Life insurance is a foundational component of many people’s wealth plans. But there are a number of signs that should give you and your wealth manager pause when it comes to using strategies incorporating life insurance. This month’s Whistle Stop Report, “Avoiding Unpleasant Surprises—or Worse—with Your Life Insurance,” is aimed at helping you avoid life insurance pitfalls that could prove to be very costly.
This report was brought to us by the VFO Inner Circle, a global financial concierge group I have on retainer to keep me up to date on the latest research and strategies for addressing the key concerns of successful people like you.
For our full report, click below.
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Many of us start out each year with big goals for ourselves, only to give up within a matter of weeks. This month's Flash Report, “Keeping Those New Year's Resolutions,” is designed to help you see why it can be so hard to stick to your resolutions—and offer actionable advice aimed at keeping you on track into the new year and beyond.
This report was brought to us by the VFO Inner Circle, a global financial concierge group I have on retainer to keep me up to date on the latest research and strategies for addressing the key concerns of successful people like you.
For our full report, click below.
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Success can come with a major downside: It can make you a potential magnet for frivolous and unfounded lawsuits as well as other attacks that can wreak havoc on your financial health and stability. This Whistle Stop Report, “A Wall Around Your Wealth: The Importance of Asset Protection,”reveals four key action steps you should consider taking to help safeguard the wealth you’ve worked so hard to build.
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To achieve your key financial goals, one of the biggest decisions you can make—often the single most important decision—is selecting and working with the right primary wealth manager. This Whistle Stop Report, “Finding the Right Wealth Manager for You,” reveals three key traits to look for in a wealth manager—integrity, competence and experience—and how to size up candidates on each characteristic.
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What if you could do well by doing good—using your wealth to help revitalize economically distressed communities and enjoying some impressive tax breaks for your efforts? That’s exactly what you may be able to accomplish through a new type of investment called Qualified Opportunity Funds.
In this month’s Whistle Stop Report, Qualified Opportunity Funds: The Latest Way to Do Well by Doing Good, you’ll learn all about how Qualified Opportunity Funds work along with their many benefits. Armed with that information, you can start to determine if these funds make sense for you and your goals—and, if so, how to take the next steps.
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In today’s litigious world, we all know how important it is to have liability coverage. The challenge is that many people do not carry enough liability coverage, leaving their assets and financial security vulnerable if they were ever to be sued. The good news is that a personal umbrella policy can give you the level of wealth protection you need above and beyond your existing liability coverage. And it tends to be relatively inexpensive.
This month’s Whistle Stop Report, The Importance of Personal Umbrella Policies, sets out in plain language how an umbrella policy works, what it covers and how much coverage you might need. We hope you find it useful as you consider whether to give your family’s assets this extra layer of protection.
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No two work days are created equal. Like everyone else in the working class, I have good days and bad days. I have days of great success, and days of unexpected disappointment. However, every once in a while I have a day that reminds me why I do what I do for a living…and I never forget those days.
Yesterday was one of those days.
I met these particular clients in August of 2017. At the time, these clients had never used a financial advisor. The biggest problem they had was a collection of 401k and IRA accounts from previous jobs…five to be exact. Essentially, I served as the janitor that cleaned up their situation, and combined five accounts into one. Once we completed the consolidation, they were happy to be on board and grateful that I organized their accounts. At that point, we agreed to continue building the relationship over the next year with quarterly appointments and constructing their financial plan.
In December she called me very worried. From the onset he had planned to retire in 3-4 years, however, his biggest client went bankrupt, and in order to stay with his company of 30 years, it would require a significant relocation. This couple relocated several times over the years, but Indianapolis is now home, and she had no interest in another move whatsoever.
If he didn’t relocate within the company, the odds of finding another job locally that would pay him a similar salary were pretty slim. So therein laid the problem…she didn’t want to move, and he was convinced they didn’t have enough money to retire. We set an appointment to accelerate the financial planning process right away.
Once I built their plan, even though he was not yet 60 years old, it was clear to me based upon their assets and projected spending, he could retire right away. I’ll never forget the look on both of their faces: it was a mixture of pleasant surprise and worried skepticism. As the meeting ended they felt much better about their position, but he still intended to travel to other cities to interview within the organization. He didn’t quite believe me.
He completed some interviews, and while he was away, she came to the office again to run through the numbers. She became increasingly convinced that I was correct.
The reluctance to let go of a career happens with almost every retiree. I tell them up front…at 41 years old I’ve retired hundreds of times alongside my clients. I understand the emotional transition from collecting a paycheck to living off the money saved. I’m not only the advisor that guides clients with investments, but more importantly, a coach that guides them through the emotional roller coaster.
Over the years I have had clients tell me of their dreams in retirement, yet continue to work extra years because of the irrational fear of running out of money. In many cases, one of them passes prematurely never reaches any of their dreams. I have made it my mission as a trusted advisor to make sure my clients retire when it is financially possible, even if I have to push them out of a comfort zone.
In the spring of 2018, he decided to take a chance that my analysis was correct, and ceased looking for employment. I remember him saying, “You better be right.” I chuckled and said, “Get out of my office and go enjoy yourself. Let me worry about the money while you worry about having fun.”
Yesterday was our first quarterly review since his decision. As I was waiting for them in my conference room, through the window I saw smiles ear to ear and casual clothing as they exited the car. I was greeted with an iron grip handshake and a big thank you. Immediately I was validated. I did my job.
As I mentioned at the beginning, I will never forget this day. As their trusted financial advisor, I changed their lives forever. I prevented a move half way across the country, and added extra years to their retirement. This moment is what motivates me to get to the office every morning.
I must admit that when I received my personal "Weekly Investment Summary" this morning, it was a bit shocking to see such a decline over the past 7 days. I obviously knew it had been a really bad week and even wrote about the losses within the major market indexes in a blog this morning (see "Shorter Term Indicator Goes Negative"). But seeing those losses in dollar terms can be down right scary.
So what do you do when you know that emotions are the enemy of investment returns and yet you still need help fighting off the fear? Here is a five point game plan I've developed over the years. Adopt it and I'll promise you'll sleep better tonight.
I hope going through this 5 part exercise helps calm your fear and allows you to sleep better. If not, you can always use me as your expert and allow me to carry you through this one.
Being named the executor of a family member’s (or other loved one’s) estate is, in many ways, an honor. The decision shows that the person saw you as a highly trustworthy, capable person of integrity.
But it’s also a major responsibility that can quickly become a burden if you aren’t set up to do your job properly. The fact is, administering an estate comes with plenty of potential pitfalls that can threaten your loved one’s wealth—and your peace of mind. That goes double if the death is unexpected and leaves you reeling emotionally as you try to take on the legally required duties of an executor.
The good news: You can take steps to avoid some of the biggest mistakes that executors often make and to ensure that the process goes as smoothly as possible.
First, a few basics. At death, everything a person owns becomes part of his or her taxable estate. Estate administration is the process of managing the estate at this time—including paying off debts and any taxes due, and distributing the property to heirs in accordance with the deceased person’s wishes (or by state law if the deceased did not leave a will).
The executor is the person responsible for estate administration. If you have been named the executor of an estate, you are legally required to wrap up its affairs, arrange for the payment of any income and estate taxes, and distribute the assets of the estate.
All too often, executors without quality legal guidance make mistakes during the process of carrying out these responsibilities—mistakes that expose the estate to litigation, increased tax liability and other potentially serious consequences.
FIVE MISTAKES TO AVOID
Mistake #1: Making distributions too early
As executor, you are liable for the estate and its distributions. If you make distributions from the estate—handing out money to family members, for example—before taxes and other liabilities are paid, you are personally responsible. The same is true if you make disproportionate payments to family members. Such distributions, known as “at risk” distributions, should be avoided. That’s not to say you can’t make these distributions. But a miscalculation or unexpected claim puts you at risk—if, say, you need to get money back from a family member to pay a tax bill but that person has already spent it all.
Mistake #2: Failing to make the “portability election”
The concept of portability means a surviving spouse can make use of both his or her individual federal estate tax exemption and the unused exemption of the first-to-die spouse. Because every decedent is allowed a federal exemption of $11.2 million in 2018, this allows a married couple to shelter a combined $22.4 million from any federal estate tax liability.
However, this estate tax exemption can often cause a problem for surviving spouses when the entire estate of the first-to-die spouse is sheltered from estate tax. This key requirement is commonly overlooked because you have to ask for it. Even if no estate tax is due upon the death of a first-to-die spouse, the executor of the estate must elect portability by filing an estate tax return on Form 706 within 15 months of the death, with the filing of a proper extension. And if you don’t use it, you lose it.
Mistake #3: Failing to properly advertise the estate
The appointment of an executor and the existence of the estate may need to be advertised in a local newspaper. If there are debts owed, creditors need to be notified so they can make claims against the estate if necessary. Each state has different laws that govern the advertisement of an estate. Failure to satisfy a notice requirement may expose you personally to the estate’s creditors.
Mistake #4: Failing to liquidate securities through a market downturn
As executor, you would be responsible for managing the estate’s assets—including any stock portfolio. While you don’t necessarily need to have the financial and business acumen of Warren Buffett, failing to monitor the markets and estate investments could seriously damage the estate’s value. As an executor, you’re also a fiduciary—someone who is legally required to act in the best interests of the heirs or other beneficiaries of the deceased person and to follow the instructions the deceased person spelled out for you. That means it falls on your shoulders to ensure the estate’s financial health. That job may involve buying and selling stocks or other securities in response to bull and bear markets.
Mistake #5: Failing to properly conclude the estate
Executors who have properly distributed most of the estate’s assets often fail to properly close the estate. This may involve filing a family settlement agreement with the court showing that all beneficiaries agree that they received their share of the estate or going through a court accounting process where a judge ultimately approves of the distributions.
It is also recommended to work with an accountant (or an estate administration lawyer in more complicated cases) to ensure all tax matters are concluded before the estate is finished with administration.
ACKNOWLEDGMENT: This article was published by the BSW Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright 2018 by AES Nation, LLC.
