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Spring Review

 

Spring Review

Summary: Spring is an excellent time to review the details of your existing financial plan components. Updates can avoid problems down the road as the specifics of our lives change over time.

Spring is in the Air

Before we get caught up in the hustle of the summer season, late spring is often a good time to “take a knee” (as we used to say in the military) and evaluate where we are. Here are some example questions you should ponder and then contact us for a link to our interview tool if you have questions or would like to discuss your situation. In general terms, you can also join our forums to review the threads there or post your own questions (and we’ll respond within a work-day).  So ask yourself:

  • Do I have the correct beneficiary elections (HSA, life insurance — don’t forget all those little policies at places like credit unions or membership organizations, IRAs, 401(k)/TSP/457(b)/403(b))?
  • Do I have property ownership the way I want it?
  • Do I have bank and other accounts correctly titled?
  • For items in my estate (none of the above are in your estate), is it time to revise my estate plan (will or trust)?
  • Are my investments optimized?
  • What to do with tax withholdings?

A close friend recently passed away. As I was helping his widow close out the estate, we found that he’d never updated the life insurance. The insurance company paid the policy out to his previous spouse, something I’m sure my friend wouldn’t have wanted, but he never got around to changing that beneficiary or lost track of that policy. It’s a lesson in keeping beneficiaries up to date and to not forget all those little policies that are out there, such as those issued by membership organizations and credit unions. We recommend keeping a spreadsheet with all this information. See our article on online security for related information on how to keep this type of personal information secure.

The same logic applies to so-called “real property.” Make sure that you have it titled properly in such a way that ownership passes directly to who you want. This is called, in some states, joint tenancy with right of survivorship, but consult with an expert in your state. Vehicles and anything else that has a written title to it can be treated this way and kept outside either an estate or a trust.

Bank accounts are frequently overlooked. Failure to have them properly titled can result in all the cash in your estate being locked up until a court can act. That makes it critical that at least an operating, or survival cash, account be shared with someone who can care for you if you become unable to care for yourself, or who can care for your loved ones who are unable to care for themselves.

If you have significant collections of art or other collectibles or real property that wasn’t titled as we’ve previously discussed in this article, does your will or trust, i.e., your estate plan, or provide, for the disposition of those things? If not, now is a great time to think through this and develop a plan and mechanisms, in conjunction with your trusted advisor, to address this.

You should be reviewing your investments regularly. This process, though, may give you new insights into your needs. If it does, you’ll need to get in touch with your investments advisor to discuss near-term, mid-term, and retirement needs.

If you received a tax refund, this is also a good time to go to the IRS Withholding Calculator and update your W-4. Your employer’s HR department will know what to do with the IRS Form W-4 that results.  If your take home pay will increase as a result of this, consider seriously opening up a savings account to receive the difference each month, so you never see it.  It is a great way to increase your savings.

Making this an annual ritual (we plan on updating and rerunning this article yearly), will keep the fundamentals of your “financial house” in order, and fits neatly with the urge to spring clean other aspects of life.