Til Death Do Us Part

Mar 6, 2021 | Estate Planning, Financial Planning

While we don’t want to think about it, it’s inevitable. Our mortality. The responsible thing to do is start planning today. On this podcast, the discussion revolves around practical steps you can take today to make sure your family is provided for regarding household finances.

Good morning everybody, welcome to the podcast. My name is Karl Eggerss. Grab yourself a cup of coffee, sit back, we’re going to dive into some issues today. Our telephone number (210) 526-0057. It’s creatingricherlives.com. By the way, go check out creatingricherlives.com, we have a new website. If you haven’t been there, make sure to go look at it. If you really want to know what Covenant is all about and what we do, we made it pretty simple. When you go to creatingricherlives.com, there is a video right there, the first thing you see. You can click on watch video and it’s literally a minute, minute and a half, and it kind of walks through really what we do for clients and the decisions that they have to make. So go check that out. If you haven’t been there in a while, there’s also a great services page that talks a little more about what Covenant can do for you, a friend, family member.

Also, you can go see our pretty faces and all the wonderful people that work at Covenant on the about us page. And of course we have a resources page which has all of our blog articles, podcasts, TV, interviews, et cetera, all right there for you. So make sure you go check that out, let us know what you think about the website. It does a pretty nice, if I do say so myself, and you can even see our new building which is on there as well. We had moved locations of our San Antonio office back in June and you can see it right on there. So make sure you go check out creatingricherlives.com.

And by the way, we did have a webinar this week and we covered the markets, we had an estate planning attorney join us. We also had a tax expert join us on the webinar. It’s an hour long. If you’d like to go see it, just go to our YouTube page. You can go to Creating Richer Lives. If you go to youtube.com and search creating richer lives, and you can watch it on there, it’s exactly an hour. I hosted it. We did a kind of a round table a little bit and had some good questions along the way. And we’re going to be doing more of these webinars as we move forward. It’s a great way for you to get more information about very specific topics that frankly, I don’t have enough time to talk about on the podcast and I can’t show you, right?

A webinar’s nice because it’s very interactive. Not only can we show you different things, but we can also answer your questions because you can ask questions right in the webinar. There’s polls, there’s all kinds of interactive tools that we can use to really educate you more and satisfy some of the question you might have very specific topics. So we’re going to be doing a lot more of those in the next few weeks and months, so stay tuned for that. But again, if you’d like to see that, just go to youtube.com and search for our channel, which is creating richer lives and let us know what you think about that.

All right, today’s topic, that we’re going to talk about, is death. And we’ve talked about this on the podcast a few times over the years and unfortunately I’ve had to deal with a lot of deaths in the past year. Friends, close friends, clients. Our job is to walk people through all kinds of financial decisions they have to make. this particular challenge is what it sounds like. It’s a challenge of walking people through when a spouse or somebody passes away in a family, all the things you have to do over the next few weeks and months.

And it’s certainly a hard thing to do, not only because of the amount of work involved, but it’s hard because of the emotional part of dealing with this. It’s the last thing anybody wants to deal with is paperwork and everything that goes along with the death of a spouse, especially that particular time, there’s a lot of emotions going on. And so we have a checklist and it’s updated for 2021, it’s what issues should I consider if my spouse passed away? And it’s good to look at, obviously if your spouse has passed away, but it’s great to look at if you have the joy of having your spouse still with you. It’s a one pager, actually it’s a two pager, but it’s got some yes or nos and it asks some various questions. I’m going to go through some of that here in a bit and then if you would like that, reach out to us, and we will certainly send it to you. Again, it’s a PDF we can email it to you. You just call our office (210) 526-0057. Or if you reach out to us on the website, creatingricherlives.com, we can also get it to you.

And again, what it’s called is what issue should I consider if my spouse passed away. And it’s not a lengthy report, it is simply a two page kind of a checklist if you will. So we will get to that just a minute and I’ll cover some of these, some of these items. Kind of an interesting week in the market, as it always is. We certainly saw the big drivers this week, it was a lot of volatility. What’s interesting is most people probably wouldn’t think that the markets were actually up this week. The Dow Jones was up almost 2%. The Standard & Poor’s 500 was not up quite as much, up about 0.8%. And the NASDAQ was actually down 2%. So you’re getting selling in tech and that’s where it gets a little interesting, even small caps were kind of in the middle.

And kind of the big move this week came again in interest rates. And so some of the big things that I saw this week were Chairman Powell basically saying, we’re going to be there for you, right? And we’re going to keep rates low and nothing we haven’t heard before. But he didn’t come out at and announce that they’re going to continue to purchase bonds. And I think people wanted to see what are you really going to do? And he didn’t announce that. We’re kind of used to that and the market didn’t get it. And so I think it was Wednesday or Thursday rates really shot up and went through one and a half percent on a 10 year treasury. One and a half percent’s still very low guys, but as I’ve said in the past several weeks, when you go from 0.4% to 1.5% as quickly as we have, that’s what has the stock market spooked right now.

So if you’re wondering, what’s got the stock market a little spooked. Number one, it’s stretched, which we’ve talked about. Number two, I believe we have a tech bubble in certain stocks and I think you’re seeing that come to fruition. You saw the NASDAQ has pulled back almost 10% from high to low. And interest rates going up, certainly have added to that, or maybe they were the culprit for the selling. And so that was a big deal this week was really Powell in the reaction to Chairman Powell.

We also saw oil go above $66 on Friday. I mean, what a move, right? Remember we were almost at minus 40 so we’ve seen a well over a hundred dollar move from negative to positive in the past year. And the energy stocks have really been strong. I mean, if you look at what some of the outliers this week, energy stocks up 10% this week. Steel up 7% this week. Banks up 5% financial. So if it was energy or as in anything that benefited from higher interest rates, it had a really good week this week.

On the flip side, as I mentioned before, technology got hit hard. In fact, look at biotechnology specifically. Biotechnology from its high, which is around the 9th of February, it’s down 20%. And that was only, not even a month ago, we’re here March 6 so little less than a month ago, you’ve seen a big drop in biotechnology, but it was down 6% this week. We saw silver and gold and semiconductors down. And look, if you think gold is your safehaven, it’s down 11% year to date down another 2%. You’ve had the dollar weaker and gold still struggling to have people calling me, asking me, “Why isn’t gold doing better?” I think some of the cryptocurrencies are stealing some of it’s thunder. Forget about the currency part, let’s just call them cryptos. As an asset class some money’s going into those instead of gold as an alternative to stocks and bonds. And I think that’s a part of it. So gold is not the safe haven. I don’t believe it ever has been a safe haven. I’m not sure why people believe that.

In fact, I told somebody this week, I said, look from 1975 until now, as far back as my Bloomberg would go on that. Stock market’s tripled gold during that time. And there’s been times where gold’s done better and stocks habit. And I’m not saying it’s not a diversifier, but for some reason, people still believe that it’s the safe haven to go to, and it’s not the safe haven to go to.

So gold struggling this week. So that was a little bit… I think the only other thing we saw was, we saw big a jobs number on Friday and rates spiked up, and then they kind of reversed a little bit. So I still believe, as I said last week, one and a half percent on a 10 year treasury is kind of the line in the sand. I think that’s still a place where you might see some buyers come into the bond market because it’s been such a nasty start to the year for bond investors.

The other last thing I’ll talk about is just the NASDAQ, the S&P, they went below their 50 day moving average. And for those of you who don’t know what that is, it’s just a smoothing mechanism. So when you’re looking at the price of the NASDAQ or the S&P 500, a lot of people watched these moving averages. It takes out the daily noise. It’s literally the last 50 trading days and they divide it by 50 and you get this number and it knocks off the earlier one and it keeps rolling like a rolling calendar if you will. They went below those and so that caused some extra selling I think. It’s just, again, for people that watch charts, it was a technical indicator that was breached, and you’ll hear people all weekend say we have a 10% correction in the NASDAQ, or it didn’t quite reach 10% on a closing basis, so it’s not really a correction. If you own technology stocks, it was a correction, okay? It was a nasty selloff and it may still be happening but who cares if it’s 9.9, nine or 10.01, it’s real money, it was a correction.

Okay, let’s transition into the topic today, which is really what issues should I consider and what things should I do if a spouse passed away. And again, I’m dealing with this with clients, I’m dealing with this with friends and helping people out in these situations. And the first and foremost thing, and we’ll kind of… This isn’t really the to dos, right? The to dos are to get death certificates and all of those things, that some of this has really kind of yes or no answers to some questions. So for example, are your cashflow needs going to change, right? And oftentimes they do. You may have… If it’s a retired couple, maybe one pension goes away, one social security goes away, the income could be altered. There may not be life insurance in place anymore. So cashflow needs may change.

I don’t really think the expense side drops as much as people think it does. It certainly does not drop by 50%. But you do need to figure out, I have a new income and expense plan, right? My income is going to change, what are my expenses going to look like? And so it’s probably a good idea to start tracking expenses, again, when the healing begins, this is not something to do suddenly because this is when rash decisions can be made. But this is where a good advisor can walk alongside you and walk at the same pace you are and get things done and put them in front of you that need to get done.

Unfortunately, some of this has to get done. You don’t want to do it, but it does need to get done, it just has to. And it doesn’t have to be the day of death, but it certainly has to be done at some point. So you’re looking at income needs like social security. What about required minimum distributions? If you’re a spouse, you can take over an IRA, but you got to start thinking about required minimum distributions. And again, as I mentioned, is a pension going away? And sometimes, if it’s a surviving spouse, they may have a quarter of the of the pension half, maybe they get the full pension, it just depends. Again, that’s where planning’s going to come in to play.

Did your spouse have a will? And again, probably 60, 70% of people in this country do not have will, they pass away without a will. If they passed away without a will, then you as their surviving spouse or a family member is going to be appointed executor of the state, and you’re going to be subject to those particular rules. And so you start looking at estate stuff, you start looking at asset titling. Again, I mentioned the IRA transferred over to the surviving spouse. Did the spouse have an individual account, right? Maybe it wasn’t a joint account. And even if it was a joint account, it now needs to go into an individual account for the surviving spouse. And when we talk about cashflow, we do have to look at the assets too, because if the cashflow needs change, then the next thing we have to look at is the assets that are there. Are there enough assets to protect the spouse to live off of, the surviving spouse, the rest of their life.

And again was there insurance in place? So if there’s life insurance in place, again, there’s going to be some complexity there in terms dealing with that new sum of money and how it integrates into your existing portfolio. Most people probably don’t have to worry about this, but again, the $11.7 million exclusion or 23.4 for a couple, again, hopefully if you you’re at that level, you did some estate planning. If you’re at that level now and you have not done estate planning, you need to, and there’s obviously talk that things could change in the next few months or couple of years where the state tax exemption could drop. So again, get these docs up to date. So many people have not looked at their wills, their medical directives, all of those things. Who’s going to be in charge. Some of the people named in your documents may not even be alive anymore so you have to look at that also.

What about digital assets? We’ve talked about that before, but hopefully as a family, you know where all the digital assets are, right? We’re talking about photos primarily. All these photos, were they stored in a Google Drive? Were they stored in a Dropbox? Were they stored in a iPhoto? iCloud? And things that, if you don’t have the password, can you get these heirlooms? This is not a book of photos sitting around like it used to be, right, this is up in the cloud somewhere. And can you access that cloud? It’s a big one. If the spouse that passed away was employed, thinking about did they have group life insurance at the company? That’s a big one. It feels an accidental death. You know, there may be accidental death benefits and accidental death life insurance as well.

And if you do have a surviving spouse and they have a child under the age of 18, they may be eligible for social security benefits. So again, look at that as well. If you have a dependent child, and again, this is for somebody younger, you may be able to use the qualifying literature tax filing status for the two years, two tax years, I should say, following the year your spouse passed away. There’s all these decisions, I mean, you can see how the last thing somebody needs is to be dealing with some of these decisions and overlooking some things. And so again, this is why I may be biased here, but this is why having a financial advisor comes into play. And not somebody that sells you products, right? But somebody that knows your situation, somebody you trust and earned the trust over time.

Not that you trusted because you’ve seen them at church or seeing them on the soccer field with your little kid and they seem like a nice gal or a nice guy. No, this is somebody that has earned the trust over time and is knowledgeable about these things. And if they’re not knowledgeable, they have a team of people around them are knowledgeable. That’s what I do, right? I put a good team around me. But on a serious note, I mean, there’s a lot of decisions here and there’s things can be overlooked. So this is a simple checklist, and I’m just covering a few of them today. But really, if you want this, let us know, we’ll be glad to give it to you. And again, I would encourage you to look at these things now. This is not to be looked at after.

Yes, it will help. But a lot of these things will make you say, “Oh, we need to address that now while we’re both here. And really when it comes to this estate planning docs, I mean, you need an estate planning attorney. Covenant doesn’t write documents up, what we help do is not only develop the plan and to look at it from the 30,000 foot view and really talk through what things need to be done, but a lot of times we go with clients to these appointments with the estate planning attorney, make sure everything’s getting done to really be the liaison between the estate planning attorney and the client and to make sure that you understand everything that’s going on here. And again, put in a team of people around you.

And they’re going to have packages. And look, you can go with, and we talked about this in the webinar, which you can go watch, but you can get online docs done, but there are some horror stories with some of those. Some work fine but it’s not that expensive to sit down with an attorney who can ask the right questions. That’s the thing, when you do it online, you don’t get that interaction, right? You don’t get those questions and get all your questions potentially answered. So that’s the issue with some of those. So go get an estate planning attorney. And again, if you don’t have one, Covenant can certainly recommend one for you or two or three, and you can go interview them yourself. But it’s something to do today. Again, I’m seeing people pass away at all different ages, suddenly from diseases, from all kinds of issues. And it’s something I’ve had to deal with my whole life as an advisor and having a lot of clients I deal with and seeing death and walking people through it. And it’s never easy, but having some of this checklist and just making sure these things are in place in advance is responsible.

It’s not fun to talk about. And that’s why I think so many people pass away without a will, they don’t accept their mortality. And this is the responsible thing to do. And I’ve seen situations, even very sick people come to me and they have everything in order and they make it so easy on their surviving spouse and that’s hugely important. My father passed away when I was seven years old. I had two siblings, and so obviously we were very, very young and he did that. He was sick for two years and was able to tell my mother, here’s the things you have to do. And he was sick and was still being responsible for the family and putting these things in order, knowing that he was not going to be around much longer.

So this is the responsible thing to do, it’s not a fun topic. I know we want to talk about Bitcoin and tech stocks going up, but this is real life issues. The market, all this noise all week in the market, and guess what it finished, some things were up a little bit, some things were down a little bit. These are more pressing issues. I guarantee you, people that are dealing with surviving, that are a surviving spouse, they’re not thinking about what the market did this week. They’re thinking about real life issues and all the documents, and again, the changes going on in their life. So I hope that was helpful to you. Again, if you need our help in that, in the preparation part or after the fact, let us know (210) 562-0057 or creatingricherlives.com.

And just a reminder go to the YouTube channel, we’re going to start putting more things on there, but certainly go watch the webinar, let us know some topics you want to hear about. I’ve got some things in my mind that will be coming out on the webinar, trying to get really some topical experts in their field on some of these things. And again, the nice thing about a webinar is we can get very, very specific about certain topics and it allows you to get your questions answered. And so when you watch it on the YouTube channel, that’s great. You’ll get to watch it, but you won’t be participating as some of the people did in the live webinar.

So again, we will be having more of those in the future and we’ll be letting you know and that way you can participate in it when it’s live and get your questions answered. Hey, y’all have a great weekend. Go enjoy some nice weather and we will see you back here next week on Creating Richer Lives, the podcast. Thanks guys.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product, including the investments and or investment strategies recommended or undertaken by Covenant Multifamily Offices, LLC, Covenant, or any non-investment related content will be profitable, equal any corresponding indicated historical performance levels, be suitable for your portfolio or individual situation, or prove successful. Moreover, you should not assume that any discussion or information serves as the receipt of, or as a substitute for personalized investment advice from Covenant. To the extent that a listener has any questions regarding the applicability of any specific issue discussed above to his, her individual situation. He, she is encouraged to consult with a professional advisor of his, her choosing. Covenant is neither a law firm nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of our current written disclosure brochure discussing our advisory services and fees is available upon request or ar creatingricherlives.com.

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