Preparing for the Unexpected: Estate Planning Tips

Consider the following six tips to setting up a comprehensive estate plan to help protect your estate, assets, children, and legacy and to ensure what is left to your loved ones is what you originally intended.

1) If you are single and over the age of 18, consider a…

Will (last will and testament): This is a written document which leaves your estate to named persons or entities, including portions or percentages of the estate, specific gifts, trusts for management and future distribution of all or a portion of the estate. A will typically names an executor to manage the estate as well as states the authority and obligations of the executor in the management and distribution of the estate and sometimes gives funeral and/or burial instructions. Assets in a will can include real estate, cars, bank accounts, stocks and bonds.

If you are in a relationship but unmarried, you should consider…

Adjustments to your will: If you are in a relationship but unmarried, be sure to 1) set up a will, if you haven’t already, if you want your life partner (unmarried) to inherit your possessions OR 2) update your will to include your unmarried life partner, otherwise it will go to your closest relatives as directed by state law.

Trust: A trust is a legal entity that can hold title to property for the benefit of one of more persons or entities. Contrary to popular belief, trusts are not just for the affluent. Setting up a trust is an excellent way to control what happens to your estate, regardless of its size, to prevent the frustrating and expensive probate process.

2) If you are married, consider…

Living Trust: One of the most valuable benefits of a living trust is that it allows for ease in transition of your estate and outlines how you would like your affairs handled if you become incapacitated. You and your spouse are typically the primary beneficiaries of the trust with beneficiaries, such as children, named after your deaths. A living trust allows you to retain control of your assets as long as you are able to manage your own affairs. In a trust you are able to address all of your significant property in one document and the desired transfer/distribution of your property upon your passing. When set up properly, a living trust can protect your estate from probate, the process a will may undergo to prove its validity, and potentially save thousands of dollars in attorney fees to settle the estate, as well as time.

3) If you have children, consider…

Guardianship: In order to prevent confusion as to who will take care of your child or children after your passing, it is important to establish guardianship of your children in the event of you and your spouse’s passing, which can be done in a will. Have a qualified advisor help you think this decision through, since it can have a huge impact on the lives of your children.

4) If you are retired or getting ready to retire, consider…

Financial contracts (beneficiary designations): More than likely you’ve accumulated assets such as annuities, life insurance, and IRAs that are considered financial contracts. These types of assets are not considered to be part of a probate estate and are generally not accounted for in a will. With that said, you need to designate beneficiaries with your custodian and check to make sure that the designation is accepted and will produce your desired result.

If for some reason your IRA custodian is unable to identify your beneficiary, or if the amount of the account value you would like passed on to your beneficiaries isn’t what was anticipated (i.e. account value dropped and the specific monetary amounts you’d required to be left are no longer feasible), this ambiguity can result in legal fees, time and ultimately not leaving what you intended to your heirs. Instead consider leaving a percentage to beneficiaries. No matter what the state of the economy or your account balance, a percentage is always a definable amount.

Estate planning for your retirement accounts (reduce tax liabilities): Most people forget to do estate planning for traditional IRAs, 401(k)s and other types of retirement accounts. These dollars have typically never been taxed and there are changes to law that now afford you the opportunity to control how and when they are taxed. Tools like the multi-generational IRA and the Roth IRA can drastically reduce the income tax impact your beneficiaries will face when they inherit these accounts.

Long-term care insurance: With Americans living longer, the risk of outliving one’s life savings due to the high costs of medical and long-term care is a tough reality for many. One way to combat this situation is to explore the option of long-term care insurance. This type of insurance is designed to give coverage for necessary medical or personal care services provided, such as a nursing home or in-home care.

5) If you or a loved one is in a nursing home and you still have assets, consider…

Nursing home or assisted living plan: There may be government benefits available to help pay for the high cost of care while retaining some of your life savings. This can be especially important if there is still a healthy spouse living at home or if there is an interest in passing on some of your life savings to your heirs. A qualified advisor can explain options such as Medicaid or the Veteran’s Aid and Attendance Benefits Program and help you determine if you are eligible for such programs.

6) Regardless of your stage of life and where you are in the estate planning process, consider…

Durable power of attorney for health care (living will): These are legally qualified advance directives, giving instructions as to what actions should be taken for your healthcare in the event you are no longer able to make decisions due to illness or incapacitation. Typically, if you do not have a durable power of attorney for health care it can cause problems in the decision making process, if needed, and the decision making will be left to your parents, children or next closest living relative, rather than honoring your wishes.

Tips for Estate Planning Success

Once you have an understanding of what you need to meet your estate planning needs, you need to complete your estate plan ensuring it’s legally binding. Consider the following tips for estate planning success:

1) Pick an estate planning team.

You will need a qualified team of experts to provide you with the counsel and tools you need to implement a comprehensive estate plan. Be sure to meet with a few individuals to ensure you feel comfortable with and confident in the persons you select.

Be sure your team takes a comprehensive approach to your estate plan and that all areas are working together and in your best interest.

Seek the advice of more than one expert. Ideally, you should receive counsel from an estate planning attorney, tax accountant, financial planner, and insurance agent. An attorney should be put in charge of drafting a will, creating a trust, or drafting a Power of Attorney. A tax accountant can help you figure out what your estate’s tax bill will be and can explore the advantages of tax-deferred investment strategies with you. A financial planner can recommend investments that are best suited to your estate plan and can tell you how your retirement income will be distributed in retirement, as well as an inheritance after your passing. Lastly, an insurance agent can help you with matters involving life insurance, disability coverage, and more.

Don’t attempt to set up your own plan. While there is a lot of information available in books and on the Internet, I do not advise setting up your estate plan on your own. The estate planning process is a tricky thing to attempt without the help of one or more professionals. By using information you pull from the Internet or read in a book, you run the risk of missing important changes to laws governing estate planning. An attorney is responsible for keeping track of any relevant changes and how they will impact your estate plan. Also, know that a small mistake, like a wrong word, in one of your documents can potentially change the way that the court interprets what you meant.

2) Explain your arrangements to those close to you and tell them where they can locate all-important documents, should they become necessary.

One complication that many families face when they have lost a loved one and are trying to take care of final arrangements is locating the appropriate documents. Discuss your estate plan with your loved ones. Be clear about your intentions and be sure to let several trusted family members know where your documents are stored.

Don’t keep your estate documents in a safe-deposit box if it’s just in your name. This delays the process as it takes a court order to open one after the owner dies. Key information should be stored in a fireproof box in their homes or in an airtight bag in the freezer to protect them from fire or flood.

Telling your family about the arrangements you have made will help to dispel any potential conflicts after you are gone. Inheritance can be a loaded issue, and to help promote family harmony after your passing, it is best to let the individuals affected know your plans. Of course, use your discretion and only reveal to them what you wish. I always recommend that my clients be open and honest with loved ones about their wishes. Explaining your plan openly gives you the opportunity to clear up any misunderstandings and to answer any questions your family may have. I usually find that by eliminating surprises you also help to eliminate fights.

3) Evaluate your plan on an annual basis and when you have a life-changing event.

Once you have completed all these steps and all documents are up-to-date, be sure to keep them current. It is very important that you evaluate your estate plan with your team on an annual basis AND when a life-changing event happens. Re-evaluate your estate plan documents to make sure they are up-to-date and that you have the best plan for the unexpected. Also, be sure your estate plan is tailored to fit your current situation and goals.

Estate planning is not a one-time job. There are a number of life changes that call for a review of your plan. Some of these changes, such as marriage, divorce, birth or death are all life events that warrant a reevaluation of your estate plan. Work with a professional to be sure your plan is current and always reflects your final wishes.


– What is probate, how can this process impact your estate and how can you protect your estate from it?

– What types of “life” events should cause you to re-evaluate your estate and retirement plan?

– What is the difference between a will and living will?

– What is the difference between a trust and a living trust?

– How can you pass some of your assets onto a charity efficiently and what is the process for doing so?

– What are some things to consider when selecting guardians for your children?


Chad’s Interview with the Edwardsville Intelligencer; article titled "Double-Dip Recession on the Horizon?"

St. Louis County foreclosures nearly double and Missouri’s unemployment reaches 9.1 percent, St. Louis advisor addresses what you can do now to prepare your finances for a potential second-wave of economic hardship

The fear of a “double-dip” recession is back. The Federal Reserve recently issued a cautious outlook, noting that the economic recovery had “slowed in recent months. “ This, paired with high unemployment, growing federal debt, the possibility of increased taxes, reduced consumer spending, the ongoing foreclosure crisis, and more, has led some analysts to question whether the recovery will hold. With St. Louis County foreclosure numbers nearly doubling since 2009 and the state of Missouri’s unemployment rate nearing the national average of 9.5 percent, the fear of a “double dip” recession is a serious concern here at home.

“Despite the slowing economy, the odds are still in favor that the recovery will continue,” said Chad Slagle, chief financial advisor and president of Slagle Financial, LLC, an independent financial and retirement advisory firm based in St. Louis. “But err on the side of caution! What we need to make sure of now is that we have learned from our experiences in the last recession, that our previous vulnerabilities have been addressed, and that our financial affairs are protected and positioned to withstand another dip.” Slagle has identified the five most prevalent financial hardships experienced as a result of the last recession, and offered insights and advice on what you can do today to reduce the potentially negative repercussions a second recession may bring.

• Make your mortgage manageable. The mortgage meltdown and falling home prices had a lot to do with the first tumble into recession. However, today, we are experiencing record low interest rates, yielding the opportunity for many to refinance their homes to receive more manageable monthly payments. If you have been struggling with paying your mortgage due to unemployment, the Obama administration approved a bill on August 11 to provide $3 billion to unemployed homeowners facing foreclosure. $2 billion will go to the 17 states that have unemployment rates higher than the national average of 9.5 percent, and the other $1 billion will go to a new program, being run by the Department of Housing and Urban Development, to provide homeowners with emergency, zero interest loans, up to $50,000 for two years.

• Invest based on your risk tolerance. Due to the first recession, many people lost money in investments that they needed to access in the near future. If you are relying on money for retirement or to put your children through college within the next few years, then it should really be invested conservatively. Take into account your age and timeline to retirement, as this plays a part in your ability to “ride out” the stock market. Countless people have had to postpone retirement or even come out of retirement to go back to work because of the 2008 recession. While ideally you don’t want to expose your finances to any unnecessary risks, risk can also provide upside potential. At the minimum, be sure that a portion of your investable assets are liquid and/or invested conservatively. You should have at least six months of living expenses readily accessible in the event of an emergency, and for your longer-term investments, a general rule of thumb, is the ‘Rule of 100.’ Simply stated take your age and subtract it from 100. The result is the percentage that you could have exposed to higher risk investments, and the remainder should be placed in more conservative accounts. While it’s not exact science, at least it’s a place to start.

• Explore “non-correlated” investment options. Never place all of your eggs in one basket. Many who experienced substantial loss during the last recession did not have proper diversification of their financial accounts. There are numerous financial instruments and investment vehicles that are considered “non-correlated”, which means they are not tied to the performance of the stock market. Take an interest in interest-bearing accounts, such as CDs, savings bonds, savings accounts, and money market accounts. However, it is important to note that although you get to “keep” your money when investing in interest-bearing accounts, today’s low interest rates work two ways. You can borrow at low interest rates, but the return on interest bearing accounts will also be low. While you can keep what you have, interest accounts will not help you to significantly build your wealth. Additionally, look at other options such as commodities, insurance products, like fixed annuities, or even non-traditional or alternative investments. Diversification is key to not allowing any significant shift in the economy to put a halt to your future financial or retirement dreams. But if you’re getting creative with your investment strategy, be sure to seek assistance from a qualified advisor.

• Plan for your retirement. With the recession came changes to how we save for retirement. Many employers discontinued contributing to 401(k) s, pensions became harder to fund, and investments linked to troubled companies disappeared. Government funded Social Security has experienced its share of difficulties because of the recession as the lack of payroll taxes due to high unemployment has temporarily caused the program to run at a deficit. It is becoming more apparent that you have to be responsible for your own retirement savings, and as such, should place your savings in a safe and secure financial instrument. As of this year, Roth IRAs are available to anyone, no matter their income. If you convert your traditional retirement plan before the end of year, you can do so at this year’s tax rates. In the future, you may be paying a higher income tax rate on the conversion amount, which could potentially be much more expensive. As far as pensions are concerned, don’t be so sure that you’re safe, especially when it comes to public pensions. Even before the recession, pensions were troubled, and now major companies (including GM and Chrysler) are unsure of what the future holds.

• Be tax conscious. Don’t add insult to injury and put your money into an account that will nearly triple in tax liabilities next year if you cannot afford the bite. Tax rates for dividends and short-term capital gains will be taxed at a tax-payer’s ordinary income tax rate next year, up from the 15 percent we’ve seen in recent years, which could make the tax due as high as 39.6 percent. Long-term capital gains will increase to 20 percent from 15 percent, and more changes are expected to the tax code towards the end of this year. You may want to consider paying taxes on tax-deferred investments now, such as converting your retirement plan to a Roth or cashing in long-term investments to lock in today’s rates. For the future, seek tax advantageous options that allow for you to pay taxes only when the investment is realized or money is withdrawn, rather than annually. Examples of tax advantageous investments include municipal bonds, fixed annuities and treasury bills.

Slagle concluded, “If you include early projections for the last quarter, we’ve seen positive economic growth over the last four quarters, which would mean that we are technically out of a recession. Some economists believe that due to the lack of a quick recovery and combined lingering problems, such as unemployment and foreclosures, we could see another recession by as early as next year. Of course, other economists argue that a recovery is still underway, and although slow, it is steady. The bottom line is—we need to take action to ensure that we are prepared for a possible “double-dip” recession and that our finances are protected from market and any economic volatility.”

For more information on how to protect your finances from a double-dip recession and to set up an interview with Chad Slagle, please contact Alex Timeus at (702) 685-7437 or


How To Keep Your Retirement Savings Plans Working, Even If You Are Not

It’s unavoidable! You turn to the news and there is another round of announcements about the rising unemployment rate, company layoffs or massive corporate cutbacks.

People spend decades contributing to their 401(k) with the anticipation of not having to touch it until they are ready to retire. It’s times like this when that plan goes awry because they were forced to retire, laid off, or find themselves needing to withdraw from their retirement account early, that they must have a solid understanding of how that decision could seriously impact their financial future.

We are all feeling the effects of this ailing economy, unemployed or not. Now it the time to have a plan and make decisions regarding your 401(k) or IRA to ensure it’s working for you. Here are some essential tips for understanding your retirement account and the options available to you…

1) Understand Loans & 401(k) s

If you are employed and considering taking a loan from your 401(K) to get through the “hard times”, understand that you will have to pay it back with interest (typically prime plus one). Although you pay the interest to yourself, as the monies borrowed are not growing for retirement while out of the account, this money is earmarked for retirement. Don’t shortcut the retirement years for quick cash today. If no longer with an employer and you have taken a loan from your account, you will need to pay it back within 60 days of termination to avoid paying income taxes and early withdrawal fees. If you can’t repay the loan, then it is considered defaulted, and you will be taxed on the outstanding balance, as well as assessed an early withdrawal penalty if you are not at least age 59 1/2. A loan is not transferable and cannot be rolled over to another plan.

2) Understand Your Current Account Value

On average, 401(k) account balances declined 18% in 2008, with reports as high as double, or more, in total account value loss for Americans. Since these contributions were done pre-income tax, rolling over a 401(k) now, at a reduced account value, does not provide you any tax credit. If you were hoping to write it off, think again – since no taxes were paid on the amount contributed to the account in the first place, there is no tax break for “realizing” the loss through account reallocation or rollover.

3) Review Your Options

When leaving a company, don’t make any hasty decisions concerning your financial future. Evaluate all of your options and determine which makes the most sense for you. Rolling over your 401(k) to an IRA may not be the best option if you intend to find additional work. Rather you may want to consider rolling over your 401(k) to the new company sponsored plan and take advantage of any benefits your new employer offers, such as fund matching. Employer sponsored plans offer more flexibility for early withdrawal, loans, lower minimum balance requirements and higher before tax contributions.

If rolling over to an IRA is the best decision, understand which type makes the most sense for you. Traditional IRAs allow for tax deductible contributions. Withdrawals can begin by age 59 ½ without penalty, however before 59 ½ there is a 10% early withdrawal penalty on the amount taken prematurely. Withdrawals from IRAs are mandatory by 70 ½, even if the money is not yet needed for retirement. Taxes are paid on the withdrawal amounts. There are a number of investment options within an IRA, allowing one to invest according to their risk tolerance and time horizon.

Roth IRAs are gaining in popularity, as there is no mandatory distribution age, all earnings and principal are 100% tax free and funds within a Roth IRA can be invested in a variety of ways, again, ensuring one invests according to their risk tolerance and time horizon. Although contributions to a Roth IRA are not tax deductible, some experts believe paying taxes on the amount invested today may prove to be profitable decision, as tax rates are likely to increase in the future. Although there are income restrictions for Roth conversions, available only to single-filers making up to $95,000 or married couples making a combined maximum of $150,000 annually, starting next year in 2010 these restrictions are lifted. If considering rolling to a Roth IRA, now may be a good time — account values are likely down and the income tax rates are still relatively low.


Understanding Roth IRAs

Since the invention of the Roth IRA in 1997, retirement savers and financial advisors alike have been thrilled at the notion of a retirement savings vehicle that allows money to compound tax-free. The Roth gained even more popularity with the New Year when the tax laws surrounding the Roth changed making it available for all retirement savers, no matter their income. Prior to 2010, only individuals earning less than $100,000, single or married filing jointly, were allowed to convert to Roth IRAs. As of January 1, 2010, anyone saving for retirement can switch to a Roth. Who wouldn’t want to pay taxes up front and lock in today’s lower rates rather than wait until it’s time to withdraw in retirement and pay taxes at the future rates?

Although the hype and fascination of converting to a Roth is a popular strategy of today, many are not taking the time to understand whether or not converting makes sense for them and their situation. A Roth can be a powerful retirement savings tool, but understand that it may not be for everyone. The following four problems converters should understand and avoid in order to get the most out of their potential Roth IRA conversion:

Problem # 1: Converted, even if it’s not right for your situation

Just because you’re able to convert to a Roth doesn’t mean you should. For instance, taxes are due on the amount of money converted, although you can pay off this liability over a two-year period, it could still be an expensive decision. Dipping into your retirement account to afford conversion taxes should be avoided at all costs. Not only can you get penalized for doing so (this is addressed a little later), but also, you’ll run down your other accounts by taking money out to pay the taxes.

You should also consider your income tax bracket in retirement. If it’s going to be considerably lower then converting to a Roth might not make sense, since taxes owed are based on your tax bracket, and you might pay more today on the conversion than you’d pay on the withdrawal of funds in retirement – if you are in a lower tax bracket.

Problem #2: Converted the wrong way

A Roth conversion has penalty traps that result in converting the wrong way, but can be avoided if you’re aware of them.

If you converted but failed to do a direct transfer of your traditional IRA or 401(k), you will likely have to pay an early withdrawal penalty if you’re under the age of 59 ½. Also, if a check is issued in your name and you deposit the money into the new Roth account yourself, you’ll have to pay a 20 percent withholding tax. If your IRA or 401(k) custodian doesn’t allow a direct transfer, different rules apply (this is covered under Problem #3).

Also, if you rolled over your Required Minimum Distribution to a Roth, and are required to take an RMD from your traditional IRA or 401(k) the year you convert to a Roth, be sure to not rollover the RMD. If you do convert the RMD, you may go over the amount you’re allowed to contribute every year, which would result in a 6 percent excise tax for every year the excess amount stays in the account.

Problem #3: Converted ineligible funds

In addition to RMDs, there are a few other ways you’d get penalized for converting ineligible funds.

Waiting too long to put funds into a Roth makes them ineligible for conversion. The 60 day rollover mistake happens when a plan, such as an employer sponsored plan, does not allow a trustee-to-trustee transfer, aka a direct transfer, and the account owner is given a check. An account owner has 60 days to put the funds into another retirement account and after that they’re no longer viable for conversion.

As mentioned before, if you decide to withdraw funds from an existing retirement savings account to pay for conversion taxes, you will be hit with a 10 percent penalty tax as well as income tax. Pay the taxes out of pocket to avoid these hefty fees.

Problem #4: Converted without updating estate documents

Making sure your estate documents are up-to-date is crucial to the proper execution of your estate, especially when passing on your retirement accounts to beneficiaries. Failing to do so can result in your estate going through probate and paying estate taxes, ultimately leaving your heirs with exactly what you did not intend.

Be sure to obtain and complete beneficiary forms immediately after the conversion. Your Roth custodian should have the beneficiary designation forms you need, and you will need to fill them out and sign them in order for your funds to end up in the right hands after you pass. These forms don’t transfer from one account to the next.

If you weren’t specific in naming (designating) beneficiaries, there’s a good chance that your beneficiaries will end up in court and that means legal fees and stress.

As with any major financial decision, be sure to consult a qualified professional before converting some or all of your retirement savings into a Roth IRA. While you can undo the conversion if you made a mistake, it is best to do your research in the beginning so you don’t have to backtrack.


Chad Slagle is founder and president of Slagle Financial, an independent financial advisory firm. Slagle is an Investment Advisor Representative of Slagle Financial, LLC, a Registered Investment Advisor, and holds all required securities and insurance licenses to offer comprehensive financial solutions. With 14 years of experience in the financial services industry, Slagle counsels on a broad range of topics including retirement and estate planning, 401(k) rollovers, investment planning, and college funding strategies. He and his wife April, along with their four children, reside in Edwardsville. Slagle financial has offices in Edwardsville and Jacksonville, Illinois, as well as St. Louis, Missouri. For more information about Chad Slagle and Slagle Financial, please visit

Chad Slagle is an Investment Advisor Representative of Slagle Financial LLC, a Registered Investment Advisor.