in 401(k) plans and shorter job tenures are contributing to an increasing number of inactive 401(k) accounts, according to a U.S. Government Accountability Office report. If the new year brings you a new job, or retirement, be sure to rollover your 401(k) to your new employer-sponsored account or an individual retirement account if you are leaving the workforce. And, if you’re not yet contributing to a retirement plan, do so and ensure you save at least enough to enjoy your employer’s match if there is one. Don’t leave any free money on the table.

5. Establish an emergency fund. Whether it is a job loss, health emergency, or car or home repair, an emergency fund provides a cushion to help you cover unexpected costs without interfering with your financial goals. Include backstops like disability income insurance to protect your income stream should you become seriously ill or injured, and consider life insurance with options that give you access to cash for life’s priorities, such as whole life insurance.

For more tips to help your financial well-being, visit massmutual.com.

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Where there is a will – and more – there’s peace of mind

(BPT) – What’s the state of your estate? Robert Fishbein, a vice president and corporate counsel in Prudential Financial’s Tax Department, says now’s a good time to find out.

Changes in federal estate tax law have significantly increased the amount at which federal estate tax is triggered, says Fishbein. The individual exemption is $5.49 million (2017 amount, indexed for inflation) so a couple can accumulate almost $11 million dollars of assets without federal estate tax depleting the value.

The $5.49 million will increase over time. As a result, most individuals no longer need an estate plan to minimize federal estate tax.

That said, Fishbein adds, there are compelling reasons for having an estate plan, and three core documents you’ll need to create one: a power of attorney, a living will or health care proxy, and a will. In this article, Fishbein describes these core documents and how you can use them.

Power of attorney

A power of attorney is the document designating someone to make financial decisions for you, whether you’re out of the country for a long period, have a physical injury preventing you from conducting business in person, or are mentally incapacitated.

A power of attorney can be “springing” — going into effect upon your incapacity — or “durable,” meaning it goes into effect immediately. The challenge with a springing power of attorney is it can be subject to disagreement and dispute between the holder of the power and another family member. One solution is to require the incapacity be certified by a physician, although even those findings can be disputed.

With the durable power of attorney, there’s no basis for contesting whether the holder of the power can act. The risk is the holder has the immediate right and ability to access and take action with respect to the financial assets subject to the power. One possible strategy? Limit the power to specific assets. This won’t help if the grantor if the power is totally incapacitated and the holder may need access to all of the grantor’s assets.

A durable power of attorney is arguably less problematic, provided you are comfortable with the person you’re choosing. The holder of the power has a legal obligation, as a fiduciary of the grantor, to act in the best interests of the grantor and not in his or her interests.

It makes sense to have a power of attorney so you know your financial affairs will be attended to. The alternative could be a costly judicial process and court appointment of someone to manage your assets while you are living and unable to do so yourself.

Living will and health care proxy

A “living will” ensures your health care wishes are acted upon if you are unable to make such decisions. It lets you describe the types of treatment you do or don’t want under specific circumstances. For example, if you have a terminal illness, you may not want extraordinary measures taken to save your life. The challenge is it’s almost impossible to anticipate all possible scenarios to indicate what health care treatment you’ll want.

An alternative to a pure living will is a “living will and health care proxy,” wherein you designate an individual to make health care choices for you. The living will portion describes in general terms your health care philosophy, and the health care proxy allows you to name an individual to make health care choices for you consistent with that philosophy. The choice of such an individual is important, and you should make sure you are comfortable he or she understands and will act consistent with your wishes.

You should have a living will drawn up as part of your basic estate planning. Again, the alternative is a costly legal process for someone — maybe not of your choice — to get appointed as your proxy to make health care decisions on your behalf.

Last will and testament

A “last will and testament” serves several important purposes, including determining how your assets are distributed, who’ll care for your minor children and who’ll invest and distribute property held in trust for your children, grandchildren or other beneficiaries. The basic function of a last will and testament is to ensure your assets are distributed as you’d want. Absent a will, your assets will be distributed in accordance with applicable state law.

You’ll also designate the legal guardian, and possible successors, for any minor children who survive you and your spouse. This is one of the most important and difficult decisions for parents — so difficult that it sometimes can hold up the entire estate plan. But agreement by the parents is important and avoids the possibility of someone else being court-appointed who may or may not share your child-rearing views.

With the increase of the federal estate tax exemption and an individual’s ability to use the exemption of a deceased spouse, trusts for federal estate tax planning have been made largely irrelevant for most individuals. However, if you have minor children who could take property if both you and your spouse die, or grandchildren who could take property if a child of yours dies and leaves children, you’ll probably need trusts to hold property for those beneficiaries. Such trusts will enable you to determine who’ll invest the trust property, how it’ll be used for the child’s benefit and at what age the beneficiary will receive the remaining property.

Think you don’t have a large enough estate to warrant setting up trusts for your beneficiaries? Consider even the most basic estate when you own a house, have retirement assets and maybe additional investments or property. Given the total value of these assets, you’d probably want to hold them in trust for minor heirs. If there’s life insurance, a trust for younger beneficiaries will almost certainly make sense.

Although federal estate tax is no longer a significant consideration for most individuals, you may want to consider the cost of state estate tax. The state exemption is sometimes less than the federal exemption, and state estate tax can take a meaningful bite out of what you expect to leave to your beneficiaries.

Prudential Financial, its affiliates, and its financial professionals do not render tax or legal advice. Please consult your tax and legal advisors for advice concerning your particular circumstances.

The Prudential Insurance Company of America, Newark, NJ and its affiliates.

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