Military Officer - September 2006 - (Page 40) financialforum Financially Fit Staying healthy requires regular checkups — and so does being financially sound. Phil Dyer, CFP, explains how to ensure your finances are in good shape, even if you aren’t. W Do You Need a Credit Shelter Trust? ■ If you are married with combined household assets (including face value of life insurance policies) in excess of $2 million, consider a credit shelter trust (also called an AB Trust or Bypass Trust) for you and your spouse. e all know regular medical and dental checkups are a good idea. Sadly, far too many of us fail to get a routine financial checkup to ensure our finances remain healthy. There have been numerous tax, estate tax, and retirement distribution rule changes in the past five years, so a financial checkup is critical. Fall is a great time for a financial physical, because there is still enough time to make adjustments before the end of the year. Consider the following action items as part of your review: Income taxes. Has your tax situation changed considerably in the past year or two? Have you retired from the military or a second career, paid off a home, gone into an assisted-living or retirement community, made large tax-deductible donations, started required minimum distributions (RMDs) from retirement plans, or moved to a new state? If so, reexamine your income tax withholding at both the state and federal levels to ensure you aren’t having too much or too little withheld. Investments. When was the last time you rebalanced your investment portfolio? Certain sectors of the broad markets, such as small company, real estate, international, energy and natural resources, and emerging market stocks have enjoyed a huge run-up in the past several years. Sticking with a disciplined asset allocation strategy ensures you sell off sectors that have gotten too large within the portfolio and move the money to other areas that might be somewhat out of favor. Profes- sional money managers use such asset allocation strategies to ensure they buy high and sell low — shouldn’t you? Retirement planning. Did you fully fund your retirement plan(s) this year? Are you eligible for a Roth IRA or Roth IRA conversion? If you started withdrawing retirement assets, did you adjust your income-tax withholding? Have you taken your 2006 RMD yet? Do all of your retirement accounts have the proper primary and secondary beneficiary designations on them? Have you explored the need for and the advantages and disadvantages of long term care insurance? Estate planning. Do you have a basic estate plan, including wills, living wills, and health care powers of attorney? If so, has it been updated in the past five years? Are you comfortable with your choices for executor, guardians, attorneys, etcetera? Should you consider a revocable living trust? If you are in a second marriage, have you and your spouse discussed qualified terminable interest trust arrangements to ensure assets go where you want them to go? These issues can seem overwhelming, but getting in the habit of an annual financial checkup can keep your money healthy and deliver financial peace of mind. MO — Former Army Capt. Phil Dyer, CFP®, is deputy director for financial education, Benefits Information. To find a financial planner near you, contact Garrett Planning Network at (866) MOAA-GPN (662-2476) or www.moaa .org/garrett, or visit www.moaa.org/financial center for other resources. PHOTO: GREG SCHALER 40 MILITARY OFFICER SEPTEMBER 2006 http://www.moaa.org/garrett http://www.moaa.org/garrett http://www.moaa.org/financialcenter http://www.moaa.org/financialcenter
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