eFocus @ Legacy

January 2015

Author: Marta O'Brien, Trust and Financial Advisor

Financial Resolutions to Consider for 2015

As we welcome the hope of a refreshing New Year, we certainly have to be grateful for the warm tidings that 2014 left behind:

  • The S&P 500 showed a 13.69% return (dividends included) which is the sixth year in a row that the index has shown a positive return since the -37% result in 2008;
  • The average price per gallon for gas has dropped about 33% since January of 2014 and many states may see the price drop below $2.00 before the trend in decreasing prices ends;
  • The unemployment rate has dropped to 5.8%, reaching levels below the long-term historic level of 5.83%.

Hopefully, your financial confidence is feeling the positive effects that result from strong markets and a growing economy. At the same time, we all wish that we could we temper the anxiety of what to expect in the future. While the external factors that impact our finances are often beyond our control, we have a few ideas for you to resolve to complete that might make you feel less anxious when 2015 tries to hurl snowballs your way:

  • Organize your financial paperwork by gathering important documents, reviewing electronic files and creating an inventory list of their location. Remember to create a secured log of important web sites (bank/investment accounts, bill payments, tax preparation) and their passwords. Don't forget to make a list of the professionals you use who may hold key pieces of information. As you organize, you'll be doing an inventory of everything that encompasses your financial picture and you may find areas that could use a little attention. In the end, you will feel more empowered to handle any outside influences when everything is inventoried and accounted for. It also might make you decide to consolidate some of your assets when you see how many different companies hold a portion of your portfolio.
  • Examine all your designation assignments: insurance, retirement plan and investment/trust beneficiaries; power of attorney for finances; power of attorney for health care; personal representative and successor trustees. The decisions you made when you originally filled out designation paperwork may be different now that some time and life events have occurred. You may have gotten a divorce, a loved one has died, you've added new assets, or your health has changed - there are countless reasons why you may need to alter your designations so that your wishes can be efficiently carried out in the event that you can't execute your financial duties any longer.
  • Review your risk protection, especially as it relates to your overall liability exposure that can be greater for individuals and families who have achieved a level of financial success. A car accident with injuries, a friend who is wounded while on your watercraft, or a worker hurt while performing tasks at your home can open up a large-scale lawsuit when wealth is apparent. Awards from jury verdicts and settlements have grown far grown far beyond the $2 million to $5 million range that many people with wealth have insured themselves for. Making sure you have adequate umbrella liability insurance that protects all of your assets from a personal injury lawsuit has become increasingly important.

While it's always a great idea to give your financial plans an overall review, these suggestions may give the task some immediate action items. We hope that your New Year is filled with prosperity and as always, if you need any assistance planning for the future or reviewing your current state of affairs, please give me or one my other colleagues at Legacy a call.

When my last remaining parent passed away a few years ago, my sister and I knew exactly where to find all of our father's financial paperwork-a rustic chest that was originally used to store player piano scrolls conveniently located in the family room for over 40 years. Copies of handwritten tax returns, bank and investment statements, and even military service paperwork had been neatly stored, completely unsecured, in this family heirloom. Lucky for us, this retired IBM mainframe computer salesman never had the desire to go digital himself. We didn't have to hunt for passwords or search electronic files to find what was needed to settle his estate.
Today, it's much more likely that everyone will leave a footprint in the digital world. Information and data stored on computers, smart phones, email accounts and social media (Facebook and the like) are all examples of what is being coined "digital property" or "digital assets." Not only will the task of locating important documents become even more of a challenge (think Turbo Tax accounts), but access to digital assets is currently not an automatic right given to a personal representative or trustee in charge of settling an estate.
Adding to these complexities are the wide variety of disclosures in the Terms of Service Agreements that digital service providers require you to accept at the time of sign-up. These agreements can make it difficult for someone to get access in order to preserve any data or even terminate the user's account in the event of death or incapacity.
In July of this year, the Uniform Law Commission approved the Uniform Fiduciary Access to Digital Assets Act. The Act provides that if a fiduciary would have access to a tangible asset, that fiduciary would also have access to a similar type of digital asset.
Recognizing the need for legislation in this area and aware of this Act, the Real Property Probate & Trust Section of the Wisconsin State Bar is working toward establishing a Wisconsin statute addressing digital property issues. Whether Wisconsin adopts the Uniform Act in its entirety or some version of it, Wisconsin should have a new digital property law within the year. In the meantime, though, you should consider taking some steps on your own.
Specifically, you should create an inventory of everything you've placed in the digital world and a corresponding roadmap for your personal representative or other fiduciary to follow for access to such property. The new legislation is expected to provide a legal framework for gaining access to digital property, but if you have strong feelings about how such property should be preserved, protected, distributed or terminated, you should leave clear, detailed instructions documenting your wishes.