The Investment Piece – An online publication to help educate people about investment choices.

I’ve been an estate planning and elder law attorney for years.  Most of my clients are in their 60s, 70s, and 80s.  Some have a substantial amount of money, and will likely leave behind millions after their deaths, and others truly struggle to maintain a very diminished lifestyle in their later years.

One couple in their early 80s came to me and explained that they needed help, but couldn’t afford to pay me anything.  They lived in a mobile home that they owned, and the husband admitted that he had made just about every wrong decision that was possible ever since they got married when they were in their very early 20s.  He said that the only way they managed to have a few simple pleasures in life, like going out to breakfast or lunch a couple of times a month, was because their daughter had a steady job and was able to give them $200 a month.  The man had held a solid union job for most of his career, but they had never managed to save and invest.  How did they end up like this?  That gift of just $200 each month was enough to make a huge difference in their quality of life.

On the other end of the spectrum, I’ve had clients with a nice home and cars and other possessions, and $1 million to $3 million in retirement accounts, but they’re “frozen” in inaction by fear of not knowing what to do and being hit by surprise taxes everywhere they turn because they don’t understand how things can affect their finances.  They don’t really know how much they can spend and still be safe into the future.  They haven’t gone through the exercise of evaluating risks and looking at options.  They don’t know where to turn.

I understand that many people have made good decisions, and others have made poor decisions, but how do we educate and guide people?

In one case, my client was divorced without children, but she had retired from a successful career that provided her with a solid pension, and she had also invested for her future.  On top of all that, she inherited an amount that nearly doubled her net worth, and then she had to readjust her thoughts on how to distribute her wealth at her death to six or eight different people.  I knew that she wanted to help one family member who was close to her, but that person had already inherited a nice home and then lost it through mismanagement of their finances.  Now, that same person will likely inherit close to $2 million without any taxes due, and I’m guessing that it will all be lost within a few short years.  There are individuals who think they know all they need to know and simply won’t seek qualified advice.  I’m not saying that everyone who offers advice offers great advice, but I think that it’s prudent to speak with a qualified advisor to get opinions on what to do.

Will your money last?  How long do you want it to last?  What are your goals?  What about money is important to you?  Are you concerned with leaving a legacy to your heirs, or is the primary focus on making sure that you, or you and your spouse, have enough funds to carry you until your deaths?  Are you enjoying your wealth, or are you afraid to spend it?  Have you looked at the different earning and inflation and growth possibilities and considered your risks?

For many people, they want to leave legacy gifts to their children or grandchildren, but at what cost?  Does the parent or grandparent have sufficient funds to enjoy life, take care of themselves until death, and still leave a legacy?

In many cases, the owners of the assets become reluctant to spend their own funds for their own enjoyment.  It’s something to think about.

As an estate planning attorney, I had many clients ask me to help them manage their investments, but I declined their requests because I didn’t feel comfortable giving that advice.  But with more and more clients asking for help, I finally took the extra step of gaining additional education and professional credentials so that I felt comfortable in opening my own Registered Investment Advisor (RIA) firm to help people manage their investments and understand more about their financial options.

And what if the owner of the assets has spent conservatively, and the assets have grown to a value that far exceeds what they had anticipated?  Is it time to adjust your lifestyle?  Is it time to make gifts while living?

We like to discuss where investors are, where things might go, what financial and emotional needs they might have for funds for themselves and their heirs, and then look at their investment portfolio and level of risk that they’re willing to accept.  Can you sleep well at night even if there is market turbulence?

These are all considerations.