Things to Consider if You are Anticipating an Inheritance

Contributed by: Sandra Adams, CFP®

If you are like most clients, anticipating an inheritance likely means that something is happening, or has happened, to someone you love. Often this means dealing with the complexities of grief and loss, in addition to the potential stress of additional financial opportunities and responsibilities. Combining your past money experience and your relationship with the person you are losing or have lost can cause varying degrees of stress.

Based on our experience with clients who expect to receive an inheritance, we offer a few suggestions that will serve you well and help you avoid some of the common pitfalls:

• Avoid making big plans to upgrade your home, buy the fancy car, or take the exotic trips. In other words, don’t spend the money before you have it.

• Don’t let others pressure you into quick decisions or coax you into making purchases or gifts that you wouldn’t normally make.

• Don’t make any big purchases until you have taken the time to do more purposeful planning.

• Take an intentional time-out from decision-making. Give yourself the ability to grieve, and to make sure your head is clear and ready to make smart financial decisions.

• In the planning process, determine what will change, or has changed, for you since receiving the inheritance (income, savings, investments, expenses, home, etc.); this information will help guide your financial planning decisions with the inherited funds.

• Identify your current and future financial goals, then plan so that inherited funds help you meet those goals.

Even if you have a financial plan and are an experienced investor, receiving an inheritance can throw you for a loop from an emotional standpoint – and from a planning standpoint – when you rush to make decisions. If you have no experience with money, receiving an inheritance can seem completely overwhelming and stressful. In either case, having a financial planner – a decision partner to provide assistance, guidance, and a sounding board – can be invaluable. If you expect, or know someone who expects, an inheritance and could use some guidance, please contact us for assistance (Sandy.Adams@CenterFinPlan.com). We are always happy to help!

Sandra Adams, CFP®, CeFT™, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

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Any opinions are those of Sandra D. Adams, CFP® and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP® in the U.S.

How to Deal with Financial Decisions When a Major Life Event Has You Feeling Stuck

Contributed by: Sandra Adams, CFP®

We’ve all had at least one. A major life event — some might even describe it as a trauma — that leaves us feeling like we’ve been run over by a freight train. For some of us, it may have been a divorce; for others, the loss of a spouse or other close loved one. It could be the sudden loss of a job, a terminal illness diagnosis or accident. Even unexpected “good news” events, like an inheritance or job promotion that comes with a move, can feel stressful when other aspects of your life are unsettled.

Times like these might leave a person unable to envision future goals or make ANY short or long term decisions. It’s common to feel stressed, numb, uncomfortable, anxious, confused — any of these, all of these — or just plain STUCK!

If “stuck” sounds like a place where you (or someone you know) might be, what can you do?

• First, work with your financial decision partner (your financial advisor) to make sure that you are immediately okay and that any immediate cash flow needs are being met. Those are the only decisions that REALLY need to be made now.

• Next, take an intentional “time out” (we call this the “DECISION FREE ZONE”) from making any major financial decisions or plans. This gives you time to deal with the life event that has happened or is happening to you.  Take time to take care of you — physically, psychologically, and emotionally — and get back to the business of future planning and decision making when your head is in a more clear place.

• When you are ready to start thinking about planning again, take a step away from your current situation. “Getting on the balcony” can give you a more clear perspective. With the help of your financial decision partner, you can see your situation from a new point of view and begin the process of setting new goals for your new normal.

Getting “un-stuck” is not easy. And it cannot be done without patience, time, and the help of a good decision partner. 

What has you stuck?  What life event or life events have you feeling numb, stressed, and unable to make decisions?  Understand that this is likely to happen to all of us at some point in our lives, so do not feel alone.  And do not feel pressured to make decisions and or to move forward until you have taken care of yourself and feel comfortable moving ahead. 

We at The Center are trained to help clients with these types of difficult transitions. Please reach out if we can assist you or anyone you know and love.  Sandy.Adams@CenterFinPlan.com.

Sandra Adams, CFP®, CeFT™, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

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Any opinions are those of Sandra D. Adams, CFP® and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

I’m a Millennial and I Inherited a Million Dollars – Now What?

Contributed by: Nick Defenthaler, CFP®

More than 75 million millennials born between 1981 and 1997 are set to take over an estimated $30 trillion in wealth from baby boomers (source – AARP).  No, that is not a typo - $30 TRILLION dollars.  Personally, I’ve had several circumstances arise in the past several years where friends in their mid 30s have lost parents.  For someone in a similar age group as the folks that have experienced this loss, it scares the heck out of me.  I’m getting to that stage in life where it’s not beyond uncommon for a child to lose a parent.  That’s a pretty big reality check to digest. 

Although it can be tough to even think about, it’s a reality.  More and more people who are in their 30s who are busy building a family, career and overall great life, will inherit a level of wealth that previously seemed unfathomable.  Recently, a friend reached out to me after his father passed and left him $1,000,000 in retirement assets and life insurance proceeds.  He was overwhelmed and had no idea what to do next (thus the title of this blog!).  He was a teacher and his wife was in IT.  Needless to say, navigating the investments, required distributions and tax rules (just to name a few) associated with his inheritance was extremely stressful.  The stress caused a state of paralysis in making any decisions with the dollars out of fear of stepping on any unintended land mines or making the wrong move with the dollars.  The more we talked, it was clear that now was time for them to have a professional partner in their life who they knew was qualified but more importantly, fully trusted to provide recommendations that made the most sense for their own personal situation and goals.

My friends decided to hire me as their planner and we were able to provide advice and value not only on the planning items directly associated with their inheritance, but also in the areas that were more near term and important to them (student loan payoff strategies, discussing how to pay for child care expenses tax efficiently, helping them through the process of purchasing their first home and drafting their estate plan – just to name a few).  After 6 short months of working together, we got to place where the most time sensitive issues were addressed and we had developed a financial action plan to review annually and keep them moving in the right direction.  Of course, we plan to meet at least once a year to address other life events that come up and work towards the goals they’ve set as a family. 

Financial planning doesn’t always have to be associated with retirement. Helping clients through significant life events and providing advice beyond the dollars and cents is an environment in which our team thrives. Don’t feel paralyzed. Please feel to reach out if you’re in a similar position and need a professional to help guide you through these tough conversations and complicated matters.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

Why Retirement Planning is Like Climbing Mount Everest

Contributed by: Nick Defenthaler, CFP®

Mount Everest.  One of the most beautiful, natural wonders in the world.  With an elevation of just over 29,000 feet, it is the highest mountain above sea level on the planet. As you would expect, climbing Mount Everest is an incredibly difficult and dangerous feat. Sadly, over 375 people have lost their lives making the trek. One thing that might surprise you is that the vast majority who have died on the mountain, did not pass away while climbing to the top. Believe it or not, it’s actually the climb down, or descent, that has caused the greatest amount of fatalities.

Case in point, Eric Arnold was a multiple Mount Everest climber who sadly died in 2016 on one of his climbs. Before he passed, he was interviewed by a local media outlet and was quoted as saying “two-thirds of the accidents happen on the way down. If you get euphoric and think ‘I have reached my goal,’ the most dangerous part is still ahead of you.”  Eric’s quote really struck me and I couldn’t help but think of the parallels his words had with retirement planning and how we, as advisers, help serve clients.  Let me explain.   

Most of us will work 40+ years, save diligently, and hopefully invest wisely with the guidance of a trusted professional with the goal of retiring and happily living out the ‘golden years.'  It can be an exhilarating feeling – getting towards the end of your career, knowing that you’ve accumulated sufficient assets to achieve the goals you’ve set forth for you and your family. However, we can’t forget that the climb is only half way done. We have to continue working together and develop a quality plan to help you on your climb down the mountain as well! When do I take Social Security? Which pension option should I elect? How do I navigate Medicare? Which accounts do I draw from to get me the money I need to live on in the most tax-efficient manner? Even though you’ve reached the peak of the mountain – aka retirement, we have to recognize that the work is far from over. There are still monumental financial decisions that need to be made during the years you aren’t working that most of us simply can’t afford to get wrong. 

As with those who climb Mount Everest, many financial plans that are in good shape when entering retirement can easily be derailed on the descent or when funds start to be withdrawn from your portfolio – aka the “decumulation” phase of retirement planning. A quality financial and investment strategy doesn’t end upon retirement – this is the time when proper planning becomes even more critical.  Email me if I can help you on the climb – both on the way up and on the way down the mountain.  Learn more about our process here.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

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Any opinions are those of Nick Defenthaler, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Any information provided has been prepared from sources believed to be reliable, but is not guaranteed by Raymond James Financial Services and is not a complete summary or statement of all available data necessary for making an investment decision. Any information provided is for informational purposes only and does not constitute a recommendation. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNERTM and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.