Last week, I did an interview with business and personal planner, Matt Hausman. The advice Matt shared in this interview may prove to be valuable to a lot of folks out there.
Matt has also assisted my company with business planning. At the time, he requested that we bring in our team of advisors so they could coordinate their efforts, and it was that coordination that really helped facilitate our corporate objectives.
To start off the interview, I asked Matt what he wants to accomplish for his clients, especially his newer or high net worth folks.
His response was that although a new client may have a bigger need for his services, what he really wants is to help them accomplish their goals, whether that’s taxes, asset protection, investments, retirement planning, or leaving a legacy.
Matt went on to say that most people are very unfamiliar with how the tax laws will affect their spendable cash or how money in their 401Ks or IRAs will work when they go to spend it or pass it on. This is why when Matt and a client first meet it starts out as more of a fact-finding mission. Then, the next step is planning ahead.
Don’t use Your Accountant as a Historian
This is a great line, but also demonstrates a point. Many accountants only look backwards or at the current year, but often they don’t look at the 30,000 foot view of their clients’ needs over their entire lifespan.
Many investors experience a lack of coordination amongst their advisors. For example, does your accountant talk with your attorney, business planner, insurance guy, and your spouse? Do you have regular family meetings?
For many people, the answer to these questions is a big no.
So, what prevents people from planning?
The number one thing that prevents planning is most likely the fact that people don’t like to think about or deal with their own mortality. Matt said that often times, a premature death of a loved one or friend will wake that person up, and they will come in to speak with him about estate or legacy planning.
The same thing happened to me with my best friend growing up (he was the captain of the football team back in the day and in great shape). When he died at age 36 of cancer, leaving behind three kids, I realized then that I better start to get my own house in order.
And, oftentimes, getting your plans in order means hiring the right people to be on your team of advisors.
I’ll never forget my two sets of grandparents. One had made every arrangement possible, and the other didn’t plan at all. Boy what a difference that made. My grandparents, who had failed to plan, wiped out three estates by saving money (by not hiring the right attorney). It’s hard to believe how many of us, at times, can be so penny wise and pound foolish.
When I asked Matt about some of the potential issues people with real estate holdings may run into, when it comes to financial planning, he explained a few:
- When a couple buys some investment real estate and they just have it titled in one of the spouse’s names, or even an LLC, they may assume that everything just moves over automatically.
- Someone may not be aware of the implications that out-of-state properties may have when settling their estate. For example, if they retire in a different state and forget to update their will, their new state of residence may have different tax and inheritance laws.
- Real estate investors don’t always utilize many of the tools available, such as trusts, and they often don’t plan for how their real estate should be treated after they pass, especially when it comes to taxes.
During the remainder of my interview with Matt, he expressed that it’s prudent to meet with someone you can trust and to make sure certain things are reviewed.
Sure, do the basics, like your wills, power of attorney’s, living trusts, etc. But, also look at all of your contracts and money accounts too. Update your beneficiaries, and check your life insurance policies, IRA accounts, and even your bank accounts.
If you have a business, there’s even more to look at, including the number of employees, the impact of selling the business, and the obvious buy/sell agreements.
If you’re planning retirement, it’s also important to consider and strategize for your future tax situation. For example, some people may end up with less cash flow and more taxes, by having all of their real estate properties paid off in retirement (losing their mortgage interest deduction).
So, with all of the ins and outs, involving taxes, investments, retirement planning, legacy and estate planning, etc., I can’t stress enough how valuable it is to have all of your advisors on the same page.
Share your thoughts below!