Tag: Estate

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.

Where Should I Keep My Estate Planning Documents?

The Hook Law Firm has a good article on where you should keep your estate planning documents.  Read the whole thing.
They make a number of good points.

  • Make sure that you have original copy of your will.  Copies may not be accepted for probate.
  • Make sure someone knows where your important documents are.
  • Make sure that people you trust to use the documents can get to them.
  • Destroy old or out-of-date documents to avoid confusion.

We offer a set of books: Before I Go and Before I Go Workbook to guide people through the process of preparing their estate for their heirs.  You can order a copy at Amazon.com or get an autographed set directly from us for $25.  Just send us a check made out to Korving & Company, 1510 Breezeport Way, Suite 800, Suffolk, VA 23435.

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Finding financial guidance for the middle aged executive

Let’s imagine that you’re now firmly on your career track. You’re an expert in your field and have a team of experts to manage some of the complexities of life outside of work.

  • You doctor gives you regular medical check-ups.
  • Your attorney to reviews your estate plans regularly.
  • Your CPA prepares your taxes and suggests ways to reduce them.
  • But there’s something missing ….

You are putting away some serious money and you are getting nervous about market risk so you want to find a good financial advisor. You don’t want a broker who will call you to sell stocks and bonds on commission. You want someone who will create a plan and give you unbiased financial advice. Someone who will manage your portfolio for you – commission free – so that your retirement plans won’t blow up just as you get ready to enjoy independence.

But there’s a dilemma. Just as you feel more comfortable knowing that the pilot on your next flight has spent thousands of hours flying your plane, you want to find a seasoned financial pro who has experience in all kinds of markets. But those years of experience could well mean that he’ll retire before you do! What’s the solution?

Recognizing that continuity is important in a relationship as personal as financial guidance, many advisors have set up teams.

Korving & Company is a good example. Arie Korving has nearly 30 years of experience as a financial advisor. A Certified Financial Planner, he is the author of numerous articles and books on finance and estate planning, he has experience that includes both Bull and Bear markets. He’s seen the investment world from both sides and knows that honesty and experience is what people want in their advisor.

Stephen Korving received his degree in finance from Virginia Tech with a focus on risk management. After graduation he joined Cambridge Associates, one of the country’s leading investment management consulting firms. Cambridge provides guidance to major institutions and the super-rich. A Certified Financial Planner, he teamed up with Arie ten years ago and in 2010 they founded Korving & Company, a boutique RIA (Registered Investment Advisor) focused on providing holistic financial guidance to executives and retirees.

Together they provide decades of experience and a plan to continue to do so for decades into the future.  Check them out.

How to live well in retirement

No one plans to live in poverty in retirement. But one of the biggest problems for the majority of current workers is that they don’t plan … period. So what can we do to live better in retirement?

  •  Save, save, save and start early. The biggest tool that anyone has is time. Time is the magic that makes compound interest a miracle.  There is no substitute for starting early, and that means as soon as you leave school and begin work. Those who begin saving in their 20s saving $50 a month will end up with more money that those who started in their 40s.
  • Don’t retire early. People are living longer than ever before. Unless you are already rich, retiring early has at least three pernicious effects. First, your income stops and you begin drawing down your savings. Second, your pension and social security payments are much lower than if you wait. Third, you will spend more time as a retiree, forcing you to reduce spending to stretch your savings dollars.
  • After you retire from your main job and if you are physically able, find a paying job that will supplement your other income sources.
  • Find a way to cut costs. One of the best ways to reduce the cost of living during retirement is to be out of debt and that includes mortgage debt. It also pays, once you are empty nesters, to downsize the home. This has the effect of reducing taxes, utility and maintenance costs.

And once you are retired, get a copy of my book, Before I Go, so that you will be ready for the next stage on your journey.

If you were widowed, would you fire your husband’s financial advisor?

According to an article in Financial Advisor magazine,

Surviving spouses — statistically, wives — have a habit of firing financial advisors. Most sources peg the rate at about 50%, but the advisor-education website says the rate is closer to 70% if you wait a few years for the penny to drop.

Why is that?  It seems that most advisors have an “unbalanced advisor-client relationship.”  That means the advisor focuses on the half of the couple that seems to be more financially savvy.  This results in the surviving spouse, often the wife, not really thinking that the advisor is “her” advisor.

The article goes on to suggest that the advisor “provide basic, nuts-and-bolts financial advice to the surviving spouse.”

At Korving & Co. we go one better.  We have written a set of books “Before I Go” and the “Before I Go Workbook” anticipating the issues that the surviving spouse will face.

That’s why when our clients lose a spouse, we rarely lose the survivor.  They know that we focus on the family and the surviving widow trust us to take care of her.  In fact, we often find that when both husband and wife have passed on, the children come to us to manage their affairs.

For a personally autographed copy of both books, or more information on how we can help you, contact us.

It’s about making people’s lives better

It’s not just about money.

In most people’s minds the term “financial advisor” has all the emphasis on “financial” and very little about “advisor.” We disagree. We think of ourselves as advisors to the family, helping guide families with a whole range of issues. Some don’t have anything to do with investing.

We have gone car shopping for a client who didn’t want to deal with car salesmen. We have helped people choose the right retirement community.  We help educate young people about investing to make sure they get a good start in life.  We explore vacation destinations for our clients. We review our clients’ estate plans and beneficiary designations to make sure that they are in line with their wishes. We wrote a book designed to help people provide critical information to their heirs before they pass on (Before I Go).

And, of course, we have provided peace of mind to clients who worried about running out of money in their retirement years. This allowed them to do the things they wanted such as travel, spend time with their grandchildren or just relax with a good book.

We do more than manage portfolios. We assist the people who come to us for advice with the deeply personal things in their lives. Making people’s lives better is our goal.

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Family Business Financial Planning

A family business is one of the ways that individuals build something of value for themselves and their family. Suffolk is a great example of a community where family owned restaurants, hardware stores, gift shops, bike shops, jewelry, sporting goods, clothing and furniture stores line the streets. Suffolk has its national chains, but its most recognizable businesses – in the pork and peanut industry – began as family businesses.

These family shops often provide a comfortable living as well as job opportunities for family members of the founders. Whether they stay small and local or grow into large businesses, there are challenges that everyone running a business has to face.

The first is competition. For every business there is a better financed competitor. The supermarket doomed the family-run grocery store. Wal Mart is a feared competitor for anyone selling groceries, clothing, furniture, electronics, toys, eyeglasses; and now it’s even getting into banking.

The second challenge is a bad economy. Many communities have seen their downtowns shuttered when local industry left. The businesses depending on housing have still not fully recovered from the crash of 2008.

Finally, most small businesses are very dependent on one or a few key people. If the children don’t want to get into the business when the parents are ready to retire, the business often closes. There is no guarantee that a business can be sold when they owner is ready to retire. Unless the owner has prepared for this, the financial results can be devastating.

For all these reasons, the family business owner has to make sure that they have prepared themselves financially for life after the business. Succession planning is critically important and should be part of the business plan from the moment the business is started. If a business is a partnership, buy-sell agreements should be in place to avoid complications from the death of a partner. If a business is going to be passed along to children, the owners should be clear about the division of assets. Otherwise there is likely to be wrangling – or even lawsuits – over who is entitled to what.

Most people in business choose to convert from individual proprietorships to limited liability companies. This protects the business owners’ personal assets in case of a lawsuit against the business. Some convert to “Chapter C” corporations for tax purposes. If a company wants to grow even larger, it may want to raise cash by “going public” and selling shares to the general public.

One of the most common mistakes that business owners make is to invest too much of their money in the business. It’s a fact that a family business is a high-risk enterprise. Competition, the economy – even a change in traffic patterns – can bring a business to its knees. Building an investment portfolio should go hand-in-hand with building a business. When most of your money is tied up in your business you are making the same mistake as the investor who owns only one stock. Diversification reduces risk and provides a safety net. Factors that are out of your control could end up severely damaging your business value, thereby crippling your total savings and your future goals and ambitions.

In addition to the traditional savings and investment accounts, the tax code provides many ways for business owners to put money aside in a variety of tax-deferred accounts such as SEP-IRAs, 401(k) plans, and SIMPLE-IRA plans. As a business owner you can even set up a “Defined Benefit Plan” which works much like a traditional pension.

There are a great many things that running a business entails beyond offering customers a great product or service. People who start a business are usually focused on this aspect of the business. But to insure that the business – and the family – survives and thrives, business owners should seek the assistance and guidance of a team consisting of an attorney, an accountant and a financial planner. They may be in the background, but they are critical for the financial success of the family business.

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.

The Biggest Problem for Wealthy Families

I recently visited a house that was once the largest private residence in the country: the “Biltmore” mansion. It was built by the grandson of the founder, “Commodore” Cornelius Vanderbilt, who built the original family fortune. His son doubled the fortune which, in today’s dollars would be worth $300 billion, making the family one of the ten richest in human history. But the heirs managed to run through this immense wealth.

Biltmore

Within just 30 years of the death of the Commodore no member of the Vanderbilt family was among the richest in the US. And 48 years after his death, one of his grandchildren is said to have died penniless.
In less than a single generation the surviving Vanderbilts had spent the majority of their family wealth!

No one today is that wealthy, but there is a lesson here for those who have accumulated multimillion dollar fortunes. While families today will openly discuss formerly taboo subjects like same-sex marriage and drug use, talking about family wealth seems to be harder to discuss.

Most wealthy people have wills and trusts but a substantial number of children have no idea of how much money their parents have. I have experienced this frequently in our practice when we disclose to heirs how much money they are actually inheriting. This applies not just to the wealthy but also the moderately “comfortable.”

According to a recent study, approximately 80{030251e622a83165372097b752b1e1477acc3e16319689a4bdeb1497eb0fac93} to 90{030251e622a83165372097b752b1e1477acc3e16319689a4bdeb1497eb0fac93} of families who have inheritable wealth have an up-to-date will. Only about half have discussed their inheritance with their children.

The reasons why parents don’t talk about money with their children range from not thinking it’s important, don’t want children to feel entitled, or they just don’t talk about money.

The problem is that the receipt of sudden wealth can have a deleterious affect on people. Too often a family fortune that has been created with great effort is squandered by people who have no idea that their inheritance is finite.

What can be done? Creating an environment and venue where family wealth can be discussed can be facilitated by a family’s financial advisor, ideally a Registered Investment Advisor – rather than a broker – who has the best interest of the family at heart.

If you need someone who can help you talk about money with your heirs, give us a call. We’ll be happy to help.

Choosing 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.

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