The Great Wealth Transfer: Husband to Wife

Let’s face it, women outlive men. We’ve heard this before, but this presents a unique challenge for planners.

In the traditional family the husband is often responsible for investments. Many financial planners never talk to the wife until the husband dies. That’s when we find out how much or how little the wife knows about the family finances.

While the financial services industry focuses on the transfer of wealth from parents to children, the greatest wealth transfer is from husband to wife.

Approximately 76 million baby boomers are steamrolling toward retirement, and among them 58 percent of women of retirement age are going to need financial guidance. This is especially true of the do-it-yourself investor. In too many of these cases, the wife is just unaware of the husband’s investment strategy. She may not even know the value of the family investments or even where they are located.

Sometimes the situation is complicated by children still living at home, and by ageing parents who depend of the surviving spouse for care and support.

These are just some of the reasons we published a set of books: Before I Go, and the Before I Go Workbook.

Copies of these books are available at Amazon.com or you can contact us.

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Before I Go

 

We were asked to speak to a group of retirees at a retirement home recently.  We took as our subject our book: Before I Go.

We wrote it based on the experience we had over three decades helping people deal with the aftermath of a death in the family.  Most often is was the death of a spouse.

When the deceased was the one who managed the family assets and paid the bills, we found that all too often the surviving spouse was at a loss.  Suddenly she was alone, and often had little or no guidance about the financial affairs for which she was now responsible.

Before I Go is a guide and a workbook for couples; a list of things that the other should know in anticipation that one of them will be left alone.

For a copy of the book and workbook, go HERE.  Sharing it with your spouse will be a labor or love.

Being There

Anyone who has been in a long-term committed relationship understands what “being there” means.

One of the benefits of a stable relationship is that you have someone you can rely in when you need help.  Couples support each other.  Even as traditional roles have evolved, most families still have a division of labor when it comes to certain chores and tasks.  The fact is that some people are good at one thing and not so good at others.  What’s great about compatible couples is that they complement each other and, as a result, they are stronger, smarter and wiser together.

This is why the loss of a companion is such a traumatic experience.

All of a sudden, the person you have relied on is no longer there.  There is a big void in your life.  You may find yourself wondering what you are going to do.

While we don’t promote ourselves as the substitute spouse, in a financial sense we quite often find ourselves in that role.

When a spouse or long-time companion dies, our surviving clients often call on us to provide financial guidance.  Having dealt with hundreds of these transitions, we know the ins and outs of the estate settlement process.  We know the common pitfalls and things that can go wrong and are there to provide advice and guidance to help lift the burden and take care of things correctly and efficiently.

We relieve people from having to do it themselves.

We’ve written a set of books on this issue to help people plan ahead before their time comes, called BEFORE I GO.  The book and workbook are a wonderful compliment to traditional estate planning documents and help to fill in the missing information that those documents tend to leave out.

For a copy of these guides, you can contact us or you can buy them on Amazon.com.  Click HERE for a link.

Let us know if you have any questions or if you or anyone you’re close to needs an experienced and helpful hand working through one of these situations.

 

Consolidating your assets

In 1945, two brothers, Jacob and Samuel, were rescued from the Nazi extermination camp of Buchenwald. The rest of their family had been killed. The brothers joined other refugees that left Europe after World War II. Jacob came to the United States, became an engineer, and worked many years for a major corporation. Samuel immigrated to Australia and became an accountant.

Several years ago, Jacob died. He had never married. Samuel — by now quite elderly —came to the United States to settle Jacob’s affairs. What he found was financial chaos. Jacob had always lived frugally and invested widely. Unfortunately, he kept very poor records. Samuel spent several weeks rummaging through files, boxes, drawers, and even under couch pillows trying to gather together all the certificates, statements, and even uncashed dividend checks that Jacob had left behind. We will never be certain that all of Jacobs’s assets have been located.

Few people leave behind as chaotic a financial tangle as Jacob did, but I find that more than half of the people I advise after a death are not certain that they can identify all of a deceased’s investment assets.

The first lesson from this example is this: DO NOT KEEP STOCK OR BOND CERTIFICATES AT HOME OR IN A SAFE DEPOSIT BOX. KEEP ALL FINANCIAL ASSETS IN BROKERAGE ACCOUNTS.

Modern brokerage accounts now allow access via checkbook, electronic funds transfer (EFT) and charge cards. Have all dividends and interest payments deposited in your account; and, if you need cash, you may write a check. There is no reason for your heirs to search through your papers to find uncashed dividend checks.

As people get older, financial advisors and estate planning attorneys often advise clients to consolidate their assets. This is sound advice and greatly simplifies the job of managing an estate at death.

It is often possible to consolidate assets — even mutual funds that you have bought outside of a brokerage account — with a single financial advisor or team of advisors. This has the advantage of giving your financial advisor a better view of your assets and thus providing more comprehensive plans and advice. It also makes it easier for the surviving spouse or heirs to identify your investment assets.

Investment accounts with brokerage firms, money managers, and mutual funds typically make up the bulk of the assets of most families. It is not unusual for a family to have multiple accounts.

Be sure to make a list of your investment accounts. You may use that investment section of the workbook to do so.

From BEFORE I GO by Arie Korving.  Available at Amazon.

 

At what age are you too old to manage your money?

I was fascinated to read an article with the above title that was published recently.  It was accompanied by a picture of an elderly couple and their caregiver walking with canes.

The article reflects many of our own observations.  We have been managing money for people for over thirty years.  During that time we have seen the effect of age and ill health on the people we work with.

Here’s the good news:

“Most people who don’t suffer from cognitive impairment can continue managing their money in their 70s and 80s, according to a report just published by the Center for Retirement Research at Boston College (CRR). But of course some older Americans, and especially financial novices who take over money management after the death of a spouse, will need help …”

Here’s the bad news:

As we get older our ability to process information slows down.  As a result, the elderly are more likely to be defrauded or abused by financial scams.  They may not open their mail regularly, have problems paying bills and fail to read and understand their financial statements and reports.

If you’ve never made investment decisions, paid the bills, balanced the family checkbook or reviewed the investment accounts you are especially vulnerable.  This if often true of older couples in which the wife managed the household and the husband managed the family finances.

As we get older, there are a few basic things that we should do to protect ourselves and our loved ones.

1. Have a spending plan for your retirement years.
2. Make sure that your spouse and your financial advisor knows about the plan and knows where your accounts are so that they can be monitored for fraud or abuse.
3. At some point you or your spouse should agree to transfer your responsibility for managing your investments, and make sure that both members of a couple should know how to run the household finances.

For guidance on these issues, we suggest ordering a copy of BEFORE I GO and BEFORE I GO WORKBOOK.

Single Women and Investing

Women are in charge of more than half of the investable assets in this country.  A recent Business Insider article claims that women now control 51% of U.S. wealth worth $14 trillion, a number that’s expected to grow to $22 trillion by 2020.

Single women, whether divorced, widowed, or never married, have been a significant part of our clientele since our founding.  Widows that come to us appreciate that we listen and take time to educate them, especially if their spouses managed the family finances.  Once their initial concerns are alleviated they’re often terrific investors because they are able to take a long-term view and don’t let short-term issues rattle them very much.

Unfortunately, we have had women complain to us that other advisors that they’ve had in the past did not want to discuss the details of their investments and the strategy employed. Other women have come to us with portfolios that were devastated by inadequate diversification.

Our female clients are intelligent adults who hire us to do our best for them so that they can focus on the things that are important to them.  We are always happy to get into as much detail on their portfolios as they require.  Our focus on education, communication, diversification and risk control has led to a large and growing core of women investors, many of whom have been with us for decades.

Our book, BEFORE I GO, and the accompanying BEFORE I GO WORKBOOK, is a must-have for women who are with a spouse that handles the family finances.  Men who have always handled the family finances should also grab a copy and fill out the workbook.  If something were to happen to them, it would be a tremendous relief to their spouse to have such a resource when taking over the financial duties.  The first three chapters of our book are available free on our website.

We welcome your inquiries.

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How Advisors Can Help Surviving Spouses

Investopedia published an article we authored.

When the subject of death comes up, a term that’s often used to describe the feelings of those left behind is “loss.” But there is more to that loss than the loss of companionship. There’s also the loss of information, especially if the person who died also handled the family finances.

In my 30 years of experience advising families I have often had to help and council widows who depended on their husbands to manage the family finances. It’s fairly common for families to have several investment relationships. It’s quite rare to find that the spouse who managed the money actually did a good job keeping records and keeping his spouse “in the loop” when it comes to money management. And when her spouse dies, the widow has to deal with a host of organizations whose primary focus is on making sure that they don’t distribute money to anyone who is not entitled to it. The liability is too great. So we typically have a widow dealing with the death of a loved one, plus the Social Security Administration, the husband’s pension plan, and two, three or more brokerage firms who handled the couple’s investments. (For more, see: Estate Planning: 16 Things to Do Before You Die.)

Who Handles the Finances?

One of my earliest experiences was with a widow whose husband took care of all the family finances. He made the investment decisions, paid the bills and balanced the checkbook. He died suddenly and his wife did not know what to do. Childless and with no near relatives, she needed help. (For more, see: Estate Planning for a Surviving Spouse.)

While her husband’s will was up to date, during our first meeting she revealed that she knew nothing about her financial condition. She did not know how much she was worth, what her income sources were or what it cost her to live. It took a while to learn where all the investments were, what her income sources were and how much she needed to maintain her lifestyle. (For related reading, see: Advanced Estate Planning: Information for Caregivers and Survivors.)

Over the years I found that this situation was not uncommon. Balancing a checkbook, paying bills and making investment decisions does not appeal to a lot of people. They are happy to allow their partner to do that for them. The problem with this division of labor does not appear until the individual in charge of the finances disappears either through death or incapacitation.

Helping Manage the Transition

This is the point at which a trusted financial advisor can ride to the rescue. A good one is willing to go through records to see what it takes to run the household. He will be able to determine the survivor’s income. He will know how to identify the family’s investment and bank accounts even if the records are incomplete. Just as important, a financial advisor should be willing to provide more than simply financial advice to the surviving spouse. This is the point where questions arise about selling the extra car, upgrades around the home, moving to be nearer the children – or moving into a senior living facility. These may well be the questions a trusted advisor is able to answer. (For more, see: 6 Estate Planning Must-Haves.)

Advisors who are simply money managers will, at this point, probably find themselves replaced. According to PriceWaterhouseCoopers’ Global Private Banking/Wealth Management Survey, 2011, more than half (55%) of the survivors will fire their financial advisor following the death of a spouse. A lot of that will be due to the changing level of service that a surviving spouse needs. (For related reading, see: Why Do Widows Leave Their Advisors?)

But there is actually a better answer to the financial confusion that often follows a death. The best time to gather comprehensive information about family finances is when the couple is still alive.

Why a Will Might Not Be Enough

With due respect to the legal profession, will and trust documents are written to specify how assets are to be distributed at death. With few exceptions, they rarely get down to the kind of detail that allows the surviving spouse to take up where the deceased has left off.

What is needed is a specific book of instructions itemizing financial assets, their location and their ownership. Income will be vitally important to the surviving spouse. Realizing that income will change once one’s spouse dies, it’s important to know what the survivor’s income sources will be. Finally, the cost of maintaining the surviving spouse can be determined while both are still alive much more easily than after one has passed away. And since so many transactions now take place via password protected Internet portals, the survivor needs a list of those portals and passwords. (For further reading, see: The Importance of Estate and Contingency Planning.)

When someone dies, the surviving spouse will always have a period of grieving. But if a little though is given to preparing for the inevitable, grief does not have to be accompanied by fear of an unknown financial future.

To make it easy for couple who want to plan, purchase a copy of our book: BEFORE I GO and the BEFORE I GO WORKBOOK.  Contact us:

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Want a Short Term Market Forecast?

John Kenneth Galbraith is quoted as saying that “The function of economic forecasting is to make astrology look respectable.”

One of the most common questions that we are asked at social functions when people find out that we are in the investment business is “where’s the market headed from here?” It’s an important question, but in the short-term the answer is unknowable.

Barron’s Magazine created a graph that tracked the average of Wall Street’s top strategist’s prediction for the past 15 years versus the actual return for the market. The strategists got it wrong every year. That’s why we really don’t react to the talking heads on the cable news shows and the forecasts in newspapers and magazines. We are not paid to make short-term predictions, we are paid to get our clients a fair return on their money and to avoid major losses that could lead to financial ruin.

Investment decisions are made based on factors that we know. Things such as our clients’ time horizon; the amount of money they have to invest, their tolerance for risk, and their income sources. Then we make sure we are properly diversified. Knowing what you don’t know is as important as knowing what you do know. Guessing is not a strategy and we have no interest in making astrology look respectable.

If you want more information on Korving & Company click HERE.  To read the first three chapters of our book BEFORE I GO click HERE.

It’s National Estate Planning Awareness Week

We are reminded by an attorney friend of ours that October 19-25 is National Estate Planning Awareness Week. We are told that most Americans don’t have an estate plan. That means that there will be both confusion and probably squabbling when one of these people dies. Even worse, the whole thing can end up in court.

Contrary to popular belief, estate planning is not just for the wealthy. It’s for everyone who has someone they care about. Over the decades we have frequently helped people cope with the death of a spouse, a parent or just a good friend. Even with a up-to-date will or trust there is inevitably a great many loose ends that need attention.

Even those who have the proper documents in place often overlook the fact that they usually don’t get into the kind of detail that the people who are left behind really need. That’s why we have published a set of books specifically designed to cover the subject of estate planning and more. You can get a copy of BEFORE I GO and BEFORE I GO WORKBOOK from Korving & Company or order it from Amazon.com.

To read the first three chapters free, go HERE. And if your estate plan is non-existent or out of date, this is a wake-up call.

What Your Executor NEEDS to Know

We live in an age when everything about us seems to be public. Facebook has our pictures, the pictures of our kids, our cats, where we go, and who our friends are. Computer hackers have our e-mail addresses, our social security numbers and our deepest secrets (if we ever worked for the government). So it’s only natural that we try to hold on to as much of our privacy as possible. Unfortunately, that means that the people who we appoint to take care of our affairs after our death are often in the dark.

Here is how one on man described the situation when he asked his sister where her estate planning documents were.

Years ago, my sister named me as her personal representative, but she hadn’t given me copies of any of her estate-planning documents. Eventually, I took a trip to Phoenix to visit her and my brother-in-law, in part to discuss this very topic with her. When I asked her where she kept the documents, she led me into the guest bedroom. She opened the door to the closet, bent down and uncovered a well-camouflaged “secret compartment” in the carpeted floor. In the compartment was a locked metal box with a combination lock.

I looked at her incredulously and asked how she could expect me to be able to open the box without knowing the combination. “Oh, you’ll find that in the butter dish in the fridge,” she told me.

There was no way I would’ve found the lockbox under the trapdoor in the closet in an obscure room of her house — not to mention the combination. In fact, I wasn’t even sure I’d be able to get into her house, which was in a gated community with a coded keypad.

We have experienced similar situations many times and it is one of the reasons we wrote BEFORE I GO and the accompanying workbook.

You executor needs to know where your important papers are, how to get to them, how to access bank and investment records and any important computer files. If you do not leave them with clear instructions, you are running a huge risk that either your wishes won’t be followed or that you will have created a huge burden on your executor and cost them precious time and additional stress.

If you are interested in our guide book, you can download the first three chapters of BEFORE I GO for free by going HERE.