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The Cary Connection MARCH 2024
Cary • Raleigh • Wake • Forest • Chapel Hill
Spring has arrived, and while your New Year’s resolutions may be long gone, the season might motivate you to get your affairs in order. It’s actually around this time of year we get numerous phone calls asking similar questions: “What’s the difference between a living will and a power of attorney?” and “Which one is right for me?” Well, there’s a big difference between the two, and before you can decide which suits you best, you need to know what sets them apart. Whether it’s an unexpected accident or illness that leads to incapacitation or end-of-life care, you want to have your wishes followed when you’re unable to express them yourself. We often hear about situations where wishes were never officially put in place, so the family has to struggle with emotionally draining decisions. That’s where two estate planning components come in. First, let’s dive into what exactly a power of attorney, or POA, is. A POA enables you to designate a trusted person to make financial, medical, and legal decisions if you cannot do so yourself. This means that you can specify a particular person who can pay your bills, manage your benefits, and coordinate your medical care if you are ever incapacitated for any reason. While you don’t need a complete estate plan or our team to draw up a POA, it’s a subject that will always come up when creating your estate plan. Meanwhile, a living will doesn’t deal with incapacitation but exclusively determines a person’s end-of-life care. This is such a delicate subject, and oftentimes, when families or loved ones are faced with tough decisions, they may choose a treatment others Take Control of Your Future: THE CRUCIAL ROLE OF LIVING WILLS AND POWERS OF ATTORNEY
would not agree with. With a living will, you can specify exactly what you want or don’t want when the time comes. Unlike a POA, which determines a specific person, a living will simply communicates your wishes for you to your loved ones and medical team. The main difference you must remember is that a POA and a living will have different types of authority. A POA covers a wide range of financial and health matters, while a living will revolves entirely around end-of-life decisions and care. Another factor to remember is that needing a POA is not always long-term. For example, if a 19-year-old were in a car crash and incapacitated for two weeks, they would require a POA for just that short time they were unconscious. Meanwhile, a living will aims to make a person’s end as smooth as possible for everyone involved. Both powers of attorney and living wills are important to discuss with your loved ones and your estate planning lawyer. In fact, the biggest risk is having nothing set in place at all! Estate planning is for everyone, and as you know, we take the time to review and discuss what works best for you.
We welcome the opportunity to discuss and review your current plan to ensure your peace of mind. You may call our office any time to schedule your review meeting.
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-Paul Yokabitus
CaryEstatePlanning.com • 1
DON’T MISS OUT ON THIS 401(K) GROWTH OPPORTUNITY
expense ratio, while the tax-cost ratio is whatever capital gains taxes are triggered if the fund is outside of a tax-advantaged account like a 401(k). In this case, as we’re exploring how to grow your 401(k), you would only have to worry about the expense ratio. You should research which index funds have the lowest expense ratios and their investment strategies — what type of industries (energy, technology, etc.) they invest in. Small-, mid-, and large- cap indexes track small, medium, and large companies. Figuring out which sector you want to invest in within these categories is also crucial. Also, consider foreign, domestic, or a combination within emerging markets. You’ll find many choices, but ultimately, you just need to choose one that best suits your needs. Okay, I’m convinced. What’s next? Once you decide, you can invest in the fund that suits your needs. Consider convenience, costs, commission-free options, and whether you want your investment to reflect your ethics. After investing, review the fund regularly to ensure it still measures up by looking at your mutual fund’s quote page. If fees start climbing or your fund isn’t doing its job (rate of return), you can always switch to another. Also, consider diversifying your portfolio by investing in multiple index funds. We know this is a lot of information, but we hope this 101 on low- cost index funds has given you a new option to consider. It’s one of the safest, low-cost ways to boost your 401(k). Your options are broad, and we welcome your questions. We’re here to help; reach out to our office to schedule an appointment.
Planning for retirement can be exciting — deciding where you’ll travel, what hobbies to pick up, or how to otherwise fill your time in your golden years. The hardest part is planning with the optimal financial tools. The goal is for your investments (combined with Social Security) to take care of you in retirement, not to wonder why the investments you put your hard-earned money into didn’t pan out. And as with all financial decisions, you must carefully weigh your options for growing your 401(k). This article will explore one tool specifically, the low-cost index fund, which can effectively grow your 401(k) with minimal expense.
“The goal is for your investments (combined with Social Security) to take care of you in retirement, not to wonder why the investments you put your hard-earned money into didn’t pan out.”
What is a low-cost index fund? Low-cost index funds can diversify your investments without a huge price tag. This pre-set index of stocks is often either a mutual fund or an exchange-traded fund (ETF). These funds follow popular indexes, which frequently point to the overall economy. The Standard and Poor’s 500 index is one example. The Dow Jones Industrial Average is another. They’re staples of investing and offer security and stability for many investors. Index funds aim to mirror the performance of a specific index. So, no real management is necessary for this fund since they don’t try to outsmart the market or beat its averages. That’s what keeps costs low within the index. Because the fund is not actively managed, the costs are usually lower. Why choose a low-cost index fund? Comparatively, a low-cost index fund only requires an investment minimum (many times as low as $500–$1,000 initial investment) and an account minimum. Both of these can be as low as zero, especially for those with a Roth or Traditional IRA. The main cost is the expense and tax-cost ratios. The fees subtracted from any returns is the
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ASSET DISTRIBUTION DONE RIGHT Know Your Options to Help Protect Beneficiaries Discussions about inheritances are often delicate. However, the goal is to consider the unique circumstances of your children or other beneficiaries. You want to provide for loved ones without offending anyone in the process, yet some are more responsible with money than others, and you want to help them make the most of their inheritance. Here are a few suggestions to set your family up for success after you pass. No-Contest Clauses Employing a no-contest clause
TAKE A BREAK
AQUAMARINE BASKETBALL BUTTERFLY CLOVER DAFFODIL GREEN IDES LEPRECHAUN MADNESS SPRING TANGERINE WOMEN
in your will can eliminate any potential in-fighting or contention to break away from your wishes. It automatically disinherits any contentious family members. If you know your kids enjoy bickering, then adding this no-contest clause puts them on notice to leave their
BELL PEPPER SANDWICH
bickering aside, especially in court. Preventing a long, drawn-out court mess is a surefire way to take care of your family. It’s an easily added clause; you just have to choose to include it. A Living Trust Establishing a living trust is one way to delineate how you want your assets to be distributed after you pass, and you can revoke or change it at any time while you’re still around. You can set up a few different ways for the successor trustee to distribute assets from the trust, depending on your family circumstances: outright distributions, staggered, or discretionary. An outright distribution means beneficiaries receive assets without any protections — but an irresponsible recipient might squander the inheritance very quickly. The staggered distribution allows you to set the rules about how and when funds will be distributed or if any triggering events will play a role (turning 18, marriage, etc.). The last option is to give your successor trustee discretionary power to distribute assets — they will decide when and what a beneficiary will receive. Choosing the Right Trustee Whichever distribution option you choose, selecting the right person or entity to be your trustee (an individual, a private fiduciary, or a bank) is crucial. They should be trustworthy and fair, especially if you grant them discretionary power. They’ll be in charge of making sure your assets are distributed according to your wishes — and their best judgment. Being firm in your care for others won’t make you the villain. Thankfully, you can share your legacy and assets according to your best judgment and discretion. You have several options and tools — just remember, you know your children best.
Inspired by TheSpruceEats.com
Ingredients
• 1 1/2 oz Swiss cheese, thinly sliced • 1/2 small cucumber, cut into 6–8 thin slices • 2 tbsp guacamole or a few slices of avocado • Dash of salt and pepper
• 1 medium bell pepper, any color • 2–3 tbsp cream cheese • 1 tsp whole-grain mustard • 2 oz ham (or other deli meat), thinly sliced
Directions 1. On a cutting board, remove the stem of the bell pepper with a sharp knife. Cut the pepper in half lengthwise and remove the ribs and seeds. 2. Lay the pepper halves on the cutting board and spread cream cheese inside each half. Spread whole-grain mustard on top of the cream cheese. 3. Layer your deli meat, cheese, cucumbers, and guacamole on each bell pepper half. Add a dash of salt and pepper, then combine both halves and serve!
CaryEstatePlanning.com • 3
Ask about our Financial Planning services at your next review meeting, or call Cary Financial Planning at 919-694-6945 to learn more!
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1 The Vital Distinction Between a Living Will and Power of Attorney Inside This Issue Cary • Raleigh • Wake • Forest • Chapel Hill - new location! 1255 Crescent Green, Suite 200, Cary, NC 27518 919-726-0896 • www.caryestateplanning.com
How Low-Cost Index Funds Can Maximize Your 401(k)
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Bell Pepper Sandwich
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Ensure Your Assets Are Distributed Wisely
Embrace the Empty Nest
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HOW TO ENJOY THE EMPTY NEST
and share your own. Arranging in-person visits can turn into new traditions for your family. Allow yourself to enjoy this different but equally rewarding aspect of parenthood. Now, let’s turn the spotlight on you. This is your time, a golden opportunity to focus on self-care and personal growth. Remember those hobbies you shelved when parenting took center stage? Dust them off and give them
Welcome to the new phase of life every parent faces, the empty nest. It’s that bittersweet time when the last child packs up and leaves only echoes in their once bustling rooms. Suddenly, the soundtrack of your life has shifted from a lively chorus to silence. For 18 years or more, school runs, sports practices, and the ever- present hum of family life framed most of your days. Now, your home feels a tad too spacious.
a whirl! Painting, hiking, learning a musical instrument, or even skydiving — there’s no better time to explore old or new interests.
It’s normal to miss the commotion and the constant interaction with your children. But you are entering an exciting new chapter in your life, just like your children are. Your role as a parent is simply evolving. You’ve been their guide, teacher, and protector for years, and those roles don’t just disappear — they transform. Your children will still look to you for support and guidance; this is your chance to be there for them in a new way. There’s no reason to be cut off from your children. Stay connected through texts, FaceTime calls, and good old-fashioned phone conversations. Discuss their new experiences
With fewer responsibilities at home, you can pack your bags and explore. Whether across the globe or the state, travel refreshes your spirit and broadens your horizons, offering perspectives that can only come from stepping out of your comfort zone.
Life doesn’t stop teaching, and we never stop learning. Your nest might be empty, but your life is full of opportunities waiting for you to seize.
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