1. Check your beneficiaries.
It is a wise person who ensures that the next generation will receive its inheritance with the least amount of hassle and in the manner intended. I make it a standard in my practice to remind my clients to review the beneficiaries of all their accounts at least annually.
Life changes quickly, and so may your choices for whom will get your hard-earned money. Births, deaths, divorces and marriages all can change the way you designate your assets, so make sure to check all of your accounts at least annually.
It is also a good idea to add contingent beneficiaries in case the primary is no longer living or may not wish to receive the asset.
2. Check your tax allocation percentages.
Now is the time to ensure your tax picture is in order. Especially in the case of assets that will face taxes in the future, you may want to divide your portfolio up into three categories – taxable, tax-deferred and tax-free – and look at the percentage you have in each.
Your goal may be to have the highest percentage in the tax-free category, especially if you feel taxes may rise in the future. This may be a good way to get a feel of the overall tax status of your estate and allow you to begin to plan how to move assets around for a more favorable tax future.
3. Check your liability limits.
Due to the highly litigious society we live in, it is important that you have proper liability protection. Start by looking at your auto and homeowners policy. The state minimums in PA are set way too low, in my opinion, for any real protection in today’s high-priced world. Talk to your agent and ask about how to increase your protection if necessary.
You might also want to look into an umbrella policy. This can be a low-cost way to help protect the rest of your assets in an uncertain world
4. Check for overlap.
Overlap occurs when you own multiple investments inside your portfolio that hold the same underlying equities or bonds. This may subject you to increased risk while giving you a false sense of diversification. There are some good online tools available to help see how much overlap you may have inside your portfolio. I see this occur with the majority of new clients when they bring in their statements. A quick check may help you reduce risk and provide some much needed diversification*.
Following these quick steps may help you begin 2013 with an improved financial picture and get you off to a better start for that rosy retirement we all dream of.
*Diversification does not guarantee profit or protection from loss.
Joe Wirbick is the president of the Lancaster financial services firm Sequinox. Joe specializes in retirement planning and distribution. This allows him to concentrate on developing strategies that help address the unique issues that confront retirees and those approaching retirement.
Tax information is provided for informational purposes only, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation.. Tax returns should be completed in conjunction with a qualified tax professional. While we are familiar with the tax provisions of the issues presented herein, Sequinox Financial and JWC/JWCA do not offer tax advice and are not affiliated. Mr. Wirbick is an Investment Advisor Representative offering advisory services through J.W. Cole Financial Advisors, Inc. (JWCA) and securities through J.W. Cole Financial, Inc. (JWC) Member FINRA/SIPC. The opinions expressed are those of Mr. Wirbick and based on information believed to be reliable but not guaranteed and subject to change and do not necessarily reflect the position of JWC/JWCA.JWC/JWCA and Sequinox are unaffiliated independent entities.