This month we're covering three things that came up again and again in recent client conversations: blended families and the paperwork that protects them, the real cost of scattered accounts, and the question we hear more than almost any other right now: what's going to happen to Social Security? Let's take a look.
1. When Blended Families Skip the Paperwork
We worked with a family recently when a father passed away suddenly. Years ago, he had gone through a divorce, and then eventually a remarriage. With their new blended family, he had not revisited what he wanted his estate plan to look like.
Upon his passing, his children from his first marriage were completely cut out. Everything went to his current wife and her children. He never intended that outcome. He just ran out of time to fix it.
Every blended family is different. Some parents treat all their children equally, no matter which marriage they came from. Others keep finances separate on purpose. Neither approach is wrong, but both require the same thing: documents that say what you mean, put in place while there's still time.
We're not estate attorneys, and this isn't legal advice, but we've learned that our role is making sure the people we work with get in front of one, and that what gets decided in that room matches what's titled on the accounts we manage. A trust that exists on paper but was never funded protects no one.
If it's been a while since you looked at your beneficiaries, or you've never had this conversation in a blended family of your own, now is a good time.
2. Too Many Accounts
We recently helped a client consolidate twenty-two separate accounts spread across different institutions. Twenty-two 1099s every tax season. Redundant holdings nobody was tracking. No single person could see the whole picture.
A lot of people assume spreading accounts across institutions is a form of diversification. Real diversification comes from how your money is invested, not how many statements arrive in January. Consolidating doesn't mean giving up flexibility, as much as it means finally being able to see clearly and knowing that the people who'd need to step in for you someday would know exactly where to look.
Once everything sits in one place, quite a bit becomes possible: eliminating overlap, coordinating tax loss harvesting, withdrawing from the right accounts at the right time, and simply knowing that everyone involved knows exactly who to call.
3. Social Security: What We Tell Clients Who Ask
This is the question we hear more than almost any other right now. “What do you think will happen to Social Security?”
First of all, no one can know the answer to that question, but the range of possibilities does have planning implications. So, here is a high-level view of factors we think about when we consider this question.
Our honest answer: it will need to change, and it's changed before. Adjustments like these have happened before, and they haven't been dramatic. The current Social Security system is seemingly financially unsustainable, and change is the way it continues.
So, when might change happen? No political leader wants to be the one who raises taxes or delays benefits, so those decisions tend to get pushed until there's no other option. We wouldn't be surprised if that's exactly how this plays out again, a solution arriving late, at the last possible hour.
In the meantime, we plan as if the program will look the way it's designed to look today, while keeping an eye on the parts of a plan we can control. We still treat Social Security as a fixed income source, but we do see this dynamic as a point of emphasis: we want your balance sheet diversified and strong. Margin is our friend during uncertainty.
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.