We often write about the markets, the economy, specific investment ideas, or strategic themes, but in this newsletter we want to focus on the planning solutions we implement day in and day out for the families we serve. It is our goal to provide financial peace of mind for you, and this extends beyond creating portfolios for cash flow and growth. Helping you find solutions for day-to-day life and long-term goals go hand in hand; whether it’s planning for today, tomorrow, or a long way off, Noesis provides guidance in this journey.
Many of you are finally able to travel and gather for the first time in two summers. This might be an excellent time to think about your retirement and succession planning, your family, what is important to you, and to discuss your values with family members.
With this in mind we will focus on two areas: Retirement Planning and Estate Planning.
First, Adriana Pereira, CFP®, will give us an overview of the Certified Financial Planning principles and will provide examples of our cash flow and balance sheet analysis process which in turn helps you make decisions about preparing for retirement, living in retirement, and generational planning. Second, Jeffrey Greer, our Certified Trust & Fiduciary Advisor (CTFA) will provide guidance on the basics of estate planning, and how we help people navigate the estate, wealth and inheritance tax rules and pass assets efficiently according to your wishes.
Adriana joined Noesis in 2014. She worked in our Boca Raton headquarters as a paraplanner for three years while studying for and earning her CFP designation. Currently she provides portfolio and balance sheet analysis reporting for our clients. She often joins the planning discussion along with Noesis team members for each of the families we provide this service to.
Financial planning is an ongoing process, providing direction for achieving your goals, taking a holistic view of your lifestyle, your needs, and your priorities. It is a tool to analyze your current financial situation and provide projections that can assist you in understanding your situation and whether you can achieve your goals. Financial planning starts with getting to know your current financial situation and goals, and continues with measuring performance toward those goals and adjusting the plan as needed when new challenges or situations arise. The process should help you get organized and relieve the stress that can often come from the unknown and bring you peace of mind.
At Noesis, we familiarize ourselves with the family as a first step. We begin this process by asking questions about the client’s family relationship, health, background, values, goals, needs, priorities, etc. as well as quantitative questions. We ask questions like, “what do you want your money to do?” and “what is most important to you?” as well as “would you like your money to grow and/or be able to withdraw a comfortable income from your portfolio?” Many, if not most, families want to ensure they have enough income to support their lifestyle while also growing the portfolio to protect against inflation. Often we are asked, “how much should I save for retirement, can I retire earlier, do I need to delay my retirement or do I have to work part time the first few years of my retirement, can I afford a second house, and do I have enough for charitable giving?” Through careful planning we can assist you to answer those questions.
Cash flow projections include annual budgets, assets and liabilities, income and expenses, current investments, taxes, emergencies, funding education, inheritance, selling a business, home purchase, wedding expenses, philanthropy, and more. We also address inflation and compounding. At the end of this process, we typically discover that clients have more money than they realize; this is far more common than you might expect. Or you may find that the time to enjoy retirement has arrived. As a result, you may be able to stop worrying about money.
At Noesis we have several CFP® professionals. They make a commitment to the CFP Board to act as a fiduciary which means they always act in their client’s best interests.
It has been our experience that financial planning is not a one-time event, it is an ongoing lifelong process.
Jeff also joined Noesis in 2014 after spending ten years with a trust company in Palm Beach and over three years with an investment advisory firm. He earned his CTFA designation while at Noesis.
CLT. GRAT. GRUT. GRIT. CRAT. CLAT. QPRT. QDOT.
The list could go on forever, but these are just a handful of acronyms for different types of trusts available for implementation by a qualified estate planning attorney on behalf of individuals or families in the United States.
The reality is everyone needs an estate plan regardless of the complexity or size of the estate. In Florida, it’s all about the “five documents” that help with wealth and health situations during your lifetime and after.
My parents were very careful about setting up their estate plan – I know, because my mother and father both passed (my father quite recently) and I was executor of their estate. Because they took careful measures in advance, there was very little burden on me or my family in terms of transitioning their legacy to the next generation, as well as carrying out their specific wishes.
Here are the basics, but please keep in mind we do not practice law at Noesis and this is a simple guide for when to engage with an attorney:
The Living Will
Sometimes known as the “pull the plug” document, the living will specifically outlines your wishes regarding your care, should your health fail due to illness or catastrophe. People may elect not to be kept alive by machines. This document provides peace of mind for the potentially afflicted person because they know the family will not have to make a tough decision should something tragic happen.
Health Care Surrogate
If you are incapacitated this assigns the healthcare decisions to a loved one or trusted friend.
Durable Power of Attorney
The DPOA is actually active immediately upon execution, which is why married couples typically assign each other as DPOA. It gives the assigned person the ability to make financial decisions on your behalf.
After your passing, the will outlines the disposition of your estate. Absent the need for a trust of any kind, the will is the overriding document for your personal belongings and assets such as real estate, investments, art and liquid cash. Retirement and pension accounts fall outside the purview of a Will and the beneficiaries’ assets will be transferred to inherited IRA accounts (in the case of the spouse there are choices to be made).
Living Revocable Trusts were popular prior to 2010 when the lifetime exclusion for federal estate tax was as low as $675,000. Utilizing trusts or pour-over wills, and proper funding, spouses were able to preserve both credits and avoid unnecessary estate tax. Now that the annual exclusion exceeds $11 million per person, and we have portability, only estates $20 million and above need this technique. Tax law changes often enough that this is a moving target including in 2021.
Trusts do avoid lengthy and expensive probate here in the U.S, and trusts keep matters simple and completely private. Probate is typically still opened to allow creditors time to make claims against the estate, but the trust(s) is excluded from this scrutiny.
Planning varies not just state-to-state here in the U.S. but country-to-country. It can be quite simple in some cases and extremely complex in others, but we are here to help.
For families all over the world, the key is to ask yourselves “what do we want our money to do?” Noesis can help guide you and find solutions. Finding purpose requires discussion with your family – but once established, you can determine what succession looks like for you, what you wish your legacy to be, and then we can help execute the plan by working with the right attorneys to draft your estate documents.
We can be able to help our international families with tax planning, and introduce you to a great partner in Greenback Tax Services, an accounting firm specializing in U.S. taxes for expats.
Achieving Peace of Mind is not simply making more money, or enough money. It is knowing that your money will support your lifestyle and serve its purpose. We are here to support you.
Jeffrey and Adriana