The Time Between
Words by: Bryon Gragg
Published January/February 2013
Now that the holidays are over and another year is behind us, we face that long period of time between holiday fun and the arrival of spring. I hope you completed your tax planning prior to Dec. 31 and are just waiting on all the official documents to file your tax returns.
These slow winter months are a great time to make sure you start the year off right by either getting your financial house in order, or keeping it in order. We’ll discuss a few things that you can review in the course of an hour or so and if they need follow-up, the time between is a good time to take care of it.
First is a review of your will. You do have a will, right? If not, it is time to get one. Don’t leave those around you in a difficult situation by passing without one. It is OK to postpone getting a will in one situation, which is when you know the exact date and time of your passing; then you just need to get it done before then. For the rest of us, we simply can’t put it off. If you have your will, make sure that any significant changes — marriage, divorce, birth of children or other major life events — are updated. If there are changes to be made, contact your attorney and get it done in the time between.
A power of attorney generally goes hand in hand with your will. Make sure that you have this document and that it is still appropriate. Make sure the person or persons you have to act on your behalf when you can’t are still able to do so. Again, major life changes generally require that you make changes to this document.
Review beneficiary designations on your retirement accounts, investment accounts and life insurance policies. Having the wrong beneficiary or no beneficiary is one way to make sure that those you leave behind are upset with you. Updating the beneficiaries is one of the simplest tasks you can do, but is often one of the most overlooked.
Wills and powers of attorney are important documents for when you are unable to make decisions or are no longer around.
Let’s look at some of the things you can do for the here and now. A good start is insurance review which includes life insurance, property insurance, disability insurance, long-term care insurance and umbrella insurance as the most common. When reviewing your policies, the question should be: Do you need them? Is the coverage amount appropriate? Are the deductibles and waiting periods appropriate?
If you’ve paid off your mortgage or refinanced, make sure the interested parties are updated. The same goes for automobiles; if you are financing and have paid it off, let the insurance company know to release the financing party from the insurance.
Review your investment portfolio allocation during this time between. You will have the year-end statements and a summary of the transactions from the previous year. Have your goals or objectives changed? Are allocations still appropriate to meet them? Is your portfolio tax efficient for investments outside your retirement accounts? Are fees reasonable for the services provided? Consult with your advisor to make sure you are on the right track. Also remember that we have just experienced a volatile period while Congress was dealing with the fiscal cliff issue. I hope you were able to keep a long-term perspective and didn’t panic during this time. Stocks move from weak hands to strong hands during volatile times and you want to make sure you possess strong hands.
A review of your debt is also appropriate at this time. While interest rates are at historic lows, it may be the time to consider refinancing your home. If you’ve owned your home for a while and haven’t refinanced recently, it is possible to cut your mortgage term in half without raising your monthly payment. If you have other debt, make sure you have a plan to reduce it quickly and in the most efficient manner possible. Look at paying off the higher-interest debt first and then knocking down other debt until extinguished.
So after a careful review of your documents, you can either put them away knowing that you have everything under control and your financial house is still in order, or you can take time to get the necessary changes completed in the time between.