Monthly Archives: June 2013

What to know before becoming suddenly single

The following article appeared in INSIDE BUSINESS, the Hampton Roads Business Journal.
They say that there are only two things certain: death and taxes. So it’s inevitable that at some point, one spouse in a marriage will find themselves “suddenly single.”

Most people try to avoid thinking about the death of their spouse. But that often means that when it occurs, the spouse left behind is unprepared. Statistics show that men typically pre-decease their wives. Most couples have a division of labor, and traditionally that has involved leaving investment decisions to the husband and the care of the home and children to the wife.

What was once a team, where each member had their own role, the surviving spouse now has to do it all. The survivor has lots of decisions to make. These often begin before death and may involve the health care determinations for a spouse unable to make them on his or her own.

Funeral decisions come next. In many cases arrangements have been made ahead of time, but there are still details that have to be made unless the deceased has left detailed instructions. Do we know the names of all the friends or acquaintances of the deceased who should be notified?

After the funeral, the survivor is faced with a host of financial issues. Assuming the surviving spouse is a widow, she is often left with many vital but unanswered questions.

* How will her income change?

We know that the income of the surviving spouse will change. Income from sources such as pensions or Social Security usually decline. On the other hand, income from other sources like insurance proceeds may go up. Finding the answers is much easier before someone dies.

* What is needed to maintain her lifestyle?

I have seen many instances where the widow did not know how much it took to maintain the home and all the other expenses that continue after a spouse dies. It’s not because she is incompetent, it simply was not her job. The time to make a list of these things is while the couple is still together.

* Are there insurance policies and where are they?

Hundreds of millions in life insurance goes unclaimed each year simply because people don’t know it exists. Life insurance can be a vital resource to keep a family together, especially if the couple is still young.

* Does she know where all the family assets are? Whose name are they in and how can they be transferred to her?

Many people have investments scattered at various institutions. Too often the spouse left behind doesn’t know where everything is and is left looking at the mail for statements from various investment firms. This can be a serious problem if the accounts are not titled properly or the beneficiary is uncertain.

* If she has relied on her husband for managing the family finances will she be able to take over? Will age play a factor? Who can you trust to help?

Many families take the do-it-yourself approach to managing the family assets. The problem arises if the widow is unprepared to do it herself, leading to confusion and uncertainty. This is also the time when people are vulnerable and can be exploited by unscrupulous advisers. The best time to plan for the transition is while both the husband and wife are still alive and identify an investment professional who can be trusted to manage the family assets in her best interests after he is gone.

* Who can she talk with to ensure she does not run out of money?

This is a follow-up to the previous point. The income needs of the widow are going to be different from those of the couple. The trusted adviser should be able to create a financial plan that will take into consideration the changes in income, the assets that are left and a path to financial success. The goal is to “finish stronger.”

Over the last quarter century I have been asked to help many people who have lost a spouse. In many cases the grieving spouse did not know the answers to many of the previous questions, which caused a great deal of extra anxiety. It does not have to be that way.

I was inspired by my experience with the couples I advised and the widows who came to me after their husbands passed. It also occurred to me that I was not immortal, so I wrote “Before I Go” and the accompanying workbook in part, for my wife. “Before I Go” is designed to answer all the questions that she would have when I’m no longer here. I think it will help her to “Finish Stronger.”

Arie Korving is a lifelong financial adviser and the founding principal of Korving & Co. in Suffolk. To reach him, visit or call 638-5494.

A link to BEFORE I GO.

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Richest Island Owners

If you are rich enough, the private jet and luxury yacht no longer sets you apart.  Owning your own island is now the new status symbol.

Here are five billionaires and their private islands.

1. Lawrence Ellison: Lanai Island, Hawaii Net worth: $43.9 billion Country: U.S. Position: Co-founder, Oracle


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Getting help with your 401(k)

A survey of over 1000 401(k) holders by a major investment firm showed that over half of those polled wanted help from a financial professional.  And no wonder.  Over 70% of these people expected their employer’s retirement savings plan to be their main source of income after they stop working.

A significant majority (71%) expected their employer’s retirement savings plan to be their main source of income after they stop working. Yet participation is far from perfect. Two thirds of employees reported socking 5% or more of their pay into a 401(k) plan. Among those within five years of retiring, 56% save at least 10%. But only 20% overall are saving the legal maximum per year, and even among pre-retirees, just 37% are maximizing contributions.

Employers are unwilling to provide advice because of the liability involved.  And even if they wanted, they are unable to provide the advice because they do not have the necessary expertise in-house.

Korving & Company has begun offering investment advice to participants in 401(k) and similar retirement savings plans.  We do not require people interested in our services to open accounts.  For more information, you can contact us via our website or call us at 757-638-5490.

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Are Your Beneficiary Designations up to Date?

From the law firm of Oast & Taylor some examples of what can happen if your estate plan is not properly reviewed.

Having recently married Sarah, Rob recognized it was a good time to get their estate plan in place.  Rob remembered seeing a lawyer’s office on the way to work, so one day over their lunch breaks, Rob and Sarah stopped by to talk with the lawyer to discuss the preparation of their wills.  They explained to the lawyer that if something happened to one of them, they wanted to leave everything to each other.  After the wills had been executed, they tucked the documents into their filing cabinet knowing that their affairs were now in order, and that they could rest easily.

Unfortunately, several months later Rob was involved in a tragic accident in which he lost his life.  As his executor, Sarah began the process of administering Rob’s estate.  She knew about the 401(k) plan that Rob had begun contributing to several years ago when he started his career, before they even knew each other.  Rob had contributed the maximum amount possible, and his company provided generous matching contributions, and the account had grown to a sizeable sum.  Sarah remembered the conversation during the car ride home from signing their wills, when Rob told her that he was happy to know that she would receive his 401(k) plan if something were to happen to him.

Sarah called the custodian of the 401(k) plan and was told that she was not entitled to the account.  Sarah was shocked and wondered how this could be.  She explained to the company about Rob’s will and its provisions.  That’s when Sarah learned an important lesson: Even though Rob’s will said that his estate was to pass to his wife, the plan is a private contract between the custodian and the account holder.  As such, the terms of Rob’s will did not control the distribution of the 401k plan assets and instead the company had to follow the beneficiary designation that Rob completed years ago in which Rob named his now-estranged father as his beneficiary.

As Sarah continued to check into Rob’s assets, she continued to find the same result.  The life insurance policy that Rob’s company provided also named Rob’s father as the beneficiary.  Rob and Sarah had not combined their assets, so Rob’s bank account that he established years ago as a joint account with his father also passed outside of his will.  In the end, Sarah inherited much less from her late husband than she expected.

The lesson to be learned?  Your will, while an extremely important document to have in place, only controls assets that are titled solely in your name and which are not controlled by a transferable on death or payable on death designation.  You may think that you have taken care of your loved ones by including them in your will, but as Sarah found out, that may not be the case.

Even if all of your planning is done right, beneficiary forms corrected and legal documents are in order, there are still may details that are not found in most plans.  That’s where our book Before I Go becomes an invaluable guide to getting the small things right once the big things have been taken care of.  For a copy of our book, buy it at of call us at 757-638-5490.


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Here’s what $5.95 million will buy you.

Penthouse One

Lower East Side, New York. For Sale for $5.95 million.
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Good News: ‘The Sky is Falling’

Interesting commentary on the rise of interest rates and municipal bonds.  From the President of First Miami:

Have you heard the clucking?

It’s the sound of Chicken Little returning to the municipal bond market.

In 2008, he paid a visit during the mortgage crisis. At the time, bond insurers were downgraded when they strayed from their traditional market and ventured into exotic – and toxic – financial products, while major banks, brokerages and hedge funds, which traditionally provided support to the muni market, became net sellers to enhance their own liquidity during the tumult.

Munis themselves were fine, but the chickens clucked, bond prices slumped and too many average investors panicked and sold. Veteran bond investors, meantime, did what they always do: take advantage of the disruptions and feast on fatter yields.

Two years later, Chicken Little reappeared, this time in the guise of a banking analyst whose comments on state and local finances during a TV interview spooked investors and spurred a muni selloff. Nevermind that her warnings of Armageddon were wildly off the mark; many took heed and, as a result, blew a hole in their portfolios.

He’s back

Today, Chicken Little has returned, with the same, equity-oriented pundits warning of a calamitous interest-rate spike and urging investors to shed their bonds.

Which bonds are they referring to? We’re not sure, and due to their lack of expertise in bonds, they’re probably not either. We only hear about Treasury bonds, but we don’t know of a single individual investor who owns any.

Read the whole thing.

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Interest Rates On The Rise

From the First Trust Market Watch of Friday, June 21, 2013:

The yield on the 10-Year T-Note has risen from 2.13% as of last Friday’s close to 2.50% this morning. It is up 83 basis points since April 30. That is only 38 trading days. Since 1991, the average number of trading days it took for the yield on the 10-Year T-Note to rise 100 basis points (using 10 instances) was 80 trading days.  Goldman Sachs just released its yield targets for the 10-Year putting it at 2.50% at year-end, but then sees it climbing to 3.75% by the end of 2016, according to Barron’s.

As of today, the yield on the 10 year US Treasury note is 2.65%.

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What do investors want?

When you feel ill and go to a doctor, what do you want?  The doctor sees you as a patient whose ills he has to diagnose and treat.  What you want is to feel better.  When you go to the hardware store for a drill bit, what do you really want?  The answer may not be obvious.

A guy buys a new refrigerator with an icemaker. The icemaker is new for him, so he has to hook up a water line. He figures he will drill a hole in the water line and connect the tube to the fridge. So he goes to the hardware store looking for the right size drill bit.

When he gets to the store and asks for what bit size would be right for the tube he is connecting, the clerk asks him what he is trying to accomplish. Once he understands the needs, he recommends a saddle valve – a device that combines making the hole and installing the valve. You clamp it on the pipe, turn the screw, and it bores into the pipe itself. No drill needed.

What the clerk recognized was that the customer did not need a bit, he needed a hole.

When you invest your money, what do you really want?  Money or the things money can do for you? A good investment advisor will want to know.


Common Mistakes by first time home buyers

Mortgage rates are near historic lows and are likely to begin moving up, so a lot of renters may want to lock in today’s low rates and buy their first home.  There are a few mistakes that home buyers make that can cost them both money or headaches later on.

  • Don’t be turned off by problems that are easily fixed.  Many first-time home buyers look for move-in ready homes.  They make the mistake of thinking that dirty carpets, ugly wallpaper, scratched flooring or cracks in plaster are reasons not to buy.  But these cosmetic issues are easy and inexpensive to fix.  Issues like this often mean that the seller will be getting lower bids on their home and provide an opportunity for the smart buyer to do some bargain hunting.
  • There are a lot of costs the homeowner faces that a renter does not.  Keep in mind that when a major appliance, a HVAC system or structural repairs are needed, you are your own landlord.  Keep that in mind when buying a home and budgeting for your ongoing expenses.
  • If a home you want to buy requires major renovation, make sure that you can afford it after making the down-payment and your monthly mortgage.
  • Taxes and insurance are items that renters often overlook when making their first home purchase.  Both add thousands of dollars to the cost of owning your own home.  Make sure it’s part of your budget.

5 Money Questions to Ask Before You Marry

US News has an article about the things you should know about your “spouse to be” before you decide to marry.  Why ask about money?  Because money is the top reason people get divorced.  So here goes:

  • How much debt do you have? Definitely   a romance buzz-killer, but you’re going to be marrying this person and   sharing their life. You should ask this question, and if you have a  lot  of debt, you should absolutely volunteer this information.  Especially in an age when student loan debt often exceeds five figures, debt is a big deal and can lead to serious conflict.
  • What’s your credit score?  A follow-up to the previous question.  If it’s bad your future spouse may have a spending problem.
  • What about our children?  Kids are expensive.  Want to pay for child care, expensive schooling, a nanny?  Will  one spouse stop working to take care of the kids?
  • What about our parents? You learn a lot from your parents.  If they are frugal, their children may be also; if they are spendthrifts who have no savings not only will you not get an inheritance, you may find your spouse will also be careless with money.
  • Who is paying what? Is this going to be a two income household?  Is one partner coming into the marriage with a lot more money than the other and are they going to pool their finances or keep them separate?  Who’s going to pay the bills and make the investment decisions?  Who’s the organized one and who is careless?

As we said earlier, money is at the root of a lot of the conflicts in a marriage.  There are a lot of compatibility issues when you decide you want to spend your lives together.  Make sure that financial compatibility is well thought out.

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