Financial by Deirdre McGuire , Wealth Advisor November 11, 2020
Imagine being the pilot of a long nonstop flight. Imagine the alertness and vigilance required — you must constantly check speed, fuel, miles, altitude, and temperature gauges. You would never wait to correct an issue until you see flashing red lights, when it may already be too late. Rather, you would be constantly monitoring to ensure the flight path is clear and making the necessary adjustments.
It may seem obvious that a pilot needs to monitor all systems throughout the long flight. Yet when it comes to our finances, we often put our interests on autopilot and hope for the best.
Consider these scenarios:
Susan is married to her second husband, Alan. Her grown children live in different cities. Susan always managed the family’s money. But since her stroke, she has been unable to keep on top of everything. Susan never documented her wishes nor had a conversation with her family about how she would like to be cared for or where she kept the financial documentation. Nobody knows that Susan’s long‐term care policy papers are in a box in the closet, or that the car title is in a drawer in the kitchen. Susan never expected to be unable to run the household, but the lack of planning has made the family struggle with both the medical and financial issues. Alan feels overwhelmed, and her adult children are unsure what role they should play.
John and Beth are both busy 42‐year‐old professionals. They have been in a relationship for six years, but they are not married. When they aren’t working, they love to hike, bike, and enjoy everything the outdoors has to offer. John goes on a mountain biking trip with his friends and gets in an accident. He is seriously injured and is kept in a medically induced coma for several days; Beth is at his side but has no authority to make decisions. Beth is worried about John, but instead of being at the hospital she must meet with an attorney and go to court to be appointed as a legal guardian. Because John did not have the appropriate legal documentation in place, Beth lost valuable time, money, and control.
David and Sarah have been married for 47 years. They met with their estate planning attorney, who suggested they own all assets jointly. They updated their bank accounts and investment accounts to Joint Tenants with Rights of Survivorship (JTWROS) and designated each other as beneficiaries on their IRAs. They believed everything was in good order, but when David passed away, Sarah learned that the bank and investment accounts weren’t the only things she should have ensured were joint accounts. She called the credit card company to let them know that David passed away, and it immediately cancelled the card; as she was only an authorized user on the account and not a joint account owner. She then had to apply for a credit card under her own name, but she qualified for a much lower credit limit because she didn’t have the same credit history. Sarah then learned their car and the safe deposit box containing the car title were in David’s name only. Sarah had to coordinate with the attorney for a Small Estate Affidavit to get access to the safe deposit box and update the car registration. Sarah was frustrated; she was grieving for her husband and then had to deal with “nonsense” when she thought she and David had taken care of everything.
James and Josh have been married for two years. Both have children from a previous marriage. They pool their assets and buy a house together. The house is put in JTWROS (title companies automatically title homes this way for married couples). Their bank and brokerage accounts are also titled JTWROS. James and Josh are in a car accident in which Josh dies immediately, and James dies a week later without a will. Title to all their joint assets passed to James immediately when Josh died. James’s children are his only heirs. Due to poor planning, Josh’s children are left with no access to any of the assets.
These stories illustrate the potential impact of having your financial affairs on autopilot. Life throws us headwinds and storms, and we sometimes deviate from the flight path. Reviewing your affairs will give you an opportunity to think about what is most important to you and how you can best protect yourself and those closest to you.
At GHP Investment Advisors (GHPIA), we recommend clients not only plan for death but also for life. Address what you want to happen should your ability to make decisions become impaired and express those wishes to your family.
The GHPIA Financial Concierge team seeks ways to assist clients with matters beyond their investment portfolios. GHPIA was founded on the premise that financial planning, investments, and tax planning should be inextricably linked. Consequently, we reach out to our clients each year to review their balance sheet, income statement, and insurance coverage, as well as their estate planning and other easily overlooked financial items. This process helps us maintain a 30,000-foot perspective of our clients’ overall financial wellbeing and allows us to partner with our clients to help ensure that they’re keeping their affairs in order.
Don’t wait for flashing red flights or an issue to occur. Put your pilot hat on firmly and take control.
Click the “Download PDF” button below to get a printable version of this article, including two checklists you can save, one with the questions you should ask yourself about your preparations, and one to help you keep track of your important financial documents and other key information.