FAQ

You Have Questions – We Have Answers

Working with Shakespeare I’m looking for a financial advisor. How do I begin?

We begin every relationship with an introductory phone call or virtual meeting to explore mutual fit, answer your questions and discuss your financial goals. Following this initial call, we’ll conduct several in-depth meetings, either in personal or virtually, during which we set up your customized financial planning website, review your current statements and tax returns and prepare a comprehensive financial plan. This process can be completed with 2-5 meetings, depending on the complexity of your situation. We would then work with you on an ongoing basis as this plan is implemented, making adjustments as needed based on changes in your family situation, changes in the tax code and estate laws, and more.

Give us a call and we’ll schedule an introductory meeting. We are here to help provide peace of mind for you and your future generations.

How is Shakespeare different from other advisors?

Our advisors are all CERTIFIED FINANCIAL PLANNERS™ and have deep, technical knowledge of the tax and estate laws to cater to our high-net-worth clients. We differentiate ourselves through our proactive, relationship-focused approach, ensuring your financial plan is continuously aligned with your goals through meticulous monitoring and timely implementation of necessary adjustments.

Shakespeare combines technical knowledge with ongoing advice and the ability to invest your assets in a manner that meets your specific needs.

What are your fees?

We are a Fee-Only firm, which means we do not accept any form of commission. This creates a higher level of transparency and eliminates the conflicts of interest present with many financial advisors. Our ongoing fee is determined during your initial meeting with Shakespeare and is based on the level of complexity in your financial situation and breadth of services required. We charge an asset management fee comparable to most advisors and mutual funds but provide significantly more value to our clients. Our fees range between 0.50% and 1.5%.

What is the difference between Fee-Only Financial Advisors and Fee-Based Advisors?

‘Fee-Only’ advisors, like Shakespeare, earn solely from the transparent, agreed upon client fee set during your initial meeting. A ‘Fee-Based’ advisor is able to charge an advisory fee to manage assets, but also has the ability to sell you financial products that pay commissions such as annuities and insurance products. This creates conflicts of interest, with the advisor having the ability to earn higher compensation if they steer you into certain products.

To verify an advisor’s status, check if their website or business cards includes terms related to securities sales or broker-dealer affiliations, such as SIPC and FINRA, followed by legal disclaimers. As a Fee-Only firm, we are registered only with the SEC, focused exclusively on your best interest.

Is Shakespeare a Fiduciary?

Yes, Shakespeare always operates as a Fiduciary. We are committed and legally obligated to prioritize your interests above all else. If you’ve never worked with a fiduciary advisor, now is the time to experience the difference.

We do not sell any financial products. Given our deep understanding of your financial situation relative to your goals, we will provide advice based on your needs. We will then work with professionals such as insurance agents and attorneys alongside you to ensure you get the right product at the right price. Having Shakespeare properly quantify your needs, and then serve as your advocate ensures you get the best results.

Why is ongoing financial planning important?

The world is rapidly changing. If you are not actively monitoring your financial plan and making adjustments, you will not achieve optimal results. Clients experience changes to tax laws, estate laws, employment, income, family situations, health, and more. You need an adviser who will make necessary adjustments to your plan as things change.

What if I don’t want ongoing advice?

Our experience shows the best financial outcomes result from ongoing relationships. Constant updates in laws and personal circumstances make one-time plans less effective over time. Therefore, we focus on establishing long-term partnerships with our clients to maintain the relevance and effectiveness of financial strategies.

What are your minimums?

Shakespeare serves high-net-worth individuals with a minimum of $1 million to invest.

This minimum includes:

Cash, checking and savings accounts
CDs and money market accounts
Stocks, bonds and mutual funds
Retirement accounts and trusts

*Property and physical assets like your home, vehicles, real estate investment properties, art, jewelry or collectibles are not considered liquid or near-liquid investable assets.

Our expertise lies in areas relating to the complex financial issues and concerns of our affluent clients.

We are a boutique firm that offers a high level of comprehensive expertise to all clients because of this minimum.

What types of clients do you work with?

Our clients have several commonalities, including:

A more complex financial situation relative to the average investor.
Several moving parts to a financial plan, including multiple retirement accounts, investment accounts, real estate investments, second homes, businesses, LLC investments, complex family dynamics and more.
They have saved consistently throughout their lives; and their asset levels now require the guidance of a more sophisticated advisor.
They are preparing for retirement, needing help navigating Social Security, Medicare, 401k Rollovers, Pension distributions, tax planning, etc.
They may be experiencing life transitions, such as loss of a loved one, divorce, widowed, business sale, retirement, career change, and more.
Their number one asset is their family, and they have a strong desire to provide contingency planning for their family. They want to make sure they have a trusted advisor in place to help manage the family’s finances before a sickness or death occurs.

Do you manage money?

Yes, our investment management is customized to best meet the needs identified in your financial plan. Our process is built on academic research and is continuously monitored by our team of advisors. We have taken the guesswork out of the investment process and instead rely on trusted disciplines to add value. We build and manage portfolios based on your real-world needs, such as income replacement and risk management. We have software to help us implement and monitor your portfolio to keep you moving forward.

Do you work with clients out-of-state?

Yes, we have clients located throughout the country. Based on our sophisticated financial planning software that allows for easy collaboration, we are able to offer our services remotely without compromising the quality and responsiveness of our engagement.

Retirement Planning Do I have enough money to retire?

A comprehensive financial plan will help you answer this. Include all current and future income, expenses, and assets. Stress test your plan based on various ‘What If’ scenarios to anticipate future surprises. A skilled financial advisor will assist with this process.

How do my various retirement and investment accounts work together when I need money?

Properly structuring withdrawals from various types of accounts to coincide with your tax situation, both present and future, is critical to helping you maximize your finances. Trying to anticipate your future Required Minimum Distributions (RMDs) and Social Security and Pension payments is needed to best answer this question.

How does health insurance work in retirement?

Medicare begins at age 65 and is a relatively cost effective health insurance. Prior to age 65, there are an array of options, including Cobra Insurance and individual health insurance purchased through the Healthcare Exchange/Marketplace. Identify if you can qualify for tax credits for your health insurance and understand the many ways to structure an individual health insurance policy. This is a relatively complex issue with unlimited choices to consider.

My spouse is several years younger/older than I am. Does this impact our planning?

The age of your spouse impacts Social Security claiming strategies, pension elections, insurance decisions (life, disability, LTC, health), required minimum distributions, investment allocations, withdrawal strategies, tax planning and more. Your advisor should incorporate your age differential into your financial plan and stress tests various planning strategies and scenarios.

Will working an extra year or two in my career or working part-time in retirement be beneficial to my financial plan?

Additional earnings makes every financial plan last longer, even if you earn a modest income. When it comes to earnings, more is almost always better. Running a ‘What If’ scenario to your financial plan will show the impact of the extra earnings on your plan.

If I’m already retired, is there anything to consider related to my financial plan?

Retirement planning is a process that lasts throughout the entirety of your life. You should be constantly reviewing your budget, income plan, tax plan, RMDs, charitable contributions, estate planning, insurance planning, gifting, and more. Surprises in retirement plan are best identified early, to minimize the impact to future years.

Which retirement account(s) should I save in? 401k, IRA, Roth IRA, 457(b)?

The answer to this question is hidden in your financial plan. Understanding your current and future income, assets and expenses will guide you to the best answer. If your employer offers a 401k matching contribution, you should always try to earn this ‘free’ money before considering other options. After that, the answer is truly dependent on your situation.

Should I save for retirement or pay for my children’s college tuition?

If you have to choose between the two, we recommend saving for retirement first, and paying tuition next. The old adage is you can borrow money to pay for college, but you can’t borrow money to pay for retirement. If you aren’t able to pay as much of your children’s tuition as you wanted, keep in mind you can help them pay back student loans in the future if your employment and finances allow for it.

Should I do a Roth Conversion?

The simple answer: If you think you’ll be in a similar or higher tax bracket in the future, relative to today, then you should convert. In addition, if you hope to leave assets to children, the Roth IRA is the ultimate asset to leave them because of its tax free status. For the most accurate answer, a comprehensive financial plan is required, along with consultation between your financial and tax advisors.

Which document determines who inherits my retirement accounts, my Will or Beneficiary Form?

A beneficiary form trumps a Will or Trust, and should be coordinated with your overall estate plan. Making sure the beneficiary form is properly worded is imperative to fulfilling your intentions.

Do retirement accounts have asset protection; and is this important?

Retirement accounts do have asset projection features and are generally exempt from bankruptcy and other judgements, but still subjected to seizure in cases of fraud. If you are facing financial distress and bankruptcy, consult an advisor before making withdrawals.

How will my budget change in retirement relative to when I’m working?

Most people spend 80-100% of their typical budgets in the first few years of retirement, then settle into a pattern of spending that is closer to 80% of their last years’ expenses. Everyone’s situation is different. The key is quantifying your expenses, making sure you account for all spending, including some unexpected expenses.

Should I retire to a beach or a mountain top?

Both! We recommend the beach from October through February with a move to the mountains from March through September – but we’ll leave that up to you.

Investment Management I’m concerned about the markets. Should I move my assets to cash?

Market timing is a concept that’s proven to fail. When you make short term changes to your asset allocation, you need to be correct twice – when you sell and when you buy back. The markets are designed to win, appreciating 75% of the time since 1926. Pick an appropriate asset allocation for your risk tolerance and stay with it. Along the way, rebalance your portfolio to maintain your target mixture.

Are active mutual funds better than passive index funds?

It’s been proven that a vast majority of active mutual fund managers don’t beat their benchmark over time. However, be aware of the design flaws present with most passive index funds. No one solution is perfect.

Do index funds like the S&P 500 have any flaws?

Most index funds are cap weighted, meaning the bigger companies encompass a larger share of the index. As a result, most index funds overweight companies that are overvalued. This results in higher volatility, which is felt the most during market downturns and during periods where asset bubbles persist.

What are Smart Beta Mutual funds?

Smart Beta funds operate like an index fund, but they use proven factors of return to determine the weighting of each security in a fund. These funds tend to provide a better risk/return profile than cap weighted index funds like the S&P 500. If employed with an appropriate asset allocation and strict rebalance strategy, your probability of success increases significantly.

What’s the best asset allocation?

A person’s asset allocation is determined by a number of factors, including: current age, time horizon, risk tolerance, income needs, return objectives, legacy goals, and more. It can be appropriate for a retired client to have an aggressive portfolio and a younger client to have a conservative portfolio. The right mix depends on many factors and will change over time. Your advisor should provide a specific recommendation based on the many factors.

When should a person be most conservative with their investment mixture?

The 3 years prior to and into retirement are the years a person should be most conservative with their investment mix. This is the stage of life when you can no longer rebuild your assets from a bear market correction, and when the withdrawal timeline (life expectancy) is the longest. Be sure to meet with your advisor regularly to review your asset mixture.

Should I invest in individual stocks?

The financial marketplace is dominated by institutional investors and mutual funds that control trillions of dollars. As an individual investor, you’re competing with these large investors and the deck is stacked against you. The probability of outsmarting larger investors is low, especially over time. It’s imperative that you have a partner who understands the dynamics of the marketplace and uses the best tools on your behalf.

Shouldn’t I simply buy the lowest cost mutual funds?

All things being equal, lower is better when it comes to investment fees. However, you tend to get what you pay for. We pay a little extra for safer cars, specialty brands, larger sizes, premium tickets etc. In investing, it’s the same concept. Look for value relative to cost.

I have multiple investment accounts. Am I diversified?

Not necessarily. If you own the same types of securities in each account, you’re not diversified. Know what you own, and strive to own asset classes that work differently from each other in order to minimize risk and maximize return. Consolidating your assets into one account or with one advisor can actually provide a more diversified account, which is easier to administer.

I’m retiring, should I move all of my assets to bonds and other income paying securities?

It’s imperative to have a strategy that not only provides income and stability, but also provides a hedge against inflation.

I want financial advice but want to take a more active role in managing my money. Does this make sense?

Although an advisor (like Shakespeare) has an inherent conflict in this question, there are some points to consider. A Fiduciary Advisor is required to work in your best interest and to stay current with various financial products, laws, rules, research, planning strategies and more. In addition to shifting this responsibility to an advisor, you can also shift the risk to them. Few of us fix our own cars, prescribe ourselves medications, write our own Wills, fill our own cavities, complete our own tax returns or even cook our own meals, recognizing that others are better trained for the job. Having a trusted partner to guide you through unexpected events (market crashes, asset bubbles, a mindful of financial data, the risks of the markets, an appropriate withdrawal strategy, tax & estate issues, etc.), provides Peace of Mind and is a priceless resource. Finally, if you become incapacitated or die pre-maturely, having an advisor to take care of your family is an incredible asset.

Women & Wealth My husband handles most of the finances but I want to learn more. How do I begin?

It’s important that both spouses have a firm grasp of their family’s financial situation. Start with a conversation and begin attending all financial meetings together. Tell your advisor you’d like to learn more, be involved and included in all correspondence related to your finances. One-on-one discussions with your advisor will help jump start your efforts. There are countless resources available to you. Even if you are lacking in financial knowledge or experience, trust your instincts when dealing with advisors.

I’m concerned that I’ll end up reliant upon others. How can I put this concern to rest?

This is a common and legitimate concern. The first step to any problem is knowledge. Work with an advisor to learn about your situation and develop a financial plan. Part of this process will include a review of your budget and savings habits to determine any risks and opportunities. In addition, stress test the plan for ‘What If’ scenarios. These may include the pre-mature death of a spouse, divorce, or job loss. Once you understand the financial impacts of these situations, you’re better able to prepare. If your concern still persists, ask your advisor to introduce you to other women who have had similar concerns to learn more. Knowledge is power.

My advisor deals primarily with my husband, keeping me out of the loop. Is this normal?

A good advisor represents the interests of both spouses and communicates openly with each of you. Have a conversation with your advisor about your concerns and ask to be included in correspondence and all decisions. If you’re not taken seriously, it’s time to find a new advisor.

I’ve been passed over for promotions the last several years in favor of men. What should I do?

Discrimination in the workforce still persists. Legal action is always an option but there are also other solutions. First, document all of your responsibilities and accomplishments at your job. Schedule a meeting with your boss to ask for their feedback on your performance and role. Make your case for having a larger role in the company and higher compensation. With any job, be sure you’re committed to lifetime learning and developing your skill set. If the company can’t provide a clear roadmap for your career, meet with a career counselor or head hunter to consider other options. In the 21st century, the workforce rewards high performers; and employers are always looking for talent. Take control of your career, as your earnings potential is a very significant asset. We should all be fairly compensated for our efforts.

I need to review my 401k investment options but I’m embarrassed that I don’t know what to do. Help!

Don’t be embarrassed. It takes a lifetime of experience AND the appropriate investment tools to make sense of all of the investment options typically available to 401k participants. An investment professional will likely take several hours of research to make an informed decision. Talk to your financial advisor and have them assist. The advisor should be coordinating your 401k investment allocation with the entirety of your other assets and financial plan. Review your beneficiary designation, making sure it jives with your estate plan. If you have children under age 18, consider leaving assets to them via a trust. Your advisor can facilitate this.

My marriage is failing and divorce looks imminent. What do I do?

First, be sure you’re speaking with a marriage counselor to try and keep communication lines open with your partner and see if salvaging the marriage is possible. If necessary, consult with a divorce attorney to learn more about the process of divorce. Although divorce is extremely emotional, the legal process is relatively structured. If you live in a ‘no-fault’ state, it doesn’t matter if there has been infidelity or neglect. Financially, meet with an advisor that specializes in working with divorcing clients. They will assist the attorney in structuring the divorce decree, helping to calculate the division of assets and income. During this process, you will want to get a handle on what your new budget would look like as you transition to single life. This too helps structure the divorce decree. An advisor will assist in determining appropriate amounts to spend on housing, savings, insurance, entertainment, etc. After the divorce, meet frequently with your advisor to review issues that develop and to update your financial plan. After 6-12 months, you’ll have a much clearer picture of how your new life and your finances are working.

My husband recently passed away. How do I deal with all of the financial issues?

Losing a spouse is one of the most difficult things we face. It’s important to have peace of mind related to your finances so you can properly grieve and cope with other components of your life. A skilled advisor will meet with you a few weeks after your husband’s passing to handle a few critical issues. In this meeting, they will lay out a calendar of meetings over the following 6-12 months to deal with other action items. Consider incorporating adult children or a trusted family friend in the conversation to assist, as two sets of ears and eyes are better than one. Don’t hesitate to ask any and all questions or to ask for additional information. It’s important that you feel empowered and listened to as you learn to handle all of the financial decisions.

What is included in an Estate Plan? Schedule a meeting with your financial advisor or estate planning attorney to review your estate documents. You should have two Powers of Attorney (POA) documents that operate if you are incapacitated: one will appoint an individual to make decisions for you related to financial issues and the other for medical issues. You will need a Will that determines the disposition of your assets at death. It’s common to have a Revocable Living Trust that operates with your Will. This trust helps avoid the Probate process at death, which is both a public record and a lengthy process. The Revocable Trust also has other benefits when leaving assets to children. My husband takes more risk with our investments than I’m comfortable with. What can I do?

You should be communicating your concerns both to your husband and to your advisor. Have a meeting to specifically address this issue. The advisor can provide education and feedback that may ease your concerns. If not, the advisor should provide solutions and recommendations to both of you. If you’re still not comfortable with the result, get a second opinion.

How do I teach my children more about financial issues?

There is a wealth of knowledge and many programs available to assist kids in improving their financial literacy. For kids ages 10-14, Junior Achievement is an excellent resource to start with. They will provide resources and come speak at your children’s school if you coordinate with their teacher. For kids 14-18, look into programs available at their high school, as most schools now offer financial literacy classes. Along the way utilize an appropriate allowance to teach them how to handle money, save, and give to charity. Share with them the basics of your finances. Teach them how to write a check, what happens when you withdraw money from an ATM, and how your paystub has deductions for taxes and savings. Have a financial advisor consult with your adult children and teach them the basics related to budgeting, savings, insurance, taxes, etc.

Selling A Business How far in advance should I plan a business sale in order to maximize value?

Begin planning at least 5 years prior to selling your business to maximize value… preferably from the first day you’re in business. Every decision you make should bear in mind a potential buyer and how they would value the decision.

Most of my assets are tied up in my business. What planning can I do?

There are lots of planning opportunities for business owners, if your assets are not liquid. These include maximizing retirement plan contributions, taking advantage of all available tax deductions and credits, diversifying your assets when possible, and more. Employing your children is a great way for them to learn the business, shift income to a lower tax bracket, and begin saving for their college tuition or even their retirement.

How would I replace my income if I sell my business?

An income replacement plan will utilize the proceeds from your business sale to efficiently create an income stream (synthetic paycheck) to live on.

My business has great cash flow and I’m getting killed with taxes. Help!

There are several strategies available to reduce current income taxes. Maximizing retirement accounts with a 401k and Profit Sharing Plan is a nice first step. A Cash Balance Pension Plan can also be utilized with a Profit Sharing Plan to defer up to $250,000+/year. There are several other advanced strategies depending on your entity type, time horizon and business plan. Contact us if you would like to learn more.

Should the asset allocation of my investments be impacted by my business ownership?

Yes. If a majority of your net-worth is invested in a privately held business, your other assets should likely be invested more conservatively. You want to refrain from owning investments that perform similarly to your business. For example, don’t own REITs if you are in a real estate intensive business.

What’s the best way to pass my business on to my children?

There are several ways to facilitate the transfer of a business to a child. Some advanced techniques allow you to discount the value of the business when selling or gifting to family members, while still maintaining control of the business while you’re alive or until you choose to surrender control.

Death of a Loved One My spouse or parent has just passed. What do I need to do right away?

Losing a loved one is hard enough… having to deal with financial issues can be extremely difficult. We’ve created a checklist to identify key areas to address: Checklist – Death Of A Loved One A few weeks after the funeral get in touch with a trusted financial advisor to sort through the remaining issues.

My spouse, who handled the finances, is gone. Where do I start?

Taking over the family finances after the death of a loved one can be daunting. Understanding what to do and locating all of your financial information can be overwhelming. We will help you take inventory of your situation, prioritize the pressing needs, and begin sorting through all of the issues. Patience, education and understanding are critical as we walk with you into the future.

What happens to my spouse’s social security benefit and/or pension when they pass?

When a spouse passes away, the surviving spouse keeps the higher of their two social security benefits, with the lessor benefit being eliminated. Just prior to starting a pension payout, the recipient must elect a survivor option. There are many payout options, with the most restrictive being 100% life only (which goes away when the recipient dies) and the most encompassing being 100% joint and survivor (which lasts for the longer of both spouses).

How will my budget change now that my spouse passed? Typically when one spouse passes away, the survivor’s family budget is reduced by at least 20%. Keep in mind there is typically a reduction in income if the deceased spouse was still working or if both spouses were receiving social security benefits. My spouse or parent is terminally ill. Are there planning issues to address?

Some planning issues to consider include a review of all beneficiary designations to retirement accounts, life insurance policies, and bank accounts (POD). Beneficiary designations trump what is written in a will so it’s critical that your designations reflect your intentions. Survivors receive a step-up in basis on any taxable assets; so it’s likely you will NOT want to sell investments that have an investment gain. In addition, taking all losses prior to death can be a good decision. A Roth Conversion may make sense prior to death, especially if there is a surviving spouse. A joint tax return will be filed in the year of death which can create planning opportunities for the surviving spouse. It’s important to consult your advisors when your loved one is terminally ill.

How do I deal with financial service companies and life insurance policies now that my spouse or parent is gone? Dealing with banks, brokerage firms and insurance companies can be difficult. Being organized will help the process. Use a notebook or computer program to track your conversations and follow-ups. Have at least 15 copies of the death certificate made, which will be needed to prove the death of your loved one. An Affidavit of Domicile, used when moving assets, is a legal document signed by the executor of the estate. What tax documents or filings are necessary?

The easy answer is to contact a trusted financial advisor or CPA.

Do I need to meet with an attorney when my spouse or parent passes away?

Not surprisingly, the easy answer is to contact an attorney who specializes in estate law to have a discussion. Generally, the estate tax return is due nine months after the date of death.

What should I do with my Spouse’s IRA?

If you’re the beneficiary to your spouse’s IRA and you are younger than your spouse, you may want to roll the IRA to your own. Their account becomes yours; and you can access it based on the normal distribution rules. You may want to leave the IRA in their name if you’re under age 59 ½ and have (or may have) a need to access their funds prior to your age 59 ½. Be sure to review your own beneficiary designation now that your spouse is gone, remembering that this form trumps what is written in your estate plan.

What should I do with my parent’s IRA?

If you’re the beneficiary on a parent’s IRA, you will likely want to roll this IRA into an Inherited IRA in your name. Distributions must be taken beginning the year after death. Current rules require you to take a minimum distribution each year and to fully distribute the account within 10 years. Of course, you likely have the ability to take the IRA as a lump sum distribution; but this will create a tax liability (potentially large based on the size of the IRA and your income) and eliminate tax deferral into future years.

Legacy Planning I currently write checks to various charities. Is there a better way?

If you have appreciated securities in a taxable account, it’s more tax efficient to give shares of the security to the charity than to write a check. By giving shares of the security, you (and the charity) avoid paying a capital gain tax when it is sold, and yet receive the full value of the gift as a deduction.

I am in my highest tax year(s) and will likely be in a lower tax bracket soon. Are there strategies to consider?

A Donor Advised Fund (DAF) is an account that lets you pre-fund future charitable gifts, but take the deduction in the year it’s funded. For example, if you gifted $10,000 into an account now, you get the deduction this year, but can distribute the gift to any charities over future years.

How do I teach my children or grandchildren about the importance of charitable giving?

Teaching children about your values is an incredible gift. Include kids or grandkids in your gifting decisions, allowing them to determine where some of your gifts will be given. If you disagree with their choices, it provides an excellent opportunity to have a discussion.

I want to support a specific charity(s), but I’m not sure if my assets and cash flow allow me to give now. What are some options?

There are several ways to approach this situation. First, many people name charities in their Will, making a bequest upon their death. There are also charitable gift annuities and charitable trusts that provide you an income stream and a tax deduction for making the gift, with remaining proceeds going to the charity. Consult with your advisor to learn more about these sophisticated techniques.

Can I set aside money that will help provide for specific causes after my death? There are charitable foundations that will accept gifts, either while you’re alive or at death, and continue to support charities or causes that are important to you. This becomes a gift that keeps on giving and allows you to impact future generations long after you’re gone. How do I shift money to my kids and grandkids, as I consider them my greatest legacy?

There are lots of ways to support kids and grandkids while you’re alive and after you’re gone. You are allowed to gift $16,000 (2022) per year to any individual without filing a gift tax return. You’re allowed to pay an unlimited amount of health expenses or educational expenses for another person; and it’s not considered a gift. Gifting money above the annual exemption would require that you file a gift tax return; but it’s a great way to get family and friends assets while you’re alive (giving you an opportunity to impart valuable financial lessons). Within your estate plan, you’re able to set-up various trusts for the benefit of any individual. Trusts can have numerous constraints, if so desired.

Career Change I’ve changed careers. What should I do with my old 401ks?

Consolidating retirement accounts makes it easier to administer, maintaining a uniform beneficiary designation, asset allocation, and investment holdings. Rolling the old 401ks into an IRA offers unlimited investment holdings with lower administrative expenses than 401k plans. Rolling the assets to a new 401k may be a consideration, especially if you wish to convert non-deductible IRA contributions into a Roth.

I’ve changed careers. What happens to my old pension plan?

The pension benefits from your old company may have a feature that allows you to do a lump sum distribution to an IRA, or continue the pension with the intention of annuitizing when you reach retirement age. A net present value calculation should be done on the pension and compared with the lump sum option as part of the process of determining which option to choose.

I’m looking to quit my job and don’t have a new job set up yet. Are there any issues to consider?

When you quit your job, you lose your group benefits of life and disability insurance. Review your individual insurance situation prior to quitting to make sure your family is protected in the event you get sick or pass away while between jobs. Review your cash flow situation to make sure you can withstand a long period without a paycheck. Any unpaid 401k loans become a tax distribution upon termination; so pay those off before leaving.

I’m 90% of the way to my retirement goal, but hate my job. Can I quit today?

Your capacity to earn income is an extremely important asset, frequently the biggest asset for those under the age of 50. Before you quit your job, review your financial plan and consider all of your options. Transitioning into a new job that you would enjoy more, even if you made less money, might be a consideration that would allow you to work longer. Taking a few classes and acquiring new skills would help you transition into a new job.

I have great contacts and career experience. I’d like to quit my job and become a consultant. Any considerations before I pull the plug?

Look before you leap into the world of consulting. You’re far more valuable as a consultant when you are employed than you are when you are unemployed. Make sure your financial plan can tolerate the loss of income and benefits when you transition into consulting; and be ultra-conservative in your revenue estimates. Having a significant cash reserve is important. Establishing a corporation (S-Corp or LLC) is a consideration to mitigate risk, provide the corporate structure to demonstrate you’re a serious business, and allows you to establish benefit plans.

I’m looking to take a job transfer. What issues should I consider?

When taking a job transfer, you will want to compare any changes to your income, benefit package, cost of living in a new location, moving expenses, quality of life, services and amenities, cultural activities, schools, state income taxes and more. Sometimes making more money results in having less.

I’m looking to get back into the workforce after years of absence. What should I consider?

Make sure you hone your computer skills, presentation skills, and wardrobe before beginning interviews. Focus on your strengths, particularly your work ethic and positive attitude. Most employers are willing to train specific skills. Once employed, consider the impact of your income on your family budget, your necessary savings rate, how to best utilize available corporate benefits, and more.

College Planning What are 529 plans? 529 Plans allow individuals to save money for a family member’s college education expenses. The money invested grows tax-free if the withdrawals are used on qualified educational expenses. Depending on your state of residency, you may qualify for a state income tax deduction on a portion of the contribution. There are penalties and taxes due if the money withdrawn is not used for qualified expenses. How much should I save for my children’s college education?

Each person has different goals in funding their children’s education. It’s important to map out potential expenses and how you will pay for them at that point. Have a conversation with your children when they are in high school explaining your funding strategy.

I have multiple children. What issues should I be concerned about related to college funding?

With multiple children attending college, potentially at the same time, mapping out your future cash flow and expenses is vital to your financial plan. It will be far more achievable to save money over time for this expense, than to try paying for it out of pocket.

What is the four-pronged approach to paying for college education?

Typical funding sources for college include: 1. Parent cash flow & savings; 2. Child cash flow & savings; 3. Scholarships from the university and others; and 4. Student Loans. As a parent, keep in mind you may help your child pay off student loans after they graduate, depending on your cash flow.

What is the FAFSA Form?

The Free Application for Student Aid (FAFSA) is the form that is used annually by current and prospective students to determine your eligibility for student financial aid.

I paid for my own college. Can’t my kids do the same?

While it is possible, it won’t be easy. College tuition costs have increased at a significant rate over the last two decades. As a result, even the best students with a strong work history will have a hard time covering the full cost. Finding a low cost college, scholarships, student jobs and student loans can definitely help. Paying for college has become a family expense, using time and a team effort to pay the bills.

Can I negotiate with the admissions office regarding the cost?

There are scholarships and other incentives a university can offer to make the cost more palatable for your family. Consider applying to comparable universities as means of negotiating a better price. The university system is big business; and creating competition between schools for your child (and checkbook) can lead to cost savings.

Insurance – Preserve and Protect I don’t want to talk to an insurance agent because they will try to sell me something.

If you were disabled or passed away unexpectedly, could your loved ones survive without your income? Would their standard of living decrease as a result? We insure our cars and our homes; yet the single greatest asset for most people is our ability to earn an income. It’s important to insure your family for the potential loss of your income. Ask a parent, grandparent or mentor if they know anyone your age that died or was disabled. Find out how their family survived without them and if they should have done anything differently.

I don’t need insurance. I have enough assets to take care of my survivors.

Have an advisor review your financial plan, incorporating current and future income, assets, and expenses. Don’t forget about unexpected expenses like college tuition, health insurance, mortgage payment, travel, weddings, and more. Next, stress test the plan for a disability or premature death. If your plan works, you likely don’t need insurance. If not, you can cover any shortfall by purchasing insurance. If you anticipate support from extended family in the event of your death or disability, be sure to include them in your discussions so everyone has a common understanding.

Insurance seems like an unnecessary expense; and my budget really can’t afford it.

If you think your budget can’t afford insurance premiums, than your family really can’t afford to live without your future income stream. Prioritize your expenses. It’s not uncommon for people to realize they spend more money on coffee, tobacco, alcohol, gym memberships, cell phones or eating out (each individually) than they would on purchasing proper insurance. Find out how much $50 or $100/month of insurance would buy you. You may be pleasantly surprised at how affordable it is.

My children are grown and I have significant assets. What should I do with this old insurance policy?

Review old insurance policies with an advisor to learn about your options, in the context of your financial plan. You have several options with a permanent life insurance policy: 1. Redeem the cash value and terminate the policy. You will pay income tax on any gain. 2. Determine if the policy can sustain itself in future years if you stop paying the premium. It’s possible the policy allows you to make changes to make the current cash value work more efficiently. 3. Maintain the policy as a safety net for your family. Insurance proceeds at death are always a welcome addition.

If you have a long term disability and don’t have proper LTC or disability coverage, the life insurance cash value could be used to pay bills OR the death benefit could be used to ‘reimburse’ your survivors for money that was spent out of pocket on your end of life care.

What is second to die life insurance? When is it used?

Most insurance policies are based on one person’s life. Second to die is based on the lives of two people, and pays to beneficiaries on the death of the second insured. For couples that want to provide a specific benefit to their children, or to charities, upon their death, this is a tool to facilitate those plans. Some families use this type of insurance to provide needed liquidity at their death. If you have substantial assets invested in a business, farm or real estate, then second to die insurance could be used to pay any estate taxes that may be due on the second death, or simply provide liquidity to your heirs. Second to die insurance, because it is based on two lives, allows for easier underwriting, even if one spouse is considered uninsurable.

Should I buy long term care (LTC) Insurance?

A thorough financial plan will stress test various LTC scenarios to see how you can manage with a long term illness. Even if your assets can withstand an extended illness, many people choose to shift the risk to an insurance company. Be sure to review non-financial considerations, including whether your children are able to assist in your care, if you spouse will be alive and able to assist with your care, if your spouse could maintain the same standard of living during and after an extended long term care illness, and if you would opt for a higher level of care if you had insurance.

I worry about my grandchildren if something happens to their parents. What can I do?

If your children or their spouses are disabled or die pre-maturely, your grandchildren will likely suffer if their parents aren’t properly insured. Inquire about the specifics of their insurance coverage. Suggest they meet with an advisor to review their risks. Offering to pay for appropriate insurance lets your children know how serious you feel about this issue. Insurance makes the ultimate gift. It protects your assets in the event the unexpected happens to your children, as most grandparents feel compelled to support their grandchildren if necessary.

How much life insurance do I need?

Although rules of thumb are convenient, the amount of life insurance needed is different for every person and changes over time. Completing a financial plan will look at your specific needs today and in the future.

Term insurance or whole life/permanent insurance. Which is better?

Term insurance provides a large amount of insurance coverage for lower cost than permanent insurance, but obviously doesn’t last forever. One presumption of term insurance is that your financial assets will grow and/or your expenses will decline in the future such that you can self-insure a future loss. If you have term insurance, make sure you’re diligently saving and growing your assets. Permanent insurance is clearly better if you want to guarantee coverage into old age. It also provides cash value that could be used in the future, unlike term insurance. Keep in mind that term insurance policies should have a convertibility feature that lets you convert the policy into a permanent policy in the future. Your specific situation will dictate which one to choose.

I have insurance at work. Why have individual insurance policies?

Your group insurance at work typically doesn’t cover your entire insurance need. If you switch employment or lose your job you may lose your group insurance. In addition, you may become uninsurable in future years, so obtaining proper individual insurance coverage that you keep regardless of employment protects your family. The younger you buy individual insurance the cheaper it is.

VIEW FROM THE LAKE