Stewart Barnes, a private wealth advisor with The Myrias Group, a private wealth advisory practice of Ameriprise Financial Services, Inc. in Roanoke County, explained in that article how The Family Love Letter provides family members important clues and information about financial needs, assets, liabilities and other issues that will confront them in the event of incapacitation or death, and how that Letter helps ensure items aren’t overlooked or mistakes made during this confusing, stressful period.
Part two in this ongoing series takes a closer look at The Family Love Letter’s first section – Advisors and Assets – and why those topics are the foundation on which all other sections of the Letter are built. Subsequent articles will examine the Letter’s other sections.
What are the assets, where are they located, and who manages them?
“Does anyone know who your key advisors are and exactly what you own – those are the answers and facts we want to get down on paper as first steps,” Barnes explains. “People try to put the cart before the horse by worrying at this stage about individual assets and whom they’re leaving the assets to. They often are intimidated by this whole process and want to jump to step five instead of starting with step one. We first have to figure out what is owned and where it is by establishing the facts. Think of those facts as a bread crumb trail that someone can follow to help them understand your complete financial picture.”
That first step, Barnes counsels, includes listing all advisors engaged in an individual’s life and financial landscape. For example, advisors can include an accountant, attorneys, stockbroker, retirement plan administrator, physician, banker, and employer or former employer. It’s also important to include contact information for each advisor.
In today’s increasingly digital society, Barnes said website addresses, usernames and passwords used for accessing each account should also be listed.
“Can the people you trust find out exactly what accounts you have,” Barnes asks. “Can they properly support you during your incapacity? Can they access your computer to view your accounts? More and more people no longer receive paper statements, choosing instead to pay bills, view balances, and move money online. It’s important for whoever comes behind you to know where all the accounts and related passwords are.”
The next step is committing to paper a detailed inventory of assets owned and where they are, including retirement plans and accounts, stock options and purchase plans, deferred compensation, military benefits, mutual funds, stocks, brokerage accounts, and even frequent flyer miles.
“We’re trying to help people make a detailed inventory and leave no stone unturned,” Barnes explains. “A lot of people will forget about assets over time or fail to provide information about them – such as the lady who had a deferred compensation plan from a previous employer that no one else knew about, or the client who owned a valuable piece of primitive furniture that no one realized was valuable and subsequently was sold for pennies on the dollar following her death.”
Similarly, Barnes says it’s important to also list any items of value loaned to someone or items stored or hidden somewhere for safekeeping.
“We’ve all heard stories or seen the TV show about the contents of storage sheds being auctioned off for non-payment of rent,” Barnes says. “Many of these auctions are undoubtedly the result of people who died but no one knew they had a storage shed full of items with both monetary and sentimental value. You need to let people know what you have stored and where.”
Barnes also recommends obtaining written appraisals and documentation of high-value items to ensure that they’re sold for a fair price if heirs are faced with dispersing assets.
Once all of an individual’s various assets have been identified and information about each entered into The Family Love Letter document, Barnes says the next step is to examine how assets and accounts are titled.
Titles and beneficiaries may hold some surprises.
“If an account is only in one person’s name instead of being a joint account, or if a vehicle title has just one person’s name on the title, it becomes much more difficult to make any changes to that title or account if the individual listed dies or becomes incapacitated,” Barnes explains. “Don’t just go by what you think the title or account says or rely on what someone else tells you. Instead, actually look at it – get your eyes and hands on the physical title to determine who is listed or on the account statement to determine if it’s jointly owned or only in one person’s name.”
At the complimentary workshops the Myrias Group offers to attendees and clients to help them complete their Family Love Letter, Barnes says that an attorney and an accountant are both present to answer questions and offer their unique expertise and perspective. Each has shared numerous horror stories with Barnes about assets being titled incorrectly or contrary to how the asset owner thought they were titled, further complicating an already complex situation for caregivers or surviving heirs.
A similar concern relates to beneficiaries and whether the beneficiary arrangements accurately reflect the deceased’s wishes.
[Start Pull out box] “Oftentimes people will think, ‘I have a will so it doesn’t matter what my insurance policy says about beneficiaries.’ That’s incorrect,” Barnes explains. “An insurance policy is a contract, and whoever is identified on that contract as the beneficiary – regardless of how the will reads – is awarded the benefits.” [End Pull out box]
Just as with titles, Barnes recommends looking at the physical document to determine the beneficiaries listed and then reviewing that information to see how it compares with the will to ensure the two align.
“The fact that the beneficiaries listed on a contract, such as an IRA or annuity, take precedence over what’s specified by the will is probably the one thing that surprises people the most,” Barnes says.
By examining assets with an objective view and listing exactly what those assets are, their location, and manages financial accounts, an estate will be better organized in the event of incapacitation or death and items of monetary or sentimental won’t be overlooked.
“Only after this step is completed can the work of specifying and interpreting asset distribution begin,” Barnes cautions.
Part three of The Family Love Letter series appearing the July/August issue of OurHealth Roanoke & New River Valley magazine explores the Love Letter’s second section – Financial Information – and discusses liabilities and budgets, providing a balanced look at the financial picture now that assets have been determined with completion of section one.