The County Press

Getting your house in order

Here’s everything you need to know



Rick Warren says everyone should have a plan for their loved ones for when they’re gone. Photo by Phil Foley

Rick Warren says everyone should have a plan for their loved ones for when they’re gone. Photo by Phil Foley

Nobody wants to think about it, but you need a plan for the end

LAPEER COUNTY — For a lot of us when we were kids the first thing we turned to in the newspaper was the comics, but there comes a time the first thing we look at over our morning coffee are the obituaries.

And no matter how many obits we read, a lot of us are convinced deep down that will live forever. We won’t and according to Rick Warren, principal at R.L. Warren Associates LLC, it’s never too early to start planning for the inevitable.

Warren noted that if most of us had begun socking away 10 percent of our income in savings and investments when we got out of school, we’d have well over a million dollars in retirement savings by now.

The thing is, most of us don’t do that. “Many people don’t think about retirement until its 5-10 years out,” observed Warren.

By then, say the folks at Investopedia, there are a number of things you need to do, if you haven’t already, among them:

Rick Warren

Rick Warren

• Draft an inventory of physical things you own that a worth more than $100. This should include everything from art and antiques to computers and power tools. This will also come in handy in the event of a disaster, such as a tornado or house fire.

• Make a list of your non-tangible assets. Put all of your bank accounts, brokerage accounts, 401k plans, IRA assets, life insurance policies and any other insurance policies you have on one master list.

• Total up your debts. This should include everything such as auto loans, existing mortgages, home equity lines of credit and any other debts you might owe.

• Make a list of all the groups you belong too. Many organizations include a free accidental death benefit as part of their annual dues. Make sure you’ve selected a beneficiary and that name is on your list.

• Draft a will. Everyone over the age of 18 should have one. Many families get torn apart in fights over who gets the china or a treasured family clock.

• Make copies of your lists and make sure they are in more than one place.

Warren said people should also consider getting a living trust. A living trust, he said, allows you to avoid the time and expense of probate.

Warren said there are two kinds of living trusts — revocable and irrevocable. With the former, he said, you have control of your assets and can make changes up until the time of your death. With an irrevocable trust, you have given up control of the asset in it.

Setting up a trust isn’t for everyone and you should have a discussion with a competent attorney before drawing one up. The advantage of the irrevocable trust is that it allows someone with very large assets to avoid estate taxes.

Warren noted that while most people don’t think much about life insurance when they’re young, it’s something everyone should consider to ensure their loved ones are cared for after they’re gone.

He noted many people don’t stop to consider that pension payments are cut in half for the serving spouse when the pensioner dies. “I’ve seen a lot of widows who never worked finding it difficult to live on the reduced pension.”

Life insurance isn’t the only form of insurance people should consider, he said. There are policies for final expenses that dramatically drop in price the earlier we start them.

There are also long-term care policies. “Life insurance is fine, if you die,” he said. “But what are you going to do, if you have a stroke?”

He said that while many people try to avoid it at all costs, when people reach a certain age, it’s important to sit down with their children all at one time and have a frank discussion of what their wishes are.

Warren said that can avoid destructive family feuds later. He said frequently the biggest and most painful family fights aren’t over a large sums of money, but rather a favorite piece of furniture.

Warren said as people age, their investment strategy should change. “If we’ve started out when we’re young, we can put 75 percent of our retirement fund in higher risk instruments and 25 percent in low risk investments. But as we age those two numbers should slowly reverse since will have less time to recover, if an investment goes bad,” he said.