Financial Planning Part 1: Don’t Be Afraid to Ask In part 1 of this 3-part series on financial planning, our expert gives advice on what to know and ask when planning your estate. BY SIMON SINGER, CFP
When you have questions about your financial future, ask them!
“ Planning should be a two way street, not a teacher instructing the student.”
When meeting with your financial planner, tax attorney or estate attorney it is not unusual to be intimidated. Don’t be. This is your life and your assets, and you need to be in charge. I tell all my clients the person sitting on the other side of the desk from you should be making an effort to get to know you as a person not just as a new engagement and likewise you should be doing the same with them. It should not consist of them asking you questions about your assets, net worth and family. It should be more than that, much more.
What I have found in the 40-plus years I have been practicing is that many people just idly stand by and let the professional lecture to them as opposed to having a conversation with their advisor. Planning should be a two-way street, not a teacher instructing the student.
As a business owner, I meet many interesting clients (mostly high net worth types), but whether you're affluent or not, the process of getting and keeping your affairs in order should be approached in much the same manner.
Along with this first entry on Estate Planning, I will be writing a series of five additional articles on financial planning, all of which are meant to guide you as you go about getting your affairs in order. I will discuss things like: Retirement Planning, Portfolio Review, Estate Tax Planning and Forensic Insurance Analysis and Forensic Retirement Analysis.
In each segment I will create a list of questions I believe you should, at a minimum, expect from your financial advisor or team of advisors. Please note that when it is your turn to ask the question, you are entitled to an answer, and when you get an answer, it is important that you understand the answer. If that answer is relevant to your particular situation, do not be intimidated, keep asking questions until you fully understand and are satisfied with the answers you are receiving.
What Does Estate Planning Mean to You?
If you understand the term then say so. However, if you don’t then you shouldn’t be afraid to ask. The term "estate planning" can mean different things to different people, so it’s important you and the advisor be on the same page. Here are some items you should discuss with your consultant:
* Know your estate. Your advisor will ask you what you have done so far in the way of estate planning? When asked this question, share with the advisor whether or not you have done wills, trusts, powers of attorney, etc. If you have existing documents such as wills, trusts and powers of attorney you’ll have to determine how long it has been since they were reviewed. You will need to make copies of these documents in order for you and your planner to review them.
* Understand the paperwork. Not to be insulting, but sometimes these documents can be very complex and you need to understand what each one of them means and what they are for. You may run into situations like having additional assets, family members, prior separations or divorce? Are they reflected in your existing documents? If not, they need to be.
* Keep items updates. Speaking of family, is there anything that you would like to change that you already have in place? For instance, a child’s marriage that has gone bad, a grandchild that might need special care, etc.?
* Protect your heirs. It’s also important to give thought to reducing your heirs’ exposure to estate taxes. There are opportunities in the tax code especially in today’s environment—if you implement them correctly—to minimize if not completely eliminate the estate taxes your heirs would have to pay; something few are aware of!
* Protect your assets. Do you have any interest in protecting your heir’s claims from creditors, bankruptcy, business reversals or even divorce? Asset protection may not be of any direct interest to you, but the attitude might be completely different when talking about a child who may get divorced in the future, or that child starting a new business and the business goes bankrupt. With proper planning, you can make certain that assets stay in the bloodline for family use and that they benefit in perpetuity.
Simon Singer is the founder of the Advisor Consulting Group, a Southern California financial and estate planning firm designed to provide assistance to affluent clients and to those CPA and tax attorney firms that handle complex financial matters. He has been in the business of Financial Services since 1966, and is a mentor and advisor to many multi-millionaires and billionaires. Singer is an author and speaker who also provides regular commentary to media on various financial topics of the day.