Category: Wisdoms

What’s Wrong With Probate?

Probate can be a simple, painless process. Sometimes, however, it can be a nightmare, and that’s what gives it a bad name. Probate just means “to prove.” Your personal representative has to prove to the court that the document being offered for probate is your last will. Probate begins with your personal representative filing your will with the court, along with your death certificate and a petition asking the judge to recognize your will as your last will and testament. The petition also asks the court to give your personal representative the authority to carry out its terms.

Once the petition is filed, copies of it and your will must be sent to just about all of the people who could be affected by your will. Those people include not only the individuals named in your will, but also the people who, by law, would have gotten your stuff if you died without a will. So the first thing probate does is provide a venue (for larger estates, a colosseum) for a fight.
If that doesn’t sell you on the benefits of probate avoidance, consider this. Probate is a public proceeding. That means that anybody who wants to can go to the probate court, obtain copies of your will, and gather other sensitive and personal information about you, your stuff, and your family members, and then do who-knows-what with that information. If you and your loved ones value privacy — and you should — then probate is an awfully good thing to avoid. The public nature of probate all by itself should deter most people from subjecting their loved ones to it.

Some years ago, the Last Will and Testament of Michael Jackson appeared on the internet. Once the King of Pop’s will was filed in court, somebody downloaded a copy and posted it on the internet. Do you want your will to be the next online “Thriller” or would you prefer to tell the internet trolls to “Beat It?” So, probate can take a long time, be expensive and publicize things that are best kept private. Read my next article for more about avoiding probate.

EST8PLANNING COUNSEL LLLC
Scott Makuakane, Counselor at Law
808-587-8227 | maku@est8planning.com
Est8planning.com

Probate can be a simple, painless process. Sometimes, however, it can be a nightmare, and that’s what gives it a bad name. Probate just means “to prove.” Your personal representative has to prove to the court that the document being offered for probate is your last will. Probate begins with your personal representative filing your…
Do You Have Retirement Questions?

Most hardworking Americans dream about retirement, but the path to get there can be less than clear. For those relatively new to the workforce, the idea of retiring may feel distant and abstract. However, even people who are only a few years from retirement are often perplexed by the decisions they face. While everyone’s journey is different, I know from my years of experience as a financial advisor that there are common themes when it comes to questions about retirement.

For example, those who just started their careers and have decades before retirement may wonder:

■ “With all my current financial priorities, why should I worry about saving money for retirement?”

The sooner you start saving for retirement, the greater the opportunity for your money to grow. If you are in your twenties or thirties, you may not have as many assets as those who have been in the workforce for decades. What you do have is time, and that can be a powerful ally. Time allows you to take full advantage of the opportunity to compound growth in your investments. Even modest investment amounts that have years to potentially grow can make a significant difference in your retirement savings.

■ “How much should I save for retirement?”

A reasonable goal is to save 10% of your pre-tax income in retirement savings vehicles. If you have the option, strongly consider directing a portion from your paycheck to a 401(k) or another workplace savings plan. If your employer offers a matching contribution, even better. That’s essentially “free money” that you don’t want to miss out on. If you have additional discretionary income beyond that, you may want to save it in a Roth IRA, which could help you build retirement savings with after-tax dollars and create potentially tax-free income in the future.

On the other hand, if retirement is in your near future, you may be pondering these questions:

■ “Should I pay off my home mortgage early?”

Paying off your mortgage may seem like a great idea, and if you’re like a lot of near retirees, the prospect of eliminating debt and reducing your monthly expenses may be appealing. But there are a variety of factors to consider. One of the biggest is the cost and potential tax consequences of moving a large sum of money out of an existing investment in order to pay off your mortgage. If the interest rate you pay on your mortgage is low, you may want to keep that money invested and continue making mortgage payments.

Also, holding a mortgage is key to many Americans’ tax strategy because the interest paid could potentially be tax-deductible. If mortgage interest is part of your tax strategy, consult with your tax professional before making the decision to own your home outright.

■ “How will I know if I saved enough money?”

The answer to this question will depend on your retirement dreams and current financial situation. The variables that come into play include the amount of money you’ll need to cover your expenses each year and other sources of income you have (a pension or Social Security). Most people should be prepared to spend several decades in retirement. A financial plan can help you test different assumptions based on an appropriate retirement date.

■ “Will Medicare cover my healthcare costs in retirement?”

Healthcare is one of the largest expenses most retirees incur in their later years and Medicare only covers a portion of healthcare expenses. Medicare is broken up into different parts. Part A is offered at no cost, but mainly covers only expenses related to hospitalization. Part B requires a monthly premium, but makes medical services such as care from a doctor or tests more affordable. Part C is an alternative type of Medicare coverage provided through private insurers at a cost. Part D is a prescription program that helps reduce the price of drugs. Medicare Supplement coverage is another form of coverage that charges a premium, but helps reduce out-of-pocket medical expenses.

■ “At what age should I begin to collect Social Security?”

This varies by person. The earliest you can qualify to begin collecting Social Security retirement benefits is age 62. The longer you wait, the larger your benefit will be. The highest monthly benefit you can earn occurs when you reach age 70. If you continue to work, it may make sense to delay taking Social Security. When you retire, you’ll need to weigh the value of delaying Social Security against the cost of taking money out of your personal savings to make up the difference.

Whether retirement is a year away or decades down the road, it’s important to craft a plan for how you will build your nest egg and fund your retirement dreams. If you have questions or want to discuss your personal situation, consult your financial advisor, estate planner and tax professional for expert guidance.

MICHAEL W. K. YEE, CFP,® CFS,® CLTC, CRPC®
1585 Kapiolani Blvd., Ste. 1100, Honolulu, HI 96814
808-952-1240 | michael.w.yee@ampf.com
ameripriseadvisors.com/michael.w.yee

Michael W. K. Yee, CFP®, CFS®, CLTC, CRPC ®, is a Private Wealth Advisor, Certified Financial Planner ™ practitioner, with Ameriprise Financial Services, LLC in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 39 years. Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser. Ameriprise Financial Services, LLC. Member FINRA and SIPC. © 2023 Ameriprise Financial, Inc. All rights reserved

Most hardworking Americans dream about retirement, but the path to get there can be less than clear. For those relatively new to the workforce, the idea of retiring may feel distant and abstract. However, even people who are only a few years from retirement are often perplexed by the decisions they face. While everyone’s journey…
Genius Tip: Designing Your Game Plan

Albert Einstein famously said that an intellectual solves problems, while a genius avoids them. Here is an example of how you should employ this mindset when you put your estate plan in place. One of the most important things you will do is name your substitute decision-makers. These are the people who will step in upon your incapacity or death to make decisions about things like your healthcare, your living arrangements, how your assets will be managed, and where your assets will eventually go.

Remember this about the successor trustees and other fiduciaries you name in your estate planning documents: Up until they take office, they are nominees, not appointees. Until you become incapacitated or die, your nominees are like the bench on a sports team. Players sitting on the bench are there to step into the game if called upon, but they do not actually participate in the game until the coach calls their numbers. The coaches on your estate planning team are your trusted advisors. They are on your sideline to advise you and your loved ones, but generally, your coaches will not enter the game themselves.

When you become incapacitated or die, your nominees must decide whether to accept their nominations or not, and they have no legal obligation to “get off the bench.” For that reason, you should talk with your intended nominees before you nominate them, to make sure they are willing to “play ball,” and you should check in with them from time to time to confirm they are still on board with being integral members of the team who will advance your estate planning when you are no longer able to “be in the game.”

Throughout the process of designing your estate plan, you should constantly ask yourself, “what can I do, and how should I plan to avoid the problems that will someday smack me and my ‘ohana in the face unless I provide a solution beforehand?” Only this way can you avoid the problems that the intellectuals in your family will have to solve upon your death or incapacity.

SCOTT MAKUAKANE, COUNSELOR AT LAW
Author of Est8Planning for Geniuses
808-587-8227 | maku@est8planning.com
est8planning.com

Albert Einstein famously said that an intellectual solves problems, while a genius avoids them. Here is an example of how you should employ this mindset when you put your estate plan in place.
Grief & Bereavement — Part IX

In the last article we introduced and discussed the process of the virtuous circle of communication. In this article we will discuss how to communicate in a family meeting. Often conversations with family are well-intended, however the conversation can become caustic if approached with accusation and blame. Family members will tend to shut down and/or become defensive, thereby losing the opportunity to express themselves. This can further damage family relationships.

Before beginning a family meeting, ground rules must be established. If at any time the meeting is not safe or productive, then the meeting should pause so that family members can take a time out. Once everyone is willing to adhere to the ground rules, the discussion can be resumed. Communicating is not an easy task, especially when discussing a highly emotional topic with family.

In Marshall Rosenberg’s book, Nonviolent Communication, he offers a process where families engage in family meetings using four components: observation, feelings, needs, and requests.

1) OBSERVATION. Rosenberg writes with respect to observation: “First, we observe what is actually happening in a situation: What are we observing others saying or doing that is either enriching or not enriching our lives? The trick is to be able to articulate the observation without introducing any judgment or evaluation.”

2) FEELINGS. The second component is to express how one is feeling. At first glance, this may appear to be simple. However, most people can express only a limited number of feelings. The book’s author provides a helpful list of words that express feelings that can be used instead of comparable words that do not express feelings.

3) NEEDS. Once we can clearly express our feelings, we want to express our needs. Rosenberg explains that, when we are expressing feelings such as hurt, sadness and anger, what it really means is that our needs are not being met. And, if we want to communicate clearly and deeply, we will want to determine what the unmet need is that is causing these feelings.

4) REQUESTS. The final component of nonviolent communication is to make positive requests, meaning we ask for actions that might fulfill our needs. Rosenberg suggests making requests in a positive manner. Rather than saying “I don’t want you to … ,” say “I would like you to … .” Request specific actions rather than asking for a change in others’ general behavior.

STEPHEN B. YIM, ATTORNEY AT LAW
2054 S. Beretania St., Honolulu, HI 96826
808-524-0251 | stephenyimestateplanning.com

In the last article we introduced and discussed the process of the virtuous circle of communication. In this article we will discuss how to communicate in a family meeting.
No Kids? 5 Tips for Your Retirement

Many people build their retirement and estate plans around their children and grandchildren. Everything from where they live, to how they spend their time and money, to the legacy they want to leave behind is considered through the prism of their role as parents and grandparents. For those without kids and grandkids, a different formula may apply as these individuals may have more financial freedom and flexibility as they enter retirement and beyond. But they still need to be as vigilant — if not more — about planning for their later years.

Prioritize saving for retirement

Since you’re not facing the costs for childcare and educational institutions, consider doubling-down on saving for retirement. Calculate what it will take for you to live the lifestyle you want in retirement and compare it to your current savings. Contribute as much as you can to your workplace savings plan and consider building up Roth IRA savings to help create a source of income that is potentially tax-free in retirement.

Recognize your long-term care challenges

Long-term care can be a challenge for anyone as they age, and there’s added complexity in situations where you may not be able to rely on family members to step in. Medical expenses continue to rise, so it’s important to have adequate savings and insurance coverage. Make it a priority to explore your options through Medicare and your current or former employer and consider if long-term care insurance would benefit you. Also research caregiving options and long-term care facilities in your area so you are familiar with the choices if you need them down the road.

Prepare for medical care

A significant medical event can happen at any time, so make sure to have an advanced directive, also known as a living will, in place. This document lets your spouse, extended family and friends know your preferences for treatment and gives you the opportunity to designate a healthcare power of attorney, who will be empowered
to make decisions on your behalf if necessary. Have your financial decision-makers in place It’s also important to designate a spouse, friend, extended family member or professional to look out for your financial interests if you become incapacitated. Draw up documents to name a durable power of attorney to oversee your financial matters if you are unable to, including legal and tax matters. You do not have to share your full financial situation and account numbers; a common approach is to share enough information so that the contact can step in, if and where you need help making financial decisions.

Plan your legacy

With no direct heirs in line to inherit your estate, you will want to consider what you’d like your legacy to be. You may choose to leave your estate to any combination of family members, friends, charities, education institutions, or other causes that are important to you. Creating or updating your will is one of the best ways to articulate your wishes.

Also consider using trusts, which sometimes allow more flexibility than a will, to help you meet specific legacy goals. Consult with a financial advisor, attorney and tax legal professional to develop a comprehensive legacy strategy that suits your ultimate goals.

MICHAEL W. K. YEE, CFP,® CFS,® CLTC, CRPC®
1585 Kapiolani Blvd., Ste. 1100, Honolulu, HI 96814
808-952-1240 | michael.w.yee@ampf.com
ameripriseadvisors.com/michael.w.yee

Michael W. K. Yee, CFP®, CFS®, CLTC, CRPC ®, is a Private Wealth Advisor, Certified Financial Planner ™ practitioner, with Ameriprise Financial Services, LLC in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 39 years. Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.

Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser. Ameriprise Financial Services, LLC. Member FINRA and SIPC. © 2023 Ameriprise Financial, Inc. All rights reserved.

Many people build their retirement and estate plans around their children and grandchildren. Everything from where they live, to how they spend their time and money, to the legacy they want to leave behind is considered through the prism of their role as parents and grandparents. For those without kids and grandkids, a different formula…
Nurturing Your Financial Freedom

As we all get older, our needs in life change. That can happen in both large and small ways. But one thing we all need to consider is the journey of long-term financial planning. While that can seem like a huge task, by breaking it down into manageable steps, we can all work towards financial security in retirement. Here are some thought starters to consider.

1. Craft a Thoughtful Spending Plan

Continually reassess your budget. Prioritize necessities over luxuries, earmarking funds for essentials like healthcare, housing and day-to-day living expenses. A well-structured spending plan provides a roadmap for financial stability.

2. Invest Strategically

Diversify your investments to minimize risk and maintain a steady income throughout retirement. Explore options like stocks, bonds and retirement accounts, including IRAs and 401(k)s. A diversified portfolio is a financial safety net.

3. Preserve Your Health and Wealth

Healthcare expenses can significantly impact your finances during retirement. Ensure you have comprehensive health insurance coverage and consider long-term care insurance to safeguard your savings.

4. Secure Your Legacy

Protect your assets and legacy by establishing or updating your will and estate documents. This can help reduce estate taxes and guarantee your assets are distributed according to your wishes.

5. Optimize Social Security

Exploring strategies to maximize your Social Security benefits is essential. Delaying your benefits can lead to larger monthly payments, enhancing your financial security in the long term.

6. Trim High-Interest Debts

Prioritize paying off high-interest debts before retiring Reducing your debt load will free up more of your retirement income for daily expenses and leisure activities.

7. Build an Emergency Fund

Maintain an emergency fund to cover unexpected expenses. A financial cushion will prevent you from tapping into your retirement savings prematurely.

At its core, the aloha spirit is all about helping each other. As we care for each other, we make our community stronger. Just remember, we never need be alone in making decisions to last a lifetime.

GATHER FEDERAL CREDIT UNION
(Lihue, Kapa’a, Koloa, ‘Ele‘ele and Waimea, Kaua’i)
808-245-6791 | info@gatherfcu.org | gatherfcu.org

As we all get older, our needs in life change. That can happen in both large and small ways. But one thing we all need to consider is the journey of long-term financial planning. While that can seem like a huge task, by breaking it down into manageable steps, we can all work towards financial…
Grief & Bereavement — Part VIII

In Sherry Turkle’s book, Reclaiming Conversation: The Power of Talk In A Digital Age, she writes about the process of the virtuous circle of communication by discussing the poet, Henry David Thoreau’s moving to Waldon Pond to live more deliberately. Thoreau furnished his cabin with three chairs. One chair to represent solitude, where he could self-reflect on matters most important for him. Two chairs to engage in conversation where he could express his thoughts to another. During these conversations, he could process information and gain new insights that better prepared him for self-reflection. All three chairs were set for a conversation with the larger community to allow for a broader awareness heading back to self-reflection. Thus, the virtuous circle that allows us to define and redefine our thoughts.

Estate planners can provide guides for each client to sit in self-reflection and consider for themselves what is most important with respect to healthcare and quality-of-life choices, as well as how to plan their financial estate. Once the plan is established, the attorney can facilitate a family meeting where the client expresses feelings and introduces the plan to family members, who can express their thoughts. The client then can self-reflect in solitude with this additional information preparing them for a better, more meaningful family meeting. Eventually, the attorney will engage the client and family with professional advisors, including the accountant and financial advisor, so that everyone understands the client’s intentions. It is vital to include and involve the client’s trusted advisors in the conversation with family. My observation is that, while families disagree, they usually can come to mutual understanding and decision. If trusted advisors come to different conclusions without consulting with one another, clients do not know how to proceed, causing the client to doubt the entire plan. It is essential that the client’s professional trusted advisors communicate with one another and come to a settled unanimous path for the client to pursue.

This virtuous circle of communication continues until the client can no longer communicate their intentions. By that time, the client’s family members and trusted advisors know, understand and will honor the client’s wishes. This process is not only important for the client in gaining perspective over personal choices, it is equally as important for participating family members and trusted advisors because they get to know the client on a much deeper level. By using this approach, family members and professionals will be on the same page in honoring the client’s intentions.

STEPHEN B. YIM, ATTORNEY AT LAW
2054 S. Beretania St., Honolulu, HI 96826
808-524-0251 | stephenyimestateplanning.com

In Sherry Turkle’s book, Reclaiming Conversation: The Power of Talk In A Digital Age, she writes about the process of the virtuous circle of communication by discussing the poet, Henry David Thoreau’s moving to Waldon Pond to live more deliberately. Thoreau furnished his cabin with three chairs. One chair to represent solitude, where he could…
Estate Planning 101

The first step in the estate planning process is learning. What do you need to learn? I suggest this as your starting point: You need to discover how to stay in control of your stuff while you are able to be in control, as well as how to be sure that that your wishes will be carried out when incapacity or the grim reaper catch up with you. Sorry to rub it in, but at least one of those things is going to happen to you. Odds are that both of them will.

Certainly, you have views about the kind of healthcare you want to receive throughout your lifetime, and you have views about who should enjoy your stuff when you are done with it. The only way to make effective choices about those things is to know what your choices are. Learning about your choices is a lifelong process because your choices will change as your circumstances change. Your health is going to change. Your assets are going to change. Your comfort with your list of designated decision-makers is going to change. The laws that affect your estate plan are going to change. As those things change, you will need to stay on top of the choices you can make in order to be confident that your wishes will be followed at every phase of your life — and perhaps beyond your lifetime.

Let’s say you are thinking about going on an adventure. Where do you want to go? How do you want to get there? Are there any better destinations you might want to consider? Is there a better means of getting you there than the one you originally chose? The only way to know the answers to these questions is to do some research, talk with people who have taken similar trips and, better yet, talk with folks who have helped lots of people take all kinds of journeys. It’s kind of like asking for directions. While I have never regretted asking for them, I have regretted waiting too long to do so. Don’t make that mistake.

Your life is a journey. If you do not make your own choices about the path of your journey, someone else will make those choices for you, and you might not like where you end up. So, learning about estate planning is your key to ending your journey well. The sooner you learn about your estate planning options, the sooner you can implement ways to mitigate or head off problems that are headed your way, even though you don’t know exactly what they are or when they will arrive. Read what you can, talk with your trusted advisors, and put what you learn to work in building the estate plan that will take you to your chosen destination.

SCOTT MAKUAKANE, COUNSELOR AT LAW
Author of Est8Planning for Geniuses
808-587-8227 | maku@est8planning.com
est8planning.com

The first step in the estate planning process is learning. What do you need to learn? I suggest this as your starting point: You need to discover how to stay in control of your stuff while you are able to be in control, as well as how to be sure that that your wishes will…
Tips for Entering Retirement Solo

Approximately 23 million Americans ages 65 and older are single, divorced or widowed, according to the most recent data available from the U.S. Census Bureau (1). That means there are many people in this country who are planning their retirement on their own, without the help of a spouse or partner.

If you are a part of this group, there are unique considerations you may need to keep in mind as you navigate your path to retirement on your own.

■ Align your lifestyle with your savings: Whether it’s traveling, volunteering, visiting family, or working part-time, think about how you want to fill your days — then consider how you’ll fund your new lifestyle.
■ Plan for healthcare expenses: Decide how expenses are handled, including possibly needing long-term care. Depending on your situation, insurance coverage (including Medicare, Medicaid and long-term care insurance), health savings accounts and investment savings may be part of the solution.
■ Update your estate plan: Review and make any necessary adjustments to your estate plan and beneficiaries on key accounts to ensure they align with your wishes. Pick a trusted family member or friend to serve as your financial and healthcare proxy. An attorney can help you assign someone to make decisions for you in the event you can no longer act on your own.
■ Consider your mortgage: Think about whether you’d like to pay it off before or during retirement. Consider your tax strategy, cash flow needs today and down the road, and whether you intend to downsize or move.
■ For those who are divorced: If you were previously married, additional considerations apply as you think about your retirement plans:
• If you receive alimony payments, be aware that the amount you receive may be modified — or even end — once your ex-spouse reaches retirement age. On the other hand, if you are the one who makes alimony payments, make sure you understand how much you’re obligated to continue paying in retirement.
• You may also consider claiming Social Security benefits based on the earnings of your ex-spouse; as early as age 62. However, the longer you delay claiming benefits (up to your full retirement age), the larger your monthly benefit will be. Your claim has no impact on the amount of your ex-spouse’s benefits.
■ For widows and widowers: The following tips can help you as you reframe your retirement years:
• If you were not closely involved in managing household finances, enlist a trusted family member or financial professional to review your current situation. Track down passwords to all your accounts and make an updated plan to address your current needs and retirement goals.
• If you collected an insurance settlement following the passing of your spouse, focus on investing that money effectively to help generate income during your retirement.

You can also claim Social Security survivor benefits if you are at least age 60. How you decide to spend your retirement days is personal — so your retirement plan should be too. Turn to a tax professional and financial advisor for guidance on what steps to take next.

MICHAEL W. K. YEE, CFP,® CFS,® CLTC, CRPC®
1585 Kapiolani Blvd., Ste. 1100, Honolulu, HI 96814
808-952-1240 | michael.w.yee@ampf.com
ameripriseadvisors.com/michael.w.yee
Michael W. K. Yee, CFP®, CFS®, CLTC, CRPC ®, is a Private Wealth Advisor, Certified Financial Planner ™ practitioner, with Ameriprise Financial Services, LLC in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 39 years.

(1) “America’s Families and Living Arrangements: 2022 – Table A1,” United States Census Bureau. Last Revised – November 21, 2022. census.gov/data/tables/2022/demo/families/cps-2022.html.

Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser. Ameriprise Financial Services, LLC. Member FINRA and SIPC. © 2023 Ameriprise Financial, Inc. All rights reserved.

Approximately 23 million Americans ages 65 and older are single, divorced or widowed, according to the most recent data available from the U.S. Census Bureau. That means there are many people in this country who are planning their retirement on their own, without the help of a spouse or partner.
Grief & Bereavement — Part VII

Estate planning attorneys help their clients make sound, intentional decisions relating to their estate plans when they manage to help clients minimize guilt, conflict and anxiety. At the same time, survivors should be allowed experience the natural process of grief.

An estate planning attorney can achieve this balance by:

• Creating a safe, comfortable physical environment
• Utilizing good counseling skills
• Encouraging and facilitating open, transparent and respectful communication among family members and others involved in the estate.

Physical Environment

Facing one’s mortality, visiting with an attorney, worrying about costs and dealing with new terminology can cause clients to experience stress. No one can make sound decisions while under stress. In Janice Mucalov’s article entitled “Lawyers: Gatekeepers for Psychological Issues,” she outlines the precarious nature of this issue.

“Emotionally distressed clients pose greater risks than non-distressed clients,” she writes. “Because emotions cloud their thinking, you may fail to appreciate the nature of the client’s problems, or they may fail to understand your advice.”

Truly, the estate planner’s first effort should be in creating a safe, calm environment for the client. This will reduce stress.

Counseling

Attorneys will want to learn and apply good counseling skills in order to help clients make the best decisions regarding their estate plans. Carl Rogers introduces a particularly useful method of counseling for estate planning in his work On Becoming a Person. He proposes developing and applying three qualities of counseling:

• Meet and interact with each client in counseling with genuineness and congruence.
• Enter each relationship and treat each clientwith unconditional positive regard.
• Enter and engage each counseling session with empathic understanding.

Communication

Estate planning attorneys must emphasize that because life is fluid, a periodic review of the client’s estate plan is essential in order to ensure that the plan remains current. How often the client meets with the attorney depends on the client’s particular situation and need. The process, however, remains constant. Estate planners can provide guides for each client to sit in self-reflection and consider for themselves what is most important with respect to healthcare and quality of life choices, as well as how to plan their financial estate.

STEPHEN B. YIM, ATTORNEY AT LAW
2054 S. Beretania St., Honolulu, HI 96826
808-524-0251 | stephenyimestateplanning.com

Estate planning attorneys help their clients make sound, intentional decisions relating to their estate plans when they manage to help clients minimize guilt, conflict and anxiety. At the same time, survivors should be allowed experience the natural process of grief.
The Great Certainties: Death & Taxes

They say that the only certainties in life are death and taxes. When your life comes to an end, your loved ones can be left facing both certainties at the same time. The good news is that to some extent, we can postpone both, and we can avoid (notice I did not say evade) taxes almost entirely. Postponing death is a matter of staying as healthy as we can through diet, exercise, meditation, having an emotional support system, and maintaining a positive state of mind. Of course, if we don’t look both ways before we cross the street, then all those vegan rice cakes, pickleball games and Ommm sessions go out the window. On the other hand, postponing or avoiding taxes takes a lot less work and can be almost as fun as staying healthy.

The taxes that could take a swipe at your loved ones after you die are mostly these: income tax, capital gains tax, estate tax, and generation-skipping transfer tax. Although the gift tax only applies to transfers made during your lifetime, your lifetime transfers may impact your ultimate estate tax liability. Other taxes may apply as well, but those are the big ones collected by the IRS. Each state also imposes and collects a variety of taxes. Hawai‘i does not officially have a gift tax, but it does collect the other taxes listed above. Hawai‘i’s estate tax takes into account lifetime gifts, so while there is no state gift tax during your lifetime, your estate may have to pay additional Hawai‘i estate taxes that more or less make up for the fact that you did not have to pay Hawai‘i gift tax during your lifetime.

But don’t despair. There are relatively painless ways to minimize or avoid all of these taxes, especially if you would prefer to support your favorite charity instead. When it comes down to it, estate tax can be completely avoided through a combination of taking advantage of the estate tax “coupon” (the amount that you can give away estate tax free) and the unlimited estate tax charitable deduction. If the value of your estate exceeds the coupon amount, you can give the coupon amount to your loved ones (so far, no tax) and any excess to your favorite charity, just like that, you have passed on significant wealth without giving any of it to the tax man.

Disinheriting both the IRS and the State of Hawai‘i means that some assets that could have gone to family will instead go to good causes that will benefit your community, possibly for years after you are gone. Not only that, you will have proven that taxes may not be a “certainty” after all. Your trusted advisors can show you the way.

SCOTT MAKUAKANE, Counselor at Law
Focusing exclusively on estate planning and trust law.
808-587-8227 | maku@est8planning.com
est8planning.com

They say that the only certainties in life are death and taxes. When your life comes to an end, your loved ones can be left facing both certainties at the same time. The good news is that to some extent, we can postpone both, and we can avoid (notice I did not say evade) taxes…
Pay Off Debt or Invest: A Balancing Act

If you find yourself with extra cash — either a lump sum or excess dollars from your monthly paycheck — you may be wondering what to do with it. If you have debt — such as a mortgage or student loans — the prudent option may be to pay off your balances. Yet it might make more sense to put the money to work in the form of investments that have the potential to generate greater returns than the interest rate on your debt.

Deciding what to do requires analysis.

When Paying Down Debt Makes Sense

Depending on your financial circumstances, there may be good reasons to try to get at least some debt off your books. Among the most notable:

• You hold loans that come with high-interest rates. This is especially the case if you’ve accumulated credit card debt, where rates tend to be particularly burdensome.
• You want to improve your credit score. Paying off debts can help boost your credit rating, which may put you in a better position to pursue auto or home loans.
• You feel more comfortable lightening your debt load. It isn’t just a matter of dollars and cents. If the level of debt you hold makes you uneasy, it may be worth lessening the load when you can.

A general rule of thumb is to place a priority on paying off any debts where interest rates reach levels of 7% or greater. These costly loans can be a big drain on your resources and may exceed the returns you’d be able to achieve in a typical mix of investments.

When Investing Makes Sense

In some situations, it may be best to put available dollars to work in investments to help you achieve future goals. Growing wealth can help achieve a more c comfortable future, particularly if:

• Your current debt load is manageable, not placing an undue burden on your overall monthly cash flow situation.
• You are coming up short of a key financial goal that’s important to you, and an infusion of extra cash could help you achieve that goal. For example, you should make a priority of adjusting your budget (and using your extra cash to help make it happen) if you have not been in a financial position to take full advantage of employer-matching contributions to your workplace retirement plan.
• There is a shortfall in your emergency fund. You should have at least three-to-six months’ worth of income set aside in liquid savings to pay the costs of an unforeseen expense.

Finding a Middle Ground

Depending on the circumstances, a case can be made for a “hybrid” approach: using some of the cash to pay down debt while investing the other portion of your funds. Once again, this is a matter of choosing your priorities. You may not be able to accomplish everything you’d like, but you can determine what combination of debt repayment and investing makes the most sense for you, based on the priorities laid out above.

Work with a trusted and experienced financial advisor to ensure any decision you make is consistent with your overall financial plan and investment strategy.

MICHAEL W. K. YEE, CFP,® CFS,® CLTC, CRPC®
1585 Kapiolani Blvd., Ste. 1100, Honolulu, HI 96814
808-952-1240 | michael.w.yee@ampf.com
ameripriseadvisors.com/michael.w.yee
Michael W. K. Yee, CFP®, CFS®, CLTC, CRPC ®, is a Private Wealth Advisor, Certified Financial Planner ™ practitioner, with Ameriprise Financial Services, LLC in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 39 years. Ameriprise Financial and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser. Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. Ameriprise Financial Services, LLC. Member FINRA and SIPC. ©2023 Ameriprise Financial, Inc. All rights reserved.

If you find yourself with extra cash — either a lump sum or excess dollars from your monthly paycheck — you may be wondering what to do with it. If you have debt — such as a mortgage or student loans — the prudent option may be to pay off your balances. Yet it might…