By Maurice Stouse, Financial Advisor and Branch Manager
As one year closes out and another one begins, we have some thoughts for our clients on things to review and consider.
First: Know What you Own
We suggest it is a good idea to review your assets, stocks, bonds, cash, real estate, business interests and family interests, among others.
Second: Know Where you Own It
It is a good idea to conduct an inventory of all your assets and where they are held.
Third: Know How You Own It
Is the account taxable or tax deferred? Is it a retirement asset (401k, IRA, pension or other retirement asset)?
Also, do all your assets have a beneficiary?
Many people want their families to avoid the probate process if possible. Having a beneficiary on as many assets as possible is a common practice. Some might find that using a living or revocable trust is an effective way to ensure that assets pass directly and avoid probate. Single people, be they widows or widowers, might want to review how their home is titled and to give some thought to how that asset will pass upon their death.
Next, we suggest you think about what your estate plan is. Whether you have a formal plan or not, you do have an estate plan. Formalizing it might make sense:
Chief among these is to have a will. It usually makes sense to at the very least have a will. It is often a good idea to also have a power of attorney in place (we suggest a durable power of attorney, which takes effect if you are physically or mentally incapacitated. Note, those cease at passing). Also, an advanced medical directive for family, friends and loved ones to carry out your wishes if necessary. That would include things such as a do not resuscitate order for your caretakers.
Next, what is your long-term care plan?
Whether formalized or not, everyone has a long-term care plan. Will it be workable for you and your family is the question. Long-term care can come in the form of insurance (be it a term policy for pay as you go, or the increasingly popular asset based long term care insurance). Many people want to be able to rely upon family so it is a good idea to perhaps formalize that and to learn what support and benefits might be available to them (for example, some states are allowing family members to apply for payment, through Medicaid, for providing in-home care for a family member). Most people will need some form of long-term care and the need grows for most people in their last two or three years of life.
Also consider if you have a permanent source of income at retirement
It is a good practice to go to ssa.gov and get updated on what your Social Security benefits are scheduled to be. Also, do you have a pension (most estimates are that fewer than 15 percent of private sector workers have these anymore)? Perhaps you have deferred annuities that can pay you and or a beneficiary income for a lifetime.
Do you have a protected or conservative source of cash on which to draw for emergencies and opportunities?
Is that cash in the bank, a money market mutual fund, or CDs? For some it might be cash value life insurance which we feel is best left as a strategic reserve particularly if you are taking an income stream from your investments. That way you can shield yourself from the effects of the sequence of returns (which means you are taking more of your principal in down years and might run out of that source sooner than expected). We feel most retirees, or those needing a consistent source of income should not ever tap into principal.
It is considered a good practice to review and perhaps update all things as they pertain to your wealth and your health periodically or at the very least to go through this exercise on a yearly basis. Here at The First Wealth Management, we look forward to helping you review and discuss and perhaps help you find solutions.
Maurice Stouse is a Financial Advisor and the branch manager of The First Wealth Management and Raymond James. Main office located at First Florida Bank, a division of The First, 2000 98 Palms Blvd, Destin, FL 32451, with branch offices in Niceville, Mary Esther, Miramar Beach, Freeport and Panama City; 850.654.8124. Raymond James advisors do not offer tax advice. Please see your tax professionals. Email: Maurice.email@example.com.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC, and are not insured by bank insurance, the FDIC or any other government agency, are not deposits or obligations of the bank, are not guaranteed by the bank, and are subject to risks, including the possible loss of principal. Investment Advisory Services are offered through Raymond James Financial Services Advisors, Inc. First Florida Wealth Group and First Florida Bank are not registered broker/dealers and are independent of Raymond James Financial Services.
Views expressed are the current opinion of the author and are subject to change without notice. Information provided is general in nature and is not a complete statement of all information necessary for making an investment decision and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results.