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Don’t Let Your Beneficiary Designations Surprise You

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For many people, retirement accounts such as an IRAs, 401ks, or 403(b)s are their largest assets.  And while many spend considerable time thinking about wills and trusts in determining where their hard earned assets will go, many, unfortunately, are too cavalier in addressing their IRA, 401k or 403(b) beneficiary designations.    

A beneficiary form is called a “will substitute” because a will does not speak to your qualified retirement assets. This means that the beneficiary form determines who will receive your assets in these plans.  It is important to coordinate beneficiary forms with your overall estate and income tax planning to ensure that those you want to benefit from those assets receive them.  

In working with a new client recently, let’s call them Mike and Carol, we discovered (much to their surprise) that their beneficiary forms were inconsistent with their living trusts.  Mike and Carol had recently amended their Trusts to provide half to each other and half to their children from previous marriages at their deaths.  Upon review of their IRA beneficiary forms, we discovered that their forms still listed each other as primary beneficiary and, therefore, their desire to split the assets would not occur.  Fortunately, Mike and Carol were able to update their beneficiary forms and now their planning is consistent with their goals.   

Beneficiary designation forms are free to complete or change, and they are just as important as your wills or trusts. 

Review your beneficiary designations today, and leave any surprises for your next birthday!

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Lost Life Insurance Policies -- How Do You Find Them?

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As I watched the many documentaries and tributes to those that perished during the 9/11/2001 attacks, I was reminded of how many spouses and children were left behind.   Families were left with voids in their lives, not only physically and emotionally, but financially as well.  It is likely that many of those that died during 9/11 left behind financial security by way of life insurance policies with their spouses and/or children as the beneficiaries.  What happened if the beneficiaries were not aware of the details of those policies?

Every day, life insurance policyholders fail to inform the beneficiaries of the policies they have in existence.  As a result, death benefits go unclaimed and families are left to struggle financially.  Where can you go to find insurance policies and benefits that you may be due?

  • Michigan’s Money Quest - The Michigan Department of Treasury’s site for unclaimed property.
  • NAUPA – The National Association of Unclaimed Property Administrators.
  • MissingMoney.com – A search engine for unclaimed property in the U.S.
  • NAIC – The National Association of Insurance Commissioners orphaned life insurance policy search.
  • MIB Solutions – Lost life insurance policy locator service.

If you think you may be the beneficiary on a lost insurance policy, start your search today.

In addition, if you are the owner of a life insurance policy, make sure that the important people in your financial life are aware of the policy (insurance company, policy number, beneficiaries).  Document your life insurance policies and additional important financial information using the Center’s free Personal Financial Record Keeping document.

Beach Volleyball Wisdom


Commitment to a process, adjusting to new circumstances, and effective communication are all actions that help keep financial plans on track.  Partner Matt Chope transfers the same skills to the volleyball court, for which he was recently honored.  

This winter Matt competed in an international tournament in Puerto Vallarta, Mexico.  The tournament brought together 80+ players and 5 pros from around the world for 6 days of intense competition.  With 11 beach courts used concurrently, the tournament format has each player compete in 30-40 games where teammates and opponents change every game.     

 Matt says, "What makes this an exciting event is not only the physical dexterity and conditioning required to last six days in the hot sand and elements, but also developing friendships with such a diverse group of people with unique strengths and abilities." 

Much to Matt's surprise and honor, he was chosen as one of three male Most Valuable Players by his peer players at the end of the tourney.  Besides performing well on the volleyball court, a positive attitude and good sportsmanship are keys to Matt's tournament success.

These qualities also make Matt a valued Center team member and effective financial planner.Congratulations, Matt!
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What Does MOM Stand For?

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The other day, my teenage daughter related to me a quip she received by way of Twitter.  It goes something like this… a child was pestering his mother about his urgent need for a new cell phone.  The mother continued to answer “NO,” without an end to the requests.  She finally asked in frustration, “Do you think I’m made of money?”   The child replied, “Isn’t that what MOM stands for… Made Of Money?”

My first response to this story was to chuckle; it is a very clever play on words.  However, after my own children continued to use the Made Of Money reference over the next several days, I realized that this is a clear indication of a real problem.  Most school age children and younger adults are receiving little to no financial education at school or at home.  They see the kids on TV and their friends at school ask and receive anything they ask for, without understanding what it takes to earn the dollars that are being spent.

As a parent, what can you do to begin to teach your children about the value of money?

  • Help them learn the difference between wants and needs. 
  • Pay them an allowance, but make them earn it with specific weekly responsibilities.
  • Put them in charge of something (financially) at home; put them in charge of something at home (like food for their pet).  They are in charge of buying it when it runs out…using part of their allowance.
  • Encourage saving (i.e. if they can save ½ of something they want, you can match it to make up the difference).

For list of Financial Education Resources for Parents and Children, visit the Certified Financial Planner Board of Standards, Inc. website at http://www.cfp.net/learn/resources_children.asp

Gold Sparkles, But For How Long?

There has been much interest in the media over the past year regarding gold as the bullion price per ounce has gained nearly 30% this year.  As a result, investor interest in gold has increased as a diversifier to portfolios because many view this as a "safe haven." Gold is a “fear” asset class, and uncertainty in almost every risk asset class has intensified gold’s price increase.  Much of the gains this year can be attributed to growing uncertainty surrounding U.S. Treasuries and European Sovereign debt.  Investor demand has also increased because the asset class has become more accessible through new products such as ETF’s (Exchange Traded Funds). 

In the past gold has shown itself to be a good hedging instrument against inflation and a weakening dollar and tends to have almost no correlation to stock and bonds.  Other investments also serve as a potential hedge against inflation and a weakening US dollar such as TIPS (Treasury Inflation-Protected Security), commodities, and foreign currency bond funds.  Naturally, gold has been part of our research efforts on this front.  The run up in the price of gold over the last few years is a concern to us (see chart below). 

The cost to extract gold from the ground is roughly $740 per ounce.  With gold trading over $1,882 per ounce as of 9/2/11 that is a $1142 premium.  This could indicate a supply and demand imbalance and perhaps, panic or speculative buying.  Gold’s price has often been driven more by speculation or its role as investment portfolio “insurance” than by fundamentals.  As a result, gold is subject to market risk. 

Sources:

No-Load Fund Analyst July 2009

Geoff Considine Ph.D., Advisor Perspectives, Sept. 2010

 

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning, Inc., and are not necessarily those of RJFS or Raymond James.  Investments mentioned may not be suitable for all investors.  Past performance may not be indicative of future results.  Gold is subject to the special risks associated with investing in precious metals, including but not limited to:  price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated.

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Back-to-School Shopping -- 5 Financial Lessons for Your Kids

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It’s that time again – the first day of school is right around the corner!  You likely received your supply lists weeks ago and stores have been advertising back-to-school items since the Fourth of July.  If you’re like me, you’re dreading the last-minute crowds…and the bill at check-out.

I have read several articles recently telling parents that the easiest way to save money on school supplies is to leave your children at home.  As tempting as this may be, I urge you to take your children on this shopping trip.  Back-to-school shopping can be a great opportunity for financial education. 

 

Here are 5 financial lessons you can teach your children:

 

1.  Take inventory of what you have.  Before you leave the house, make sure you know what you have and what you need to avoid purchasing duplicate items.

2.  Comparison shop.  Search printed newspaper ads or shop the internet to find sales and compare prices on the items you need.  Coupons are also a great savings tool!

3.  Set a budget.  Set the maximum dollar amount you can afford to spend, and stick to it.  This is a basic cash flow planning principle we should all stick to!

4.  Stick to a list.  Make a list of the items you need, and don't deviate.  Just like a trip to the grocery store, straying from your list can be detrimental to your wallet.

5.  Make smart choices.  Within your budget, there may be items you choose to spend more on.  Consider buying store brands for basic items, and spending a little extra for others (backpacks, clothes, etc.) to enhance quality or style.

Prepare a plan and stick to it for the start to a successful school year!

Live YOUR Plan™

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