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Tag Archive: Ask Jesse

Ask Jesse: Are there risks involved in using an online site to create your own Last Will & Testament?

Hi, Jesse! I know you are an attorney and you guys are fans of Dave Ramsey. I saw Dave Ramsey’s website has a link for a recommended site for doing your own Last Will & Testament. I would appreciate your opinion on how to go about setting up a will, including guardianship/trustee for children.

I have heard attorneys say those online ones can have inaccuracies which would make the whole document void. I definitely need some guidance in this and I don’t want to go cheap just to save money on something so important. The one attorney I asked for a price said it would cost $900-$1000 to set this up and that sounded like a lot! Thank you! -Beth

Hi Beth,

Whether someone can or should do their own will with a kit or with a discount online company is one of the questions I get most often. And you touch on one of the main reasons that I discourage it generally: the possibility of mistake.

Every estate is different. In addition, every state is different. As such, it is my opinion that if someone is looking at getting a will or estate plan done, they should at the very least talk to a qualified professional who can offer help or some sort of direction.

For some background, Last Wills and Testaments have been around for hundreds of years for devising property to subsequent generations. Generally, it was a matter of common law, or tradition, as to what laws applied and what didn’t.

As we developed as a country, the various states developed its own laws pertaining to land and property within its own state and what constituted the proper documentation to make the transfers. In Kansas, for instance, anyone making a will must have it witnessed by two people and must attest to it, stating before a notary that the will expresses their desires. If it is handwritten and notarized, it is improper and will be invalidated.

Each state is different. There are some states where these handwritten wills (called “holographic”) are fine and will be honored. This said, many of the kits and discount websites are geared toward specific states and, at the very least, should meet the minimums necessary to be valid.

This, though, brings me to my second objection: lack of personal attention. Everyone has individual needs and circumstances for planning and goals and just filling in blanks on a website or on a form is very impersonal and consultation with a legal professional that is knowledgeable in this area may highlight issues not addressed by these kits and sites.

It seems Congress is constantly changing the estate tax threshold, which no doubt is good for business for the high-end estate planners. Nonetheless, it is my opinion that everyone needs to know exactly what they have and exactly where they want it to go and choose whatever route is best for you and your family.  I will caution that you to be careful not to get overcharged or up-sold for these services, though, and shop around.

Jesse Paine is a licensed attorney who owns his own law firm. He’s married to Crystal and is the numbers nerd of the MoneySavingMom.com team! If you have a question you’d like him to answer in a future column, you can submit it here.

The content of this column intended for informational use only and is not to be construed as providing legal, investing, accounting, or other professional advice. Your situation is factually specific and you should accordingly seek qualified professional counsel concerning your specific legal, investing or accounting needs.

photo from Big Stock

Ask Jesse: Where should we put our tax refund money?

Today’s question is from Jessica:

Jesse,
We recently moved into a home that needs work, we also received money from our tax refund and do not want to blow through this. Where should we put our money that will draw interest and be able to access if needed? This is the first time we will actually be able to save our tax refund instead of using it on our home taxes as our mortgage now is all included. -Jessica

Hi Jessica, getting a tax refund always feels good. Like you said, it is important not to blow through it and later find you could have used it more wisely instead of buying that big new toy you’ve always dreamed about.

If I were in your shoes, I would make sure our emergency fund is built up to what we would need should all other sources of income shut off for six months, especially if you are looking at making some sizable repairs to your house in the future that could be a drain on any excess income you have coming in.

I have always used either a money market account at our local bank or an online account that ties to my local bank that I could easily get to if needed for emergency fund and other savings. The reason was solely for the ease of access.

I never really took the interest rate into account (except for the fact that it was higher than the usual savings account) because quick access to me outweighed the return I would get due to interest because the account was not set up for long-term use, other than the emergency fund.

Jesse Paine is a licensed attorney who owns his own law firm. He’s married to Crystal and is the numbers nerd of the MoneySavingMom.com team! If you have a question you’d like him to answer in a future column, you can submit it here.

The content of this column intended for informational use only and is not to be construed as providing legal, investing, accounting, or other professional advice. Your situation is factually specific and you should accordingly seek qualified professional counsel concerning your specific legal, investing or accounting needs.

photo credit

Ask Jesse: When saving for a home, where should we keep our money?

We are debt-free and want to start saving for a 100% down payment for a house. Do you have any suggestions as to where the money should be held while saving? Savings account or money market? Any info would be appreciated. Thank you, Kelly

What a great goal! It can be daunting at times, but persevere and you will not regret it.

When we were saving for our house, we put every last penny we could squeeze out of our budget in a money market account. The reason we chose to use a money market account was because they do tend to pay more in interest per month than a regular savings account. Plus, you have the benefit of being able to write checks against the account when you want to take money out.

With a savings account, you need to transfer money and do not have as easy access to it. That said, if you like the idea of having an extra safeguard in place so you cannot get at your money very easily for discipline purposes, a savings account is still an okay choice. It all comes down to the reasons for doing what are doing.

Money markets traditionally pay out more in interest because they are tied to a market and carry a little more risk than a savings account. So, if the money markets change, you run the possibility of having your interest rates fluctuate.

In all my times of utilizing this tool, I have never lost money. I have only seen the rate interest is paid out increase or decrease, depending on how the economy is doing.

Jesse Paine is a licensed attorney who owns his own law firm. He’s married to Crystal and is the numbers nerd of the MoneySavingMom.com team! If you have a question you’d like him to answer in a future column, you can submit it here.

The content of this column intended for informational use only and is not to be construed as providing legal, investing, accounting, or other professional advice. Your situation is factually specific and you should accordingly seek qualified professional counsel concerning your specific legal, investing or accounting needs.

photo credit

Ask Jesse: How do you feel about keeping life insurance as a form of inheritance?

My husband and I are currently switching our life insurance policies from whole life to term, thus resulting in better coverage for the same premium. We are wondering how you felt about keeping our life insurance as a form of inheritance for our three children (our youngest has severe autism). We are in our lower 40’s.

I understand the premium will go up as we grow older but we want to insure that all of our children, especially our son with a disability, is covered. He also has a special needs trust. – a reader

I applaud you for taking the bull by the horns and thinking long-term. It is not often that people, when still younger, not only think about but make preparations for the care of their children, in the event of your death.

I think it is important for anyone, whatever their age, if they have dependents, to make sure to have a lawfully executed will with guardians set up for their dependents. So many people do not have this and, instead, leave it to the state to determine who gets what and who takes care of the children, if both parents are gone.

The purpose of life insurance is to make sure your children have something to take care of them for their support and maintenance when you die. It should actually be called “death insurance” or “care insurance” but that is beside the point.

Because you have a special needs child, it sounds like you have done the necessary estate planning to make sure he is cared for with a special needs trust. This trust can be funded with life insurance by naming the trust as beneficiary of the life insurance. The trustee would then disperse and manage the money according to the terms of the trust, while the other children would be named as beneficiaries and get the money outright (unless they are minors at the time).

If you did not have the trust set up by an estate planning attorney, I would highly recommend it and have them look at the methods of funding. Most trusts go unfunded and the last thing you would want is to have this special trust not funded properly and your child not benefit from your planning. An ounce of prevention is worth a pound of cure.

That said, while at this point you can fund with that life insurance, your goal should be to fund it with other assets developed over time so you don’t just have to rely on the life insurance–especially if that life insurance is the term insurance. While you could always reapply for term insurance, which is wise to do when the term gets close to being up, it would be good to have a real asset there to fund the trust if that life insurance is no longer available.

Thus, I do not think that it is necessary for you to keep both the whole life and the term policies going simultaneously, especially when you can get quite a bit more insurance for the price of the whole life with term insurance. The term should work just fine as long as you keep on the ball with estate planning.

Again, I would recommend you talk with an estate planning attorney in your state to make sure all i’s are dotted and t’s crossed.

Jesse Paine is a licensed attorney who owns his own law firm. He’s married to Crystal and is the numbers nerd of the MoneySavingMom.com team! If you have a question you’d like him to answer in a future column, you can submit it here.

The content of this column intended for informational use only and is not to be construed as providing legal, investing, accounting, or other professional advice. Your situation is factually specific and you should accordingly seek qualified professional counsel concerning your specific legal, investing or accounting needs.

Ask Jesse: What should we consider when moving from irregular income to regular income?

I have been a stay-at-home mom since the beginning of 2011, but before then I worked hourly and my schedule constantly changed. My husband own his own small seasonal business, is in the ministry (he receives a housing allowance), and has worked any job that has come up for the past two years (always temporary, part-time, changing schedules).

He now has a job offer in another state that is a full-time position with a set salary and benefits. This would be the first time ever in our marriage of four years that we’ve had a full-time job like this. We are very excited, but we are quite nervous as to how to figure out what our budget changes might be.

What are some things that we should consider when looking at the job offer? Also, any tips on what to do when considering a change from one state to another and how to figure out the cost differences between states? – a reader

Making a move for a career change is a momentous event, even if you are not moving out of state. We have moved a number of times and have always had an irregular income, so proper budgeting is always key to making the transition a success.

First, I would make sure that you and your husband are where you are supposed to be, that you are on the same page, and that you both have complete peace about making the jump. These are the most important considerations to make and you can easily be overcome by the enticement of the regular paycheck. If you make this move prematurely, without family harmony, or for the wrong motives, that regular check will probably not go as far as the old irregular income–or at least there will probably be conflict and frustration attached with it.

Second, if you pass the first test, determine the lowest amount you could live on, add some wiggle room, and then create a budget based on that amount (provided it is still less than your set income). If you’ve never budgeted before, you’ll want to give yourself some breathing room as a cushion while you get settled into the new area and become more accustomed to budgeting.

After you get somewhat acclimated (usually somewhere around three to six months), reevaluate your budget and your financial priorities to see what areas need to be tweaked. Remember, a budget is a living document. It should be changed as your needs and priorities change.

Do keep in mind that just because you don’t use all of the money you budgeted in a category doesn’t necessarily mean you need to lower that category. I’d wait for at least six months to a year before deciding to significantly cut a budget category because many categories will fluctuate throughout the year. For instance, if we have money leftover in our utilities budget (a category that tends to fluctuate quite a bit based on the time of year), we always keep that budget “bucket” balance accumulating to make up the difference on months when our utility bills are higher.

Another thing you should consider in analyzing this job opportunity are tax law changes. I once worked in a city other than where we lived that imposed a municipal income tax. We had to make sure we included that in savings just in case the employer withholding was insufficient to cover it.

Finally, the last consideration would be housing. I know that there are a lot of people adamant that you need to buy buy buy, especially in this economy. But, if you are moving to another area, my recommendation would be to rent, especially in this economy, and definitely if you are moving to another state.

Before buying a home, not only do you want to make sure you have a good down payment saved up and know that you’ll be living in an area for longer than a year or two, but it’s also helpful to have a better feel for the areas of town you’d want to live. You’d much rather rent for six month or a year and scout out your home and location options, than to just run ahead and buy something when you’re really unfamiliar with the area.

For those of you who have made a similar jump, I would love to see your other recommendations and considerations in the comments.

Jesse Paine is a licensed attorney who owns his own law firm. He’s married to Crystal and is the numbers nerd of the MoneySavingMom.com team! If you have a question you’d like him to answer in a future column, you can submit it here.

The content of this column intended for informational use only and is not to be construed as providing legal, investing, accounting, or other professional advice. Your situation is factually specific and you should accordingly seek qualified professional counsel concerning your specific legal, investing or accounting needs.



Ask Jesse: What financial aspects should I consider when becoming a stay-at-home mom?

I have been thinking about becoming a stay-at-home mom. I have a 1-year-old and a 3-year-old. I am going to start my budget to see if we can afford to live off of one income. My parents informed me that I would not be able to contribute to an IRA since I would have no income. What other things should I take into consideration when making this decision? I know I will be saving on gas, work clothes, daycare, etc. What else am I missing? Thanks so much! -Lori

Staying home and devoting your life to nurturing and raising the next generation is a wonderful thing. That said, many who want to make the jump from working outside of the home full-time to working inside the home full-time are realistically not financially able to do so.

If you are thinking you may be able to do it, what I recommend you do is to first sit down with your husband and create a written budget based upon his income alone. You may need to cut back, eliminate or restructure some of your budget categories and expenses in order to accomplish this.

Then, continue working while you attempt to live only on your husband’s income and see if you can pay for all your necessary expenses. If not, go back through your budget and see if there are other areas you can cut or expenses you can reduce.

While you continue to work, bank everything you earn towards an Emergency Fund. This will not only provide a training session on how to make it on one income, it will also give you a good savings cushion for you to draw against if you need to once you quit working.

Now, pertaining to the IRA contributions you would supposedly miss out on, non-working spouses can still contribute to an IRA through the special spousal contribution allowance even though they do not have have an earned income. SmartMoney Magazine has a good piece explaining the contribution limits to IRAs for non-working spouses as well as the deductibility of the contributions to traditional IRAs. Here’s a snippet of the obviously-outdated article:

A nonworking spouse can make a deductible IRA contribution of up to $5,000 for 2010 ($6,000 if age 50 or older as of 12/31/10) as long as the couple files a joint return, and the working spouse has enough earned income to cover the contribution. However, the deductibility of the nonworking spouse’s contribution for 2010 is phased out for couples with adjusted gross income (AGI) between $167,000 and $177,000, provided that the working spouse is covered by a qualified retirement plan (via a job or self-employment). The working spouse’s ability to make a deductible contribution for 2010 is phased out between AGI of $89,000 and $109,000.

Contributions to ROTH IRAs are not deductible because they are made after tax; as such, you do not have to pay taxes on the back end when getting money out.

If you’ve transitioned from working outside the home to staying home full-time or part-time, I’d love to hear your story on how you did that.

Jesse Paine is a licensed attorney who owns his own law firm. He’s married to Crystal and is the numbers nerd of the MoneySavingMom.com team! If you have a question you’d like him to answer in a future column, you can submit it here.

The content of this column intended for informational use only and is not to be construed as providing legal, investing, accounting or other professional advice. Your situation is factually specific and you should accordingly seek qualified professional counsel concerning your specific legal, investing or accounting needs.