Financial Tips for Seniors

Accountants are trusted advisors for their clients—and especially for their senior citizen clients. These people may have been with you for many years, and now, in their retirement, they need you more than ever. With a mix of traditional savings, pension, and 401(k) and IRA accounts, these clients have to make their money last. Here's a chance to advise them on prudent behavior and serve as a gatekeeper for their financial lives.

Help them avoid the incompetent and crooked. But be wary of retirement planning services and estate planners who send invitations to free lunch seminars geared to seniors. A survey by AARP of more than 1,000 people aged 55 and over found that many who attended seminars on retirement and estate planning were "pitched investments that were unsuitable for them or were asked for information that could expose them to financial fraud."

The invitations consistently offer the same enticements: "a free gourmet meal, tips on how to earn excellent returns on your investments, eliminate market risk, grow your retirement funds, and spouses are urged to attend. These words should be red flags for investors," cautions the North American Securities Administrators Association (NASAA) on its Web site, nasaa.org. (NASAA is an international organization devoted to investor protection.)

Check that their will provisions and beneficiary designations are up to date. Review your clients' overall estate plans. Remind your clients that tax laws and other laws relating to property change—as do their circumstances and beneficiaries.

How long has it been since your clients last checked your will? Are all named beneficiaries and executors still alive? Rather than have property eventually wind up with persons in whom they aren't particularly interested, encourage your clients to name contingent beneficiaries. Why run the risk that a court might have to name a substitute if your executor dies or becomes disabled; name alternative executors. (Although you can't give legal advice unless you're a lawyer, you can encourage your clients to seek proper legal advice and even refer them to a qualified attorney.)

Remind your clients to update their beneficiary designations for insurance policies and 401(k)s, 403(b)s, IRAs and other retirement plans. Otherwise, proceeds might wind up with a former spouse or someone now considered unworthy. And it can cause problems later if it turns out that named beneficiaries had predeceased the owner.

Advise your clients to assemble the information for a non-binding document known in legal lingo as a "final letter of instructions." The letter is an informal inventory of your financial records. This includes key names and numbers, and where you store insurance policies, bank accounts, tax info, and other papers. The list helps heirs locate assets and save on administrative expenses. Advise clients to keep the letter up-to-date and accessible.

Living trusts. Consider the use of a living trust—and advise your clients to seek out an estate planning attorney to discuss one. With this kind of trust (also known as a "grantor" or "revocable" trust), it is possible to transfer property in a simple and relatively painless way that avoids some of the headache of probate. Unlike other types of trusts that are designed primarily to save income or estate taxes, you gain no income or estate tax advantages with a living trust. But assets channeled into a living trust go directly to your heirs. Thus, those assets usually escape what can be lengthy and costly proceedings.

By giving your clients good references and showing a wide interest in their financial situation, you provide additional services and ensure long-term loyalty.

About the author:

Julian Block writes and practices law in Larchmont, New York, and was formerly with the IRS as a special agent (criminal investigator) and an attorney. More on this topic is available from "Julian Block's Year Round Tax Strategies," available at julianblocktaxexpert.com.

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