Broker Check

Monday Money Report

| April 08, 2024

The markets were down last week, as inflation continues to hold steady, and the Federal Reserve signaled rate cuts are probably not happening any time soon. A strong jobs report on Friday had stocks bouncing back, as the economy continues to grow, and unemployment remains below 4%.

The strong markets have led to large 401(k) and IRA balances. It’s expected that baby boomers will pass over $50 billion to their heirs, largely Gen X and millennials.[1] But poor planning can complicate matters.

The first step is to make certain you – and your aging parents – have a will, Power of Attorney, and Advanced Medical Directive. The will says who gets what, and, if you have young children, appoints a guardian for them. The Power of Attorney allows someone to make financial decisions on your behalf.  The Medical Directive allows someone to make medical decisions for you, and also spells out what you want for end-of-life care.

Some people choose to have a Revocable Living Trust, which works with your will to define who receives what property and can help with incapacity planning.  Not everyone needs a trust so if you are being pressured to purchase one over a will, get a second opinion.

Next is to check the title and beneficiaries of all accounts. If you have joint accounts, or own real estate with someone, the title is usually either Joint Tenants by the Entirety, or Joint Tenants with Rights of Survivorship.  In both of these cases, the asset will pass to the remaining owner when you die.

We see many cases where beneficiaries have not been updated after a marriage, divorce, or death. Check the beneficiary for each account. You can also add a beneficiary to bank accounts, investment accounts, and even your car, by having a Transfer on Death, or Payable on Death, designation on the account or your vehicle title.

We encourage parents to sit down with adult children and discuss their plan.  You don’t need to share how much you have but letting them know that you are comfortable, and they won’t need to financially take care of you, is important. Tell them where your documents are located, what you want for end-of-life care, and anything you’d like for your funeral. Developing your plan and sharing it with your children is a gift and provides peace of mind for everyone involved.

Your action item this week is to open and fund a High Yield Savings Account. If you have money in the bank earning less than 1%, moving that into an account earning over 4% is an easy improvement.

Be sure to check out our website at covingtonalsina.com, or our Facebook page, for more information and to register for our upcoming educational events, including tonight’s webinar on Family Wealth Transfers.

CovingtonAlsina is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.


[1]https://www.nbcnews.com/business/consumer/generational-wealth-transfer-baby-boomers-cant-save-gen-x-millennials-rcna128099