My wife and I are very adventurous do-it-yourselfers. Framing out an addition on the home? Let me grab my nail gun. Making our own baby food? Sign us up! Replacing the brakes on the truck? No problem.
Recently, I have been completing a lot of work for do-it-yourself investors. One of the most common themes that concern these investors is what happens to the family finances if they become incapacitated or pass away. Let’s discuss how hiring the “advisor trifecta” can help alleviate some of these concerns.
Estate Planning Attorney
An estate planning attorney can draft legal documents to address incapacity, end-of-life decisions and transferring assets upon death. Many estate planning attorneys offer an estate planning package for several hundred dollars. These estate plans offer the following documents:
(bullet) Financial power of attorney, which names an individual to handle your finances if you’re unable.
(bullet) Last will and testament, which outlines who receives your assets after your death.
(bullet) Health care power of attorney, which names an individual to make medical decisions if you’re unable.
(bullet) Advanced medical directive, which names an individual to make end-of-life decisions if you’re unable.
Certified Public Accountant
I’m still waiting to meet the client who wants to pay more in taxes. Until that day comes, I highly recommend engaging a CPA. One of the most significant financial traps I see do-it-yourself investors make is delaying, deferring and focusing on near-term tax decisions. A CPA will help you create a long-term tax plan to help reduce lifetime taxation. Whether this is projecting tax optimization strategies through opportunistic Roth Conversions or understanding various deduction eligibility, having a CPA as a second set of eyes can provide significant value. But one of the largest values a CPA can offer is less tangible but just as meaningful; I call it sleep insurance. If there is an issue with my tax return, I rest easy knowing that my CPA will step in and help resolve the issue, which is much less stressful.
Financial Advisor
I think there’s a misconception as to what a financial advisor does for a living. Most of my friends think my livelihood is solely investing client’s money. And while I do help individuals invest money, most of my job revolves around providing advice and helping my clients make educated decisions during major life transitions, such as retirement. Prior to putting in your retirement notice, I want you to be confident in your retirement income plan. As clients age, I want them to be confident in their aging-in-place plan or their choice of a continuing care retirement community. I want my clients to feel confident in their inheritance plans and that their insurance needs are covered. A good financial advisor is the first resource for all things finance, whether it’s financing needs or a simple gut check on if the goal is affordable, a financial advisor is your financial advocate.
If used appropriately, the internet can be an excellent resource for research and education. For example, TurboTax can be a very cost-effective tool, but the tool is only as good as the user’s knowledge of the IRS’s 1040. Errors can result in IRS letters, audits and underpayments that result in penalties and/or interest charges. Likewise, LegalZoom can be a very cost-effective tool for creating an estate plan, but the software is limited to the user’s knowledge about Pennsylvania’s probate, incapacity and guardianship laws.
Incorrect software use can result in children going through orphans’ court, assets being transferred to ex-spouses or the state making decisions over your medical treatment. If you follow The Finance Hound, you know that I am in favor of saving money. I’m also a huge advocate for having a plan in place for your loved ones. Having the right team in place can alleviate a lot of stress whenever your significant other is grieving the loss of their loved one or navigating the stresses of an extended health issue.
Bryson Roof, CFP, is a financial advisor at Fort Pitt Capital Group in Harrisburg. Fort Pitt is a division of Kovitz Investment Group Partners, LLC, a registered investment adviser with the Securities and Exchange Commission. SEC registration does not constitute an endorsement of the firm by the commission, nor does it indicate that the adviser has attained a particular level of skill or ability.
