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NestEgg NEWS – July 2019 Thumbnail

NestEgg NEWS – July 2019

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NestEgg NEWS – July 2019

  MARKET UPDATE JULY 2019:

President Donald Trump recently threatened additional tariffs on $200 billion of Chinese goods, despite repeated claims by the administration in recent weeks that trade talks with Beijing were going well. The president indicated trade talks with China are continuing, but are moving too slowly as Beijing tries to re-negotiate.

Major sticking points between the U.S. and China have been intellectual property theft and forced technology transfers. There has also been disagreement as to whether tariffs should be removed or remain in place as an enforcement mechanism.

There are great expectations the Federal Bank will lower interest rates next week.  This is in response to recent economic data showing a slightly slowing economy. (June employment report showed a slowing job market)


ESTATE PLANNING:



We received a great estate planning question this week.  Who should I visit first, an estate attorney or my financial advisor? We recommend seeing us first, and last.  Let us understand what you would like to accomplish, then visit us after your documents are in place.  We help you develop a comprehensive financial plan covering everything — including: college funding, life insurance, retirement savings, estate planning and more. We will determine the estate planning tools you need — a will, durable power of attorney, living will, living trust — then refer you to an attorney if you need one.

 

Here is a classic example of the flaws of dealing solely with the attorney on your estate. Your attorney may recommend a revocable living trust. This is a common estate-planning tool to help your heirs avoid probate if you die, ensures your assets are properly managed if you become incapacitated and other useful provisions. Attorneys generally charge a few thousand dollars to prepare a revocable living trust.

At this point, the attorney may say, “Here’s the document, sign here; congratulations, you have a living trust.” They pat you on the back, send you out the door and you’re done. But if you never title your assets into the trust, the document has zero value. Too often, attorneys don’t follow up to see their clients retitle their assets (brokerage accounts, homes, cars, etc.) into the trust. We will ensure assets are retitled appropriately to fully implement your new estate documents. Additionally, we can ensure your beneficiaries are more tax efficient (charities should usually be listed as IRA beneficiaries, not in your will).

Whom do you visit first — the advisor or the attorney? In our experience, people usually visit us first and learn what documents are needed, then go see the attorney.


GLORIA VANDERBILT:

As Baby Boomers, a common question we struggle with is: “How much money to leave the kids?” I think the recent passing of Gloria Vanderbilt and her family’s history provides an interesting perspective.

Ms. Vanderbilt recently passed at the age of 94.  She came from one of the most fascinating families in American history.  Gloria was the granddaughter of Mr. Cornelius Vanderbilt, the railroad and steel tycoon, who built America in the 1920’s. Fearing his son would spend all the family wealth, he left Gloria a 5 million dollar trust (a lot of money now, but a fortune back then).  Mr. Vanderbilt saw the future correctly as his son did in fact spend the family fortune in a generation.

Gloria developed an interesting perspective on “inherited versus earned wealth.”  As a classic trust fund baby, she realized the spoils of “inherited wealth.”  As an adult Gloria accumulated her own “earned wealth.”  Through years of thoughtful consideration, she elected to NOT pass on any funds to her children, including Anderson Cooper the well-known CNN News anchor.  While Anderson has achieved significant financial success, his siblings have not.

Gloria announced to her children at an early age they would not receive an inheritance. “I’m not knocking inherited money,” the socialite told The New York Times in 1985 Opens a New Window, “but the money I’ve made has a reality to me that inherited money doesn’t have. As the Billie Holiday song goes, ‘Mama may have and Papa may have, but God bless the child that’s got his own.’”

Anderson Cooper later expounded on this in a Howard stern interview; “Who has inherited a lot of money that has gone on to do things in their own life?” Cooper asked Stern. “From the time I was growing up, if I felt that there was some pot of gold waiting for me, I don’t know that I would’ve been so motivated.”  When Stern mentioned that Vanderbilt ended up “incredibly well” with a successful career despite inheriting money, Cooper responded by saying his mother was an anomaly.

Again, every family is different and certainly every child is different. Cathy and I have a child who will need to be provided for, given his development delays and inability to work full time.

  • A good practice we see is some families setting expectations with their kids that there is no pot of gold, so as to not diminish their initiative.  In secret, they have made allocations to their children, but would never admit it. In our work, we certainly see how earned monies and inherited monies have significantly different meaning to recipients.
  • Every child should get something, even if they don’t need it. It is a gift of love, not just money.
  • Special needs children, like my son Ryan, require special planning (special needs trusts).
  • If your estate has grown more than your child’s needs, consider charitable giving, or to extended family members who might be in need.

If this article raises questions for you and your family, please make sure to include this in our next conversation.  We would love to learn more about your thoughts and plans while ensuring your accounts will be distributed in alignment with your current planning.

Content and quotes from the MSN article on 06/23/19 “Why Anderson Cooper will not inherit from his Mother’s Estate.”

 

I TRIED RETIREMENT FOR A DAY, HERE IS WHAT I LEARNED:

I’m 57, much too young to retire, but curious to see what it’s like.  Monday morning, I texted my partners and said, “I am playing hooky today.”  Since opening our firm 14 years ago, I’ve probably worked more than I should, but I still felt guilty about my day off.

Being a checklist person, I developed a to-do list for my day:

  • Walk with the dogs
  • Eat healthy
  • Grudge Tennis Match with Cathy
  • Movie
  • Feed the fish
  • Clean the kitchen

As I was preparing to sleep in, Cathy paraded the dogs into the bedroom and asked if they wanted to go on a “WALK“. Predictably, all 3 retrievers were on the bed in a matter of seconds and “NO” was simply not an option.  I started the day strong with a long walk and a healthy breakfast.

Cathy left for work, and unsupervised things deteriorated quickly.  I made not one, but two junk food journeys to the store.  Cold cereal and Animal Crackers are my weakness.  I devoured my snacks while counting our neighbor’s car trips (3 boys all with active sports schedules), and before I knew it, I was becoming the nosy neighbor.  Missing human interaction, I had to force myself not to greet the mailman when he swung through the cul-de-sac.

After my nap, I found the French Open at Roland Garros on TV, the exoticness of Paris in the spring mesmerized me.  By 1:30pm I was bored and started waiting for Cathy’s return and wondered why the office hadn’t called me (apparently, I’m not as essential as I thought).  Finally, at 3:00pm, Cathy returned and like the dogs, I was overly eager to greet her.

We headed right to the courts for our tennis match.  Being winless at mid-season with my men’s geriatric league, I was very eager for victory.  During warm-ups, the cold cereal started rising to the surface and after the first game, the Animal Crackers joined in on the journey!  I was in trouble and Cathy was playing well and leading by a couple games.  After slamming a shot right at my head (despite her apologies, I know it wasn’t an accident) Cathy tweaked her wrist.  I convinced her she needed rest to prevent an injury (I tried to declare victory but was quickly denied).

I finished the day strong by taking Cathy to see Elton John’s Rocket Man.  I scored points for splurging on popcorn and earned bonus points for not falling asleep! You can find my review towards the end of this post.

To summarize my scorecard:

  • Walk with the dogs (yes)
  • Eat healthy (big no)
  • Tennis victory (no)
  • Movie (yes)
  • Feed the fish (yes)
  • Clean the kitchen (no)

I confirmed the retirement stereotype of men:

  • Over reliant on wife for companionship
  • Habits are key – without an established pattern of walking first thing in the morning, I would have bailed
  • Boredom contributed to my junk food cravings
  • TV – incredibly addicting and productivity sucking (if not the French open, I would have found something else to watch)
  • PURPOSE – as Ernie Zelinski says in How to Retire Happy, Wild and Free, you must have something to do in retirement.  Volunteering, hobbies, Osher Institute, paying it forward, grandchildren, etc.  Travel and golf are hobbies, not purpose.

 

PUP-DATE:

Lily has really been enjoying summer, the perfect excuse to hop into any body of water she can find!

 

Last week, Eric’s dogs escaped and took an unsupervised stroll through the North End.  I guess their daily walk just wasn’t cutting it.  Shortly after, Eric received a call from West Side Drive, they had wandered into the kitchen.  Smart pups!

 

KELLY’S MOVIE REVIEW:

This past week I took Cathy to see Rocketman, the story of Elton John’s road to fame. A movie full of timeless classics and the harsh reality of what often happens to some of our favorite stars on their journey to fame. Coming full circle, it was great to watch Elton John find the love he deserved after a lifetime of people telling him he never would.

BEST BRUNCH?

Continuing with our search for Boise’s Best Brunch, we found ourselves on the lovely Bardenay Patio this past weekend. We enjoyed the warm Sunday sun as we dined on the best Salmon Benedict we’ve have ever had. We highly recommend Bardenay’s brunch!

 

 

I hope you found this to be educational and helpful. As we always emphasize, it is our job to assist you! If you have questions or would like to discuss anything in further detail, please give us a call.

As always, feel free to pass this on to someone important to you.

Thank you very much for the trust and confidence you’ve placed in our team.

Eric Tarver
Financial Advisor – Wood Tarver Financial

Kelly Wood
Financial Advisor – Wood Tarver Financial

 


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