As hard as it is to think about, the end of life will involve your loved ones cleaning out your home. At Merriman, we work with you and your estate planning team to get your financial affairs in order, both to ensure your wishes are met, but also for the ease of those people in your life who are most important to you. Margareta Magnusson recently published a book entitled The Gentle Art of Swedish Death Cleaning: How to Free Yourself and Your Family from a Lifetime of Clutter. Swedish death cleaning? While the sound of it may make you a little nervous, it’s a useful tool to cut down on possessions in a service to your loved ones and a fulfillment of that same goal.
The basics of Swedish death cleaning involve slowly giving away or selling the possessions that you don’t need. While it may sound like any other decluttering program, it will help you change your thought process around each item to focus on how it factors into your life now, and how it will factor into your loved ones’ lives later. Instead of asking yourself whether you like something and want to keep it for yourself, you’ll start asking whether you need things now and whether others will want and/or need them later.
Magnusson suggests starting with something easy, like your closet, where it’s quick to see what you really use and don’t use. If you’re not wearing it now, it’s time to donate it, gift it to someone important to you, or sell it. Avoid starting in an area of the house where you’ll find lots of sentimental items, like pictures or souvenirs, and focus on those areas filled with less special “stuff” first. You’ll get in the habit of reframing your decisions around the items to fit your end goal, making things easier on your loved ones.
As you get into the more sentimental and emotional areas of your home – photo albums, high school memorabilia, etc. – Magnusson suggests answering the question, “Will anyone be happier if I save this?” While your high school yearbook may bring back fond memories, it may not provide much joy to your children or grandchildren. These areas of the home may also be filled with items you want to end up with specific family members or friends. Now is a good time to do one of two things. Either give special items to loved ones now, maybe for a birthday or holiday gift, or “just because,” or create a list of items you wish to distribute at the end of your life and include this with your estate planning documents.
Here at Merriman, we do our best to help you get the necessary legal documents in place to ensure a smooth transfer of your assets to your loved ones, family, and/or charities. We don’t often talk about the way your material possessions can fit into this. You may own heirloom furniture or a set of china from generations ago that you have specific wishes for.
As you get your other estate planning documents in order, consider starting your “gifts list” for your possessions as well. This clean-out process is also a great opportunity for you to gather important digital information, like login details and passwords, as well as the most important financial information and contacts your loved ones will need when you pass. Keep these documents in a safe place and let relevant people, like the executor of your estate, know where they can find it. Doing these things now can be a true gift to your loved ones who will want to focus on remembering you and your life, not cleaning out your closets or tracking down your financial planner or attorney. You can even consider going a step further and planning a pre-paid funeral, taking yet another task away from your loved ones.
It may be hard or feel morbid, but planning for the end of one’s life can offer a feeling of peace for yourself and your family. We’re here to help you ensure your wishes are met, both for your financial assets, real estate, or material possessions. Let us know if you have questions about getting planning for your legacy. We may just offer a few decluttering tips in the process!
What’s the best asset mix for you? You already know that your two major options are stocks and bonds. The choice between them represents a basic tradeoff: growth vs. stability. Investing in stocks is more likely to produce higher returns than investing in bonds, but with more volatility. (more…)
As we get to know our clients, we always ask about the goals they have for their children and grandchildren. Over and over we hear a variation on a theme: I want them to have enough to do something, but not enough to do nothing. How do we go about teaching our kids and grandkids the value of a dollar, while giving them opportunities to have fun and enjoy what financial freedom can give? Moreover, how do we teach them about credit and borrowing money in a way that will encourage them to only spend what they have, and no more? We’ve found some useful tools to help young people learn the skills of budgeting and spending wisely, both with cash and credit.
To teach your teenager about spending, consider the American Express Serve prepaid debit card. The card requires no credit check or minimum balance, and has minimal fees. Parents can set up an account in their name, called a “Master Account,” and from there create up to four subaccounts for children aged 13 or older. Your child is issued a personal debit card with access to the funds in their subaccount, which can be used at merchants that accept American Express, as well as ATMs. They can also request funds from you, as well as send funds back from their account to yours.
Parents can view their child’s transaction history and set spending limits. Parents and children both have access to budgeting tools through American Express to see transactions divided into categories, or view each category as a percentage of their total spending. This is a great way to give kids power over how their allowance is spent, while being able to oversee spending and encourage good habits. These prepaid accounts can’t be overdrawn, offering another safeguard, and they do not affect the cardholder’s credit history.
Consider contacting your local credit union to see if they offer similar products with no fees.
What About Credit?
One of the best ways to teach your kids about credit, while also helping them build their credit history, is a secured credit card. Many major banks offer secured credit cards, which come with many of the same perks and services as traditional credit cards. Cardholders deposit funds into a checking or savings account. That deposit is then put on hold by the bank and used to secure the credit line on your credit card. A $300 deposit, for example, would become equivalent to a $300 credit line. The held funds continue to earn interest in the depository account, but can be spent using the secured credit card. Minimum payments are due monthly, and balances carried forward each month accrue interest charges just like with a traditional credit card. Balances and payments on a secured credit card are reported to the three credit bureaus, so making on-time payments is just as important.
After holding a secured card and making regular purchases and payments for a year, many banks will reassess the cardholder’s credit and, if strong enough, free up the funds used to secure the card, converting the account to a traditional card issued on credit. This type of card offers kids the ability to take time to learn about using credit cards, including the importance of making payments on time, as well as the process of billing cycles, interest charges, and spending only what they can afford to pay off each month. Some secured cards even offer rewards like traditional cards.
For something more traditional, college-age kids may consider the Discover it® for Students Card, which offers credit tracking and a reward for a good report card. A GPA of 3.0 or higher each school year will earn you $20 in rewards, and certain categories earn up to 5% cash back throughout the year. This card is also a great option for college kids who might be spending a semester studying abroad, as it charges no foreign transaction fee. Be sure to remind your student that while they may not see a fee for using their card abroad, they may still get less-than-favorable exchange rates on currency when using any credit card in another country. Lastly, in the event the card is misplaced, your student can freeze the card using an on/off feature accessible online and through the mobile app.
Cash and credit are both important tools for young people to feel comfortable using, and offering kids the freedom and responsibility to use them from an early age can make a huge difference in how careful they are with money down the road.
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