Spring is a great season. It brings an awakening, reinvigoration, renewal and new life.
The arrival of spring is very evident when we look outside in our yards. My dad always used to record the date of the first robin that he saw every year in a special notebook. That was his measure of when spring arrived. My father-in-law tracks when the first flowering bulbs that appear and bloom in his garden - whether they are crocuses or snow drops. We also see the little hibernating critters, such as chipmunks, back around the bird feeders.
In addition to the reappearance of these annual outdoor visitors, spring also brings some annual rituals, such as opening day and spring cleaning.
One of my Telemus colleagues lives on a lake. She and her husband took time off last week to tackle a number of projects to get their yard ready for the summer. Their list of projects went far beyond cleaning out flower beds and clearing out the various residue left by winter. It included repairing their seawall and replacing their deck to be more in-line with their outdoor entertainment plans for the summer.
It seems like spring cleaning can include minor projects that involved removal of debris from the winter, moderate projects that involve repairing structures that need some additional support and reinforcement and sometimes even major projects that involve replacement or removal of items that no longer fulfill their intended purpose or whose time has passed.
Is your financial yard prepared for summer? When was the last time you examined your “financial yard” for areas that need some spring cleaning?
- What financial items need to be cleaned out and simplified?
- What financial items need to be rebuilt or repaired?
- What financial items need to be replaced?
Here are a few areas of your financial yard where some spring cleaning might be called for:
- Your estate plan structure – Part 1. Does it reflect your current family structure and desires? Does it reflect your current or anticipated wealth? Does it consider potential changes in the tax structures, such as capital gains treatment, estate tax exemption levels, elimination of stepped up basis at death? Have all the appropriate documents been executed?
- Your estate plan structure – Part 2. Who knows the terms of your estate plan and why these terms were selected? You? Your Spouse? Your children? Any others? Who was involved in making these decisions? What is your plan to communicate the what’s and why’s to your family? Or do you plan to have them find out when you are not available or able to provide an explanation? What can be done to properly prepare your family members be prepared for their respective roles assigned in the plan (i.e. beneficiary, trustee, etc.).
- Your financial plan. When was the last time you reviewed an updated financial plan? Are you on track to meet your desired goals and objectives? A vacation home? Retirement? Funding of your children’s or grandchildren’s educational aspirations? Funding your or their entrepreneurial endeavors? Supporting causes that are close to your heart? Providing the preferred level of inheritance to your family members?
- Your investment portfolio. Does your asset allocation reflect your risk tolerance and investment goals? Has it been appropriately re-balanced to adjust for the historical equity bull market that we have experienced? Is your portfolio being managed in a fee and tax efficient manner? Do you have gaps and/or overlaps in security selection?
- Your insurance coverages. Have you reviewed updated illustrations on your whole life policies? Are they tracking as originally proposed? Have you checked the pricing of your term life policies? Current aggressive market pricing can result in reduced premiums. Has your buy-sell agreement related policies been adjusted to reflect the current value of your business interests? Have you considered premium finance structures as a means to supplement your giving plans? Have your personal liability coverages been increased in pace with your increased net worth?
- Your giving plans. How do you feel about your historical and current gifting activities? Your level of giving? Your choice of the recipients of those gifts? Are the gifts being utilized for the intended benefits? Have your family members been involved in determining your giving plans? Should they be?
- Your tax planning process. Is the work on your income taxes only an annual spring project – after the year is completed? Would it be advantageous to view it as an annual project with tax projections completed early in the year along with identification of key decision points that should be considered during the year (i.e., gifting – amount, timing and funding source)? Income recognition? Capital gains recognition?
- Your corporate stock compensation programs. If you are or have been a corporate executive, do you understand the features of your retained corporate compensation programs – NSO’s, ISO’s, RSA’s, SAR’s, RSU’s, Performance Shares, etc.? Do you understand their taxation? Do you have a plan to maximize their value to you and your estate?
- Your In Case of Emergency planning. What if you were suddenly incapacitated by a stroke or an accident? Would your family members know what to do or who to contact? Where is their contact information stored? The location of and access to material documents? User ID’s and Password’s to important internet sites? Have appropriate Medical Powers of Attorney and Living Will documents been executed? Any other specific issues not addressed in other documents?
- The level of financial administrative tasks that you continue to retain. Payments? Account reconciliation? Tracking down investment statements? Coordinating activities of your advisors? Are you good at these tasks? Do you find joy and purpose in these tasks? Do you have something you would rather be doing like making more money, spending more time with family, learning new skills, travelling, volunteering, etc.?
- Your relationship with your key advisors. Have they maintained connectivity with you and your family throughout this unusual COVID environment? Do they know you and your family? Do you and your family members know them? Do you and your family members trust them? Have they kept up with relevant changes in your personal and financial worlds? Have they pro-actively brought potential opportunities and challenges to your attention? Do they have a succession structure in place to insure continuity of their relationship with you and your family members?
At Telemus, the foundation of our organization is based on a holistic approach to financial life management for wealthy families. We have the experience, resources, personalized approach and succession structure to assist you in your financial spring cleaning projects.
We can assist you reviewing your financial yard and developing, implementing and supporting appropriate ongoing strategies to prepare and support you, your spouse and your children now and in the future.
Let us help you prepare for your summer. Let’s start the discussion !
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. Investment decisions should always be made based on the client's specific financial needs, goals and objectives, time horizon and risk tolerance. Current and future portfolio holdings are subject to risk. Risks may include interest-rate risk, market risk, inflation risk, deflation risk, currency risk, reinvestment risk, business risk, liquidity risk, financial risk, and cybersecurity risk. These risks are more fully described in Telemus Capital's Firm Brochure (Part 2A of Form ADV), which is available upon request. Telemus Capital does not guarantee the results of any investments. Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, and may lose value.
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