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Judy Heft: Time to harvest your assets

No one knows better than you how hard you work. And you should be entitled to reap the benefits of your labors. That’s why protecting your assets is critical for yourself and your loved ones now and for the long term.

There are a number of important tools available to effectively manage estates and other key assets. The plans and course of action you choose will depend on many factors, but here are some valuable options to consider.

Understanding the value of trusts
Pre-Marriage Trust
Setting up a trust is often better than a prenuptial agreement because removing assets from your marital estate prior to marriage provides more protections. With a prenup, the assets are still in your name and an overly zealous judge may either partially or wholly invalidate the prenup.

Asset Protection and Directed Trusts
An asset protection trust will help protect your assets from creditors, while a directed trust enables you to plan for complex assets and retain the services of a trusted investment adviser.

Dynasty Trust
A dynasty trust is a long-term trust that enables wealth to be passed on to generations and avoid or minimize certain taxes. By holding assets in trust and making well-defined distributions to beneficiaries at each generation, the assets of the trust are not subject to estate taxes, gift taxes or generation-skipping transfer taxes.

 Ensuring Proper Coverage
Long-term care insurance is an unusual financial product in that people who buy it hope they never have to use it. Still, there are compelling reasons why people age 50 and over are opting to make long-term care coverage an important part of their retirement strategies.

Savings in the Long Run
Your premium payments buy you access to a large pool of money that can be used to pay for long-term care costs. This can help you preserve your retirement savings and income.

The Sooner, the Better
The earlier you opt for long-term care coverage, the cheaper the premiums. This is why many people buy it before they retire.

Variety of Uses
Some people think long-term care coverage only pays for nursing home care, but it can actually pay for a variety of nursing, social and rehabilitative services in and out of the home for people with chronic illnesses or disabilities. For example, the coverage can fund home-health care, care in a group-living facility, and adult day care.

Life Insurance
This type of coverage provides your family with financial resources in the event of your untimely death. The amount of life insurance you buy may need to be enough to replace your income in your absence or to cover expenses your family will face, such as burial costs or other family debts like paying for college or caring for aging parents.

Reaping the Rewards of Retirement
After a lifetime of hard work, savings and investments, it’s important to plan for income when it comes time to harvest those assets. Consider the following:

  • Figure out how many years of retirement you have to plan for;
  • Budget for “must haves” and “nice to haves”; and
  • Prepare a spending plan by identifying expenses you expect to have in retirement.

In order to reap the most benefits, you need to build a retirement income strategy. Once you’ve established your plan (retirement need), match sources of income to support it. Typically, this includes pensions, Social Security and personal savings in the form of 401(k)s, IRAs, investment accounts and bank accounts (retirement savings). The ability of your savings to earn a reasonable rate of return and protect your purchasing power will depend on how you divide your assets among stocks, bonds and cash (asset allocation). Your “target income mix” is ultimately what allows you to withdraw your estimated monthly income.

Keep in mind that any life changes – birth, adoption, marriage, divorce, death – require fiduciary changes to protect your assets. You may need to change beneficiaries to many policies, adjust your will and create new trusts. The bottom line is, this is your life’s work – so protect it. Start harvesting your assets now to be prepared for what life hands you. It all starts with knowledge of your daily and monthly spend, so getting the opinion and support of experts is key.

Judy Heft is founder and CEO of Judith Heft & Associates in Stamford, a boutique financial and lifestyle concierge serving high-net-worth individuals in New York, Connecticut and nationwide. Founded in 1996, Judith Heft & Associates assists clients with a wide range of financial needs, from bill paying and tracking charitable contributions to forensic bookkeeping, as well as lifestyle services such as high-end relocations, professional organizing, home maintenance and elder care services. For information, visit www.judithheft.com.


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