Tag: financial literacy

What Happens When You Don’t Have a Will and Power of Attorney?

Andrew Steffensmeier

Specializes in small business preparation and planning, investment advisory services, business tax planning services

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Do you have a will and power of attorney? If not, you’re not alone. According to recent research, at least 68% of Americans do not have a will yet, with nearly 71.6% of those who do, having one that is not fully up-to-date. AARP adds that only slightly more than half of U.S. adults have a power of attorney, with 83% of those being 72 or older and only 41% in the Millennial generation. 

This suggests that most Americans are not adequately prepared for the future and what may come of it. This can become a problem for family and friends who will not have as easy of a time settling your affairs for you after your passing or while you are unable to care for yourself.

To stress the importance of having a will and power of attorney, we’ll cover what they are and what happens when you don’t have them. 

What Is a Will and Power of Attorney? 

A will is a legal document that explains what should happen with your property and any children after you pass away. For those who have minors in their care, it is also a chance to identify who you want to care for your children.

The document ensures your wishes are met and allows you to be very clear about what you want to be done with your assets. This way, there’s no room for misinterpretation or conflict from outside sources.

A power of attorney refers to a legal document that gives another person the authority to act for someone else in case of an emergency. For instance, many people enlist someone close to them, like a spouse or relative, to be their power of attorney. However, you should not pick someone simply because they are close to you but because you fully believe they will act in your best interests after you’re gone.

Your power of attorney will be able to make decisions about financial, medical, or property. This power will remain in effect during a medical emergency or if the person becomes disabled and can no longer make decisions on their own.

How Do They Work Together?

Your power of attorney provides you protection during your lifetime — your will provides protection after you pass away. According to LegalZoom, “Together they provide an ongoing umbrella of protection for your assets.”

Although they don’t have any effect on each other, they do go hand in hand because they ensure your wishes are met while living and after passing, protecting both your family and assets in the process. 

For instance, many experts suggest having a living will (similar to a will but specific to you still being alive but unable to make decisions) and a power of attorney. This way, the will can address scenarios such as:

  • Resuscitation (CPR & DNR)
  • Comfort Care (Palliative Care) & Pain Management
  • Tube Feeding
  • Mechanical Ventilation
  • Organ/Tissue Donations
  • Antibiotics/Antivirals

At this time, your power of attorney will be hard at work acting in your best interests regarding any additional financial, property, and business-related decisions that may need to be addressed. Having both at the same time allows your interests to be served at every angle without disruptions getting in the way. 

Downsides of Not Having a Will and Power of Attorney  

Although many of us don’t think much about not having a will and power of attorney can have on those around us, it can actually bring more stress and trouble than you may think. A will and power attorney ensures that your wishes are followed. Without them, those around you won’t have direction and may struggle to fulfill your wishes. 

Here are more specific downsides to not having either. 

Without a Will

If you don’t organize a will before your passing, the following issues can arise:

  1. Can’t be sure your wishes will be met 
  2. Can be a headache for your heirs after you pass 
  3. Estranged relatives or people you don’t want to receive any of your assets may be able to get them
  4. Your children’s care will be left up to the court
  5. Can lead to delays, more expenses, and even property loss

Without a Power of Attorney

If you don’t take the time to enlist a power of attorney, you also risk the following problems:

  1. The process of appointing someone to become a caretaker is much more strenuous and time-consuming. Loved ones may be drained of their time and money in the meantime.
  2. There’s no say in whom the court appoints (can also lead to additional fees and expenses)
  3. The person chosen may not be fully acquainted with your wishes, so they may not be fully qualified to represent your needs. For instance, a court-appointed POA could misread, and therefore, misrepresent you in major life decisions. 

Don’t Know Where to Begin? We Can Help

Despite being able to write your will as early as 18, many Americans put it off until they’re older — and some have yet to organize one even at 55 or older. According to Caring, at least 60% of adults 55 or older organized a will in 2019, but that figure has since dropped significantly to only about 44%. Although the reason is unclear, the statistics suggest the need for more awareness about the importance of protecting your family and assets. 

Even better, easy access to advisors who can assist you throughout the entire process can be beneficial. This way, you can rest assured that your wishes will be followed if anything were to happen to you. McMill CPAs & Advisors are the most trusted CPAs and advisors in Norfolk, NE, with extensive experience helping residents draft these documents when they don’t know where to begin.

Don’t risk waiting another minute to get your wishes on paper. Contact us for more insight on how we can help you prepare for the future with a will and power of attorney. 

3 Mistakes a College Planning Consultant Helps You Avoid

Andrew Steffensmeier

Specializes in small business preparation and planning, investment advisory services, business tax planning services

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When looking for ways to protect your finances while still ensuring your children receive the best education possible, there’s no better place to start than with a college planning consultant. The truth is, there’s nothing more important than being prepared and planning for your child’s future — especially today as tuition reaches new heights. A college planning consultant can help guide you through the process and find the best plan for you and your family.

According to research provided by U.S. News, “the average cost of tuition and fees for the 2021-2022 school year is $43,775 at private colleges, $28,238 for out-of-state students at public schools and $11,631 for state residents at public colleges.” However, this number is likely to change depending on your child’s choice of school.

In the meantime, our team at McMill CPAs & Advisors is here to help small business owners and their families throughout Norfolk and Northeast Nebraska make the best decisions regarding college. Here are three mistakes a college planning consultant will help you avoid.

NOT CONSIDERING THE COMMUNITY COLLEGE ROUTE

More often than not, families dismiss the potential for community college even though the end result is usually the same. This is because of the common misconception that community college is less valid than colleges and universities that are more expensive, and often over-priced. Despite this fallacy, community college actually provides sound education and is commonly used as a means of saving some money before transferring to a more selective four-year college. 

According to Dr. Steve Robinson and Forbes, “More four-year colleges are seeing community college transfers as an important part of their own enrollment strategies… Selective colleges and universities are realizing these [community college] students help bring greater diversity to their student communities. Community college students are also 75% more likely to graduate, once they transfer to a four-year institution.”

Beyond college acceptance, there are many advantages for your child to attend a community college for two years before transferring to a university to complete their undergraduate degree or continue studying. To name a few:

  • You/they will save money on tuition debt.
  • A great way for students to transition from high school to college at their own pace (especially if they struggled in high school).
  • Most community colleges are offering the same ‘dorm’ and college experience as four-year colleges. 
  • Smaller class sizes mean more hands-on and personalized assistance from teachers.

To save even more and help with the high-school-to-college transition, you should also consider having your child take college credit courses offered during high school.

AVOIDING THE INCOME TALK

When it comes to college, the prices can be intimidating, and it can certainly get more intimidating if your child is considering more prestigious options. For this reason, it is a big mistake to avoid discussing your child’s goals and expectations. 

We’re not saying that money and projected future income is everything because it certainly is not. Your children should pursue what they are passionate about and what really gives them joy. However, it’s still worthwhile having the projected loan-to-income talk — meaning, we want you and your children to understand that some career choices will force them to pay off more loans, some careers will result in less financial freedom, and some careers may be changing rapidly.

In fact, Consumer Finance stresses the importance of “understanding that your career choices may influence your ability to repay student loans [and] determining how much student loan debt you [can] afford based on that career’s starting salary.”

This will not only give your child an idea of what career may be more beneficial to their interest and success but will also help you plan accordingly. For insurance, if starting pay is often less than you can afford with student loan debt, starting at a community college and transferring may be the solution — allowing your child to pursue their dreams and save where possible. 

NOT APPLYING FOR FAFSA

Another huge mistake to avoid is not applying for Free Application for Federal Student Aid (FAFSA). While it is particularly helpful for students who need free financial assistance, it can also be beneficial in gaining access to The Stafford (Direct Federal Loan) and is required for some scholarships. So, fill it out regardless of your financial state. 

In fact, Nerd Wallet reports that in one academic year, “1,234,249 high school graduates didn’t fill out the FAFSA. Of these grads, we calculate 648,191 of them would have been Pell-eligible.” Their analysis found that “the average amount of money left on the table per eligible high school graduate who didn’t apply was $3,583. The total amount left on the table by all such grads was $2,319,016,315.” That’s billions of available dollars that weren’t tapped into by college students. 

The truth is, families consistently leave money on the table by neglecting federal aid. FAFSA, which is one of many financial aid opportunities, is an excellent resource for students who need it. Too often it is discarded by families just because they ‘think’ they won’t be eligible and don’t apply.

The process is fairly easy and straightforward — and you can always receive assistance to make it quick and easier — so there’s no reason not to check to see if your child is eligible for benefits. More often than not, you’ll see that you get it. 

BONUS: IGNORING SCHOLARSHIP OPPORTUNITIES

Every university and/or community college offers dozens of scholarships that many students don’t know about, and almost all of those applications are free or very affordable. It’s not all just academic-based scholarships, either. Your child doesn’t have to specialize in an academic area to reap the benefits of additional financial help from colleges and foundations.

Spend time exploring your college’s scholarship offerings and local foundations to apply for as many as you can to increase your odds. The truth is, ignoring scholarship opportunities can do more harm than good in the long run, especially since maximizing your scholarships are great for lowering your potential for student loan debt. 

What’s more, if you receive more financial aid and scholarships than your tuition, you won’t only benefit from FREE school. You can also use that additional money for big-ticket items like a new laptop, printer, books, and more!

Looking for a College Planning Consultant?

At McMill CPAs & Advisors, we know how challenging and overwhelming it can be to prepare for your child’s future education. That’s why we have been helping Northeast Nebraska residents avoid these most common mistakes, plus many more, with a college planning consultant.

Not only can consultants help you avoid big mistakes, but they have a significant amount of expertise and experience for you to tap into. Being a small business owner has its own host of challenges, don’t let your child’s education be one of them!

What Does Rising Inflation Really Mean for Consumers?

Clint Weeder

Specializes in business tax planning, investment advisory services, business valuations

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Chances are, you’ve been worrying about the potential for rising inflation since the pandemic — and what this means for your purchasing power. This may also have you wondering where you should put your money, and you’re not the only one. The truth is, rising inflation is here, and small businesses everywhere are asking for more guidance on the topic. 

In fact, the U.S. Bureau of Labor Statistics reports that “in July [2021], the Consumer Price Index for All Urban Consumers rose 0.5% on a seasonally adjusted basis; rising 5.4% over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.3% in July (SA); up 4.3% over the year (NSA).”

While rising inflation does present some unavoidable challenges for business owners, our team at McMill CPAs & Advisors is here to help you thrive. Here’s what rising inflation really means for consumers. 

THE CURRENT STATE OF RISING INFLATION

Since the pandemic, rising inflation has been nearly inevitable as businesses struggled with inventory and employees came in short supply for most of 2020 and 2021. Inflation has been most prominently observed in food, energy, homes, and new automobiles (all consumer necessities). However, many are promising that the current inflation should be short-lived and positively impact the bottom line in the long haul.

With a focus on CPI inflation, in particular, Forbes explains that “weird price movements were an inevitable side effect of closing down the economy to quash the virus, so they shouldn’t be totally unexpected. Luckily, they’re likely to be short-lived though may persist while the Fed works to get people back to work.”

Nancy Davis, the founder of Quadratic Capital Management, told the magazine, “I believe the Federal Reserve is more focused on the employment part of its dual mandate and will remain accommodative for as long as it takes to ensure the economy returns to full employment.” The so-called ‘easy money’ being pumped into the economy to encourage activity is likely to stay around, and “businesses (and their stocks) may continue to grow.”

Knowing this, the Fed has been clear that they don’t think inflation will stick around once people get back to work. Although this still leaves many wondering how long consumers will deal with the inflation spike in the meantime. 

HOW CAN YOU ACT PROACTIVELY?

When inflation kicks in, smaller businesses are often in a tighter spot than larger businesses that are more prepared for the ebbs and flows of inflation and purchasing power. The truth is when the same sum of money you have today can’t get you the same inventory it could previously, the value of that sum of money decreases — decreasing your purchasing power, as well. 

Right now, the U.S. is full-on experiencing this spike in inflation and shrink in purchasing power. Fortunately, there are at least two ways you can be proactive:

Stay In The Stock Market

When it comes down to it, it’s crucial that you stay in the stock market to protect your long-term assets. In many cases, inflation may hinder your stocks in the short term but can actually level out and be beneficial in the long term. Although it may go without saying, being careful not to make any drastic changes in your portfolio is important. 

Amy Arnett, a portfolio strategist at Morningstar, reminds consumers that “stocks can be good as a long-term inflation hedge but can suffer in the short term if inflation spikes.”

Mutual Fund Investing

When you invest in a mutual fund, you contribute to a pool of money alongside other investors, managed by a team of professionals looking to purchase securities. What your money is invested in depends on the type of mutual fund investing you decide to participate in.

More specifically, you’ll want to take a Passive Asset Class Management Approach. This approach emphasizes broad diversification and market returns in a controlled risk, low cost, tax-efficient environment.

Among this approach’s many advantages, you will quickly benefit from lower costs, lower portfolio turnover, greater tax efficiency, broad diversification/risk reduction, long-term perspective, control of asset allocation, passive asset class funds, and academic research (focus on the importance of asset class selection, not market timing or security selection).

TRUST A FINANCIAL PLANNER

There is no better time than now to put your trust in a financial planner to help guide you through the rising inflation and keep your business on top of the ongoing challenges the pandemic has put on you and the economy. 

McMill CPAs & Advisors has been working hard for individuals throughout Northeast Nebraska looking for comprehensive financial planning assistance, making sure you and your finances are prepared for inflation. There’s nothing more important than protecting your savings and assets — and you don’t have to go at it alone. Here at McMill, we understand the challenges and fears that come with rising inflation. We also know the best strategies for getting through these uncertain times and keeping your small business on track. To gain more insight and resources into what you can expect from rising inflation, contact us today and follow our webinars and blog for more tips.