Malvern, PA – “We frequently see a troubling situation that can easily be prevented,” says Phil Gagliardi, CPM, a planner with Hoover Financial Advisors. “A frantic call comes in from one of our client’s children. Their parent is very ill and no longer able to manage personal and financial affairs. None of the children know where any of the estate documents are located, nor do they even know the wishes of their parents.”
The dilemma is not uncommon. Generally, parents don’t want to burden their children with such issues. They sincerely believe things will work out because they took appropriate steps to put necessary plans in place. They have the will/trust, durable power of attorney and all beneficiary designations are proper. However, that is rarely enough. Communicating investment and tax planning strategy as well as ultimate hopes and requirements to the next generation is equally as important as having the documents prepared.
A family meeting is a valuable tool to ensure peace of mind and avoid friction in time of crisis. Everyone involved can ask questions and reach an appropriate level of understanding, which will help prepare children and loved ones if older family members are unable to manage their affairs. They will be ready and not burdened with an extra layer of complexity. Another benefit of this meeting is to build a relationship between outside financial advisors and family members to maintain a level of knowledge and comfort. Gagliardi offers suggestions gleaned from an article at http://www.EstatePlanning.com noting a few components and benefits of the family meeting:
1. Ask your estate planning attorney and financial advisor to be there to explain how your plan will work and why decisions were made.
2. Choose a date and time that is convenient for everyone and a place that is appropriate. The room should encourage discussion but also convey the seriousness of the meeting. Have a beginning and ending time.
3. Make a list of topics to cover. This meeting should be a general explanation of what parents have planned and why, in order to prepare family members for what they can expect and may need to do in the future. Encourage questions and discussion.
4. It is important to give children some idea of the size of any inheritance they may receive. With people living longer and long-term care expenses often lasting for years, there may be little to pass on. If the inheritance is large, it is be better to give them a realistic picture now rather than later. It is helpful to prepare a child for a sizeable inheritance so they don’t go on a spending spree, fall prey to a scam, or be afraid to use the money at all. Some people prefer to keep their wealth a secret, but it should be discussed, especially if there may be controversial issues.
More comprehensive details can be found on Gagliardi’s blog on Hoover Financial Advisors website (http://www.petehoover.com).
Gagliardi joined HFA four years ago. Prior to that, he was a trust officer with Charles Schwab Bank in Wilmington, Delaware. He is one of only 350 individuals in the U.S. to earn a Certified Portfolio Manager® designation. The planner holds a master’s degree in taxation and financial planning from Widener University.
HFA, founded by Pete Hoover, CFP® in 2005, has quadrupled in size since its inception. The firm was selected as the 2012 Small Business of the Year by Chester County Chamber of Business & Industry and the year before it was named among the top financial planners in the Philadelphia region. Headquartered on Moores Road in Malvern, HFA is an independent discretionary firm with no product ties. Services include wealth management, cash flow management, estate planning, retirement planning, financial forecasting, plan preparation and implementation, income tax strategies, insurance solutions and management of financial needs after the death of a loved one. For further information, visit the firm’s website at http://www.petehoover.com or call 610.651.2777.
Malvern, PA – , recently joined Hoover Financial Advisors as a senior tax advisor. His appointment was announced by Peter K. Hoover, CFP, president and HFA founder. “We are delighted to have someone with such impressive credentials on our team,” says Hoover. “He is an asset for clients, particularly seniors.”
Furey’s primary duties are to help HFA clients with tax planning and preparation. His expertise concerning executive compensation tax implications, stock options and restricted stock, 401(k), pension plans and employee benefits is essential in guiding clients to financial goals and comfortable retirement. In addition, Furey’s knowledge of the intricacies of incentive programs and deferred compensation is beneficial in the tax planning process. He is a volunteer preparer through the AARP tax aide program. “I enjoyed learning how to apply HFA’s state-of-the-art software to my job. I first came here as a seasonal tax preparer and it evolved into an exciting and challenging year ‘round position,” concludes Furey.
Furey was an executive for Campbell Soup Company for more than 25 years. He served as vice president and corporate secretary for 18 years and received Campbell’s prestigious Influence with Honor leadership award. He holds a bachelor’s of science degree in business administration from Villanova University. He earned a doctor of jurisprudence and master of laws in taxation from Villanova, as well. Furey and his wife Jill reside in Villanova.
HFA, which is headquartered on Moores Road in Malvern, was launched in 2005 by Hoover, who has been an independent financial advisor for more than 30 years. Since its inception, HFA has tripled in size. Employees include client relationship managers, financial planners, insurance and tax specialists, investment analyst and an information services manager. Two years ago, HFA was selected as 2012 Small Business of the Year by Chester County Chamber of Business & Industry. For more information, visit its website at www.petehoover.com or call 610.651.2777. To reach Furey, call the tax department at 610.651.2777 (Ext. 123).
Malvern, PA – Recently, a profusion of Internet and print articles proclaimed problems with the will of Philip Seymour Hoffman, who died in February. The late actor’s estimated net worth at the time of his death was $35 million. A tax exemption on the first $5.34 million is provided by federal law. However, a tax of up to 40 percent can be levied against the excess.
One of many other glitches involves Hoffman’s three children. When the will was signed in 2004, he had one son. Thus, his daughters are not mentioned in the will, which leaves everything to his companion Marianne O’Donnell, the children’s mother. A Trust is provided for their son, but nothing is allocated to the girls. The family resided in New York and the state allows only a $1 million exemption. Thus, New York can tax O’Donnell up to 16 percent on assets left to non-spouses. A total of more than $15.1 million in combined state taxes was reported in an article in Forbes. Without a marital deduction, O’Donnell’s assets could be taxed again upon her death.
Last year, news sources stated that $30 million of actor James Gandolfini’s $70 million estate would be eaten up in state and federal taxes. Subsequent reports clarifying the earlier claim indicated this was unlikely to happen.
Peter K. Hoover, CFP, is intrigued with all these reports and sees essential value in alerting people to potential disaster if proper measures aren’t in place concerning estates and beneficiaries. “If ownership, beneficiaries and implementation of assets are not worded correctly, the Trust outcome will not work as intended by the testator. One way Hoffman (or anyone) could have prevented financial crises for his heirs was by adding one or two sentences to the will to provide for future children,” he notes.
“I believe that Gandolfini had an irrevocable Trust, which is tax free,” continues Hoover. “However, there are many misconceptions that can cause estate problems for heirs. To simplify, think of an estate as moving parts that must work together.
“For example, if a married couple prepare their wills when they are relatively young and name children beneficiaries of a sizable estate, it would seem there would be no issues. But say both parents die unexpectedly a few years later and the kids are under the age of majority. A court guardian may have to be appointed and fights over the estate could ensue, disrupting the family and perhaps denying one or more children the inheritance wished for them. To prevent this, children’s estate assets can be directed toward a Trust until they reach specified ages; a Trustee could be named to administer this Trust.”
Hoover suggests another possible inheritance problem prevalent in divorce situations. “If someone re-marries and immediately revises his will naming his new wife beneficiary, one would assume she would receive the estate. Not so, if all insurance and retirement beneficiaries are not updated, as well. Because a beneficiary supersedes the will, the former spouse could get nearly everything. This is because insurance policies, 401Ks and IRAs were not changed when the will was drawn up. These are only two of many situations that could be prevented with proper planning.”
Hoover notes that other stumbling blocks to a smooth estate execution include tax law changes, improper signatory or power of attorney, even lifestyle modifications. “An individual’s estate should be carefully structured and then reviewed on a regular basis. In short, planning today provides peace of mind for heirs tomorrow.”
HFA, which is headquartered on Moores Road in Malvern, was launched in 2005 by Hoover, who has been an independent financial advisor for more than 30 years. Since its inception, HFA has more than tripled in size. Employees include client relationship managers, financial planners, insurance and tax specialists, investment analyst and an information services manager. HFA selected as 2012 Small Business of the Year by Chester County Chamber of Business & Industry. For more information, visit its website at http://www.petehoover.com or call 610.651.2777.