Conrad Siegel’s Brooke Petersen, CFP®, ChFC® shares a brief overview of the tax proposals the Biden Administration had on the table as of late May 2021. More recent developments point to corporate tax increases being unlikely at this time. What we do know is discussions and negotiations are ongoing. As potential tax changes unfold, we will continue to explore what they may mean for investors.
In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. Conrad Siegel’s Pennsylvania offices were abruptly closed on March 19, 2020, under the order to close all non-life sustaining businesses in the state. A few days later, on the 23rd of March, the S&P 500 Index bottomed out after a devastatingly fast decline of 34% from its high in February. The world was in a state of disarray and nobody knew what tomorrow would bring.
A year later, restrictions are still in place but there is a renewed sense of hope that we will soon be able to put the fears of virus the behind us. That we will once again be able to spend time with family and friends without that worry that we may be contributing to the spread. That we can all return to work and those that lost jobs will soon find a promising opportunity. That small businesses will experience renewed foot traffic and not have to contemplate closing their doors.
As we all anticipate these things, the word “NORMAL” has been the most overused word of the past 12 months. We cannot help but look forward to better times. Financial markets, which are a forward-looking indicator, have recovered and surpassed even the most optimistic projections from a year ago. So, what lessons have we learned from the past year while seeking out the new normal?
Emergency funds: We should always be prepared for emergencies. Building an emergency fund is one of the first steps toward achieving financial success and stability. We typically recommend saving 3-6 months’ worth of expenditures in a money market account for quick and easy access. Encourage your loved ones to start saving, no matter how long it may take to build this fund, so they will be prepared for those times they don’t see coming.
Life insurance: Speaking of the unexpected, the pandemic is a good reminder that risk management is a pillar of financial planning. While death is not an easy topic to think about and plan for, the necessity of life insurance to provide for our family if the worst happens cannot be ignored. There are a lot of products out there and we typically recommend certain types over others, so reach out if this is a topic you would like to review or if you would like us to make an introduction to a trusted agent.
Estate planning: Piggybacking on the last topic, let’s not forget about the importance of having wills and estate planning documents in place and up-to-date. Procrastination is common in this ever important area. If you do not have a will, Power of Attorney, and health care directives, do not delay in setting up an appointment with an estate planning attorney. Once again, we are happy to provide referrals in this area. Finally, don’t forget to check your beneficiary designations.
Bear markets have always come to an end. But, knowing that does not make it any less frightening when watching markets drop. Recency bias causes humans to have an affinity with recent events over historic ones. When financial markets are tumbling, this bias causes us to believe the recent past will continue into the future as we hear calls that “this time is different.” Reacting to this fear and impulse in the early spring of last year could have caused you to miss out on the rapid ride up the markets experienced despite many predicting further turmoil.
Long-term investing takes discipline. We have all heard the stories of market-timing and stock-picking that promise a fantasy of riches. Speculation is not long-term investing, and often these stories do not end happily ever after. This is why Conrad Siegel believes in investing in a broadly diversified portfolio that you feel comfortable sticking with regardless of market conditions, what you read in the headlines, or hear in the news. Your strategic asset allocation, or mix of stocks and bonds, should be based on your risk tolerance levels and your financial goals to provide you with a level of comfort even when a global pandemic has been declared.
Please do not hesitate to reach out if you would like to review any of the financial planning aspects discussed above.
We want to make sure you are confident in your future, knowing that you planned for the unknowns ahead. Here’s to looking forward to normal!
Conrad Siegel’s Tracy Burke, CFP®, ChFC® and Catherine Azeles, CFP®, RICP® share an overview of what’s happening in the investment world. This short video reviews what’s currently driving the markets, what we can expect moving forward, and what it all means for you.
Nobody likes to think about death, but yet we all have to face it sooner or later. The grief that dominates us when a loved one passes away can be immensely overwhelming. Then to make matters worse, the survivors need to figure out how to best move forward and settle the estate and financial affairs. Below is a checklist of estate items that need to be taken care of after a loved one passes away. Many of these tasks need to be handled by the executor of the estate, which would be named in the deceased’s estate planning documents.
Hire an estate settlement attorney: This may be the estate planning attorney of the deceased or another law firm experienced in settling estates. This attorney should drive the process in many ways and help to install the executor.
Secure property: Make sure their home and vehicles are safe, secure and locked. Also arrange for anything that may need regular care around the home. Notify the police so they can help keep an eye on it.
Locate the original will and other estate planning documents: Depending on the nature of previous estate planning, you may need to take some documents to the city or county office to have it accepted for probate. Your estate attorney hopefully can help with this process. If a person has died intestate (without having made a valid last will), then the intestacy laws of the state where the person lived will determine who will inherit their property; probate is still typically required.
Locate important personal documents: These may include driver’s license, social security card, passport, birth certificate, divorce decree, marriage license, property deeds, contracts and military separation papers among others.
Access safe deposit boxes at the bank: While these are less common, some people still have these boxes. Contact the bank to gain access.
Contact financial advisors, primary bank, brokers, insurance agents and accountants: Rely on these professionals to help you through the process and make it as easy as possible to wind down the estate.
Order sufficient copies of the death certificate: You may need 10 or more certified copies, depending on their financial activities. The funeral director usually will take care of ordering these.
Notify the person’s employer (if applicable): Work with the employer about any pay owed, life insurance and other benefits (pensions, etc.).
Set-up an Estate Bank (Checking) Account at the bank: This will receive and distribute funds that flow through the estate and allow the executor to pay bills.
Have the post office forward the mail: This will help to identify bills that need to be paid and accounts that may need to be closed. Pay the bills on time.
Contact the Social Security office: Do this regardless if the person was already receiving benefits by calling 1-800-772-1213. There may be survivor benefits or possibly a small lump-sum benefit. If the person was receiving benefits, they will need to discontinue the monthly payments.
Look into veterans’ benefits (if applicable): Call the VA at 1-800-827-1000 or check out their website.
Notify all financial institutions and utility companies: This includes but is not limited to banks, investment companies, mortgage companies, credit card companies, and insurance companies in addition to all of the utility companies providing service. The estate settlement attorney will guide you on how to wrap up financial accounts. You may need to provide financial institutions with either an official death certificate or copy of one. Be sure to close outstanding credit cards. For financial accounts, you will need the date-of-death value and for taxable investment accounts, you will need to request a step up in basis to the date-of-death value.
Insurance policies: Find out if the deceased had any life insurance policies – work with the insurance agent or company to have these paid out. Cancel other insurance coverage – this may include health insurance, homeowners/renters insurance (after the property is sold) and car insurance among others. If on Medicare, the Social Security office should inform Medicare in regards to parts A and B. Contact the insurance company that provided any supplemental Medicare coverage to cancel.
Try to identify online accounts and activity: Closing these to prevent fraud or unauthorized activity is important. Don’t forget about social media accounts.
Cancel driver’s license: This can help to prevent identity theft.
Make sure final tax returns are prepared: A final income tax return as well as an estate return will need to be filed, usually by an accountant. Generally, the estate tax return is due 9 months after the date of death – a 6-month extension can be requested.
TIPS for surviving spouse
Don’t make emotional decisions: When under emotional stress, many people rush into rash decisions they later regret. Take your time and make sure all decisions are the best ones.
Ask for help: Rely on other family members or friends to help you through the process. Lean heavily on a trusted financial advisor, who can often help with tracking down financial institutions and coordination with the estate attorney.
Revisit your own estate planning: When a spouse passes away, your own estate planning will need to be updated to make sure your wishes for your own estate are eventually followed.
Estate Planning is about more than the preparation of vital documents:
- Durable Power of Attorney
- Healthcare Proxy/Power of Attorney
- Beneficiary Statements
These documents may not always feel like pressing needs or be particularly fun to think about, but for the sake of your loved ones, it’s important to be prepared.
We tend to put these items off in light of more immediate concerns or expenses, but life events are unpredictable. This is a case of “hope for the best, plan for the worst.” Take the extra time and resources now to avoid complications later.
In addition to the legal documents, we encourage clients to consider the bigger picture.
Talk with your family about the critical issues of aging when you are still healthy. Too often families wait for a crisis before they talk, then it might be too late. Opening the lines of communication when everyone is healthy can help assure a smooth transition between the generations, preserving the family’s legacy, protecting the family’s assets, and maintaining family unity.
Questions to consider
- Would your loved ones benefit from a “family meeting” where everything is explained?
- Does your family know your funeral wishes?
- Have you made introductions to your trusted advisors (attorney, CPA, investment advisor)?
- Does your executor/executrix know about your plans and wishes? If they are a family member, do they want the job? Do they have the time and skills to manage the estate or would a corporate entity be a better choice?
- Does your Durable Power of Attorney understand your finances and the investment philosophy? Do they have easy access to your accounts and statements?
- Lastly, are there up-to-date records of usernames and passwords? Have you considered digital assets like your email account, Facebook, LinkedIn, Twitter, iTunes, etc.?
Health Care Wishes
Perhaps you feel like your finances are in order, but you don’t know where to start with health care.
Where would you like to receive care:
- In your home for as long as possible
- Skilled care facility – How will this be paid for?
3 resources to help get you started
- Five Wishes® is a document that has been created to help people more effectively communicate their intentions when they get seriously ill. Please request a copy from your Conrad Siegel consultant
- The Conversation Project also explores end of life planning, helping to organize one’s thoughts about their needs and wishes. Please request a copy from your consultant
- “File of Life” is a tool to establish one central location to maintain all your important medical data and emergency contacts. http://www.folife.org/
Medicare is a health insurance program operated by the federal government and benefits are available to qualifying individuals 65 or older.
Parts of Medicare
Deductible, coinsurance and copayments may apply to all of the below.
- Covers inpatient hospital stays, some skilled nursing facility, hospice and eligible home health care.
- No premium if you qualified for enough credits via the FICA Medicare payroll tax you paid during your working career!
- Helps pay for some services and products not covered by Part A, generally on an outpatient basis.
- Monthly premium is based on income.
Medicare Advantage Plans
- Variety of supplemental plans to Parts A & B offered through Medicare contracted private insurance.
- Separate monthly premium.
Prescription drug plans
- Helps pay for prescription drug costs.
- Separate monthly premium.
- Private supplemental policy that fills the “gaps” within the Medicare Part A & B coverage, including some of the deductible and coinsurance expenses.
- Separate monthly premium.
If Still working and can still receive medical insurance via employer:
Employer has fewer than 20 employees:
- Medicare is the primary provider
- Sign up for Medicare up to 3 months prior to turning age 65 at medicare.gov
Employer has 20 or more employees:
- Employer plan is the primary provider if IRS defined group health plan.
- Can sign up for Part A (premium-free) when you turn age 65.
- If you are on spouse’s employer plan, ask employer if non-working spouses can remain on plan after eligibility for Medicare.
- Because Medicare Part B requires a monthly premium, you may choose to delay enrollment in this plan while you still are covered under you or your spouse’s employer’s plan as an active employee.
- If you retire past the age of 65 and are coming off your employer’s group health plan, you have an 8-month special enrollment window in which you can sign up for Medicare Part B. If you do not enroll during this window, you may have to wait for coverage and will be subject to a penalty for late enrollment.
If Retired and Medicare will be the primary medical insurance:
For those already receiving Social Security retirement benefits
- You’ll automatically get Part A & B starting the first day of the month you turn 65. You’ll receive your Medicare card in the mail about 3 months before your 65th birthday. If you don’t want one or both parts, contact Medicare.
- Make decisions on other health coverage (Parts C, D, Medigap, or Supplemental
For those not receiving Social Security retirement benefits
- Sign up for Medicare up to 3 months prior to turning age 65 at medicare.gov
When trying to envision your retirement, a big question for many is, “How much money will I need to retire?”
A lot depends on how long you may live, how your assets are invested, and how much spending you plan on doing in retirement. There are two ways you can estimate your retirement expenses
- Income Replacement Ratio Method
- Detailed Expense Analysis Method
Let’s get started! First, grab your paystub, last year’s tax returns, and current financial statements. Once you have your documents ready download our Retirement Roadmap to get started!
Conrad Siegel’s Tracy Burke, CFP®, ChFC® and Catherine Azeles, CFP®, RICP® share an overview of what’s happening in the investment world. This short video takes us through a review of what’s driving the markets and how it impacts you.
Join us for practical investing tips in the new year. Periods of transition often carry a level of uncertainty, whether in the markets, politics, or life in general. As we saw in 2020, both the speed of the market decline and its subsequent recovery caught many investors off guard.
What do cooking and investing have in common? It’s all about the ingredients.
In the latest video in our Simplifying the Complex series, Investment Consultant Brooke Petersen, CFP®, ChFC® Brooke shares an overview of how the mix of “ingredients” in your portfolio can become the recipe for managing risk and addressing your goals.