Monday, November 29, 2021

It’s a Work in Progress



Ask The CFP®  Practitioner

Question: During the holiday break we took the advice offered in your last column and held a holiday huddle to review family finances. Although awkward at first, I think everyone was a bit relieved now that we’ve discussed the “what ifs.” What’s next?

Answer: Now it’s “go time!” If you have a plan in place, be sure to review it every few years making sure it still applies to your situation. If any of the following events have occurred since you prepared or last reviewed your plan, it’s likely time to revisit and potentially revise: Marriage, divorce or remarriage. Birth or adoption. Death, disability, or serious illness of a family member. Change in the status of anyone you’ve named as trustee or executor. Committing to a large loan, sizable changes in the value of your assets, changes in primary or secondary residences, significant job changes, receipt of a large gift or inheritance, sale of a business, changes in federal or state estate tax laws.

Potential concerns aren’t always easy to spot, but there are some clear signs that a plan needs work. Here are a few questions to get you started.

Do you have a will? If not, it could cause lots of headaches and perhaps a long and expensive probate process. Actually, everyone has a distribution plan, without a will that plan is determined by the state and may not be what you’d choose.

Do you have a trust? Not everyone needs a trust, but it may help you avoid probate, maintain privacy and see that your wishes are carried out not only at death, but in the event of disability or memory-loss. Some people create a trust and neglect to retitle the assets the document is to cover. It may take some legwork to retitle real estate, intellectual property, business partnerships, promissory notes and unique assets, but it’s necessary so your plan will work as intended when needed. Are family members named as successor or co-trustees?

Make sure everyone gets along, especially if you’ve named co-trustees who could disagree, not trust each other, or even end up fighting in court. One solution is to name a financial institution as a primary or co-trustee along with family members.

Do you have joint property? This may pose a problem if the survivor has considerable debt. Estate settlement could be delayed in court as debtors seek payment via those joint assets. Also, a plan leaving assets outright to beneficiaries could leave the beneficiary unprotected from creditors, predators, divorcing spouses, or lawsuits. Outside influences, lack of investment experience, and bad decisions are also issues. Legal documents can be drafted to address any potential situation you may anticipate, including the unintended consequence of naming a beneficiary who is receiving government and/or medical benefits and disqualifying them from this resource they’re entitled to in the future.

Are beneficiary designations up-to-date? A common mistake is not revising designations on annuities, 401(k)s, IRAs or life insurance to coordinate with plan revisions. Easily overlooked, this is very important if family dynamics change over the years.

Do you have life insurance? More importantly, do you need life insurance? Many retirees are over-insured. Life insurance is generally intended to replace your income, pay-off a mortgage, or fund college; things that may have been taken care of by now and coverage may no longer be necessary. Policies with high cash values could be tapped for cash flow, terminated in favor of other investments, gifted, or used for “paid up” coverage. Alternately, younger people may be under-insured leaving loved ones vulnerable to lost wages and debt.

Do you have a long-term care plan in place? A frightening number of people don’t plan for extended illness, limited capabilities or deteriorating mental capacity. Some form of long-term care arrangement or planning will require funding.

Do you have digital assets?  Most people unknowingly control approximately $35,000 in digital assets. These include social media, email accounts, digital photographs, online bill pay, websites, domain names, emails, text messages, and financial account reporting. In 2016 Florida adopted the Uniform Fiduciary Access to Digital Assets Act (UFADAA). The primary purpose of the Act is to let internet users manage and plan for the disposition of their digital assets in the event of death or disability. Any fiduciary acting under a will, trust (for death or disability), power of attorney, or as a guardian appointed to a Florida resident, are subject to the rules of the Act. Therefore, with proper planning, Florida residents, and those considering becoming Florida residents, can indicate who can access their digital assets. Ask your attorney if your documents match your wishes for disclosure or non-disclosure of
digital assets.

When should you take action? Now. Once you’ve identified areas of vulnerability that need updating, arrange to meet with your team of trusted financial professionals to complete the necessary adjustments. Once completed, you’ll be able to enjoy the New Year ahead with confidence. Stay focused and plan accordingly.

The opinions expressed are those of the writer, but not necessarily those of Raymond James and Associates, and subject to change at any time. 

“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.” 

This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Drive, Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email, or visit the website: 

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