Jim, already retired twelve years, had owned his own welding business. Terry, his wife, ran the household. When we met with them, they pulled out their investment dividend records, as Terry recorded each check they received.
The first meeting was to learn about their existing investments. After three hours, we finally had a net worth statement, but it was like pulling teeth as they had never told any one person about all of their investments. No previous advisor ever saw Jim and Terry’s big picture, as they worked with four different brokers and had twenty-three different investments. During our second meeting, a week later, we looked at their legal documents and saw that their revocable living trusts were not funded. Without funding, their legal documents were worthless! We immediately started moving their assets into their two trusts.
Fortunately, their power of attorney documents were current. Unfortunately, in the midst of moving their assets, Jim had a heart attack. He was rushed to the hospital and put on life support.
Terry, as power of attorney, immediately moved the rest of Jim’s assets to his trust, and the day after the assets were moved, his life support was stopped. Because we had moved Jim’s assets to his revocable living trust the day before he died, their estate saved over $750,000 in estate taxes!
Don’t pay a penny more in income or estate taxes than you must. Be careful who you pick as your most trusted advisor. One of the biggest mistakes inexperienced investors make is to take advice from everybody and anybody. Then they second-guess their decisions as they read various newspaper articles and listen to the latest guru on TV.
Here are some common “who to trust” problems: Investors think they need diversification in their advisors, instead of diversification in their portfolio. They purchase life insurance from a relative or old friend, then purchase a retirement plan from an advisor at a big retail firm, because “he should know what he is doing" or because a friend invests there. When they hear about no-load funds, they assume the no-load funds don’t have costs and expenses. In addition, they often think they need more real estate holdings and put faith in the gold and silver ads on TV! The problem is, none of the financial advisors knows what the other is doing, and there is no one managing the investors’ “big financial picture.” This leads to duplication of assets, higher hidden costs, higher risks, and higher taxes.
Meet every year with your most trusted advisor. This can be a person to person meeting; or a phone call could be sufficient, once your portfolio is invested in the global free market philosophy. What a relief: No more moving money or buys and sells to talk about. However, life still evolves. So whenever you have some personal needs or concerns, contact your free market coach. She or he will help you make the right decisions, appropriate for your investment philosophy and lifetime goals.
Written by: Maria J. Wordhouse Kuitula and Phyllis J. Veltman Wordhouse, free market wealth and stewardship coaches, co-authored the book Stress-Free Investing, available at Amazon.com. Maria is the president of Wordhouse Wealth Coaching and may be reached at 616-460-6518 or [email protected]. For QUESTION LISTS and INVESTOR EDUCATION VIDEOS, go to www.WordhouseWealthCoaching.com. © Wordhouse Kuitula 2013.