How to Prepare for the Death or Incapacity of You, a Spouse or Parent David Breckenridge , CFP®
One can never fully prepare for the emotional aspects of the death of a spouse or parent, but we can do certain things in advance to help the survivor cope with the financial aspects of that loss. Here are a few questions to ask and things to consider.
- Bills and Banking. How are bills paid? Bills arrive almost daily and it is of enormous help to know how the household bill payer takes care of those. Here are some questions you should ask in advance. Do they write out physical checks and mail them? Do they use their banks online bill paying service? Do bills come by U.S. mail or by e-mail. Are they auto-debited from accounts? Where are the bank accounts? Is there overdraft protection? Can bank accounts be consolidated to simplify the mechanics? Are there safe deposit box or boxes? Can you add another party to ease access to the box?
- Passwords. Does your spouse keep a master list of passwords? Where is that list and is it safe-guarded from unwanted eyes? Does it include website addresses, user names and passwords? Do they use a password manager? Who has access to that and how?
- Organization. Encourage your spouse or parent to get organized. Collect important documents by category and file in one place. Imagine how much easier it would be to step into a person’s financial shoes if there was a file cabinet and inside were folders labeled: auto insurance, tax information by year, homeowner’s association, etc. Have them show you where those files are and how they are organized.
- EP documents. Who has the originals and where are they located? If they are in a safe-deposit box, who has access to the box? Should a trusted family member or friend be added to access the box?
- POD/TOD. I know we talk about this in our Moneta review meetings, but it is an easy step to miss. Transfer on death and or Payable on Death designations for cars, boats and bank accounts saves having to go through probate, which in turn saves time and money.
- Pre-arranged funeral services. Although absolutely no one likes to do this, it is a big relief to the survivors not to have to make these decisions in the time of grief. It is an act of love to take care of this in advance and have it planned the way you want it planned, not the way someone thinks you wanted it.
- Just in case. Tell a family member or friend or who you named agent or trustee where all the above information is located, along with a key to your house. If you and your spouse should die together in an accident, someone will need to have access to this information.
Your Moneta Team helps to organize, prepare and be successor to the primary financial overseer in your family, but there are still items, some listed above, that we cannot do for you. Although this is by no means an exhaustive list, it serves as a guide to how well you have prepared for this possibility.
What’s Going On With Inflation?
Ask A Professional, Daniel Wacker
Inflation has dominated headlines of late and, consequently, investors have reacted – as they naturally do to stimuli. A rather simple concept, inflation is merely a general rise in the price level of goods and services. Yet, it remains a widely debated topic and often misunderstood by the masses. We hope to give perhaps a different lens to look at the topic through.
If you open any economics textbook, you will likely find the following relationship: Money Supply (M) x Velocity of Money (V) = Price Level (P) x Nominal GDP (Y)
Alternatively, rearranging this same relationship yields the Price Level (Inflation): P=(M x V)/Y
In English, the number of times money changes hands via transactions for goods and services in conjunction with the supply of money must grow at a faster rate than the actual output of said goods and services for inflation to persistently tick upwards.
Pundits and average Joes alike will talk about the Federal Reserve printing money and increasing the supply through its asset purchase program. The natural response to these policies is to cite the imminent threat of inflation. The more of something (money) there is, the less value (purchasing power) it has – right?
It is certainly one piece of the puzzle, but it does not paint the whole picture. To illustrate, consider a hypothetical economy in which the money supply, let’s say, triples but – for whatever reason – consumers are not willing to spend a dime. Without the demand for goods and services, price levels will actually decrease. Below is a simple, but fun graphic from the Federal Reserve Economic Data’s (FRED) interactive website, with shaded areas representing economic recessions. The chart plots the percentage change from a year ago in M2 money supply and velocity of M2.
Beginning May 2020, M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100,000) less IRA and Keogh balances at depository institutions; and (2) balances in retail MMFs less IRA and Keogh balances at MMFs. Seasonally adjusted M2 is constructed by summing savings deposits (before May 2020), small-denomination time deposits, and retail MMFs, each seasonally adjusted separately, and adding this result to seasonally adjusted M1.
I think this tells a powerful, but naturally intuitive story. The general trend when money supply skyrockets (typically during recessions as the Federal Reserve intervenes) is for the corresponding velocity to fall off a cliff. I think most, if not all of us, can agree it makes sense for economic transactions to stagnate during a recession.
So, you might ask, what does it mean today? The transactional demand for goods and services has, and likely will continue, to resurge as the economy opens back up. Another interesting prism through which to look at the situation through is how the market actually prices expected inflation into securities. Treasury Inflation Protected Securities (TIPS), as the name would suggest, offer protection against inflationary environments. Furthermore, the difference in yield between a nominal Treasury bond and a TIPS bond can serve as a proxy for inflation. For reference, below is a breakdown of both at various maturities using data from early June provided by our Investment Department:
You may note that each TIPS maturity currently offers a negative yield. Furthermore, taking the 5 year maturity as an example, inflation would have to exceed 2.497% over the next 5 years for the TIPS bond to outperform a standard Treasury bond. It’s hard to justify, particularly given the negative yields, building out an allocation to TIPS in portfolios at this time.
Alongside our Investment Department, our team is always assessing economic data and its impact on markets. As always, we are more than happy to discuss further or answer any questions you may have. Easy ones to me; difficult ones to everyone else!
NEW EMPLOYEE SPOTLIGHT
I joined Moneta this past April with this being my first full time job out of college. I graduated this May with a degree in Mathematics from Saint Louis University. Before I moved here for college, I was born and raised in Louisville, KY. However, once in STL, I knew I couldn’t leave quite yet. I started searching for jobs in the area and that’s when I came across Moneta. Prior to joining the Breckenridge Team, I interned at a reinsurance company for the past two years. With that said, I am fairly new to the wealth management and advising industry. That makes it slightly more challenging, but even more rewarding and exciting to be starting a career in a new field. I am most excited to be transitioning into working with our clients this summer!
Aside from work, I love to travel, so feel free to send me any recommendations! I recently traveled to Mexico and Napa Valley for some graduation trips with my friends. Before that, I was lucky enough to spend four months studying abroad in Madrid. For the rest of the summer, I am planning on settling into my new apartment in Clayton and spending the weekends at the Lake of the Ozarks. I already love Clayton and am excited to keep exploring all the restaurants, parks, and shops it has to offer.
I’m looking forward to being able to develop my career here at Moneta and look forward to meeting each and every one of you!
WHAT ARE WE UP TO?
As you can tell, his girls loved the vacation!
Our Mission Statement
We are a high-performing, collaborative group of colleagues and friends who support each other’s growth and success, while providing personal financial advice and exceptional service to enrich the lives of the successful, multi-generational families under our care.
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source https://monetagroup.com/blog/breckenridge-team-newsletter-summer-2021/
