Tying Up Loose Ends By Lewis J. Walker, CFP(R)

Are there financial planning matters that you have thought about, but not yet done? Are there important items that you have not considered...classic “loose ends”?

The expression “at loose ends” emanated from nautical terminology, referring to ropes that were unattached, frayed, neglected. To get things shipshape on a vessel, sailors tied up loose ends. What have you overlooked on your vessel, the M.S. Financial Independence? Here are things often unconsidered.

Regarding insurance, you have heard the rationales for life, disability, health, long term care, and property and casualty insurance. If you are underinsured in any area, and there are loved ones, business associates, or others who would be harmed financially from the impact of your incapacity or death, that's a classic loose end. If you don’t have a current will, powers of attorney for assets and health care, advance directive...more loose ends. Often unrecognized is the need for adequate Umbrella Liability insurance.

Basic auto, home, and boat coverage has liability limits, usually capped at $300,000 to $500,000 per person or incident. What if you are sued for damages beyond limits and lose? The insurance company writes a check up to the limit and you are on the hook for the rest. Umbrella insurance is extra coverage designed to protect you from lawsuits and major claims, above the limits of your existing auto, homeowners, and boat coverage. It is relatively cheap given the litigious society in which we live. We joke about ambulance chasing lawyers...they are everywhere, advertising on TV, the sides of busses, and billboards.

You worked hard to build your assets and to secure your future. We have seen situations where successful people carry liability insurance way below their net worth, not realizing how vulnerable they are. Umbrella policies can cover a wide variety of situations, for example, fatal injuries or serious disability; property damage; certain lawsuits; other personal liability happenstances.

Situations include injuries or deaths involved in a vehicle or boating accident where you are at fault; injuries to guests in your home due to falls or deck collapse; injuries or deaths to a child in your pool or yard; harm caused by your dog or other animal. Costs may involve lawyers, medical bills, and other expenses. One company mentioned damage caused by a child, pet, or you tripping and smashing a priceless antique or artwork; someone trips or slips on a rug in your rental property and sues; damage your child accidentally or purposely causes on school property.

Polices may cover slander, libel, false arrest, pain and suffering, and mental anguish. As soon as teenagers start to drive, review your liability coverage. They will have accidents.

Realize that in Georgia and in many other states, a child 18 or older is considered an adult. You should have a durable power of attorney for assets and health care authorizing you as a parent to act in the now adult child’s behalf. In 1996 Congress enacted The Health Insurance Portability and Accountability Act (HIPAA). The act strengthened privacy laws. If you get a call at 12 midnight that Junior or Suzy was injured in an accident away from home or at college, you cannot get any medical information or status unless you have a valid power of attorney for health care with proper HIPAA disclosures. Actually, that goes for anyone, even a spouse. If you have an old power of attorney it may not be valid if it does not contain HIPAA authorizations. When we explain these situations to clients, the response often is, “You’ve got to be kidding!” No we aren’t. Loose ends.

What else do you know that you have to do that you have not accomplished? What did you resolve with New Year’s resolutions, as yet undone? More than half of 2016 is behind us already. Tax planning? Don’t wait until December!

“To-do’s” not yet funded? Money in accounts earning puny interest? Old 401(K)’s or other accounts that are underperforming? Items on your bucket list that still are in the “someday” category? A circle that needs to be closed with a family member, other loved one, friend? Discipleship resolutions that are languishing? Mid-course corrections that need to be made?

Sand slips through the hourglass faster than we realize. Sailors know that loose ends can sink a ship. What needs to be done?

Lewis Walker is a financial planning and investment strategist at Capital Insight Group; 770-441-2603. Securities and advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative and investment adviser representative of SFA which is otherwise unaffiliated with Capital Insight Group.