6 Questions You Should Ask Your Financial Adviser in 2021

By: Vivaldi Wealth Advisers Brian Quinn & Ilya Zlotnik

The beginning of a new year is the perfect time to re-evaluate your financial situation. You should review your financial plan and make sure it’s in line with your goals and expectations. With all the change in 2020, this year it is particularly important to meet with your financial adviser and consider how you may want to change your investment strategy, charitable giving and even update your final estate documents.

1. Why is the CARES ACT particularly important this year?

On December 27, 2020, a new stimulus bill was passed and signed into law to ease the dramatic impact of COVID-19. This new bill extends charitable tax incentives that were enacted through the CARES Act of March 2020.

If you are itemizing deductions on your tax return, the adjusted gross income (AGI) limit for cash contributions to qualifying public charities remains increased for individual donors. For cash contributions made in 2021, you can elect to deduct up to 100 percent of your AGI (it was previously 60 percent prior to the CARES Act).

2. How does the 2017 Tax Reform impact my family?

The 2017 Tax Reform allows families to increase the amount of lifetime giving. A calculation can be performed by your CPA based on the amount you’ve gifted in the past and what you can gift moving forward. Every person and family is unique. While you don’t need to start gifting right away (current legislation is scheduled to sunset in 2025), this is something you should start discussing with your CPA.  One Vivaldi client who had already gifted $10M discovered they could gift an additional $1M with the new tax code provisions! Reviewing your estate plans and gifting now can be quite advantageous to unlocking further wealth protection for future beneficiaries.

As an added bonus, 2021 is the last year you have the ability to shelter capital gains when you invest those gains into a Qualified Opportunity Zone. For example, if you sell a valuable asset, you owe taxes on that gain. Instead of writing a check to the government, you can keep the money and invest it. If you do it right, the taxes owed will be deferred for up to seven years and you may not have to pay taxes on the growth from those invested funds! Staying on top of tax code changes can enhance your lifetime of work, your savings and your investment plan.

3. What should I do every year to make sure I’m prepared for the future?

Every year you should review the beneficiaries that are attached to your accounts. All too often trusts are created and forgotten. But life changes every year. People get married. People have babies. We lose loved ones. 2020 was a particularly tumultuous year and things have changed for a lot of people. Now is an ideal time to review the named beneficiaries for all of your accounts. Confirm how your trusts will distribute assets. Ensure that everything is up to date and follows your wishes, no matter what may come.

4. What else can I do to prepare for the future?

It’s critical to create and regularly review your Final Estate documents with an estate planning attorney to make sure they still reflect your desires and wishes. To begin, you need a basic living trust as a bare minimum. A will is contestable in a court of law. If someone passes and parts of the estate are unidentified, the court will determine what happens with those assets. A trust is a legal document that generally can’t be contested in court. Inside the trust you need a successor trustee. This person will distribute your assets after you pass. It’s a big decision because it can be a burden, so choose someone who is capable of carrying out your wishes.

You also need a Power of Attorney (POA) in place so loved ones can make medical and financial decisions for you if necessary. If you already have a POA, double check that it still names the right person. It’s important that your POA lists someone who is present and capable to help you. Make sure your Medical Directives are updated so it’s clear how you want to handle resuscitation, life support and important end of life decisions.

Another important part of your Final Estate documents is a document check list. This one-page document will help guide loved ones to find things they might not intuitively find. This includes where to find keys, titles, trust documents, important contact information, etc. This document should be stored in a safety deposit box at the bank or in a home safe.

5. Should I consider adjusting my portfolio in 2021?

The past year has been a whirlwind of events with a major impact on the economy and markets. Equity markets are at all-time highs and interest rates are at all-time lows. Now is the time to review your portfolio to ensure it’s in line with your goals and objectives. Is your asset allocation still appropriate based on the environment? Or should you make adjustments to take advantage of current opportunities and/or mitigate risk?

6. Is my financial house in order?

Finally, the beginning of the year is a great time to get your financial house in order. Using planning technology, your adviser can help you keep track of your accounts and net worth on a real time basis. Having this information available with the click of a button will help you and your financial adviser make the best decisions for your financial future. It will also relieve a lot of stress and guesswork when you have a clearer picture of where you are and where you are headed.

2020 has affected everyone differently but it has dramatically affected everyone. Be sure you contact your financial adviser as soon as possible to get started.

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The information provided here is general and educational in nature and should not be construed as legal or tax advice.  Vivaldi Capital Management, LP does not provide legal or tax advice. Content provided relates to taxation at the federal level only. Charitable deductions at the federal level are available only if you itemize deductions. Rules and regulations regarding tax deductions for charitable giving vary at the state level, and laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of the information provided. As a result, Vivaldi cannot guarantee that such information is accurate, complete, or timely. Tax laws and regulations are complex and subject to change, and changes in them may have a material impact on pre- and/or after-tax results. Vivaldi makes no warranties with regard to such information or results obtained by its use. Vivaldi disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.