Tuesday, March 6, 2018

Leaving a Legacy? Try a donor-advised charitable fund

“It is up to us to live up to the legacy that was left for us, and to leave a legacy that is worthy of our children and of future generations.” Christine Gregoire, former Washington state governor. (1947 -    )

By Julia Anderson
Leaving a legacy may recall images of wealthy people donating big bucks to build a new cancer wing at the hospital or fund construction of a homeless shelter.

Headline-producing check writing is part of the American way. Bill and Melinda Gates are giving away billions. So are Warren Buffett and Mark Zuckerberg. For the wealthy, charitable giving is about do-gooder big heartedness and also part of a long-term estate-planning and tax strategy.

News Flash: Charitable giving is not just for the rich. You, too, can leave a legacy.

The simplest way to be remembered is to put instructions in your will to provide an inheritance for your heirs or  to fund a favorite charity after you die.

But if you want to do good works before you fall off the tree branch, consider a donor-advised charitable fund.  

What is a DAF? These funds, offered by brokerage firms, banks and other entities, allow donors to make a charitable contribution, receive an immediate tax benefit and then recommend grants from the fund over time. In other words, you can put money inside your DAF but still control the money, let it earn more tax-free until you decide when and how to give it out.

Recent tax reform legislation passed by Congress in late 2017 has reduced the tax incentive for charitable giving by raising the standard federal income tax deduction to $12,000 for singles and $24,000 for couples. Those 65 and over can claim a $25,300 standard deduction.

Before these tax law changes, charitable contributions were part of the itemized deductions many of us used to lower our gross taxable income, along with other deductions such as mortgage payments and state and local taxes. With the increased standard deduction, fewer of us will bother to add it all up to get a deduction.

Why would a donor-advised charitable fund still make sense?

You can accumulate money inside a donor-advised fund and let it grow tax-free.
You decide when and how much money to donate to your favorite qualified charities. There could still tax benefits if you “bunch” your planned giving into a single year instead of spreading it over several years. The greater single amount could then be higher than the standard deduction in that year.

You get privacy with a donor-advised fund if you choose to anonymously have your fund manager send out your donations.

DAF managers typically offer you a menu of managed mutual funds where you can invest your money until it is distributed. These funds should match your risk tolerance and investment goals.

Checking out recipients

Fund managers will automatically vet potential recipients as IRS qualified public charities.
The idea is to make charitable giving effective and simple. Contributions can be made when they most benefit the donor while disbursements can occur on a separate timetable – next year, in five years or even later.

What to watch out for

According to an IRS warning, there are organizations out there that promote themselves as donor-advised fund managers but who are fraudulent. They are abusing the basic concepts underlying donor-advised funds by encouraging “questionable charitable deductions,” the IRS said.

They also may offer what are illegal economic benefits to donors and their families (including tax-sheltered investment income for the donors) and management fees for promoters.

If these violations are caught by the IRS, donors will have the charitable tax deduction disallowed and face fines and penalties.
Make sure you are dealing with a reputable fund manager with a long and well-documented track record.

Leaving a legacy is important to many of us. There are many ways to do it.

Certainly, how we are remembered by those whose lives we touched is part of that legacy. You can give away assets by gifting your investments, retirement savings and real estate holdings to your heirs in a well-crafted will. Or you can assign them to a trust for a bank or other trust management service to supervise.

If you want to give something back before you die, consider a donor-advised charitable fund. You don’t have to be rich.  Or you can live a life of service, love your neighbor and be generous and forgiving.

For more::
5 Ways to Leave a Great Legacy by Joan Moran at HuffPost
4 Ways to Leave a Legacy by Bart Astor at Forbes.
“This is how you leave a legacy,” by Jim Rohn at Success.com.

Tuesday, February 6, 2018

Health care directives -- taking charge in our later years

"What is a fear of living? It's being preeminently afraid of dying." - Maya Angelou, (1928-2014), American poet, memoirist and activist.

Those of us who have watched our parents slip into old age, face multiple health challenges and then pass through death’s door, know that the end-of-life journey can be tricky.

Modern medicine has made old age more possible, even more tolerable than in generations past. The tricky part is how we plan for these last years. We can steps to make it easier for ourselves and our family.

 Legal documents called advanced health care directives -- a living will, do-not-resuscitate instructions and designation of (health care) power of attorney – can smooth the way for ourselves and our families.

 Lately, new questions have arisen about how well patients, their families, doctors and other caregivers understand advanced health care directives. The Institute of Medicine and the National Academy ofSciences are calling for improvements in both medical and social services end-of-life care.

 A massive report, “Dying in America,” cites these issues --- A lack of awareness or interest by both patients and their families in completing advance directive forms; Lack of institutional support for completing advance directives; Clinicians’ unwillingness to adhere to patients’ wishes, resistance within the medical culture and differences in families’ culture traditions for completing health care directives.

Despite these challenges, we can do a lot to ensure that our own end of life care is as comfortable and meaningful as possible. Here’s how:

 1. Accept that fully 70 percent of us who become critically ill at the end of our lives will be incapable of participating in decisions about our health care. Without advance health care directives, we might find ourselves in a hospital intensive care unit under the eye of an “intensivist physician” whose only job is to keep us alive at whatever cost -- physical, emotional and financial.

 2.  Write a will and create a “living will” outlining the kind of care you wish to receive if you are no longer competent or in a vegetative state. Appoint a legal health care representative to carry out your wishes.

 3. Write a Do-Not-Resuscitate directive, which tells any caregivers – doctors, emergency personnel – to not intervene if you have no pulse or are not breathing. You can wear a DNR bracelet or get a tattoo. (Even a tattoo didn’t work in one recent emergency room case.)

 4. Make it clear to all family members that there will be no heroics. Get your legal directives filed with your doctor, the fire department and all family members. If you go into a care facility, have the DNR posted in BIG TYPE in plain sight in your room. (Even that measure didn’t prevent a trip to the ER in the year before my mother died at age 98). Only post contact information for your legal health care representative at your care center door. Keep other family member numbers elsewhere, so there is no confusion over who staff should call in an emergency.

 5. Tell your "friends" at the care center to not call 911 if you have a health crisis. Remember that if 911 gets involved, all the legally signed requests go out the window. The emergency folks are bound to preserve life...no matter what. The same goes for doctors in emergency rooms. (A huge brouhaha in California not long ago created industry turmoil when a bystander called 911 after a fellow care center resident had a stroke but the nursing staff refused to provide aid).

6. Legally assign someone with durable power of attorney to manage your financial affairs when or if you become incompetent or incapacitated. Or set up a bank trust that designates you as co-trustee until you hand over management of your financial affairs to the bank.

 Make sure that the forms you use for these legal documents are state-specific. You can find them at www.smartlegalforms.com. Or for free printable advance directive forms by state, try AARP at www.aarp.org.

 Most of us wish for a peaceful death in bed at home. The reality is seven out of 10 of us will spend our last years in a care facility. My mother moved to a care facility after breaking her hip at age 95. She wanted to return home but needed 24/7 care at a cost of $12,000 a month. She chose the care facility in her home town at $4,500 a month. She met with her attorney to update her health care directives and get them in place. Her strategy mostly worked except for the time the night nurse called 911 after she tipped over and bumped her head. That turned into a three-day hospital stay, which she did not want. 

So even with good planning we likely will find weaknesses in our end-of-life initiatives. Some are outlined in “The Good Death,” by Ann Neumann where she writes about the experience of her father’s dying. 

“Part of the reason we don’t know how people die is because we no longer see it up close,” she writes. “Death has been put off and professionalized to the point where we no longer have to dirty our hands with it.”

But we should. We can help ourselves and our loved ones do better by getting our instructions on paper and by talking at length about these issues with our family and our caregivers.


The Good Death, click here. 

Dying in America, click here.

Wednesday, January 10, 2018

11 things I'd tell my younger self about money

"Only 47 percent of women are confident talking about money and investments with a professional," - Fidelity Investments research, "How to take charge."  


Here is what I wish I had known at age 20 about my financial future and how best to manage it.

 No. 1 Invest early. Sign up for your employer’s 401(k) retirement savings program at the first opportunity. Put enough money into that account every year to at least get the employer’s matching money. Don’t be cautious. Invest this money in aggressive growth funds. Reinvest the dividends and let those investments ride. Never borrow from your 401(k).

 No. 2. Start you own Individual Retirement Account. You can do this with as little as $2,000 or in some online accounts, even less. Again, either invest in low-cost index stock funds or buy a few individual blue-chip stocks that have a good track record and a good dividend. Reinvestment the dividends. Don’t panic when stock prices or markets go into a downturn. The downturn is a buying opportunity at a cheaper price. Keep adding to these accounts. Learn the difference between a traditional IRA and a Roth IRA. Both have advantages.

 No. 3 Understand management fees. Some experts say fees are more important than even what you are invested in because fees cut into earnings. Over 30 years of retirement saving and investment, fees can mean hundreds of thousands of dollars less in results. Ask particularly about management fees related to your 401(k) funds since this is where you likely will save the most for retirement.
“Everyone talks about the benefits of compounding interest, but few mention the danger of compounding fees,” says Kyle Ramsay, NerdWallet’s head of investing and retirement.
No. 4 Avoid debt. Don’t become house-poor. Taking on a big mortgage payment or letting credit card debt eat into your income means limited financial flexibility. Don’t spend money you don’t have on stuff you don’t need.  Debt is borrowing against your future income.

 No. 5. Bad things can happen to good people. Divorce, for instance. While you don’t want or expect a divorce or the death of a spouse, it can happen. Women usually come out the losers in either a divorce or the death of a spouse since they may have a lesser-paying job than their spouse and going forward, they work fewer hours to manage the kids. That’s why having an emergency fund is essential in long-range planning. Buy term life insurance on each other. Term insurance is cheap and worth it.

If you divorce, be tough in negotiating your best possible financial future. Every decision a woman makes after divorce, from where to live to how to increase her income, is an important part of this process. – at LiveStrong.com. 

No. 6. Write a will, even though you are young and in good health. A will spells out how you want your stuff dispersed and who you want to take care of your young children, if something happens.
No. 7. Don’t be shy about asking for pay increases. If you are doing a good job and are a valued employee, your employer should be rewarding you with more money. More money, means more goes into your 401(k) and you have more money to support your family. Women in particular must make sure they are receiving the same pay for the same job as their male counterparts.

 No. 8. Make investing enjoyable and rewarding. Read business and economic news. Follow markets. There are no mysteries here. The American free-enterprise system has created unbelievable wealth for average investors. Good publicly held companies report every quarter to their shareholders about how they are performing, they pay dividends every quarter. You don’t need to be a genius when it comes to investing.

 No. 9. Do not discount money. Do not sneer at the importance of making money. It’s fashionable to say that money doesn’t matter, that following your dreams is what is important. Make sure your dreams are financially reasonable. If you start your own business, make sure you have the financial resources to stick it out. Will your parents bank-roll you? Is it a loan or a gift?

 No. 10 Understand Social Security. Don’t take benefits too soon because it will cost you thousands of dollars in retirement income. That means planning carefully in your 50s and early 60s so that you can continue to work as long as you want and determine how and when to take Social Security benefits.

 No. 11. Understand the difference between saving and investing.

 Saving is for hand-wringing people who are afraid to lose a penny. Investing is for people who understand the value of owning stock in good companies that offer share price growth AND pay a dividend. A CD paying 2 percent is only breaking even against inflation. Start investing early. Learn from your mistakes. Glory in your successes.

By investing $2,000 a year starting at age 19, you can end up with a whopping $2 million or more at age 65, thanks to reinvesting dividends and average a 12 percent return on the investments. Get serious about investing now, at age 20. Don’t wait until you’re 30 or 40. Time is money!!!

 Joe Smith and I discuss this topic in a Smart Money video produced by TVCTV in Beaverton, Ore. You can find our shows on YouTube, click here. 

Evaluating an employment early buyout.

How to Hold a Family Money meeting.

What is a reverse mortgage.

Preventing elder financial abuse.

Social Security myths.

Charitable giving in retirement.

Social Security. How to maximize retirement income.

Why have a will.

Traveling with grandchildren.

Talking to kids about money.

Buying a franchise business in retirement, do’s and don’ts.

Getting married after 60.

How to downsize.

What’s ransomware? What to do, if you’re held hostage.

How to choose a financial adviser, if you need one.

Getting in and getting out of a timeshare property.  

ADDITIONAL SMART MONEY VIDEO TOPICS:  click here to access on YouTube.

Tuesday, January 2, 2018

Owe back taxes? Deal with it, you may get a discount

"It's a privilege to pay taxes. Yeah! It's not a political question folks. We have to pay for stuff." - Lewis Black. Stand-up comedian. (1948 -    )

There are many situations that can put you behind in paying your federal U.S. income taxes.
An unexpected major health issue could suck up all your savings and put you on the verge of bankruptcy. Maybe you lost a job and are not back on your feet.

Or you are self-employed, business has been slow, and you are behind in sending quarterly estimated federal tax payments to the Internal Revenue Service.

You may have children or grandchildren who are facing a federal tax issue. 
Whatever the circumstances of “getting in trouble” with the IRS, you need to deal with it. These circumstances all require a tax return.

If you ignore the issue, it only gets worse because “back taxes” and late payment penalties pile up.

“People need to start the dialogue as soon as possible,” David Tucker, IRS spokesman in Seattle, told me. “Let the IRS know that you have an intent to pay. We will work with that individual to resolve the situation. When there’s no communication…that’s the problem,” Tucker said.

He recommends that if you face a complex tax situation, hire a tax professional who can walk you through the process of sorting out and catching-up.  A tax pro can tell you what documentation you will need before meeting with the IRS, what you will need to claim certain tax-deductible expenses.

“From the standpoint of the IRS, we want the (tax-paying) process to be as easy as possible,” Tucker said. “If you haven’t paid taxes for a number of years, we want to work with you. Think of it as a collaboration rather than an adversarial situation. But don’t ignore IRS notices that may be coming in the mail. Call us,” he said.

Doing the research

If you think you are in tax trouble, make an online visit to IRS.gov. Read up on the IRS “Offer in Compromise” tax debt program that may allow you to settle your tax debt for less than the full amount you owe. This is about as painless as it can get if you owe back taxes.

Low-income? Still file.
Meanwhile, if you are in a low-income bracket, you may think you don’t need to file a federal tax return. Reconsider because you might be leaving money on the table.

“People should look at filing a return regardless of whether they owe any taxes,” Tucker said. “They should go through the process to see if they qualify for a refundable credit or other tax credits.”
For example, the Earned Income Tax Credit, applies to individuals (and couples) who work but don’t earn much. The average EITC “refund” is $2,400.

As well, you may qualify for a Child Tax Credit or the American Opportunity Tax Credit, which provides incentives for going to college.

Who must file? Just about everyone. Tucker explained that as a single taxpayer under age 65, you must file a return if your gross income (in 2017) is at least $10,350. If you are 65 or older, you must file if your gross income is $11,900 or more.

If you owe back taxes contact the IRS: click here.

For more about the Offer to Compromise program, click here. 

Owe Taxes? These Tips can Help. click here

In Portland, contact the IRS Tax and Business Center at 1220 SW Third Ave. in the Federal Building in downtown Portland. Make an appointment in advance for a face-to-face meeting by calling 844-545-5640. Be prepared to explain your situation. Ask what documentation you should bring to the meeting.

If you qualify for low-income tax credits: You can get FREE help during the tax filing season by contacting a volunteer with the Income Tax Assistance Program sponsored by the AARP Foundation. Search online for AARP tax-aide locations near you.

For my original column for the Portland Tribune, click here. 
To view my Smart Money YouTube video, click here.
5 Tips for People who Owe Taxes, click here.

Tuesday, November 21, 2017

Apps to help you budget for holiday spending. But it's still up to you

 "What's Christmas time to you but a time for paying bills without money: a time for finding yourself a year older, but not an hour richer." - Ebenezer Scrooge in "The Christmas Carol," by Charles Dickens. 


Remember the old days when we used paper envelopes to budget our spending? One envelope for paying the basic bills, another envelope for meals out and another for Christmas gift spending.

Now technology is making it easy to manage your spending with an app or two on your smart phone.

Pulling out the credit cards for a holiday gift buying splurge is painless. The pain comes in January when you get the bill.  Apps on your smart phone linked to your credit cards and bank will automatically update and categorize your spending.

Best of all, some will tell you when you’ve reached your spending limit by category and/or how much you can spend and still stay within your budget limits. Some apps customize the way you manage your money by pulling transaction data. Others ask you to input your spending, manually.

At least two apps -- Acorns and StashInvest --- will help you save by rounding up the spare change from your purchases and putting it into an investment/savings account. For example, if you make a purchase costing $9.45. These apps will round up the transaction to $10, and put the extra 55 cents in savings for you. Painless, right? 

Below are some of the MOST POPULAR FREE APPs that will help you get on track with your holiday budgeting, with savings and spending. Just keep in mind that it still takes discipline to do this. It you tend to blow your budget, no app will prevent that. Just make a commitment, use the apps as reminders. 

MINT.com  https://www.mint.com/https://www.mint.com/

This may be the most popular. Track and pay bills. Easy budgeting, alerts and advice, investment tracking, top security.

WALLABY -- https://www.walla.by/  Tells you what credit cards to use for the best savings, lowest fees.

DOLLARBIRD   https://dollarbird.co/  Manual input. Helps you budget.

FUDGET   www.fudget.com

Simple budgeting, one-tap adding and editing.

GOODBUDGET  -- https://goodbudget.com/  Creates envelope budgeting. Spend only from designated categories. Helps keep you accountable.


LEARNVEST  www.learnvest.com  -- Categorizes transactions. Track goals

PERSONALCAPITAL ---www.personalcapital.com  Manages your entire financial life.  Track your net worth. Investments.

MVELOPES.COM -- Uses envelope budgeting with the latest technology. Helps you make better financial decisions. Syncs with bank accounts, credit cards and other financial accounts. Real time budgeting.

PENNYAPP.IO -- Keeps tabs by sending you text messages.  Your personal financial coach.  Spend smarter. Save more.

According to Forbes magazine, spending is “highly individual” with expenses the result of many individual decisions that might seem inconsequential at the time. For example, the major you choose in college, jobs you take, your spending and saving habits. The clothes you buy. Grocery shopping.

These apps are here to help you set guidelines, remind you of your long-term strategy for saving and spending, building a retirement nest egg. But it's still up to you. 


"Best apps to manage your money," Business Insider, click here.


"10 Smartphone Apps to Boost Your Budget," - USNEWS, click here. 

The 6 Best Budgeting Apps,"  - Digital Trends, click here.


"Tech that will change your life in 2017" WSJ - click here.


Wednesday, November 15, 2017

Marrying after 60? Five steps to keep your kids happy and give you both peace of mind

"Embrace each other with love, smiles and warm hug." -- Lailah Gifty Akita, author, "Think Great: Be Great." 

Editor's note: First published at Sixtyandme.com. Earlier version at sixtyandsingle.com, click here. 

By Julia Anderson

The recent marriage of long-time public radio host, DianeRehm, was written up in the Washington Post with the attention to detail that big weddings in big cities receive.

Coverage focused on the flowers, her dress, the post-ceremony dinner party and their love story. Rehm, 81, married John Hagedorn, 78, in a ceremony described as “traditional, serious and formal” by the Post’s Style Section writer, Roxanne Roberts. After falling in love with all the passion of 20-year-olds, Roberts reported that the couple decided to marry even though some friends asked why.

Rehm’s response? Living together “wasn’t me.”

For many of us who fall in love after age 60 and wish to share a hopeful future, marriage is important. So, we stand before a judge or minister with our friends and say, “I do” with full knowledge of what “richer or poorer” or “in sickness and in health” might mean.

The Post story was all about the event, not the nuts and bolts of getting married after 60. We would call in a financial writer to tackle that report. But no doubt, estate planning was an important part of the Rehm-Hagedorn match-up. As it should be.

A bit of long-term estate planning, experts say, will make all the difference to your adult children who may wonder about the man you’re marrying and what happens to their inheritance, if you die before he does.

These FIVE STEPS will help avoid worry, now, and possible confusion down the road.

Step one: Put a prenuptial agreement in place that spells out what assets will be held separately by each of you. Do you have tax-deferred retirement funds that when you die should go to your kids rather than to your surviving spouse? How about stock investments? Do you own real estate that will be held separately for your heirs? Is there separate debt? Shared debt? How will that be handled?

If one of you sells a house does the house that you plan to live in together remain a separate asset? What will you jointly own? Your vehicles, a vacation home that would pass to the surviving spouse?

All these questions can be answered with a prenup.

Step two: Update your separate wills to align with the prenup. Also designate who you would want to hold your durable power of attorney, if you or your spouse becomes incapacitated. Name the executor of your estate. Update the beneficiary designations on your retirement accounts.

Step three: Buy term life insurance on each other for at least for 10 years. This coverage provides a financial cushion for a surviving spouse while the bulk of each estate goes separately to your heirs. 

Step four: Put together a list of tangible assets. Jewelry, works of art, important furniture. Explain what items you would like your new spouse to continue to enjoy if you precede him in death.  Spell out how you would like the rest of separate tangible assets dispersed at your death and/or his death. This way everyone knows who gets what and when. The list and instructions bring clarity and peace of mind to your future together.

Step five: Some time after the dust settles hold a family money meeting. Tell your children about your financial plans. Explain the prenup and how it will work when one of you dies. Mention the tangible asset distribution list and how that would work. (DO NOT hold this family money meeting after a holiday dinner when everyone has had a few drinks. Instead make it a separate but important meeting where everyone has a chance to ask questions, digest the information.)

 During the meeting listen to feedback, answer questions but stay in charge. Spell out the plan. Explain that this is how the two of you want things to be settled when one of you dies.

Revisit these plans every three years to make sure your wills and other instructions are up-to-date. Is Susie still the one you want in charge of your finances when you are in the care facility?

As for Diane Rehm and John Hagedorn, the only hint we have of their advance planning is that they will keep their own names and maintain separate homes in Washington D.C. and in Florida. 

For more on prenuptial agreements and late-in-life marriages, visit these web sites:

“Why you’re more likely to have a prenup than your parents were” - Washington Post.

“Who Says Prenups Aren’t Romantic?” -  Wall Street Journal  https://blogs.wsj.com/scene/2010/11/01/who-says-prenups-arent-romantic/

"After the Loss of a Spouse, There is no Right Amount of Time Before Moving On," -  Wall Street Journal

More couples are saying “I do” to prenuptial agreements” -  Seattle Times


Thursday, November 2, 2017

Smart Money video links. Thanks, TVCTV public cable channel

During our Smart Money video conversations, co-host Joe Smith and I have covered more than 20 money-related topics. The short videos are distributed by TVCTV, the public television operation in Beaverton, Ore. These have been great fun. Our topics range from reverse mortgages to writing a will. We have discussed marrying after age 60 and how to keep your kids happy while doing it. Financial elder abuse, Social Security and downsizing, all topics. Below are YouTube links to some of these shows. 

Why women should approach Social Security differently than men.


Why have a will.


Timeshares: Buying and selling. What to watch out for.


Social Security 101.


How to Hold a family money meeting.


May to December relationships require special planning.


Reverse Mortgages: Questions to ask.


Charitable giving in Retirement


Evaluating an Early Job Buyout Offer 


Should you buy a franchise in retirement?