Prepare Today with Estate Planning
Passing on the family wealth from one generation to the next is never easy -- whether it involves a network of businesses and philanthropic organizations or simply the family home and prized heirlooms. But periodically holding family meetings can go a long way in making that transition smoother, more effective, and less painful for the head of the family and their heirs. Let us help you in the preparation process with estate planning in Ridgewood, NJ.
The wealthy have long-held Family Meetings to discuss the family’s enterprises, philanthropic endeavors, and the management of family assets. Some meetings are multi-day retreats in luxurious settings involving hired facilitators and advisors. But even for families whose “meeting” is held around the kitchen table at home, the benefits can be immeasurable.
Family Meetings can help the head of the family in many ways, including:
- Refining his or her estate plan, and clarifying its components for the benefit of the entire family
- Overcoming the reluctance to talk about family money or difficult estate planning issues such as wills and long-term care
- Allaying concerns or anxiety among heirs often engendered by being kept “out of the loop”
- Reducing the potential for family feuds over inheritances
- Conveying the family’s money history and promoting money values
- Increasing the likelihood that the family business or other family wealth will endure through subsequent generations
- Crafting or instilling a family mission statement
How to Manage Your Family Assets
An important and often overlooked step in the estate planning process is teaching your family how to handle the assets that they will receive. Vaughan & Co. Securities, Inc. addresses your personal and business assets separately. We teach your family how to invest and manage your finances wisely. Your family lives in the greatest capitalist society in the history of the world. In a capitalist economy the profits go to the capital, that is, the owners.
Most families invest hard-earned and hard-saved money by buying shares or stock in companies (or shares of mutual funds/ETFs that invest in companies). The investment may be held in a personal, IRA, 401(k) or 403(b) account. However, your family owns the shares. In addition, many parents do not spend much time teaching their children how to become investors. Certainly we are not taught in school. How your family invests the assets will determine their standard of living for the rest of their lives as well as the lives of their children. As experienced financial planners, we teach them how to become investors.
Two Ways to Invest
The good news is that there are only two choices on how to invest; many variations of these two themes, but only two.
First, your family can manage the assets themselves. They do the investment research, analyze economic trends, compare market prices, allocate your assets to the more attractive investment opportunities, and decide when to switch or sell. High-quality investment and economic research are available for sale. The business section of the national newspapers keeps you informed of the latest news. The family can open an account at an investment firm and execute their decisions by placing trades through the firm. As you know, and your family will quickly find out, investing is work; the greater your assets, the more work that will be required of your family.
Second, your family can hire someone or a firm to manage the investments for them. There are important differences in how the advisor is compensated, but basically you are hiring someone. Like hiring any other professional, family must decide that the financial advisor (FA) is worth more than their fee. A stockbroker would discuss each decision with your family and get paid a commission each time they buy or sell shares of stock. The FA earns a mark-up or mark-down on each bond purchase and sale. A mutual fund manager limits his investments to the assets described in his prospectus. The mutual fund manager is paid an asset-based fee for managing your family’s account. An investment adviser would manage an investment account specifically for your family.
The firm that the family hires does the research into specific companies, makes asset allocation decisions, monitors the investment markets, decides when to sell or switch investments, and reports back to the family. The family can have varying degrees of involvement in the decision-making process. An investment advisor, such as Vaughan & Co. Securities, Inc. would require discretion in the investment selection in your account. Your family would have to learn how to evaluate an advisor. Your family must decide whether they want to manage their investments or hire someone to advise them.
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Contact us if you have questions about pre-retirement investment advising services. We proudly serve clients in Ridgewood, Bergen County, and throughout the greater Northern NJ area.