Tying up Loose Ends

April 25, 2024


As Ferris Bueller famously said, “Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.” His sagacious advice also applies to our financial lives. Once in a while, we should stop and take a careful look at where we are.

Ask yourself: Am I on track with my goals? Am I happy with my progress? Are there things I need to change right now to make my financial future more secure and satisfying? Do I have loose ends that need to be tied up?

If you are ready for some self-reflection, consider the following questions:

Are your beneficiary designations complete and accurate? When was the last time you reviewed the beneficiary designations on your retirement accounts? If it’s been a while, you probably want to take a look. Outdated or incomplete beneficiary designations can cause a lot of trouble when your heirs settle your estate.

Recently, I read about a divorced man who forgot to remove his ex-spouse as the primary beneficiary on his IRA. He remarried, but died a short time later. You can imagine everyone’s surprise when the ex-wife inherited his IRA.

I rarely see retirement accounts without primary beneficiary designations, but sometimes people forget to name contingent beneficiaries. Missing or misstated contingent beneficiary designations can cause real problems for your heirs, including costly probate, delayed estate settlements, and hurt feelings. This can be avoided by carefully reviewing beneficiary designations during your annual review with your advisor.

Has your living trust been updated? How long has it been since your attorney reviewed your living trust? Most living trusts are written with specific parameters in mind—your age, the ages of your beneficiaries, your philanthropic goals, your overall wealth position, estate tax limits, etc.. But these parameters change over time, and sometimes they change dramatically. To keep your trust relevant, ensure your attorney reviews your trust after every significant life change (retirement, divorce, death of a spouse, etc.), or every 4 to 5 years—whichever is more frequent. Imagine the shock and emotional pain your family would feel if your trust unintentionally disinherited them because its provisions were out of date.

Does your estate plan properly allocate your assets among your beneficiaries? Not all assets are equally valuable to your estate’s beneficiaries. For example, individuals who inherit an IRA or other tax-deferred assets also inherit tax liabilities. When they withdraw money from the inherited IRA, they will have to pay taxes on the amount withdrawn as if it were ordinary income. But a person who inherits a taxable account faces very little tax liability, since the cost basis of those assets will be reset to their fair market value at the time of your death.

As you review your trust and your IRA beneficiaries, set things up so individuals get your taxable assets, and charitable organizations (if you are charitably-inclined) get your tax-deferred assets. Your financial advisor can help you optimize these allocations among your various beneficiaries.

Is your key information safe but accessible? If you were to die today, could your loved ones access your digital world? Would they know where to find your key financial information, like insurance policies, bank statements, brokerage accounts, or mortgage statements? Putting this information in a secure but accessible location is extremely important. It is also tricky. Identity theft is real, so take precautions with your passwords, account numbers, Social Security numbers, and the like.

A system for gathering this information can be helpful. Our firm has put together a little workbook called “Life in a Book,” which can help you identify the information you need to gather, and gives you a place to record it. Among other things, the workbook contains checklists for documents related to retirement planning, estate planning, and insurance planning. It also includes space to record the contact information of your key advisors, like bankers, attorneys, CPA, and financial advisors. If you would like a free copy of “Life in a Book,” please email me at smerrell@montereypw.com.

Once you complete the workbook, you need to keep it secure. We recommend storing electronic versions of important documents, including “Life in a Book” in an encrypted digital vault. Not only are these digital vaults secure, they are also accessible if you have access to the internet.


Please see important disclosure information here.

Steven C. Merrell  MBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey. He welcomes questions that you may have about financial planning and investments. Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA  93940 or email them to smerrell@montereypw.com.