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November 21, 2013
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Market Beat: Death and taxes

One of my favorite quotes from the great Benjamin Franklin was, “In this world nothing can be said to be certain, except death and taxes.” Proper planning for the inevitable is a very important step that everyone should consider.

It has been a great year for the stock market so far. Recently we saw the Dow Jones Industrial Average top 16,000 for the first time ever, and the S&P 500 set a new all time high over the 1,800 mark.

There is more to successful investing than just getting good returns from your portfolio. Most people are happy to develop an investment strategy that is suitable for them and achieving results that are in line with their expectations, but there is more to successful investing than just getting good returns.

Another aspect to consider is planning. Sometimes it may be necessary to coordinate among an attorney, a tax adviser and your financial adviser. Estate planning is one of these areas. It is a common occurrence that some individuals work hard and build up a sizable estate, but fail to make the right plans to distribute that estate to their beneficiaries.

One of the most common tools used in estate planning is the revocable living trust. Assets placed in a trust can avoid the probate process and get distributed to beneficiaries faster and be kept private. Assets that go through the probate process become public information. The probate process typically takes about six months and some cases can be dragged out for a year or more.

Qualified retirement accounts like 401Ks and IRAs have beneficiary designations, so assets in those types of accounts can pass directly to beneficiaries and remain tax deferred. It is very important to set up your beneficiaries properly and review them in case of a change in family status, like birth, death or divorce.

People who have had several job changes should review all of their retirement accounts and consider consolidating them into a rollover 401K — that way in the event of an untimely demise, the assets will be in one place and much easier for the survivors to deal with.

Another very important consideration is how to deal with medical issues that may arise while you are still alive. Estate planning attorneys recommend tools like living wills, medical powers of attorney and durable powers of attorney to make sure that your final wishes are carried out properly.

Will Rogers said, “The only difference between death and taxes is that death doesn’t get worse every time Congress meets.”

Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information on his money management service can be found at his blog at www.sellacalloption.com or by calling 775-657-8065. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.


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Tahoe Daily Tribune Updated Nov 21, 2013 07:18PM Published Nov 21, 2013 01:04PM Copyright 2013 Tahoe Daily Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.