Wealth Management Strategies, Inc.®

View Original

How to Be Wise

I challenge you to find a month of May when there’s been a graduation speaker who neglected to praise the benefits of failure - when a mistake sparked an innovation at the speaker’s company or became the catalyst for his or her enormous success. I too am grateful for a selection of my failures and will likely value a few more, but on occasion, I would like to avoid failure and be what Roy H. Williams considers a, ‘Wise Man.’

In an August, 2008 Monday Morning Memo entitled The Magic Table, Williams cites a quote from John Young: “A smart man makes a mistake, learns from it, and never makes that mistake again. But a wise man finds a smart man and learns from him how to avoid that mistake all together.” Except for a lucky-few instances, smart people who preemptively stub out the poor decisions of others are not always in the right place, at the right time. Fortunately for you and your retirement account beneficiaries, that resource exists and that resource is us.

Hillman v. Maretta: A 2013 U.S. Supreme Court decision that set a new tone for retirement accounts. The case, while groundbreaking, established a relatively simple conclusion that the name listed as a retirement account’s beneficiary on the date of the account owner’s death is the recipient entitled to the funds in the account. Prior to this ruling, each state had a different interpretation of who receives retirement account funds, if the named beneficiary were to come into question. By December, 2013 however, those differing treatments were overruled by the U.S. Supreme Court, who declared that the person named as the beneficiary will be the beneficiary.

Sounds straightforward? Well, it’s not. Changes to your beneficiaries are most often compelled by marriage or divorce. (especially divorce) No matter the event, either delivers a host of emotions and tasks that notoriously cloud the otherwise glaring priority of tending to retirement accounts and not unjustly so. Beneficiary designations are typically addressed at the account’s opening and at the owner’s death, but the decades in between often come with a litany of changes.

To us, this is not a head-in-hands scenario, because you’re only human. Over the years, you may get married, you may get divorced, and you may have children. Like a dermatologist who can spot a worrisome mole from across the room, recognizing when action needs to be taken is often abundantly clear only to those who react to such life events on a regular basis. If wisdom comes from experience, why learn from a bad one? As stewards for your wealth, our role is to take on the responsibility of ushering you and your family through the fog of life’s events.