Meeting with Your Financial Adviser
If you are overwhelmed by the amount of forms, questionnaires, and other paperwork your financial adviser asks you to bring to a meeting, especially if it is your first meeting, then consider not bringing anything to the meeting. A meeting to review your finances can start with a simple conversation, and does not have to be complicated.
Everyone has a different situation. Here are some typical trigger events that cause individuals to seek financial advice:
- Change in employment situation.
- Children have inherited assets and do not know what to do with them.
- Couples are preparing for retirement and want to know if they are on track to retire at a certain age.
- A recently widowed spouse is making all the financial decisions of her household for the first time in her life.
- New parents need life insurance coverage.
- Middle-aged children see their aging parents needing nursing home care and begin to think about long-term care insurance for their own situation.
- “Sudden Wealth” – A business owner is selling a business. A Homeowner is selling a home. An individual wins the lottery.
These are real issues. No one needs to tackle these problems alone. Call a professional to get a second opinion.
To discuss your financial concerns, or if you know someone who would benefit by discussing these issues with a professional, contact an investment adviser at Ariba at 1-800-808-7488.
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Harnessing Risk in Any Market
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This article describes several strategies you can use to stay focused on your goals and risk tolerance when investing in the stock market.
If you’re an outdoor enthusiast, at some point or another you’ve probably contemplated what you might do should you encounter a bear or other wild animal. Wildlife experts typically recommend these tips: Stay calm and don’t run. Investors might also do well to heed that advice when traversing the stock market.
Plan ahead – Rather than fret about which way the market is headed this week or even this month, do what 87% of millionaires do to reduce worries — be proactive and develop a plan.1 A sound financial plan can keep you focused on your long-term financial objectives and keep you from getting caught up in the doldrums of a short-term market downturn or the hype of the latest hot sector.
Hold on – A buy-and-hold investing strategy can also help keep you from being distracted by short-term market performance. It can also potentially help reduce the risk of loss over time.
Maintain realistic expectations – Consider that since 1926, the average total annual return of the S&P 500 has been 9.9%.2 Maintaining realistic return expectations can make it easier to cope with short-term market downturns.
Make diversification your ally – Different types of investments lead the market at different times. By holding a well-diversified portfolio of stocks and bonds, for example, you may increase the possibility that those securities that increase in value could offset those that decrease.
Try dollar cost averaging – Think about adding to your investments on a monthly basis as opposed to purchasing or selling securities based on anticipated market changes (called market timing).3 This disciplined strategy can take the emotion and guesswork out of investing. It might also save you money. By regularly investing in a mutual fund, for example, you buy fewer shares when prices are high and more shares when prices are low. Over the long term, the average cost that you pay for the shares may be less than the average price.
Seek expert advice – Meet with a qualified financial advisor regularly. In particular, you may want to get into the habit of beginning every year with a comprehensive portfolio review.
Source/Disclaimer:
1 Source: The Millionaire Mind, Thomas J. Stanley.
2Source: Standard & Poor’s, 2011.
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January 2012 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Dan Federman, CFP®, a local member of FPA.
Required Attribution
Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2011 McGraw-Hill Financial Communications. All rights reserved.
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Undue Influence
The Texas Tenth Court of Appeals recently decided a case of a will contest that involved an allegation of undue influence.
The case styled In the Estate of Doris Irene Ward, deceased, involved Doris Ward, her husband Bobby Ward, and Dwana Phillips, Doris’s daughter from her first marriage. Dwana was close to Doris; the two ladies talked on the telephone frequently and visited almost every day. Doris suffered from Parkinson’s disease and had other health issues. In early 2009, after a brief hospital stay, Doris entered a skilled nursing facility where she resided until her death on March 21, 2009.
On April 17, 2009, Bobby filed an application to probate a will that Doris had executed on December 11, 2008, and he requested appointment as the executor of her estate. The will stated that Doris left all of her real property to Bobby upon her death. This included a seventy-seven acre tract of land that Doris had inherited from her parents. The trial court admitted Doris’s will to probate and appointed Bobby as the executor pursuant to the will.
Dwana filed a lawsuit challenging the will, alleging that Doris’s will was executed as the result of undue influence exerted by Bobby. She also alleged that the will contained a mistake regarding the disposition of the seventy-seven acre tract of land commonly referred to as the family farm. Dwana testified at trial that Doris had conveyed the seventy-seven acre family farm to her in a handwritten deed, and Dwana asked the court to declare the rights of the parties under the deed. She said that Doris left the deed on Doris’s kitchen table before Doris and Bobby went on a trip to Europe. Bobby saw the deed and admitted that it did reference the family farm. After Doris and Bobby left for Europe, Dwana saw the deed on the kitchen table and read it. Dwana understood that the document meant that Doris was conveying the family farm to her. After Doris and Bobby returned from their trip, the document was destroyed. Bobby testified that Doris had intended to give Dwana the family farm, but that she changed her mind and shredded the document. Several witnesses testified regarding the existence and delivery of the deed.
With regard to whether Bobby exerted undue influence over Doris in the execution of the will, the evidence presented to the jury showed that by late 2008, Doris was taking over 20 different medications, and relied heavily on Bobby. The evidence also included a Texas Department of Family and Protective Services report regarding allegations of abuse and the medical neglect of Doris by Bobby. Other evidence included medical records from the nursing home referencing comments by Doris that she was scared of Bobby, did not want Bobby to take her home, that Bobby had choked her, and that he was aggressive and verbally abusive toward her. Additionally, Bobby was present at every meeting with the lawyer regarding the drafting and execution of the will. At the time Doris executed the will, she was unable to read or drive, and she could not walk without assistance.
At the conclusion of the trial, the jury determined that Doris had signed a deed to the family farm, and had delivered the deed to Dwana. The jury also determined that Bobby exerted undue influence over Doris in the execution of the will. The trial court entered its final judgment adopting the jury’s findings that denied Bobby’s request to probate the will that conveyed him the family farm. Bobby filed an appeal for a new trial and judgment notwithstanding the verdict. The motions were denied, and Bobby appealed that ruling.
The Texas appellate court began its analysis by stating that under Texas law, to establish undue influence, a party must prove: “(1) the existence and exertion of influence; (2) the effective operation of an influence so as to subvert the will or overpower the mind of the grantor at the time of the execution; and (3) the execution of an instrument the maker would not have executed but for such influence.” There must be sufficient evidence to show that influence was present and was exerted in executing the will. The appellate reviewed the evidence from the trial and concluded that there was “legally sufficient evidence to support the jury’s finding that Bobby exerted undue influence over Doris, at a time when her health and mental capabilities were failing, to subvert Doris’s intention to give the family farm to Dwana and that the provisions of the will bequeathing the family farm to Bobby would not have happened but for Bobby’s undue influence.” With regard to the deed, the Court determined that “there is legally sufficient evidence to indicate that Doris, the grantor, handwrote a deed conveying the family farm to Dwana, the grantee; that it was Doris’s intent that Dwana receive the family farm; and that Doris delivered the deed, as defined by the charge, to Dwana.” The appellate affirmed the judgment of the trial court.
The attorneys at The Estate Planning & Elder Law Firm can assist clients with their estate, financial, insurance, long-term care, veterans’ benefits, and special needs planning issues.
To review your overall financial planning needs, contact an investment adviser at Ariba Asset Management 1-800-808-7488.
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The Growing Public Sector Pension Gap
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Gone are the days when a public sector pension guaranteed a comfortable lifetime retirement. Like their private sector counterparts, today’s public employees need to plan and save.
Social Media Message:
With pensions eroding, public employees need to do more to save. What options are best for you?
Stories abound about the fireman who retires at age 45 with a six-figure pension, or the city manager who leaves after just five years’ service with full salary and health coverage for life.
What doesn’t make headlines, however, is the growing number of public sector employees who have seen their retirement benefits erode in the face of budget cutbacks and mounting public deficits. States and cities across the country are taking steps to reduce pension costs by whittling away employees’ retirement entitlements. Even San Francisco, bastion of liberal handouts, recently saw voters approve a plan to scale back retirement benefits for city employees.
Although traditional pensions still dominate at all levels of state and local government, hybrid plans are emerging that combine a 401(k)-type component with a guaranteed benefit. In fact, 11 states — including Alaska, Michigan, Colorado, Florida, and Ohio, plus Washington, D.C. — now have primary retirement plans that include some defined contribution component.1
The upshot for public sector employees is that, increasingly, they are likely to need to augment their pensions with salary contributions to employer-sponsored plans or save on their own if they want to maintain their preretirement lifestyle. And since many states have “double dipping” laws in place that prevent public employees from collecting both Social Security and a state pension, the need to set aside their own funds for retirement is even more important.
How to Compensate
Several tax-advantaged retirement savings options exist that may be accessible to public sector employees. The most popular include:
- 403(b) plans are generally available to employees of qualified public organizations such as schools, hospitals, and certain nonprofit employers. Similar to 401(k) plans, 403(b) plans allow employees to contribute a portion of their salary on a pre-tax basis; and no tax is paid on contributions or earnings until it is withdrawn in retirement.2
- 457 plans are available to state and local government employees and are somewhat similar to 403(b) plans. There is no penalty for early distributions from a 457 plan (however, taxes are due), although you generally cannot take in-service distributions unless you have an unforeseen emergency.
- IRAs are available to both public and private sector employees. Like 403(b) and 457 plans, IRAs also offer tax-deductible contributions and tax deferral. However, IRAs have lower annual contribution limits and eligibility for favorable tax treatment may be subject to certain income limits.2
To find more information on these or other tax-advantaged retirement savings plans, see Publication 590 at http://www.irs.gov/.
Source/Disclaimer:
1Source: Journal of Pension Economics and Finance, “Behavioral Economics Perspectives on Public Sector Pension Plans,” April 2011.
2Withdrawals from 403(b) plans and IRAs prior to age 59½ may also be subject to a 10% early withdrawal penalty, in addition to ordinary tax on withdrawn amounts.
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January 2012 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Dan Federman, CFP® , a local member of FPA.
Required Attribution
Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2011 McGraw-Hill Financial Communications. All rights reserved.
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Digital Estate Planning
Many people read articles discussing the importance of protecting and safekeeping passwords, and recognize that if they are not careful, their online accounts and other activities may be compromised, leading to disastrous results. It is possible, however, that you may protect these same passwords so well that in a period of incapacity or upon your death, your agent or executor will not have access to your online accounts.
Digital estate planning is a relatively new concept in traditional estate planning that takes online activity into account when designing your plan. Digital estate planning not only tries to ensure that your agent or executor has access to your online accounts, but it also takes into account the plethora of other electronic assets that the average American now has.
To illustrate the importance of completing digital estate planning, I’ll use the example of Scott, a 40 year old single man who, like many people, has a large online presence. Scott does all of his banking online and never receives a bank statement in the mail. He has an investment account at a company that does not have a brick-and-mortar location. Scott pays his bills electronically, without receiving a hardcopy bill, and he pays some of his bills automatically on a monthly basis. He has several e-mail accounts and maintains his own website and blog. Scott buys and sells items online through Amazon and eBay, using his PayPal account to complete the transactions. He has an extensive photo and music collection that he stores online, and he is an active Facebook and Twitter user. Finally, because Scott prefers to not have papers lying around his house, he stores copies of all of his medical, financial, tax, and legal documents on a “cloud” server.
Now imagine that Scott becomes incapacitated or dies. How would Scott’s agent or executor begin to handle his affairs? How would this agent or executor have any idea of the true extent of his or her responsibilities? Digital estate planning attempts to prevent these problems from occurring.
One of the first things that digital estate planning involves is taking inventory of your online presence. In addition those mentioned for Scott, other examples of your online presence (also referred to as “digital assets” or “electronic assets”) include:
– Website domain name ownership;
– Music playlists;
– Online videos, stored on sites like YouTube; and
– Online magazine, newspaper, and website subscriptions.
After taking an inventory, the next step is ensuring that your agent or executor is aware of and is able to handle each of the items. You should also consider storing this information on a CD or flash drive that can be kept with your estate planning documents. Your agent or executor will likely need access to your personal computer, tablet, and/or smart phone, so make sure that you provide instructions for how to access these devices.
You may also want to include language in your power of attorney or will that allows your agent or executor to handle your digital assets. It is important to note, though, that each online provider typically has a service agreement that may limit the ability of another individual (such as your agent or executor) to access your online information. Some service agreements may actually state that you do not, in fact, own your electronic assets.
There is not much established law in the field of digital estate planning, but in the coming years, we will surely see this area of law evolve. Although Virginia has not done so, other states have begun to address the issues involved with digital estate planning by passing laws that provide executors with access to digital assets, and authorizing an executor to take control of a deceased individual’s online presence. As we all move towards a more digital world, the importance of digital estate planning will only grow.
The lawyers of The Estate Planning & Elder Law Firm are available to help you with your traditional estate planning and your digital estate planning. The attorneys at The Estate Planning & Elder Law Firm can also assist clients with their estate, financial, insurance, long-term care, veterans’ benefits, and special needs planning issues.
Call Ariba Asset Management at 1-800-808-7488 for a review of your financial planning needs and for a portfolio review.
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Gifting: A Win-Win Proposition
Description
Read this article to learn how you can make annual gifts of up to $13,000 ($26,000 per married couple) to as many people as you wish without incurring federal gift taxes.
Did you know that there’s a wealth-transfer technique you can use to reduce your taxable estate and keep more of your assets for your heirs? You can make annual gifts of up to $13,000 ($26,000 per married couple) to as many people as you wish without incurring federal gift taxes.
An example: A married couple with three children could reduce their estate by $78,000 each year if $26,000 were given to each of their children.
Gifting can be used in a number of unique ways. You can use annual gifts to help build a college fund for a child, grandchild, relative, or even a friend — by contributing to a 529 plan account, a Coverdell Education Savings Account, or a UGMA/UGTA account. In fact, 529 plans have special rules that allow you to make five years’ worth of contributions in one year without incurring any gift taxes — that’s $65,000 for individuals and $130,000 for married couples.
Gifts can also be used to build wealth for future generations as well as help a child, relative, or friend fund a down payment on a home, buy a car, or start a business. Your financial advisor can help you determine how annual gifts might fit into your overall financial plan.
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January 2012 — This column is provided through the Financial Planning Association, the membership organization for the financial planning community, and is brought to you by Dan Federman, CFP®, a local member of FPA.
Required Attribution
Because of the possibility of human or mechanical error by McGraw-Hill Financial Communications or its sources, neither McGraw-Hill Financial Communications nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall McGraw-Hill Financial Communications be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.
© 2011 McGraw-Hill Financial Communications. All rights reserved.
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