Five Steps to Get Your Financial House in Order

Did you know that four in ten Americans admit that they prefer not to think about money? (1) This isn’t all too surprising as, for many people, finances can seem complicated and overwhelming, and many people suffer from decision fatigue and don’t know where to start. If that’s you, take a look at these five steps to get your financial house in order.

1. Gather and Organize Your Financial Documents

Despite how digital our lives are becoming, there are still times we need physical documents. Find a system that works for you, whether it’s a binder, a locked filing cabinet, or an in-home, fireproof safe.

To start, separate your financial papers into three categories: bills, documents or statements to save, and old items you can toss. Gather everything together neatly and store it in one place that is easy for you to access.

Utilize a Password Manager Tool

Do you have a system for keeping track of your countless usernames and passwords? You’ll save yourself some headaches if you can find a method to keep all your information in one place. There are plenty of online password managers to choose from, but however you decide to organize your login details, be sure to regularly update your passwords to protect yourself from hackers.

Go Green

If you want to minimize the amount of paper that piles up on your counters, save a tree and get rid of clutter by enrolling in paperless document delivery for all your bills and financial services. Since you’re planning to create a password management strategy, the only thing you’ll need to do to access account details is find your login information and be on your way.

Communicate

Develop a master directory that lays out all your financial information to help you manage your affairs and serve as a guide to your family members if they ever need to assist with your finances. Be sure to include account numbers and logins and keep this document password-protected or under lock and key.

2. Set and Follow a Budget

Part of being financially organized includes being aware. If you know how much money is going in and out and stick to a budget, you won’t find yourself scrambling to pay bills or wondering where that recent paycheck went.

A budget helps you establish parameters for operating your household, understand if your goals are achievable in your desired timeframe, and may help reduce stress in the event of an unexpected incident, such as the loss of a job or an injury.

3. Automate Everything

Automating your bills and savings not only streamlines and organizes your life, but also has long-term benefits for your financial world. Paying your bills automatically tends to improve your credit score, makes budgeting simpler, and can also make income tax preparation easier.

Additionally, by automating your savings, you give yourself a chance to save before you can even touch the money.

4. Tackle Your Debts

If you are excited about conquering your goals, one of the first steps you need to take is to eliminate debt. When you are paying 10-30% interest on any number of credit cards or loans, you are cutting down on the money you have available to put towards your goals.

Become relentless about reducing your debt and interest costs and consolidate accounts where you can. If you have a loan with a significantly higher interest rate than the others, you may want to work on paying off that one first. Or, if you’re feeling overwhelmed by debt, try paying off the loan with the smallest balance first, no matter the interest rate, in order to gain some momentum.

An emergency fund can help you avoid accumulating more debt. By creating a liquid, easily accessible savings account, you won’t have to rely on debt to cover those inevitable life expenses, such as home repairs or medical bills. Create this cash cushion by putting aside money from each paycheck until you have enough to cover approximately three to six months worth of living expenses. You will never regret having an emergency fund at the ready.

5. Create or Update Your Will

It’s estimated that nearly 70% of Americans die without a will. People may avoid completing their wills because they don’t like to acknowledge that they will die or they may think it’s a complicated and expensive process. But the truth is that the value for your loved ones and heirs will far exceed your cost and effort. In the simplest of terms, a will allows you to ensure that you can leave a legacy to your desired beneficiaries, from physical household items to assets. Without a will, the state will determine what will happen to your assets and the process for your survivors and heirs may be much more complicated and time-consuming than it should be.

If you don’t already have a will, it’s time to work with an experienced professional to create one. If you haven’t reviewed yours in five or more years, it’s time to review and make any necessary updates.

Ready To Get Started?

Working with a financial planner involves more than just opening an IRA and setting up monthly contributions. Advisors add value to your money and your life by taking care of the details and giving you confidence in your financial future. If you want to benefit from the knowledge and experience of a financial planner as you get your financial house in order, give me a call at 949-445-1465 or email me at [email protected] to schedule a meeting.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive level manager, partnering with and serving a diverse range of clients. Specializing in serving high and ultra-high net worth families, Jeff aims to help clients achieve their short-term and long-term goals and to worry less about their finances and more on their passions in life. Based in Orange County, he works with clients throughout Southern California, as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email [email protected].

Advisory services offered through Balboa Wealth Partners, Inc. An SEC registered Investment Adviser.  Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC

Balboa offers advisory services independent of Chalice.  Neither firm is affiliated.

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(1) https://files.consumerfinance.gov/f/cfpb_fin-ed-digest_organizing-finances.pdf

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Jumpstart Your Financial Plan for 2018!

How are you doing on your New Year’s resolutions? Hopefully you aren’t part of the 80% of Americans who discard their resolutions by February, (1) but if you are, remember that there’s nothing magical about January 1st. No matter where we are in the year, you can set new intentions and make the small steps necessary to make your goals a reality. If you have dreams of turning your finances around or setting a firm financial foundation, here are some actionable steps to jumpstart your financial plan in 2018!

1. Start Where You Are

Don’t let your past mistakes keep you from moving forward. Did you make some bad investments or neglect to save? Start fresh from today and leave the past in the past. Take a look at your current financial situation, including income, savings, debt, and expenses, then come up with practical goals to make your dreams a reality.

2. Set Big Goals And Small Milestones

Don’t be afraid to dream big financially. What if you could save an extra $100,000 in the next five years or become financially independent years before the average retirement age? Having a big goal in mind can inspire you to stay on track. To avoid getting frustrated along the way, celebrate small milestones, such as reaching $5,000, $10,000, $25,000, and so on. Reevaluate your goals frequently to ensure you’re on track and make adjustments as needed. Having a goal in front of you will give you perspective in your day-to-day decisions and help you prioritize your saving and spending.

3. Review Your Insurance Coverage

Securing your financial future isn’t just about saving and investing, but also about managing your risks. Insurance helps you protect against risks that could ruin you financially. Your insurance needs will change based on your age, employment status, marital status, number of dependent children, etc. It is important to review your coverage each year to make sure you are fully covered and also to ensure you are not spending money on insurance that you don’t need. Double check your named beneficiaries as well to make sure they still reflect your preferences.

4. Get Your House In Order

If you are excited about conquering your goals, one of the first steps you need to take is to eliminate debt. When you are paying 10-30% interest on any number of credit cards or loans, you are cutting down on the money you have available to put towards your goals. Become relentless about reducing your debt and interest costs and consolidate accounts where you can. If you have a loan with a significantly higher interest rate than the others, you may want to work on paying off that one first. Or, if you’re feeling overwhelmed by debt, try paying off the loan with the smallest balance first, no matter the interest rate, in order to gain some momentum.

An emergency fund can help you avoid accumulating more debt. By creating a liquid, easily accessible savings account, you won’t have to rely on debt to cover those inevitable life expenses, such as home repairs or medical bills. Create this cash cushion by putting aside money from each paycheck until you have enough to cover approximately three to six months worth of living expenses. You will never regret having an emergency fund at the ready.

5. Make Purposeful Investments

Anyone can close their eyes and pick a random mix of mutual funds to invest in, but having a customized retirement plan based on your circumstances, goals, and risk level is what will get you from point A to point B. Asset allocation is the most critical investment decision you can make. Sit down with a financial professional and create an investment philosophy that will give your portfolio a clear sense of purpose.

6. Consider Unexpected Risks To Your Financial Plan

No matter how hard you work to create a foolproof financial plan, there will always be risks and roadblocks that have the potential to get you off course. Inflation will decrease your purchasing power and rising healthcare costs can eat away at your nest egg. Unexpected early retirement could change the timeframe of your goals, tax changes could throw a wrench into your planning, and the loss of a spouse could impact your standard of living. Speak with your advisor to find ways to protect yourself against these risks.

7. Partner With A Financial Professional

Whatever your situation, whatever your goals, a financial professional can walk you through each of these steps to get your financial plan in shape. Have you created a financial plan?  If not, what has stopped you from creating one? At Balboa Wealth Partners, our advisors specialize in overseeing your financial affairs and coordinating the day-to-day execution of your long-term financial plan, all with high-touch, responsive service. Let us help you jumpstart your financial plan in 2018 by contacting me at 949-445-1465 or [email protected].

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive level manager, partnering with and serving a diverse range of clients. Specializing in serving high and ultra-high net worth families, Jeff aims to help clients achieve their short-term and long-term goals and to worry less about their finances and more on their passions in life. Based in Orange County, he works with clients throughout Southern California, as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email [email protected].

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(1) https://health.usnews.com/health-news/blogs/eat-run/articles/2015-12-29/why-80-percent-of-new-years-resolutions-fail

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What Should You Do During a Stock Market Decline?

The markets took a big dip on Monday, with the DOW losing 1,500 points for the first time in a single day and the S&P 500 down more than 4%. The CBOE Volatility Index, which measures fear in the market, saw its biggest one day increase in history. Many investors, especially those close to retirement, are nervous. But what should you do during a market decline?

Stay Calm

At times like these, it’s important to put current conditions into perspective. This is not the first time the market has taken a tumble and it won’t be the last. Declines in the Dow Jones Industrial Average are actually fairly regular events. In fact, drops of 10% or more happen about once a year on average.

Play Dead

There’s an old saying that the best thing to do when you meet a bear market is the same as if you were to meet a bear in the woods: play dead. While easier said than done, successful long-term investors know that it’s important to stay calm during a market correction. Market volatility has increased in recent years and the media can often make it seem like each episode is worse than the one before. In reality, volatility does not hurt investors, but selling when the market is down will lock in losses.

Remember That Your Portfolio is Diversified

We understand that volatility and market declines are stressful. However, we encourage you to keep in mind that while the stock market may be down significantly, your portfolio is made up of both stocks, bonds, and other assets that are designed to work together to decrease overall losses. It’s important to consider your specific portfolio, investment horizon, and circumstances when reflecting on economic events. If you have questions about your portfolio, get in touch with our office.

Speak With Your Advisor

Whether you’re new to investing or an experienced investor, it’s helpful to consult with an objective third-party. Human nature causes us all to act out of emotion when our accounts go down. As an independent firm, we put your best interests first. We seek to serve as a support system for our clients, helping them make informed financial decisions that aren’t driven solely by emotion.

We’re Here for Your Friends and Family

If you have friends or family who need help with their investments, we are happy to offer a complimentary portfolio review and recommendations. We can discuss what is appropriate for their immediate needs and long-term objectives. Sometimes, simply speaking with a financial advisor may help investors feel more confident and less concerned with the day-to-day market activity.

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Stocks and Company Spending Up on News of Tax Bill, But What Does it Mean for You?

On Wednesday, December 20, 2017, the House passed a tax bill, which will be signed into law by President Trump. Since the campaign trail, President Trump has promised tax reform and this bill entails a number of changes to the U.S. tax code that will impact both corporations and individuals. Company spending and stocks were already up on news of the bill passing.

Prominent economists and experts believe this tax bill may provide a boost to the economy, but by how much we don’t know. The Joint Committee on Taxation believes the bill will boost growth the total size of the US GDP by 0.8 percentage points over the first decade, while Goldman Sachs is estimating GDP growth will increase 0.3 percentage points above their baseline over the next two years.

No matter how much economic growth we can expect in the coming years, the big question is, what exactly does this bill mean for you? In a nutshell, it lowers tax rates for individuals and corporations, increases the child tax credit, doubles the standard deduction, and caps or eliminates several deductions. Here’s what we can expect from this bill.

What Does it Mean for Households?

It’s estimated that around 80% of people will see a tax cut in the first year of the legislation, and the Tax Policy Center estimates that the average person will see a tax cut of $1,610 in 2018.[1] However, the amount will vary based on income bracket. In general, the tax bill favors wealthier Americans, offering more tax breaks the more you earn, with fewer benefits to lower and middle class Americans. The TPC estimates that 65.8% of the total federal tax benefit will go to the top 20% of earners.

As a result of an increased after-tax income, some economists believe this may boost consumer confidence. However, the after-tax income increase may not be enough to see an economic change.

What About Big Businesses?

Big businesses will significantly benefit from the tax bill, namely with the federal corporate tax rate dropping from 35% to 21%. Companies will likely see a serious boost in their profits, with JPMorgan estimating that this bill will boost the earnings per share of S&P 500 companies by $10 per share in 2018.[2] Additionally, some experts estimate that giant companies like Google will save several billion dollars in 2018 due to the new tax code.

With these tax cuts, businesses may use these savings to increase wages, pay down debt, invest, or pay for capital expenditures, which could benefit their long-term value.

Will the Market Go Up?

Large companies benefit from reduced taxes, which is pushing their values higher on Wall Street. Some of the larger companies expressed their joy of the corporate tax cut by announcing bonuses and base wage increases for all their employees. The market was up in early trading after news of the bill. Many experts believe that gains are not already priced into the market and that it could continue to go up significantly through 2018.

Small and mid-cap stocks, consumer staples, telecoms, financials, and industrials pay the highest tax rate, so with the new tax cuts, these stand to benefit the most. Stocks are expected to rise, with the markets already seeing much activity. Experts at JPMorgan believe stocks could rise up to 5% after the bill officially passes.[3]

Steps to Take

We are all happy about market gains, but since this tax bill is so new, there is still much to understand about how it will impact households and businesses in the near and far future. No one is sure exactly how the economy will behave, but many experts expect a positive impact.

With so many potential changes, now is a good time to speak with your financial advisor to review your financial plan and retirement plan to see how your strategies may be impacted by this tax bill and whether it’s appropriate to make adjustments.

If you are already one of our clients, your portfolio has been built with tax reform in mind and we are continually monitoring the markets so we can make appropriate changes if needed. If you have any questions, call or email our office.

If your friends or family are concerned or have questions, now is a good time for them to review their financial plan to see how their strategies may be impacted by this tax bill and whether it’s appropriate to make adjustments. We’re never too busy to help someone you care about, so feel free to put them in touch with our office.

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[1] http://www.businessinsider.com/tax-policy-center-analysis-of-final-trump-gop-tax-reform-bill-2017-12

[2] http://www.businessinsider.com/stock-market-news-jpmorgan-marko-kolanovic-trump-tax-reform-bill-2018-outlook-2017-12

[3] https://www.cnbc.com/2017/11/27/jpmorgan-says-the-stock-market-will-surge-5-percent-if-tax-bill-passes.html

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Ten Financial Actions to Take Before the Ball Drops!

As hard as it is to believe, 2017 is almost over! While December is often a celebratory time of the year as we enjoy the holidays and spend time with our families, it can also be overwhelming and stressful for many of us. As we get ready to say goodbye to 2017, we may realize that we have not accomplished all our goals and we frantically attempt to squeeze in a few last-minute projects before January 1st rolls around.

Since your wallet definitely won’t be gathering dust this season, why would you let your financial plan fall to the wayside? Here are ten critical financial steps to take before we enter the new year.

1. Make The Most Of Your Retirement Savings

If possible, max out your contributions to your 401(k) by the end of the year to make the most of your retirement savings. For 2017, you can contribute as much as $18,000 (or $24,000 if you are 50 or older). You might also consider contributing to a Roth IRA. For 2017, you can contribute as much as $5,500 (or $6,500 if you are 50 or older). Keep in mind that if your income is over $196,000 and you’re married filing jointly, you won’t be eligible to contribute to a Roth IRA.

2. Consider a Roth Conversion

Roth IRAs are attractive because you don’t pay income tax when you withdraw funds in retirement. However, if you’re a high-income earner, you may not be eligible to contribute and instead invest in a Traditional IRA. If you have a Traditional IRA, you may have the opportunity to convert to a Roth IRA and save money on taxes in the long run. The deadline to convert to a Roth IRA is December 31st, so if you’ve been considering doing so, or wonder if it’s an appropriate option for you, talk to your financial advisor ASAP.

3. Use Your Medical and Dental Benefits

Did you have good intentions of taking care of some dental work, blood tests, or other medical procedures? Now’s the time to take advantage of all your healthcare needs before your deductible resets. Dental plans, in particular, often have a maximum coverage amount, and many cover two teeth cleanings per year. If you haven’t used up the full amount and anticipate any treatments (or just need a good teeth cleaning!) make an appointment before December 31st.

4. Use Up Your FSA Dollars

Like your health insurance benefits, you’ll want to use up your Flexible Spending Account dollars by the end of the year. Your benefits won’t carry over and you’ll lose any unspent money in your account. Check the restrictions for your account to see what the money can and cannot be used for.

5. Keep Up On Your Charitable Contributions

If you made a charitable contribution in 2017, you might be able to lower your total tax bill when you file early next year. It can be especially advantageous if you donated appreciated securities to avoid paying taxes on the gains. Along with your other tax documents, find and organize any receipts you have from your donations to charities, whether it was a cash, securities contribution, or another type of gift.

6. Review Your Insurance Policies

A lot can happen in a year. As you experience life changes, from the birth of a child to marriage to a new career, it’s important to regularly review your insurance coverages and your designated beneficiaries. Now is a good time to review your current insurance policies and make sure they are up-to-date. You might also want to evaluate your need for other types of insurance you may not currently have, such as long-term care insurance.

7. Double Check Required RMDs

If you’re retired, review your retirement accounts’ required minimum distributions (RMDs). An RMD is the annual payout savers must take from their retirement accounts, including 401(k)s, SIMPLE IRAs, SEP IRAs, and traditional IRAs, when they turn 70½. If you don’t, you may face the steep penalty of 50% of the distribution you should have taken. To calculate your RMD, use one of the IRS worksheets.

8. Discuss Loss Harvesting With Your Advisor

If you invest in bonds, mutual funds, or stocks in accounts other than your 401(k) or IRA, review your realized and unrealized gains and losses. You might be able to offset some of your gains by selling some losses. Tax-loss harvesting can help you save on taxes, but you want to make sure the move also makes financial sense for your situation. Talk with your advisor about potentially harvesting your losses and if it makes sense for you. Should you determine tax-loss harvesting is appropriate, you’ll need to complete the process by December 31st.

9. Avoid Gift Tax Consequences

It’s never too early to start planning for the legacy you want to leave your loved ones without sharing a good portion of it with Uncle Sam. You may want to consider gifting. Each year, you can gift up to $14,000 to as many people as you wish without those gifts counting against your lifetime exemption of $5 million. If you’ve yet to gift this year or haven’t reached $14,000, consider gifting to your children or grandchildren by December 31st.

10. Update Your Estate Plan

If you have taken the time and energy to create an estate plan, you’ll want to check in periodically to ensure all the documents are up-to-date and no major details have changed. Any major life event is a good time to think about updating your estate plan documents. If you change any of the beneficiaries in one place, such as a life insurance policy, make sure that they are consistent with the other documents so that there is no confusion.

Do you have questions on last-minute financial actions you can take before 2017 ends? Do you want to get on the right financial foot for the new year? I’d love the opportunity to offer you support along your financial journey. If you are interested in getting on the right financial foot, I encourage you to reach out to me for a year-end review. Give me a call at 949-445-1465 or email me at [email protected]

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive level manager, partnering with and serving a diverse range of clients. Specializing in serving high and ultra-high net worth families, Jeff aims to help clients achieve their short-term and long-term goals and to worry less about their finances and more on their passions in life. Based in Orange County, he works with clients throughout Southern California, as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email [email protected].

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How to choose a financial professional

  Who is the right Financial Advisor for you?: 10 points to consider
When is the right time to get your financial life in order? NOW. This is one priority that seems to be pushed to the back burner of our to-do list, however, should be front and center. It’s time to take control of your own financial life.
If you are managing your finances alone, now may be a good time to review how you are doing, compared to the plan you established. You didn’t establish a plan? Perhaps you should. For those who work with financial advisors or are seeking professional guidance, below are 10 things to consider when interviewing financial planners.

1) Is the professional a registered investment advisor? If yes, the advisor has a fiduciary duty, which means he/she must put your needs first. Financial professionals who aren’t fiduciaries are held to a lesser standard, called “suitability,” which means that anything they sell you must be appropriate, but not necessarily in your best interest. The new rule established by the Department of Labor (DOL) addresses this potential conflict, however, is not being fully implemented across the industry. The only way to avoid this conflict is to work with a registered investment advisor.

2) How do I pay for financial planning / wealth management services? The advisor should clearly state in writing how he/she will be paid for the services provided. The three basic methods in which advisors are paid are: flat rate or hourly fee; fees based on a percentage of your portfolio value, often called “Assets Under Management” (“AUM”); and commissions paid per transaction. (The DOL rule is impacting the use of transaction based commissions on retirement accounts) The fees based on AUM are most typical with Registered Investment Advisors.

3) What is the advisor’s experience? Make sure to ask how long the advisor has been in practice and where. Also inquire as to any professional certifications, licenses or designations. While these identify credibility, they don’t guarantee a successful relationship. Here’s a description of some of the more common financial planner designations:
• CFP® certification: The Certified Financial Planner Board of Standards (CFP Board) requires candidates to meet what it calls “the four Es”: Education (Education (through one of several approved methods, must demonstrate the ability to create, deliver and monitor a comprehensive financial plan, covering investment, insurance, estate, retirement, education and ethics), Examination (a 10-hour exam given over a day and a half; most recent exam pass rate was 62.6 percent), Experience (three years of full-time, relevant personal financial planning experience required) and Ethics (disclosure of any criminal, civil, governmental, or self-regulatory agency proceeding or inquiry). CFPs must adhere to the fiduciary standard.
• CPA Personal Financial Specialist (PFS): The American Institute of CPAs® offers a separate financial planning designation. In addition to already being a licensed CPA, a CPA/PFS candidate must earn a minimum of 75 hours of personal financial planning education and have two years of full-time business or teaching experience (or 3,000 hours equivalent) in personal financial planning, all within the five year period preceding the date of the PFS application. They must also pass an approved Personal Financial Planner exam.
• Membership in the Membership in the National Association of Personal Financial Advisors (NAPFA): NAPFA maintains a high bar for entry: Professionals must be RIAs and must also have either the CFP or CPA-PFS designation. Additionally, NAPFA advisers are fee-only, which means that they do not accept commissions or any additional fees from outside sources for the recommendations they make. In addition to being fee-only, NAPFA advisers must provide information on their background, experience, education and credentials, and are required to submit a financial plan to a peer review. After acceptance into NAPFA, members must fulfill continuing education requirements. The stiff requirements make NAPFA members among the tiniest percentage of registered investment advisers, with only 2,400 total current members.

4) What services do you offer? The services offered can depend on several factors including credentials, licenses and areas of expertise. Some offer advice on various topics, but do not sell financial products. Others may provide advice only in specific areas such as estate planning or tax matters. Most people are looking for a planner that does everything, sort of a ‘jack of all trades’. This may be right for you, or a team of professionals specializing in different areas could be the appropriate choice.

5) What is your approach to financial planning and investing? Some advisors prefer to develop a holistic plan that brings together all your financial goals. Others provide advice on specific areas, as needed. Make sure the advisor’s approach is custom to your needs, objectives, risk tolerance, etc. Some advisors will have models they assign you to based on a profile, however, isn’t necessarily a customized solution for your specific needs. It’s important to know whether the planner makes investment decisions or depends on others in the firm to do so. What was the advisor’s performance in both good and bad markets and ask yourself whether it’s more important to you to make money in a rising market or prevent losses in a down market. This is the time to let the advisor know what keeps you up at night regrading finances. If the advisor doesn’t address your concerns, it’s time to interview someone else.

6) It’s O.K. (and expected) that you ask for references. Ask for two or three current clients whose goals and finances match your own, as well as a professional reference, like an accountant or estate attorney.

7) Who is the custodian where my accounts will be held? This is your ‘sleep at night’ question. When interviewing advisors not associated with large brokerage firms or insurance companies, ask if they use an independent, third party custodian (this is the entity that produces your statements), which prevents the advisor from having direct custody of your assets and adds another level of security for your account. Make sure it’s a name / company you recognize (i.e. Charles Schwab)

8) Is there anything in his/her regulatory record that I should know about? Part of your research should include conducting background checks on the professional(s) you are interviewing. You can visit the Securities & Exchange Commission and FINRA websites or the State Securities website NASAA as well as the CFP Board. While some violations are non-starters (settlement of multiple customer complaints) others may be understandable (marketing materials not pre-approved; non-client or investment violations).

9) How often will I hear from my advisor? A good advisor will ask you how often and by what method you prefer to be contacted? If you and your advisor establish a communication schedule and strategy up front, you won’t be disappointed. It’s also important to ask if the advisor will remain your primary contact.

10) Would I have this person over for a BBQ? A relationship with a financial professional should be long term and multigenerational. You need to not only trust your advisor, but you should like him/her too. Ask yourself this question: would I invite him/her to my home for a BBQ? If the answer is no, this is not the right person for you. If you have any reservations, move on. There are plenty of qualified advisors out there, and you should make sure you find the right one that fits your qualifications.

If you have any specific questions on this topic, do not hesitate to contact Balboa Wealth Partners at (949) 445-1465

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Should I set up a family trust?

Should I set up a family trust?

Most people don’t quite understand what a family trust is—also known as a revocable living trust— how it works, and if they need one.

The differences between a trust and a simple will, for instance, are often confused.

Many people believe a trust replaces a will; that is absolutely wrong.  The trust needs to be accompanied by a will.

While it can be time-consuming—and more expensive—to have a family trust prepared, there are numerous benefits of the trust for many families.

A family trust is not a requirement in every situation, but in many, it’s quite necessary.

The most common misconception of a trust is that it reduces or eliminates estate tax.  That is false!  A trust does help to avoid probate and directs assets to its beneficiaries.

How a Family Trust Works

A family trust is a legal document that covers an individual’s assets and specifies the terms of dispersing those assets after one’s death or incapacity.  The person who sets up the trust—usually referred to as the grantor—transfers all his/her assets so the trust itself is the owner, not the individual.  It’s important to understand that any asset that is not transferred into the name of the trust will not be protected by it.  This commonly goes overlooked.

The grantor does not give up full control of the assets.

A trustee—the person(s) who will carry out the terms—is appointed at the time the trust is formed but has no role until the grantor is deceased or incapacitated.  The trustee can be a family member, close family friend or even a financial institution.

Typically, choosing a financial institution as a trustee can be costly.  The cost can be justified as these institutions specialize in these matters where a family friend may be burdened with all the responsibilities a trust brings.  In many instances, a financial institution can be named as successor trustee.

The terms of the trust—and the assets included—can be changed at any time. If there’s a new significant purchase of an asset ( Real estate. Automobile, etc.) these can be added to the trust at any time.  Also, intangible assets (securities and other financial investments) can be added at any time as well.  Similarly, the trustee(s) and beneficiaries can be changed by the grantor at any time as the grantor maintains full control.

The way assets are dispersed can be established any way the grantor sees fit and can be changed at any time.   For example, you could set up the family trust to disperse assets at different ages of your surviving child.  They could receive 1/4 of the assets at age 40; The next 1/4 at 45.  And the last half at age 50.    This is one example of the multiple ways a family trust can be established.

Benefits of a Family Trust

Some of the many advantages of a family trust include:

Avoiding the probate process.  If the grantor dies, the estate can avoid a long probate process, a considerable benefit over a simple will, where probate is common for any assets not specifically counted.

Avoidance of legal issues at the time of asset distribution.  A family trust is essentially air tight legally, another potential advantage over a simple will.

Limited exposure to estate taxes, which is part of the estate planning process.

Simple and Flexible.  A family trust is a relatively easy document to prepare. estate planning attorney.  Transferring asset ownership to the trust is an easy task.  The ability to amend and adjust the terms at any time makes it a very versatile vehicle.

Control.  The terms of a trust order what will happen to your assets in the event you are incapacitated or deceased.  The trustee must carry out your instructions, or face civil suits and possibly criminal prosecution.

In Conclusion – What a Family Trust Does

A family trust is a relatively simple and inexpensive, but potentially powerful legal vehicle, with many benefits for a wide variety of individuals.  The family trust makes certain your assets will be allocated per your instructions, should something happen to you. It guarantees your beneficiaries will have access to their inheritance—in the way you intend.  The peace of mind in that alone may be enough to recommend the process.

You can hire an attorney to draft your will and trust, or there are online options that are more cost-effective, such as LegalZoom.

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