If you died suddenly, or became impaired due to accident or illness, who steps in? What will he/she need to know about your personal and financial affairs?
In the creation story, Genesis 1:2-4 instructs, “Now the earth was formless and void, and darkness was over the surface of the deep. And the Spirit of God was hovering over the surface of the waters. And God said, ‘Let there be light, and there was light.’ And seeing that the light was good, God separated the light from the darkness.…”
Privacy is important when it comes to personal, financial, and business affairs. But no one is completely independent. There are people who depend on you and people you depend upon… spouse, adult child, business partner or co-owner, trusted friend, other loved one. When you as the go-to person thinks you aren’t being kept in the loop, purposely, inadvertently, or by willing default, you might say you are “in the dark.” Is it time to separate the dark in favor of light?
A piece in InvestmentNews (7/8/2019), “Kept In The Dark,” by Mark Schoeff, Jr., focused largely on the challenges faced by widows when a controlling husband is deceased. Schoeff cited a UBS survey of 3,652 women around the world that revealed that 58% defer long-term financial decisions to their spouse or ex-spouse. Of those surveyed, 61% were married women with at least $1 million in investible assets, savvy couples.
For those born prior to the 1970s B.C., “before computers,” before the microcomputer became ubiquitous, much has changed. In my career as a financial advisor I’ve had confused widows come in with boxes of disorganized paper, even expired stock dividend checks that were never cashed. Now the mantra is “paperless.” Statements are transmitted electronically. Dividends and other money disbursements may not be received in check form, but transferred electronically to designated accounts. Stock and bond certificates rarely are held in paper form in a safe deposit box. They exist electronically in “street name” at a custodian. Multiple investment accounts may be located at any number of custodians such as Pershing, TD Ameritrade, Fidelity, Schwab, major wirehouse or discount brokerage firm. “Financial stuff” may be all over the place. We call those “scattered assets.” Who knows where all of your assets are? How they are managed?
Bills are paid on-line. No more mailing checks in stamped envelopes. You can deposit checks using your Smartphone. Money is available 24/7 from an ATM. Rather than buying traveler’s checks, modern globetrotters generally prefer ATMs and credit and debit cards with no foreign transaction fees to obtain local currency. “Paper trails” are now password protected electronic trails. Who knows the passwords needed to access digital data if you cannot?
Those born B.C. have become computer savvy in varying degrees. But some resist technology, preferring paper and traditional approaches. Just as you may at some point taught someone to drive and navigate hectic and confusing traffic, who in your personal or business life needs to be able to drive your affairs if you cannot, if you are dead or disabled?
As advisors we frequently deal with situations where following a death, no will can be found. Or the will is old and obsolete. A named beneficiary, executor, or trustee has died. Powers of attorney for assets and health care are non-existent in case of incapacity, or they are old, obsolete, with incapacitated or deceased designees.
For a closely-held business owner, his or her enterprise may constitute 75%-80% of net worth. Yet, too often, no plans are in place to deal with an unexpected transition. In case of two or more co-owners, there is no buy/sell agreement given death, disability, divorce, disagreement, or disaster, “the 5Ds” that can destroy values and one’s life’s work. Per a 2018 Exit Planning Institute study, 47% of Georgia business owners have done zero planning to deal with the 5D’s.
If you have a heart attack or stroke at 3 a.m., a loved one’s first call will be to 911. Who will get the second call? An adult son, daughter, business partner? If they need to step in, are they in the dark as to what’s to be done? Where important documents are and how to locate information? How to run the life you no longer can? While you are able and lucid, shine a laser-like light on crucial questions. Procrastination is not an estate or continuity plan!
By Lewis J. Walker, CFP®