Estate Planning

Why New Parents Need a Will

November 7, 2024 by Hans Blake, CFA, CPA

Reading Time: 4 minutes

For many, estate planning feels like something to worry about later in life. However, Chace Campbell, a seasoned attorney, sheds light on why new parents should make this a priority. In a recent episode of Intelligent Money Minute, Chace emphasized how having a will early on is essential, especially when children are involved. From safeguarding assets to ensuring that a trusted guardian is in place, Chace shared invaluable advice for new parents looking to protect their family’s future.

The Importance of Estate Planning for New Parents

Chace explains that for parents, estate planning is about securing the well-being of their children. While many young parents might assume they don’t need a will, the truth is that intestacy laws—laws that determine asset distribution if someone dies without a will—can result in complex and unintended consequences.

“If a young family has no will in place, the division of assets can become complicated,” Chace says. In one scenario, a husband with no will passed away, leaving his wife and newborn child. The law dictated that the wife would only inherit half of the husband’s estate, with the other half going to their child. This means the wife would have to go through the courts to access her child’s share of the estate, causing undue stress during an already difficult time.

Why Minor Children Inheriting Assets Can Lead to Challenges

One of the unique challenges that arise when parents pass away without a will is the issue of minor children inheriting assets. In the absence of a will, minors may inherit substantial assets, such as a home, that they are not able to manage themselves. This leaves the surviving parent in a difficult position, needing to obtain court approval for any financial decisions related to those assets.

Chace describes a scenario in which a wife was unable to sell the family home without legal authorization because her young child inherited half of the property. “She wanted to sell the house and move closer to her support system,” Chace explains, “but legally, she only owned half of it.” Situations like these can be prevented with a straightforward will, which would allow parents to determine how their assets are handled in their absence.

The Role of a Will in Designating Guardianship

Beyond asset distribution, a will is crucial for designating a legal guardian for children. Without this clear direction, the court decides on a guardian, which could lead to family disputes and additional emotional strain. “Naming a guardian in your will ensures that your child is cared for by someone you trust,” Chace notes. For new parents, this is one of the most important aspects of creating a will, providing peace of mind that their child’s future is secure.

Estate Planning Laws Across States

While each state’s intestacy laws vary slightly, the core principles remain similar across the U.S. In Chace’s example, South Carolina laws dictate a 50-50 split between the spouse and child. In other states, these percentages may differ, but the underlying issue is the same: without a will, families are subject to the state’s rules for asset distribution, which may not align with their wishes.

Chace’s advice is clear: “Regardless of where you live, having a will in place protects your family from the complex legal processes that intestacy laws can create.”

Taking Action: Why New Parents Should Prioritize a Will

For many new parents, the expense and time commitment of creating a will may feel unnecessary. However, as Chace points out, the potential costs of not having one far outweigh the initial investment. A will not only protects your assets but also shields your family from unnecessary legal and financial stress.

In summary, creating a will allows parents to:

Designate a guardian for their children
Specify asset distribution according to their wishes
Avoid legal hurdles that can arise from intestacy laws

For new parents, estate planning is a crucial step in safeguarding their family’s future. Starting this process early can ensure that loved ones are protected, and their wishes are honored should the unexpected occur.

Stay tuned for more interviews with Chace, where we’ll dive deeper into his expertise and the valuable lessons he has to share with our intelligent investing audience, so be sure to subscribe to our Intelligent Money Minute podcasts.

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Chace Campbell Bio

Chace is a seasoned legal professional with over 20 years of experience in estate planning, business law, and probate. He began his career in 1997 at Culp, Elliot, and Carpenter, P.L.L.C., focusing on tax and corporate law before discovering his passion for family law, probate, and small businesses in 2002.

Chace is renowned for his exceptional communication skills and careful listening. He is dedicated to helping clients navigate complex legal landscapes, providing comprehensive understanding and effective resolutions through litigation, mediation, negotiation, or forward planning. He emphasizes both resolving and preventing legal issues, offering accurate information, honest advice, and concrete action steps.

Outside of work, Chace enjoys time with his wife Michelle and their three children, preparing for outdoor adventures at REI, and indulging in his passion for coffee.

Credits: This blog was written in part by ChatGPT, an AI language model developed by OpenAI. The content of this blog reflects the knowledge and opinions of ChatGPT, may or may not reflect the knowledge and opinions of Intelligent Investing, and is protected by copyright laws. Please do not reproduce or distribute without giving proper credit to ChatGPT and OpenAI.

When Should Someone Start Thinking about Estate Planning?

October 24, 2024 by Hans Blake, CFA, CPA

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Reading Time: 3 minutes

Estate planning often seems like a task for older generations, but Chace Campbell, an experienced attorney, offers a different perspective. In a recent episode of Intelligent Money Minute, Chace highlighted the importance of starting the estate planning process as early as age 18. From legal guardianship changes to healthcare decisions, Chace provided valuable insights on why young adults and their families should be proactive about estate planning.

The Right Time to Start

According to Chace, the optimal time to begin thinking about estate planning is when an individual turns 18. Before that age, parents have legal guardianship and can make medical or financial decisions for their child. However, once a person turns 18, they are legally considered an adult, and parents lose the ability to make those decisions without proper legal documentation.

Chace explains, “The moment that child turns 18, parents are no longer able to handle any of the child’s affairs, financial or health.” This means that in the case of a medical emergency, if an 18-year-old does not have a power of attorney in place, parents may need to go through an expensive and time-consuming probate process just to speak on behalf of their child.

Essential Documents for Young Adults

For young adults, Chace recommends having at least three key documents in place:

A Simple Will: While this might seem premature, a will ensures that any assets or responsibilities are handled according to the individual’s wishes.
Power of Attorney (Financial): This durable document allows a trusted person, often a parent, to manage financial matters if the young adult is incapacitated.
Healthcare Power of Attorney: This document ensures that someone can make medical decisions if the individual is unable to do so. In scenarios such as a car accident or coma, the absence of this document can leave parents unable to consent to vital medical treatments due to legal and HIPAA restrictions.

Here’s a compelling example: “A junior in college gets into an accident and ends up in a coma. Without a healthcare power of attorney, the parents are left helpless, unable to even talk to the hospital staff about their child’s condition.”

Understanding Power of Attorney

Chace further explains the two primary types of power of attorney—financial and healthcare. The durable power of attorney refers to a document that remains effective even if the individual is incapacitated, which is critical for both financial and medical decisions. In many cases, these documents include language that covers end-of-life decisions as well, simplifying the estate planning process.

In some states, healthcare power of attorney and end-of-life planning documents are separate, but Chace notes that in South Carolina, the two have been combined into a single document, allowing the appointed person to handle all medical decisions, from routine procedures to end-of-life care.

Why Early Estate Planning Matters

Chace’s advice is clear: estate planning isn’t just for the elderly. “Before you turn 18, you should be making an appointment to visit an attorney,” he emphasizes. Even though it might feel early, having these essential documents in place can provide peace of mind for both young adults and their families.

As Chace concludes, estate planning is about preparedness—ensuring that loved ones are legally able to help when needed. With the right steps, individuals can avoid legal hurdles and ensure that their wishes are honored in any situation.

For families looking to start the estate planning process, it’s never too early to consult an attorney and make sure these vital documents are in place.

Schedule a short discovery call or meeting

Chace Campbell Bio

Outside of work, Chace enjoys time with his wife Michelle and their three children, preparing for outdoor adventures at REI, and indulging in his passion for coffee.

Estate Planning 101

September 12, 2024 by Hans Blake, CFA, CPA

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Reading Time: 3 minutes

In this episode of Intelligent Money Minute, we sat down with Chace Campbell to dive into estate planning essentials. If you’re new to the concept of estate planning or just starting to think about it, this guide will break down the fundamental documents and strategies you need to consider.

What is Estate Planning?

Estate planning involves preparing for the management and distribution of your assets during your life and after your death. It’s about making sure your wishes are honored, protecting your loved ones, and minimizing any legal complexities. Chace emphasizes that estate planning is not just for the wealthy or the elderly—everyone can benefit from having a basic plan in place.

The Three Core Documents of Estate Planning

According to Chace, estate planning can be boiled down to three essential documents:

Power of Attorney: This document designates someone to make financial decisions on your behalf if you are unable to do so. It’s crucial for ensuring your financial affairs are managed properly during times of incapacity.
Healthcare Power of Attorney: This appoints someone to make medical decisions on your behalf if you cannot. It ensures that your healthcare preferences are respected and that someone you trust is in charge of your care.
Will: A will serves several purposes: it designates who will manage your estate, outlines where your assets should go after debts are paid, and specifies guardianship for minor children. Essentially, it answers the questions: Who wraps up your legal life? Where do your assets go? And, if applicable, where do your children go?

Avoiding Probate: A Deeper Look

Chace introduces the concept of probate—the legal process of transferring assets after someone dies. While probate ensures an orderly transition, it can be time-consuming, expensive, and public. Avoiding probate can be beneficial, and Chace explains this using a soccer analogy with three lines of defense:

First Line of Defense: Living Trust (Offense)
A living or revocable trust can keep your assets out of probate. By placing your assets in a trust, you maintain control during your lifetime and set clear instructions for their distribution after your death. This is akin to having a strong offense that keeps the ball out of the opposing team’s half.
Second Line of Defense: Operation of Contract (Midfielders)
This includes assets that transfer by operation of contract, such as life insurance policies, retirement accounts with designated beneficiaries, and payable-on-death accounts. These assets bypass probate and go directly to the beneficiaries you’ve named.
Third Line of Defense: Operation of Law (Defenders)
Assets that transfer by operation of law include jointly owned properties with rights of survivorship. If one owner dies, the asset automatically passes to the surviving owner without going through probate.

Many people fear probate because it is a lengthy, public, and sometimes costly process. In South Carolina, for example, probate takes a minimum of eight months and often extends to a year or more. The court process can feel bureaucratic and confusing, even to seasoned attorneys. However, with the right estate planning strategies, probate can often be avoided.

Regular Maintenance of Your Estate Plan

Chace emphasizes that estate planning is not a “set it and forget it” task. Your estate plan should be reviewed and updated accordingly as your life changes—whether you acquire new assets, sell old ones, or experience significant life events. Just like driving, where minor adjustments keep you on the road, regular tweaks to your estate plan ensure it remains aligned with your current wishes and circumstances.

Estate planning is about more than just distributing assets; it’s about safeguarding your legacy, protecting your loved ones, and ensuring your wishes are honored. By understanding and implementing these basic estate planning tools, you can create a comprehensive plan that addresses your unique needs and goals.

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Chace Campbell Bio

Outside of work, Chace enjoys time with his wife Michelle and their three children, preparing for outdoor adventures at REI, and indulging in his passion for coffee.

The Pitfalls of Recency Bias

May 18, 2023 by Hans Blake, CFA, CPA

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Reading Time: 3 minutes

In a recent episode of Intelligent Money Minute, we had the pleasure of interviewing Larry Swedroe, the head of Financial and Economic Research at Buckingham Strategic Wealth. Our discussion centered around the dangers of recency bias, a common emotional tendency among investors. Larry emphasized the importance of understanding historical context and avoiding the trap of projecting recent events onto the future. In this blog post, we’ll share some key takeaways from our conversation and explore strategies to overcome recency bias in investment decision-making.

Recognizing Recency Bias

Recency bias refers to the tendency of investors to give excessive weight to recent market events when making investment decisions. We have a natural inclination to believe that what has just occurred will continue in the short term. This bias often leads us to ignore historical data and overlook the importance of long-term correlations. Larry stressed the need to become students of history and cautioned against relying solely on recent trends to guide our investment choices.

Larry highlighted that recency bias is one of the most detrimental mistakes investors can make. While there is evidence of short-term momentum, where recent winners tend to continue performing well for a limited period, it’s crucial to remember that trees don’t grow to the sky. Valuations can reach unsustainable levels, driven by investor enthusiasm. Larry cited examples like the dot-com era and the recent market bubble, where unprofitable companies achieved sky-high valuations based on recent success. However, high valuations eventually come back to haunt investors. To avoid this pitfall, he emphasized the importance of sticking to your investment plan and not being swayed by recency bias.

Strategies to Mitigate Recency Bias

To counteract the influence of recency bias, we discussed several strategies during the interview. One effective approach is disciplined portfolio rebalancing. By selling some of the high-priced winners and buying assets that have performed poorly but offer higher expected returns, investors can maintain a balanced portfolio and avoid chasing recent winners. Additionally, we explored the role of trend following, specifically managed futures, as an investment class that captures short-term momentum swings. However, it’s crucial not to allocate all your assets to trend following, as it can underperform for extended periods. Larry recommended considering a 5% to 10% allocation to mitigate tail risk during prolonged bear markets.

Recency bias can be difficult to overcome alone, especially during times of market volatility. That’s why having a financial accountability partner is vital. This partner can help design a financial plan and keep you grounded when fear and greed tempt you to deviate from your investment strategy. At our firm, we provide clients with proprietary interrogations that guide their decision-making and minimize financial stress. We believe in the power of having someone who holds you accountable and helps you stay on track to achieve your financial goals.

Recency bias is a common pitfall that can hinder investment success. By recognizing the bias and incorporating strategies like disciplined rebalancing and selective trend following, investors can overcome this challenge. Moreover, having a financial accountability partner can provide valuable guidance and prevent emotional decision-making. Remember, it’s essential to view investment decisions through a historical lens and remain committed to your long-term investment plan. By doing so, you can minimize the impact of recency bias and maximize your chances of achieving financial success.

Schedule a short discovery call or meeting

We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has since authored seven more books.

Larry Swedroe Bio

Since joining Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

In his role as chief research officer and as a member of the firm’s Investment Policy Committee and Board of Directors, Larry regularly reviews the findings published in dozens of peer-reviewed financial journals, evaluates the outcomes and uses the result to inform the firm’s formal investment strategy recommendations.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television shows airing on NBC, CNBC, CNN and Bloomberg Personal Finance. Larry is a prolific writer, contributing regularly to multiple outlets, including Advisor Perspectives and ETF.com.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU and a bachelor’s degree in finance from Baruch College.

Why Did Traditional Diversification Fail in 2022?

May 11, 2023 by Hans Blake, CFA, CPA

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Reading Time: 3 minutes

Traditional diversification failed in 2022, but why did it happen, and will it happen again? On this episode of Intelligent Money Minute, Hans Blake interviews Larry Swedroe, the head of economic and financial research at Buckingham Wealth Partners, who also co-authored 18 books. According to Swedroe, traditional diversification, which was within the 60/40 stock and bond allocation, failed in 2022. Both stocks and safe treasuries had double-digit losses, which is the first time this has happened, making it almost the worst year for a 60/40 portfolio. Moreover, longer-term treasuries lost over 20%, and the S&P was down by about 18%. Correlation between these two risk assets has been negative for the last 20 years. However, if you look at the last hundred years, the correlation was positive at about 0.2. Therefore, traditional diversification failed because correlations between stocks and safe bonds are time-varying.

Swedroe emphasizes that investors shouldn’t treat correlations as a permanent number, as they are time-varying. He explains that correlations do not mean that when one asset goes up, the other goes down. It means that when one has a better-than-average return, the other one has a worse-than-average return. During the last 20 years, we had a negative correlation between stocks and safe bonds, so investors thought that when stocks got crushed, bonds would tend to do better than their average. However, that didn’t happen in 2022, making investors rely solely on safe bonds and equity bonds, which could be risky.

Swedroe recommends that investors consider including other non-traditional assets that will do well in such periods. For instance, reinsurance, private floating debt, long-short equity, private real estate, and other alternatives can help dampen the risk in an investor’s portfolio. He mentioned that last year, all of the alternatives he owned were up, which helped diversify his portfolio. He advises investors to consider adding other unique sources of risk to their portfolio and not rely solely on safe bonds and equity bonds. Lastly, he says that investors must have a diversified portfolio to help mitigate these unusual time periods when correlations of traditional assets rise.

Schedule a short discovery call or meeting

We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry Swedroe Bio

Since joining Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU and a bachelor’s degree in finance from Baruch College.

The Value of HSAs

June 30, 2021 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

On today’s Intelligent Money Minute, we’ll interview Larry Swedroe on the value of HSAs. HSAs are becoming more popular as people grow to understand them. Multiple benefits come when utilizing an HSA. First, there’s an upfront tax deduction. The second benefit is using the HSA as a way to fund medical expenses. Larry suggests to those who have sufficient taxable dollars to pay their medical bills without an HSA. They should treat the HSA as an investment account. The benefit is that it’s never taxed.

As Larry and I mentioned, there are a lot of benefits to using an HSA if you qualify. We’ve written a comprehensive blog on this topic on our website. At Intelligent Investing we strive to minimize fees and we think of taxes as another fee that we try and minimize for our clients. We’d love to have a complimentary coffee or virtual meeting with you to discuss ways in which we may be able to serve you and your family. To simply get started, click here.

Schedule a short discovery call or meeting

We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry Swedroe Bio

Since joining the Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU and a bachelor’s degree in finance from Baruch College.

Why You Shouldn’t Check Your Portfolio Daily

June 10, 2021 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

During this episode, Larry gives multiple reasons why you shouldn’t check your portfolio daily. There’s a good bit of science surrounding this topic, yet many still misbehave. The research shows that investors are highly risk-averse. Investors feel the pain of a loss twice as much as the feeling you get when a portfolio gains. The larger the dollar amount, the higher that ratio is. On a daily basis, Larry says the stock market goes up or down about 50% in either direction. As you extend the maturity or the length of time, the odds start to favor the market going up. The more days you watch the market the more likely there will be a negative emotional toll. Your much more likely to stay in the joy territory if you don’t check frequently.

Larry offers some good advice and reasons why you may not want to check your portfolio frequently. At Intelligent Investing, we firmly believe in the value of understanding behavioral finance, which is the school of thought that describes how investors actually act. We try to understand how men and women think to minimize the irrational decisions we make from our own emotions and inherent biases.

Schedule a short discovery call or meeting

We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry Swedroe Bio

Since joining the Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU and a bachelor’s degree in finance from Baruch College.

Two Key Elements of Retirement Success and Happiness

May 27, 2021 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

On this episode of Intelligent Money Minute, we interview Larry Swedroe on the two key elements of retirement success. There’s more than just numbers when creating a financial plan. During this episode, Larry breaks down key elements that are important to consider in a retirement plan. He stressed the importance of having a life in retirement. Many gain their sense of worth and satisfaction from their everyday work. Retirement can is a drastic shift. There are a lot of unexpected emotions and challenges that come with this change. According to Larry, you need two key elements for retirement success. First, you need depth and breadth in social relationships. Second, you need a sense of worth and accomplishment.

At Intelligent Investing, we want to minimize your financial stress to maximize your life. We believe that every person is called to a specific mission in life, and we have a limited amount of time to accomplish this mission. Our goal is to minimize financial stress to maximize your life. In doing so, you’ll be better positioned to accomplish your goals.

We’d love to take the first step in a professional relationship with you by having a virtual meeting or a complimentary coffee. Visit investedwithyou.com and click on the “Get Started” button to learn more.

Schedule a short discovery call or meeting

We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry Swedroe Bio

Since joining the Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU and a bachelor’s degree in finance from Baruch College.