3 Easy Steps For A Smooth Retirement
Now not to be a downer, but my series can’t end without at least mentioning estate planning and retirement, especially because so much can be done ahead of time.
The easiest step, according to Smith Barney’s John Fairbanks, is to make sure your company is fully funding your 401(k) and that you’re matching all those deposits. Losing out on that “easy money” is jeopardizing how much money you’ll have when you’re older. And don’t be intimidated to make an appointment with a financial planner, even just to ask questions. Many financial planners will book clients for one-to-two hour sessions just to assess where they’re at and start thinking about where they want to be.
Beyond that, same-sex couples can use the same retirement tools used by straight couples. There are no laws against saving money!
As for a starting point with estate planning, it’s never too early to draw up a will. If you’re considering that, you really should set up a trust in which you get to designate how your assets are managed once they’re allocated.
A will has limits: it says who gets what, but not what they do with it. Trusts allow greater freedom for the grantor (the person creating the trust) and the beneficiaries. There are many types of trusts, such as ones that can and can’t be changed after someone dies, but ultimately they’re favored over wills because they have tax advantages. And if you’re worried that setting up a trust costs too much, you can stipulate in your will that, upon your death, a trust be set up with certain assets. That’s an easy and cost-effective way to make sure your loved ones aren’t fighting each other for your house, car or kids.
If all you care about is that your partner gets the house or car, and you don’t have the money to pay anyone to draw up a stack of legal documents, there’s always the payable-on-death (POD) or transfer-on-death (TOD) options. Essentially what these do is take a jointly-owned asset and, upon one of the party’s death, ensure the transfer to the survivor. Almost all states allow assets sold at banks and brokerages, like CDs or money market accounts, to be POD or TOD. You just have to fill out a form and list a specific someone as the beneficiary, and then all he/she needs is a certificate of death and then he/she can claim the asset. Only a handful of states though allow for TOD on vehicles and real estate, so be sure to find out where your state stands.
Let’s say after reading all this you absolutely don’t want to plan or do any of what I’ve just talked about in this series. Well, there’s always Canada, or Spain or South Africa – countries where same-sex marriage is legal. But don’t think that if you move to Canada your problems will end there: any time you leave the country, you’re an unmarried couple with little-to-no rights. You’ll still need a health care proxy, at the very least.
Ultimately, it’s up to you to decide how much you and your partner want to integrate your lives. If you want to stop at the car, that’s fine. But everyone in all types of situations can protect him or herself by taking a step back and planning for all the curves life may throw at you.
“You need to communicate as you become more involved,” Fairbanks says. “If you decide to do anything on a joint basis, there needs to be full disclosure.”