Estate Planning Without an “Estate”

Web photo 2014When the words “estate planning” come to mind, many people think of billionaires such as Bill Gates or Mitt Romney. These wealthy Americans certainly do have an estate and a very complex estate plan. However, anyone with a few dollars in the bank or a life insurance policy technically have an estate. Your estate is anything you’ve accumulated over your lifetime. Therefore, it’s important to have an estate plan even if you don’t feel like you have an “estate.” Below are a few tips to consider, including some information that may surprise you:

  • Basic Will – We all know that a will is used to give our property to certain people or charities upon death. However, did you know that wills also provide for guardianship provisions for children? If you have children who are not considered adults in your state of residence and you don’t have a will, you may be putting your family at large risk in the event of a tragedy. For example, let’s assume two parents are married and have one child. If both parents passed away in a car accident and did not have a will with guardianship provisions, the children may have guardians appointed by the state. These guardians may be family, but it may not be the family member(s) you envisioned raising your children. Having a will is very important for children and even adults who need special care.
  • Revocable Living Trust – This estate planning tool is a bit more complex than a will, but can offer many more benefits. Please remember, a trust isn’t just for the wealthy. If you have a car, a house, some investments and a bank account, along with children under your care, a trust may be for you. First, if used properly, a trust has the potential to avoid probate court in the event of death. Avoiding probate may mean saving probate court expenses, saving months of time dealing with the probate court system and keeping your estate private versus going through the public court system. Second, a trust has the ability to dictate how assets are distributed among family, friends and charities. For example, you may want to give money to a grandchild, but only if they use if for college. If not used for college, you may want them to wait until age 35 to receive any monetary gifts. With a trust, this type of unique request can be made. There are also many other potential benefits to a trust that are unique to each person and family. What’s the downside? It’s going to cost a little more to create than a basic will.
  • Payable on Death Agreement – This handy tool is common with banks, but not every state allows such an agreement to be used. In the states of Missouri and Illinois for example, they are allowed. Adding a “POD” agreement to a checking or savings account allows those assets to pass to the named beneficiary upon death without probate court intervention. The best part about POD is that it’s generally free to do at your local bank. Please keep in mind, special rules apply when appointing minor children, incapacitated adults or other unique beneficiaries on a POD form.
  • Transfer on Death Agreement – Like the POD mentioned above, the TOD has the ability to keep assets such as vehicles or non-IRA investments out of probate. As an example, in the state of Missouri, you can add a TOD beneficiary to the title of a vehicle. In the event of death, the vehicle may then be able to pass to the TOD beneficiary even if a loan exists on the vehicle. Each state varies greatly on TOD rules, so be sure to check with a legal professional for any questions.

Hopefully this list of popular estate planning documents has been helpful. Please be sure to speak with a qualified estate attorney before making any changes to your estate plan. This can be a very complicated topic, so professional guidance is important.

By Vena Stevens, Gateway EITC Community Coalition

Date:   January 9, 2015

Tax season is quickly approaching.  Knowing a few simple facts about tax preparation and filing will help you avoid mistakes and may even save you money.

There are several options for preparing and filing your federal income tax return. You can prepare and file your own tax return.  This is a good option for someone who has a simple return. Those making less than $60,000 for the 2014 tax year can even do this for free online through and the IRS Free File website.

The majority of Americans will have their returns done for them.  There are some things that are important to know before deciding on a tax preparer. There is currently no U.S. regulation or minimum educational requirement for tax preparers. Only four states have regulations; Missouri is not one of them. According to the IRS, about 60% of tax preparers operate without any oversight or educational requirements.

Options for having your taxes prepared:

  • Certified Public Accountants (CPAs) – Make sure they specialize in individual income tax returns.
  • Enrolled agents (EAs) – EAs are federally licensed tax preparers.
  • Tax preparation chains – Preparers found in tax preparation chains are not CPAs or EAs and are not required to have professional training or pass any tests. They are likely to have varying degrees of training and experience.
  • Individual storefront tax preparers – These are not usually CPAs or EAs and often have no tax law training at all.
  • Free tax preparation – This program is available to households making $53,000 or less, persons with a disability, and the elderly. All preparers are certified by the IRS. Call United Way at 211 for site locations and hours.

Tips for Choosing a Tax Preparer:


  • Use a preparer who bases their fee on a percentage of your refund
  • Use a preparer who claims that they can get larger refunds than other preparers
  • Use a preparer who claims they can get you your refund faster
  • Use a preparer who offers to give you a portion of your refund when you leave their office
  • Use a preparer who operates another business such as, car dealerships, furniture stores,  or those who provide other financial products such as prepaid cards and check cashing


  • Ask about preparers experience and credentials
  • Get a recommendation from a friend or family member
  • Make sure you can contact preparer after tax season, should there be a problem
  • Get a written price quote before agreeing to use the service – If they refuse, go somewhere else

Other Dos and Don’ts:

  • Do keep all relevant financial documents in an accordion or similar file to bring with you
  • Do check your return before you sign it
  • Do ask preparer to explain anything you don’t understand
  • Do get a copy of your return and a breakdown of fees before the return is filed
  • Don’t allow a preparer to deposit a refund into his or her account
  • Don’t sign a blank return



By Thomas Nitzche, CFEd, ClearPoint Credit Counseling Solutions

Date: March 20, 2014

Winter doesn’t want to leave, but many of you may be ready to start your spring cleaning.  While images of mops, broomsticks, and vacuums traditionally come to mind, cleaning up your credit is an important part of maintaining your household. Start off your spring credit cleaning by getting a copy of your credit report through a reputable site that offers free credit reports like

Your credit report is an extremely important factor in becoming financially secure. There are many reasons why every consumer should pull their credit report yearly. The main reason is that you need to know exactly what is being recorded on your credit report by your creditors, and you need to make sure that information is reported correctly.

Credit reports can affect your ability to get a job, purchase a new car or home, and can also influence how much interest you will pay on your credit cards and other debts.

Many companies now pull credit reports for job applicants.  They may require your score to be above a certain number or that you are current on all of your debt obligations. You need to make sure your credit report is positive when applying for new career opportunities.

Potential lenders for new car or home loans will pull your credit report. It is part of their due diligence, and in most cases is required. All lenders have specific guidelines for who will and will not qualify for a loan. The cost of the loan will also be determined by your credit report and credit score.

When applying for new credit cards, the prospective creditor will pull your credit report. The credit line you receive and the interest rate you will pay is determined by your credit report and credit score. In most cases, lenders/creditors also take into consideration your income and assets.

Often, inaccuracies are reported to the credit bureaus and these can have significant effects on your credit rating. It is essential that you review your reports from the three major credit bureaus at least once per year to maintain good credit. You don’t want an error to be holding down your credit score and negatively affecting the way you are viewed by creditors.

Once you have your credit report in hand, the true cleaning can begin. First, review everything to be sure there aren’t any accounts you were unaware of. Then check to see if there are any negative factors being reported that you believe may be inaccurate. Should you find any information that you believe is incorrect, make sure to file a dispute in the dispute area of your credit report (disputes are generally resolved within 30-45 days).  Next, take a look over the accounts you have and make a plan to improve your score through taking care of old debts, making timely consistent payments, catching up on any past due amounts, reducing balances owed, and maintaining lower balances on your accounts over time.

By Patrice G. Dollar, Lincoln University Cooperative Extension
Date: February 14, 2014

February is the month of romance. However, finances and money are not romantic.   It is not the stuff of which love stories are made.  Talking about money, before you tie the knot is pivotally important.

There is no way to avoid the discussion of money issues.  What should you discuss?  There are day to day issues such as who will pay the bills and whether or not you should merge checking and/or saving accounts.  If you keep your account separate, whose money will pay what?  How much should you save?  What are your goals?  What if your financial situation changes in the future?

If you have been married before and are becoming a blended family, the financial discussions are more complex.  Deciding whether to keep finances separate or merge them, you need to consider how that decision will affect your respective children.  Are you willing to help your new spouse or partner put his or her kids through college?  Do you need a prenuptial agreement?  Have you written wills?  What will happen if you die first?  Will the surviving spouse leave everything to his or her kids?  There can be some sticky issues for a second marriage.

There are various models for handling income. The Equal share model is where equal amounts are put into a bank account to cover basic household expenses. Remainder salaries are spent or saved by each partner.  Problems can arise if one person earns considerably more than the other partner.  In which case, the Proportional share model may be more appropriate.  Each partner contributes a percentage of his or her income to the joint accounts for savings and living expenses.  A couple can Pool their resources, combining all of their income.    However, in pooling resources, each person should have equal say as to how the money should be spent.

Calculating your cash flow and net worth should be a priority for both individuals.  Your cash flow should reflect how much income you receive each month and how much is spent.  It tracks your day to day expenses.

The net worth statement is a list of what you own and what you owe, a financial snapshot of your situation.  Each individual should complete both a net worth statement and a cash flow statement.  The statements can provide key indicators of how your prospective partner handles money.

Does your partner spend money lavishly on dinner, expensive gifts or is he or she a tightwad?  Think about how your partner spends money. Are you a saver, while your partner has several credit cards with high balances?   No one system will function for everyone because individual needs, values, interests, goals, skills, and personalities differ.  Develop a system together; do not be afraid to revise or adjust a system that does not work.

Quote:  “Money issues resolved earlier in a relationship are fewer headaches later.”

By: Suzanne Gellman, University of Missouri Extension
Date: January 1, 2014

The New Year is a great time to take charge and re-evaluate finances.  Part of being Money Smart is looking at your financial priorities and setting or reviewing your financial goals.  If you are like most people, life changes and so some goals may no longer apply, or others need to be adjusted based on your current situation.

Visualize yourself achieving your goals.  Have you considered creating a vision board?  This is a board of pictures of the things you want to have in your life – what do you want to do?  What do you want to have?  And what do you want to be?  All of these questions usually have financial pieces to them that should be part of your financial goals.  All you need to get started are some magazines, a scissors, some glue, and a large piece of paper!  If you’re artistic – maybe all you need is paper and pencils or paint.

When you put your goals on paper you are more likely to reach them – especially if this includes an action plan.  How much are you going to save each week or each paycheck or each month to reach your goals?  How are you going to save it?

Find money to save.  When was the last time you took a look at how you spend money?  Look for ways to reduce or remove a few spending areas here or there over time so you can redirect the money to your financial goals.  Challenge yourself to keep track of your spending for 30 days, or at least a few weeks.  Review your spending – are there areas where you could set more realistic limits?  If there is no extra money to save, can you think of ways to bring in a little extra money to help fund your goals?  Do you have a hobby or talent you could use to make some extra money?

Take control of your money by creating a plan.  Many people spend without a plan and thus end up living paycheck to paycheck, when in reality, there may be more available to re-direct to financial goals than you think.  A spending plan can help you set limits and help balance your spending and saving.  Try using cash for a few months as a way to live within any plan you create for yourself; especially for areas where you might tend to overspend (i.e. food, entertainment, clothing).

Make savings a habit.  Saving is key to reaching financial goals.  The more you can automate your saving, the easier it will be to reach goals. Check with your employer and your bank or credit union to help you figure out how to have money deposited automatically into a special savings account each paycheck (hint: don’t keep it in your checking account).

Pay yourself first!  Pay yourself like a bill.  Finding a way to move even $10 a week to savings is $500 over a year.  Now that is a Money Smart way to start the New Year!

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