Category: Before I Go

Do you have a Dusty Trust?

What’s a dusty trust, you may ask, or a dusty will? They are trusts and wills that are so old that you have to blow the dust off. It’s a term made up by David Richmond of Eaton Vance.

Many actually THINK they are speaking the truth. For them, the definition of estate planning is the will and trusts they set up at age 35 when their youngest kid was still in diapers. Doesn’t matter that they are now in their late 60s and have accumulated millions since those early hopeful days, including all sorts of treasures, especially the most precious ones … grandchildren

But it also applies to trusts and wills that are not very old. The estate tax laws have been changing almost every year for the last decade. That means that terms like “estate tax exemption” now have very different meanings than they did 10 years ago. It’s possible that you could accidentally disinherit your spouse unless you update your estate planning documents.

Beneficiary designations should also be reviewed regularly. I spoke with someone recently whose wife passed away earlier this year. He was forgetful, and his investment account still had his wife’s name on it. She was the beneficiary of his IRA as well as his life insurance policy. Her name was still on the deed to their home.

The role of a good Registered Investment Advisor (RIA) like Korving & Company is to review your estate plans and beneficiary designations, advising you about changes that you need to be aware of. Whether its changes in the tax laws or changes in your personal life, keeping you updated will keep your heirs from inheriting a tangled mess.

For more information, get a copy of our estate planning guide: Before I Go.

How To Choose a Financial Advisor

The current issue of Financial Advisor magazine has an article about the ranking of financial advisors. The issue they raise is an important one. The amount of assets that an advisor has is often used as a shorthand way of determining how “good” that advisor is. It’s a term called “assets under management” (AUM). To use an automotive expression, when you look under the hood, AUM often has no bearing on the quality of the advisor.

Some large firms, even those with over a billion dollars in AUM have one huge client and a bunch of little accounts. Under those circumstances you can imagine how much attention the small clients get.  In fact, it’s a common complaint of people who work with large firms, they don’t get much attention unless they have tens or hundred of millions in assets.

Other firms have one or several principals in their mid to late 60s. They could very well go out of business when they retire, leaving their clients looking for a new advisor. How would you feel if your advisor shut down when you are retired?

The bottom line is this: your advisor should be there for you for a long, long time. Check out the firm, ask about their clients; see if the people there will be there for you for the rest of your life.

Check us out. We stack up very well.  And check out our book on estate planning: BEFORE IF GO.

What to do when couples disagree on investing

It’s well known in the investment business that women are more risk averse than men. There are, of course, exceptions and I should qualify that by saying that’s true of “most” women and men.

In most cases this does not cause problems when couples invest. That’s because there is usually a division of labor with one spouse making most of the investment decisions. However, when spouses collaborate on investing, a significant difference of opinion can cause a lot of stress in a marriage. Differences in money management styles between two partners can ruin a marriage.

That’s the time for the couple to meet with a trusted financial advisor who can provide unbiased advice and professional expertise. Getting an intermediary involved in what could be a serious dispute usually helps. This often allows a couple to come to an understanding that both can agree works for them.

If you and your partner have disagreements about money and investing, get in touch with us.

And don’t forget to read the first three chapters of BEFORE I GO.  It’s free.

What is the retiree’s biggest fear?

The retiree’s biggest fear is running out of money.

According to a recent survey, six out of ten retirees say they’re worried about their finances.  Their two biggest fears are getting sick and losing their assets to pay for medical care.  Their next greatest fear is that they’ll stay healthy and outlive their money.

And little wonder.  Interest rates on savings accounts have been near zero for years.  The stock markets remain scary to many potential investors.  And while the official inflation numbers are low, anyone who has shopped for food, filled their gas tank or visited a doctor knows that prices are going up rapidly.

This is a daunting environment for people who are managing their investments on their own.

Still others think they have diversified by having several “financial advisors” and accounts at several major investment firms.  What they actually end up having are accounts with several investment salesmen who make their money by selling them investment products.

How do high-net-worth families manage their finances?  Most prefer to work with a single firm to manage all their financial needs.  It’s a mistake to depend on stock and bond salesmen when it comes to providing planning and guidance.  They want someone who acts as a fiduciary.  A fiduciary is someone who puts your needs and ahead of his own.  That describes a fee-only RIA (Registered Investment Advisor) like Korving & Company.  Our concerns are your concerns.  Our goal is to alleviate people’s fears of running out of money in retirement.

Check out our website and see what we offer to families approaching retirement and those already in retirement.  And download and read the first three chapters of BEFORE I GO, free.

New Website for Korving & Company

Hello!
I’m excited to announce our newly redesigned website with lots of new features designed with our clients in mind. The address has not changed, it’s still www.korvingco.com.
It has a new look and many new features. Go there and you’ll find:

  • A link to our book: BEFORE I GO. You can even download the first three chapters.
  • My interview on “The Hampton Roads Show.”
  • Our latest blog posts. These are updated regularly. Our blog was recently recognized as one of the top financial blogs.
  • Our latest research paper “8 Tips for a Better Retirement.”
  • Online appointment booking – schedule phone calls or reviews with us online, when it’s convenient for you.
  • A form to send us a message.
  • A link to your Schwab account.
  • A link to your Lock Box.
  • Links to our social media pages.

We’ve worked hard to make this a website our clients can use and visit regularly. It has even been “mobile optimized” to show up better on your cell phone or tablet computer. Feel free pass this e-mail or a link to our website to family and friends. We still have some room for the right kind of clients.
If you belong to a group that’s looking for speakers, let us know. We’ll try to provide an entertaining and educational experience.
As always, we welcome your comments or suggestions for improving our service.

Before I Go" reader reviews

BEFORE I GO and the BEFORE I GO WORKBOOK is available on Amazon.com and has received wonderful reader reviews.  Here is what some of the readers said:

Nancy B Moy reviewed Before I Go

A must read for all….esp. those 60+ November 14, 2013
Every husband, wife or significant other needs to read this book and follow through with the workbook. What a wonderful gift to leave behind when you leave this earth. Everyone who has ever had to deal with the estate of a loved one knows how important it is to leave great records …..it can be mind boggling trying to locate important, accounts numbers, insurance policies, etc. Korving gives each one of us the place not only to record financial information but also our own wishes regarding our own funeral. As a financial adviser, he also clears up the differences between wills, trusts, titling of assets etc. that can help you have your “ducks in a row” when your time comes. A must purchase…both the booklet and workbook.

S. Harms “Dr Susan” reviewed Before I Go Workbook

1 of 1 people found the following helpful
Bought 2 May 26, 2013
I bought this for myself (I am 64) but I am also the executor for my 80yr old aunt. She wanted me to write down some questions to ask her attorney and also help her prepare, I sent her the book and she loved it.
I am working thru it, find that there are pages I need to attach(such as password, PIN lists) but causes me to write down things I have been thinking but wont share verbally with my sons. They don’t want to talk about me dying.
I recommend the books, both the book (easily readable in an hour) and the workbook.

beachcomber reviewed Before I Go

Estate planning beyond the Will or Trust April 5, 2013
Excellent summary of what everyone needs to do as part of their estate planning process.
People believe that they have completed their estate plans when they have a will or trust prepared by an attorney. Nothing could be further from the truth. The information people need when a spouse dies often dies with them.
Before I Go begins with a review of Advance Directives, moves on to funeral planning and then gets into the financial issues that people face after the death of a loved one.
Planning for ones own demise is no one’s idea of a good time, but avoidance of the issue does not stop the inevitable. It is wisdom and kindness to ones family to prepare.
Korving is best known as an investment adviser specializing in retirement planning. He uses his experience developed over 25 years helping people deal with the emotional and financial issues surrounding the death of a spouse. The advice he gives in Before I Go is invaluable and the accompanying workbook allows both the husband and wife to provide the information that one or the other will need when that time comes.
Thanks to our readers.  For an autographed copy, please call 757-638-5490.

Remedying a Common Estate Planning Error: Improper Titling of Assets

The Hook Law Center has written an important essay on the issue of titling of assets.  It’s a common misconception that wills and trusts determine who gets a decadent’s assets.  This is not necessarily true.

Your will or trust generally does not govern disposition of the following:

  1. Any real property or accounts that may be owned jointly by you and another with the right of survivorship;
  2. Any real property with a transfer on death designation;
  3. Any account that may have a payable on death or transfer on death designation;
  4. Retirement accounts, 401(k) plans, 403(b) plans, and IRAs;
  5. Survivor benefit plans; and
  6. Life insurance policies.

The assets in these accounts, plans and policies will usually pass to the surviving co-owner or the designated beneficiary of these accounts, plans, and policies. Beneficiary designations usually override the disposition of your assets as provided in your will or trust, as any accounts, plans, and policies that designate a specific beneficiary will be payable to that beneficiary.

Read the whole thing.   And get a copy of my book BEFORE I GOto help you plan better.

Three things you must do as you get older.

There’s a famous saying that I have come to appreciate: “Old age isn’t for sissies.”  There are lots of things that begin to bother us as we age that never did when we were young.  Aches and pains are the most obvious of them.  A lot of us become much too familiar with our doctor’s waiting room.

After a lifetime of storing memories we find that too many things have gotten lost in the pile of “stuff” that we keep in mind.  No one really wants to admit that we’re not as strong or “sharp” as we once were.  So instead of taking care of our own yard or doing our taxes, we hire someone else to do it.

Aging is a sensitive topic.  It can be awkward to tell people that they may want to look for help doing things they have always done on their own.  But it is something that has to be done because it’s just the right thing to do.

I have had this conversation with a number of clients as they age.  Sometimes they even bring up the subject.  One of my best clients, let’s call him Bill, was diagnosed with cancer a year ago.  He went through a series of treatments, but he finally came to the realization that the end was probably near.  I met with Bill and his wife and we had a long, heartfelt conversation.  He and I had worked together for years to manage his portfolio and he made me promise to take care of the family finances after he was gone.   I had already given them a copy of my book “Before I Go” and the workbook that goes along with it.   As a result, after he passed away we did not have to wonder about the family’s assets or what his wife’s income was going to be.

But for many people, the end doesn’t give us as much time as Bill had.  It may be an accident, a sudden heart attack or a stroke.  That’s why it is best to prepare while both husband and wife are still healthy and able to make informed decisions.  What should those preparations include?

  • Make sure your will is up to date.  Check with an estate planning attorney to make sure it is current with your current family situation and the tax laws.
  • Prepare an Advance Medical Directive that will tell your family and physicians what you want done if you become incapacitated.
  • Find someone who can provide quality financial guidance to the surviving widow or children if that is not something that they have the knowledge, time or interest in taking on.

The last one is often over looked, but it is critically important to those you love and would leave behind.  You need to find a person or team who puts your survivors’ interests first.  Someone who knows how to generate the income that retirees need.  Someone who is experienced in retirement planning and estate management.  Someone who you can trust to manage your assets now, and do the same for those you leave behind.

It’s a challenge, and one that you should take care of now because you never know when it will be needed.

Arie Korving is the author of the book “Before I Go” and the “Before I Go Workbook”  and Chairman of Korving & Company, a Registered Investment Advisor in Suffolk, VA.  For help with this and other subjects on estate planning, he can be contacted at 757-638-5490.  To get a copy of his book and workbook, visit Amazon.com or call Korving & Company, 757-638-5490.

Death and Taxes

The old saying about death and taxes being the only things that are certain is only partly true. Taxes change. Death is certain. The end of our lives is something that we face only reluctantly, if at all. When someone close to us dies, the effect is al­ways sadness. When a spouse or parent dies, the effect is traumatic.

Because death is an unpleasant subject, most people prefer to spend their time thinking of more pleasant subjects.  They believe that they have done their planning if they meet with an attorney to have a will or trust document prepared.  Once this is done the feeling is that the planning process is complete.  Unfortunately that’s rarely true.  This traditional view of estate planning gives your heirs the view from thirty thousand feet but often fails to provide the guidance that surviving spouses or children really need.  Here is an example from real life.

Sue Smith (not her real name) became a widow after her husband, Sam’s, brief illness. Sam had a small account with me but the bulk of his portfolio was distributed among a number of different investment firms and mutual fund custodians.  Only Sam had a complete picture of the family’s finances and he rebuffed suggestions to consolidate his assets and do planning beyond reviewing his will on a regular basis.  Sam retired after a career as an executive at a large corporation.  He had been a take-charge guy all his life, both at work and at home. He had been the sole income earner, made the investment decisions and paid the bills, while Sue was in charge of the home and children. They were a very typical couple.  Both were healthy, until Sam had a sudden stroke that left him incapacitated and led to his death a few weeks later.  Sue was suddenly alone.

In a matter of hours Sue had to make a number of decisions. Some required immediate action, such as the selection of a funeral home and the arrangement of the funeral service.  Shortly after the funeral Sue realized she needed help and asked me to be her “financial advisor” and I agreed.  We met at her home to gather basic information.  I began by asking her basic questions.  What was her income now that she was single? What level of income would she need to maintain her lifestyle?  Did she have any debts?  What were her regular bills and how were they paid?  What were her financial assets and where were they?  Did her husband have a life insurance policy or annuity?

The answer to all of these questions was “I don’t know.”

The psychological result of being left alone and unsure of herself was severe.  Sue was overwhelmed. This was a crushing burden to fall on someone who had never been required to take care of financial issues. It was as if a child had been dropped in the middle of dark woods with wild animals prowling around. The result was not only deep sadness but also fear and paranoia. Since her husband had always taken care of the fam­ily finances, she felt unprepared to handle major decisions and was terrified of being victimized. And because Sam had not left an in­struction manual for her, Sue went through a long period of grief combined with anger and confusion.

Since Sue did not have a the information that we needed, we had to go through Sam’s files, make phone calls and watch the mail and as bills and statements came in to get an true picture of her assets, income and expenses.  It took several months before we had a good handle on her finances.

Fortunately, Sam left Sue with a sizeable estate and I was able to provide all the income she needed as well as leaving a sizeable inheritance for her heirs.  However, Sue never over­came the issues that surfaced after her husband’s death, and it made her life as a “suddenly single” person very unhappy.  Sam never provided her with the guidance she needed once he was gone and it affected her in a very profound way.

As a result of my experience with Sue and a number of other widows who came to me for help, I prepared a manual that became a book, Before I Go, which I provide to all of my clients.   It provides the answers to the questions that are not addressed by the usual estate planning documents but are the questions that those who are left behind need to know.  The view from thirty thousand feet is not enough when it comes to managing the family finances and too often the details are ignored unless couples are made aware of the need for detailed planning that goes beyond preparing the will or trust.

 

What would you like to know about your grandparents? What would you like your grandchildren to know about you?

How many of us really know our deceased grandparents or even our deceased parents?  Do we know what they really stood for, their key life stories, lessons or values?

How many of us have loved ones pass away only to later wish we had asked them some provocative questions – question that would have helped us know them better and appreciate what they went through?  What could we have learned?

The problem is that family dynamics are a barrier to this level of communication.  Who asks their parents and grandparents these questions of an intensely personal nature and how many parents want to reveal themselves to their children, warts and all?

A facilitator can help make this communication possible.  One such facilitator can actually be the family’s financial advisor.

We are developing a workshop to make this possible.  In the meantime, one place to communicate this kind of information to your children and grandchildren is our book BEFORE I GO.

You may know someone who is dealing with this same issue. If you think it will  help, feel free to forward this email, and let me know if you have questions  about a specific situation

What Each Spouse Should Know About Finances

A recent Wall Street Journal article discusses the division of labor in families.

In the typical division of labor in many households, one spouse manages the bills and the assets.  This is natural and healthy, financial planners say.  But both spouses should have at least a baseline understanding of the family finances, the experts add—and this seldom seems to be the case.
Just 28{030251e622a83165372097b752b1e1477acc3e16319689a4bdeb1497eb0fac93} of couples were “completely confident” that either spouse alone was prepared to steer their joint retirement finances, according to a recent study by Fidelity Investments.

Disability, divorce or death can thrust new responsibilities on spouses when they are ill-prepared. But talking about such “what ifs” can stir up uncomfortable questions and issues, so many couples avoid doing so.
“There’s a tendency to say, ‘Tomorrow, tomorrow, tomorrow,’ ” says Dorian Mintzer, a retirement-transition coach, speaker and author. Most couples “want to avoid confrontation and don’t want to think about their own mortality,” she says, even though “talking about it can free you up and help you try to plan what’s ahead.”

I was actually happy to see the article because I completely agree with this analysis.  This is exactly the reason we published the book BEFORE I GO.  Get a copy for yourself or someone you love.  If you are a couple like the one described in the WSJ article, create a relationship with an RIA who can help the spouse who is less prepared and can help the survivor cope.

Heiress’ Estate Settlement Reached

We file this under “Estate Planning” and “Lifestyle.”  It’s from the Hook Law Center which provides us with an interesting peek into the issues that wealth can create.

Perhaps you have been reading about the estate of Huguette Clark, a wealthy, eccentric who died in New York City in May 2011. A settlement has now been reached as of September 24, 2013. It was the story of a wealthy heiress (copper industry) who had drawn up 2 conflicting wills within 6 months of each other in 2005. When $300 million is involved, it was no surprise that this would be resolved in court. Not only individuals, but philanthropic institutions like the Corcoran Gallery of Art in Washington, DC were also parties to the legal challenge. There were some winners and some losers in the outcome. Sixteen law firms were involved in the settlement.
What happened was this. Huguette Clark was the only surviving child of a 2nd marriage of William Clark, copper financier and former US Senator. He died in 1925, but Huguette did not die until 2011 at the age of 104. Huguette had a brief marriage to the son of one of her father’s employees which ended in 1930. She had no offspring. Huguette gradually became more and more reclusive as the years passed, especially after her mother’s death in 1960. She occupied her time collecting dolls, and she spent the last 20 years of her life living at Beth Israel Hospital in New York, paying nearly $400,000 a year for care, despite being relatively healthy and owning residences in New York City and Santa Barbara, CA. The second will benefited one of the beneficiaries of the first will and a longtime nurse, Hadassah Peri, while somewhat distant relatives and children from her father’s first marriage were cut out.
After more than two years of legal battles, the resolution is as follows. 20 relatives connected to William Clark’s first marriage will receive a total of $34.5 million to be divided among them. Nurse Peri has to pay back $5 million of the $31 million she received over a 20-year period, in exchange for a pledge of no further legal proceedings on her part. A goddaughter and some other employees will receive more than $4 million. The Bellosguardo Foundation, incorporated in New York, will receive her seaside estate in Santa Barbara, CA valued at $85 million, her doll collection valued at more than $1 million, and $5 million in cash. Another Bellosguardo Foundation, incorporated in CA in 2011, will receive nothing. The Corcoran Gallery of Art will receive half of the value in excess of $25 million that the sale of Monet’s “Water Lillies” yields. They also may receive 25{030251e622a83165372097b752b1e1477acc3e16319689a4bdeb1497eb0fac93} of any money recovered from other individuals who received monetary gifts from Huguette late in her life, to which they may not have been entitled. The Corcoran has received many millions over the years from the Clark family, including gifts from her father and Huguette herself. The timing couldn’t be better for the Corcoran. It has had recent financial trouble, and has even considered relocating from its prestigious DC location to meet its financial obligations.

Hugette could have benefitted from our book “Before I Go.” It’s too late for her, but not too late for you.

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