Leaving your kid(s) a million dollars as your departing gift

ST. CROIX INSIGHTS

Leaving your kid(s) a million dollars as your departing gift

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Tears of sorrow or tears of joy. That’s the discussion I have with my family about that day I depart Earth in the physical form. As much as my family “loves” me, there will be tears of joy ☺ as Mrs. Anderson now can hire that pool man I’ve denied her all these years. And not to mention the son who loves cars, but only had a bicycle until he was 25 years old because his old man was too cheap to buy him a car. Now he can buy that Ferrari he’s dream about all these years.

Being in the money business, I see how greedy loved one’s can become when their “loved one” dies, sometimes even before their body arrives at the funeral home. I hope to avoid this in my household. I’m looking to treat everyone the same – fairly, as I define fairly. That generally means equally barring any outside circumstances such as health, disability, mental or other illness that would limit their ability to take care of themselves financially. Hopefully I’ve done my job well enough and taught my children about the value of money which hasn’t been always easy. I have one kid who has his first dollar he earned because he uses mine (which is smart on his part) and another kid that if they have a dollar, it’s a dollar too much. So I know I have more to work on with them.

Yet I want to make we sure have ongoing conversations as a family around what kind of responsibility comes with having this type of money. I believe there are different kinds of money – money you’ve earned and that which is found (which comes in different forms). The kind of money we’re talking about requires a greater level of responsibility because it wasn’t earned for those receiving it. I have no desire that this money becomes easy come, easy go. If I ever suspect that’s the case, I’ll have the necessary precautions in place to prevent that. Because the money they’d receive was either hard-earned through the fruits of my labor, or I literally had to die for it.

Yet I want to make we sure have ongoing conversations as a family around what kind of responsibility comes with having this type of money. I believe there are different kinds of money – money you’ve earned and that which is found (which comes in different forms).

The kind of money we’re talking about requires a greater level of responsibility because it wasn’t earned for those receiving it. I have no desire that this money becomes easy come, easy go. If I ever suspect that’s the case, I’ll have the necessary precautions in place to prevent that. Because the money they’d receive was either hard-earned through the fruits of my labor, or I literally had to die for it.

Leaving each of my kids one million dollars can be accomplished a couple of ways. I can leave my IRA’s, investment accounts, business, home, etc., to them and we’re good. I think that would work but its subject to stock market risks, interest rates, income taxes, estate taxes, lifestyle costs, and healthcare expenses. So when I say “I think,” I can run all kinds of financial scenarios including that really cool Monte Carlo software that spits out the probability of hitting my goals. It’s still a guess at the end of the day.

Another way is I could accomplish my goal is – wait for it – the dreaded two word financial tool called life insurance. Does it make sense to take a small about of money now and purchase a single life insurance policy on me or a joint second life insurance policy on Mrs. Anderson and myself to guarantee that my kids will receive the gift I’d like to leave them? Do I want to eliminate the risks I’ve outlined above or if I fall short of my goal, does it matter? Many feel like the rate of return on life insurance stinks, yet they factor the internal rate of return. Depending upon on circumstances and/or if I want a guarantee to accomplish my goals, could it be the most efficient use of money? Trade-offs – life is full of them.

I’m in the camp of that it if I fall short of my goals, I’d like to leave a legacy behind for my kids to be impactful with their families and community. I know, some individuals have no desire to leave their kids any money and that’s your choice. I’m not judging either way. It’s a personal decision. I want to make sure I can accomplish my goal no matter what the future brings my way and I’d rather have the security of knowing that at my death I’ve completed my bucket list (the best I can with what I’ve been given) and this is just one of those items on my list.

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Unexpected Death or Disability

ST. CROIX INSIGHTS

Unexpected Death or Disability

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

What to do when the outcome is not what you expected? Now we know that outcomes can be both unexpectedly bad or good. Let’s get the bad news of out of the way first.

Unexpected death or disability is certainly bad news. I know, because I’ve been there. (Read more about my story in Bad Things Do Happen). Enough about me, though, I’ve also been there when it wasn’t about me, when it was about my clients and friends. I’ve seen the results of unexpected death and disability firsthand and understand the havoc it wreaks, not just on surviving family members, but on a business.
The most important step to minimize these impacts (and forgive my redundancy, but it’s true) is planning. The more prepared you are in the event something should happen, the better off you are when something does happen.

Without the proper foundation, it is impossible to move up the pyramid of building wealth. Certain foundation elements that come in to play when unexpected death or disabilities strike are:

  • Disability insurance
  • Life insurance
  • Long-term care insurance
  • Medical insurance
  • Estate plans
  • Large short-term savings account
  • Protecting your assets

Should you have any questions on the above or are concerned as to whether or not you’ve laid a solid foundation should the unexpected should arise, please do not hesitate to contact me today. I may be reached at brett@stcroixadvisors.com or 651-337-1919.

“Remember, the key to any wealth strategy is laying the proper foundation.”

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Your Will Isn’t Good Enough

ST. CROIX INSIGHTS

Your Will Isn’t Good Enough

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

The inevitable: death and taxes. Subscribe to our blog and follow along as we journey through these difficult topics, providing tips to ensure you’re as prepared as possible.

In this blog, we’re discussing how just having a will may not be enough. Even the most updated, will may not be enough depending on your intentions and investments.

Many times, without extra steps, some or even a majority of your assets could be distributed against your wishes as outlined in your will. Examples are:

  • 401(k) Plan: If you’re married, regardless of your intentions in your will, generally your 401(k) assets will transfer to your spouse.
  • Regardless of when the account was established (even if it was prior to walking down the aisle AND even if you have a prenuptial), your spouse becomes the sole beneficiary to your 401(k) if you name them as the beneficiary. Time to check to see who is the beneficiary of your retirement accounts.
  • If this is not your intention to leave your money to your spouse, I’d like to be a fly on the wall while you’re having that conversation. If that’s truly your desire, generally spouses have to sign an acknowledgement on your 401k account.
  • If you’re not married or if your marital status changes, make sure that your beneficiary designation remains current. In most cases, this is as easy as filling out and returning a form to your plan administrator(s).
  • IRA: Just as with your 401(k) plan, your IRA beneficiaries needed to be spelled out separately. Claims would go to the individual(s) you set forth on your beneficiary designation form.
  • It’s your choice to name whomever you want as beneficiary on your IRA, so make sure that when you are laying out your will and making an estate plan, your beneficiary designations match your intentions.
  • Once you’re married it’s time to update the beneficiary information.
  • Again, if you’re not married or if your marital status changes, make sure that your beneficiary designation remains current.

You worked hard for your money, so make sure that it passes into the hands you choose, not attorneys.

As always, make sure that you talk to your advisor(s) and attorney(s) as you create your estate plan. If you have any questions or would like additional information, please don’t hesitate to contact us.

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Winning The Retirement Lottery

ST. CROIX INSIGHTS

Winning The Retirement Lottery

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

Winning-The-Retirement -Lottery

Chances are you’ll hit the retirement lottery one day and it may well be your biggest payday ever. For most it comes in one of two forms – the sale proceeds of your business or that 401(k) you’ve been saving in for the last thirty years. Either way you are going from working for a paycheck to “mailbox money.” And I have to tell you nothing beats mailbox money because it just shows up for your retirement enjoyment.

When you cash in your “retirement lottery ticket” I have a few observations from many years of working with clients. When you go from working day in/day out and earning a paycheck every two weeks for the fruits of your labor, you’ve had one philosophy for your money. But after you retire, and often within three to six weeks and certainly within six months, you’ll develop a different philosophy towards money. And chances are you’ll become more conservative, desiring to spend less to preserve what you have.

During this time, I would recommend you do not to commit to any major purchases that you may regret. That’s probably easier said than done. You may want to travel purchase a larger retirement home or that cabin, or that well-deserved Porsche. What I see happening is clients will start to reevaluate priorities and even question will if they will have enough money to go the distance.

My recommendation – hold off on major purchases, relax into your new lifestyle, get used to mailbox money for six to twelve months before making major purchases. I suspect your values toward money will change during that time. And remember – you can finance college but not retirement.

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The Frugal Millionaire

ST. CROIX INSIGHTS

The Frugal Millionaire

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

The Frugal Millionaire

It’s a typical conversation I have throughout the week, i.e. “How to become a millionaire?” or “How to maintain your millionaire status once you’ve achieved it?” As the saying goes, it’s the first million that’s the hardest. One major factor impacting our million(s) is the housing we live in today and plan on living in during our retirement years.

I was recently on Sanibel Island and checking out my surroundings on the beach. Being mid-January, the average age of the beachgoers was around late 60’s. I was trying to bring the age average down, but I was truly over matched. I was reflecting that as Mrs. Anderson and I age, what is our retirement going to be like? How are we going to spend our time? Where are we going to spend our retirement years, God willing?

Just to the right of me on the beach, I was observing this couple (pictured above). In my opinion, they had it all….beach chairs, umbrella, perfect hats, newspapers (nothing like the original) and a little cooler. They were set for the entire day on the beach. Relaxing, reading, people watching and enjoying each other’s company. All this for $4 an hour to park and a seven minute walk from the parking lot. In fact, if I had turned the camera around, you would’ve seen me and Mrs. Anderson doing the same thing. I’m not sure it gets better than this when it’s cold and snowing at home.

Vacation Home

This January, I was walking along the Naples boardwalk and passed this beautiful home. This home was so amazing I’d move in yesterday and not even think twice. I suspect this home cost millions, yet truly offers no privacy as hundreds, if not thousands, walk by their front and backdoor each day. And let’s not forget, they don’t even have a private beach for that kind of money.

I had a chance to visit with a number of retired “snow birds” recently and learn about their varied housing styles. They all had a number of things in common. First, they had resources to live where they’d like to live no matter where it was. Second, they were excited to be out of the cold and snow. Third, they embraced the great outdoors in the Sunshine State. Bottom-line, you don’t need to spend millions to live like a millionaire in your retirement when it comes to housing.

If you’d like to discuss what details of who, what, where and why on your retirement location and ideal housing arrangements, give me a shout.

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Essentialism – The Disciplined Pursuit of Less

ST. CROIX INSIGHTS

Essentialism – The Disciplined Pursuit of Less

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC

It’s not the pursuit of less. It’s the exact opposite of what you’d think. It’s more. “An Essentialist produces more – brings forth – by removing more instead of doing more!” Now that’s cool!

Essentialism Defined

Essentialism – The Disciplined Pursuit of Less by Greg McKeown is a book I just finished. It was recommended by a client of St. Croix Advisors. He thought I’d connect and relate to its message, and boy did I. Here’s why I connected with its message: It’s about “learning to filter through all those options and select only those that are truly essential.”

Essentialism in Financial Planning

Essentialism

The Disciplined Pursuit of Less by Greg McKeown

When you start to contemplate that, you realize it’s a powerful opportunity we can implement in our daily lives.

3 Areas to Apply Essentialism

We can start to apply essentialism to three primary parts of our lives:

  1. Work
  2. Family
  3. Financial Planning

It’s not about getting more and more things done. I think we’ve all tried that and probably failed. We’ve also heard ‘work smarter not harder’; been there, done that. Instead it’s about investing in “the right activities”. In other words, Essentialism is a disciplined systematic approach for determining where our highest point of contribution lies, and then with little effort execute on those things.

A great question an Essentialist will ask is “what are the trade-offs I’m willing to make?” A trade-off isn’t a negative.

We can apply this to our daily lives and our financial lives. We can have more. I’m not talking about more stuff necessarily, but instead perhaps less financial stress. Having clarity on our goals and envisioning what our retirement will look like, for example, will cause us to make different or better decisions today to achieve our goals sooner.

If you’d like to chat about the book or talk about making decisions or even financial simplicity, give me a call.

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