From ScienceWriters: Five (often overlooked) financial planning tips

ScienceWriters Summer 2014

ScienceWriters Summer 2014

By Julian Block

Educate yourself

It’s vital that you assume greater responsibility for your financial future. Don’t rely exclusively on paid advisers. At the very least, become knowledgeable enough to raise good questions and evaluate answers when dealing with professionals. The informed client gets the best advice.

A quick, low-cost way to become savvy is to sign up for adult education courses on taxes, investing, and other aspects of personal finance. Select from an array of classes tailored to your interest that are available at places like high schools and community colleges. Courses cost a fraction of what it would otherwise cost to meet on a one-to-one basis with instructors, who usually are attorneys, CPAs, and financial planners. Instructors use their hands-on experience to provide helpful, unbiased advice on topics like how to time the receipt of income and the payment of deductions to your best advantage.

The courses alert you to money-saving techniques that you can apply yourself or, should you decide to seek professional help, test out on your advisers. And, conceivably, those advisers might turn out to be your instructors, whom you’ve had an excellent chance to evaluate.

Beneficiary designations

Update the designations for insurance policies and retirement plans. Otherwise, proceeds might wind up with a former spouse or someone you now consider unworthy.

Prepare a will and keep it current

Redo your will if, for example, you’ve divorced, legally separated, or married since you wrote it. Your property intentions normally change when your marriage ends. And a remarriage also increases the complications, particularly when each spouse has children from previous marriages.

When you die without a will (intestate, in legalese), your assets pass in accordance with your state’s intestacy laws. The absence of a will often means that your estate will be burdened with unnecessary administrative expenses and taxes.

Letter of final instructions

When you make out a will or bring one up to date, it’s also the practical time to write a “letter of instructions.” This is the legal you list the location of your important personal papers and assets.

Usually, it’s addressed to your surviving spouse, one of your adult children, your lawyer, or your executor. Keep the letter up to date and accessible.

Why is it worthwhile to go through the chore? The letter, among other things, alerts the people most important to you to the existence of assets that otherwise might prove difficult or even impossible to find when death, a serious illness, or another crisis leaves you unexpectedly unable to handle your financial affairs. Also, certain important details, like funeral arrangements or care of pets, can change quickly and thus are usually impractical to put into your will.

Be mindful of the IRS

Include in the letter where you keep copies of checks, credit card slips, and other documents that supply the information you rely on at tax time to justify the amounts shown as income, deductions, exemptions, and other Form 1040 figures for the past three years or so. If the IRS should question those figures and the necessary substantiating records are unavailable, then your estate may be drastically diminished by assessments for additional federal taxes, interest charges, and, perhaps, penalties. The same goes for any applicable state taxes.

Have a federal tax question pertaining to writing?

If so, email your question(s) to tax expert Julian Block at Questions deemed of interest to most members will be answered in future ScienceWriters columns. Block will not answer members directly. Do not send sensitive information or financial details.

Julian Block is an attorney and author based in Larchmont, N.Y. He has been cited as “a leading tax professional” (New York Times), “an accomplished writer on taxes” (Wall Street Journal) and “an authority on tax planning” (Financial Planning Magazine). Information about his books is at