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W E A LT H
MANAGEMENT Every stage of life requires a different focus for managing money, starting with basic financial literacy and ending with estate planning. Many important topics fall in between, including how to sell a business. A trio of Insights contributors tackle these topics on the following pages.
ELDRIDGE D. DODSON
North Carolina Board Certified Specialist in Estate Planning, Ward and Smith, P.A.
M. CHAD PEARSON,
CFP®, CEPA, CPWA®
Senior Vice President–Wealth Management Decision Point Wealth Consulting
JASON WHEELER,
CFP®, AIF®, CLU®, ChFC®,
CEO and Wealth Advisor, Pathfinder Wealth Consulting
AN OUNCE OF PREVENTION
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s an estate planning attorney, typically my clients have spent their lifetime accumulating assets, and their focus is on leaving a legacy for their families after their death. Making legal preparations to ensure they are well cared for during their own lifetime often is an afterthought. Planning for aging and incapacity has become even more critical as our population grows older. Recent statistics show that in 2019, 16.5% of the U.S. population is over age 65, and that percentage is expected to reach 20% by 2030. There is a commonly overlooked and increasing need for planning to protect the interests of older adults. As we age, the legal issues that an individual and his or her family face may change. In addition to estate planning, older adults need to plan to address changes in health care needs, plan for retirement, protect against financial abuse and take steps to protect their assets. With so many potential concerns, it is critical to have plans in place that allow you or your family members to address your financial and health needs. Planning in advance may be essential to maintaining your quality of life, preserving your assets for your benefit, and minimizing fees and expenses. Particularly, when someone has failed to plan for incapacity, litigation over who will care for them becomes more likely. The cost of litigation reduces the funds available to care for the incapacitated individual. In addition to the financial toll of litigation, the emotional toll on the family is significant. With second marriages, the risk of conflict is higher.
However, litigation over the care for an incapacitated person is not limited to blended families; we increasingly see conflict between siblings over who should be in charge of their parent's care and resources.
"Planning for incapacity is not just a concern for older adults." That point was brought home to me early in my career when one of my co-workers had a stroke in his early 40s. One Saturday he stayed home to catch up on work while his wife and children went to the kids' sporting events. He had a stroke while they were gone, and he went hours without treatment. He was never able to return to work or to perform many of his activities of daily living. Whether you are 40 or 90, having a plan in place so that someone could handle your financial affairs and make health decisions is critical. Doing so will avoid the expense and red tape of a guardianship. In addition, you can insure that the person you trust most is the person who will be making decisions. In the Cape Fear region, as an attractive retirement area, there is an acute need for older adults to have plans in place to assist them as they age. In addition, there will be an increasing need for community services to assist them in aging successfully, meeting their transportation and fiduciary needs, and providing them with the best quality of life.
ELDRIDGE D. DODSON North Carolina Board Certified Specialist in Estate Planning and Probate Law, Ward and Smith, P.A. Eldridge is certified by the North Carolina State Bar as a Board Certified Specialist in Estate Planning and Probate Law. She assists all types of clients in drafting and implementing estate plans, including estate, gift and generation skipping transfer tax planning, and also provides counsel to executors and trustees in administering estates and trusts. Eldridge frequently lectures to civic and community groups and at continuing legal education seminars on various topics relating to estate planning, estate administration, and elder law.
edd@wardandsmith.com 910.794.4830
THE THREE DIMENSIONS OF SELLING YOUR BUSINESS DECISION POINT WEALTH CONSULTING The more successful one is, the more complex life becomes. Along the way, we all experience transition points. Marriage, children, divorce, selling a business, retirement, death of a loved one are just some of the points in life where important decisions are made. That is why we chose the name, "Decision Point Wealth Consulting." We help uniquely successful families make better financial decisions at the crucial decision points in life.
Contact Decision Point Wealth Consulting at 910.509.2161 or visit www.ubs.com/team/decisionpoint.
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ith our team of Certified Exit Planning Advisors and CERTIFIED FINANCIAL PLANNER™ professionals, Chad Pearson, Donis Smith and Jillian Dempsey, as well as access to the resources of UBS, we can help you at every state of your business lifecycle, whether you’re accelerating growth, evaluating value, preparing a transition or planning your post-exit life. I. Professional Considerations Grow or exit. Our team can you help identify ways to mitigate risk in your business and then focus on value drivers with a set action plan and goals. We will help assess the attractiveness of your business to a third party and the readiness of a business to be sold. Timing the exit. An emphasis on maximizing value at all times can drive more predictable results. By thinking about an exit now and running your business as such, you can be ready for the unexpected. II. Financial Considerations We will help you with comprehensive financial and estate
planning strategies that fully understand the needs that you, your family and future generations must consider. Realizing value. Identifying the right pre-exit strategy, in consultation with UBS’ trust and estate planning specialists and your CPA or tax professional, can make a significant difference in the proceeds you take home. Post-liquidity wealth management. A majority of business owners have almost all of their net worth tied up in their business. That’s why the right post-sale wealth management strategy can help you make a successful transition to the next phase of life. III. Personal Considerations Life after business. What net proceeds figure do you need to sustain the rest of your life? What passions do you want to pursue in your next act in life? What about your impact to future generations, causes and philanthropies? We look at all aspects of your financial world to help you make the right decisions. Your family and heirs. We make it a point to understand the roles and
responsibilities within your family and each member’s personal goals. We help prepare each generation for the transition and can consider a more formal family governance structure. UBS Financial Services Inc. 1985 Eastwood Road, Suite 110 Wilmington, NC 28403 Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ in the US.For designation disclosures, visit ubs.com/us/en/designationdisclosures. Neither UBS Financial Services Inc. nor any of its employees provide tax or legal advice. You should consult with your personal tax or legal advisor regarding your personal circumstances. As a firm providing wealth management services to clients, UBS Financial Services Inc. offers investment advisory services in its capacity as an SEC-registered investment adviser and brokerage services in its capacity as an SEC-registered broker-dealer. Investment advisory services and brokerage services are separate and distinct, differ in material ways and are governed by different laws and separate arrangements. It is important that clients understand the ways in which we conduct business, that they carefully read the agreements and disclosures that we provide to them about the products or services we offer. For more information, please review the PDF document at ubs.com/ relationshipsummary. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC.
FINANCIAL LITERACY DOESN'T HAVE TO BE ROCKET SCIENCE
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JASON WHEELER CEO and Wealth Advisor, CFP®, AIF®, CLU®, ChFC®,
Pathfinder Wealth Consulting Pathfinder Wealth Consulting was formed in 2005, in Wilmington, North Carolina, by Rob Penn and Jason Wheeler. Committed to developing a more personal long-term planning experience for their clients, they teamed up to help families achieve financial confidence through education and smart planning – no matter life’s path. Over the past 16 years, the firm has added additional professional staff to continue to support their clients, continuing their focus of leading all relationships with a comprehensive planning approach and letting clients’ situation and preferences determine the products and services that are in their best interests.
pwcpath.com 910.793.0616 Advisory services offered through Commonwealth Financial Network®, a Registered Investment Advisor.
n past generations, financial literacy was simple. If you did not have the money in your pocket, you didn’t buy it. Credit, loans, and other financial products have all come about as consumer habits have changed. This means financial literacy has also changed. Financial literacy is an understanding of your financial situation and the options available to you. This knowledge equips you to manage your current assets and income, and to build a framework for future decisions. It is not just about the money you are spending; it is about the choices you are making every day, with a focus on the future. While the level of financial education varies across education and income levels, evidence has shown that highly educated consumers with high incomes are not immune to financial illiteracy. We have worked with a couple who had an annual income of about $1million. Most people would assume that family was very financially literate. However, despite this impressive income, the family’s net worth was not increasing, and their savings rates were unimpressive. It is not simply a matter of how much income you are bringing in, it is about how much money you are putting away. The focus cannot just be on growing your income but growing your net worth in the most efficient way (a combination of increasing assets and reducing liabilities). Simply put, it is about living below your means and investing the difference. A good first step is taking an inventory of your financial situation and knowing where you are today, so you can connect the dots to where you want to go. Creating a household income statement, balance sheet, and budget, is a great first move. From there, identify the differences in your needs, wants, and
wishes so you can prioritize and balance your current lifestyle with the future you want. Your financial situation also includes your resources, net worth, insurance policies, etc. You should be able to conduct a cash flow analysis to understand your savings rate, contributions to retirement accounts and other investments, and your future potential for social security and pensions. On the investment side, financial literacy goes beyond knowing what you are invested in; it is also understanding the risk associated with your portfolio, the potential upside and downside, your rate of return, and income potential. As you approach retirement, there will be even more factors to consider: navigating insurance and Medicare, establishing an income stream and portfolio withdrawal rates, understanding your Social Security options, and maximizing your tax situation. Major transitions are when all the work gets done; therefore, it is important to plan ahead, so the execution is seamless, you aren’t playing catch up, and you avoid major mistakes. The good news is that you do not need to be an expert in all these areas. A basic understanding will give you the knowledge to speak with a trusted advisor to create a long-term plan and be your guiding light for important decisions. At Pathfinder, we pride ourselves on providing that sense of security for our clients. Everyone needs to have a role in their financial life, but you do not have to walk the path alone. If you are ready to take the first step, give us a call at 910-793-0616. We are here to guide you forward.