Don’t Make These Errors With Your Estate Plan

Estate planning is a financial topic that many individuals oftentimes overlook; however, it is one of the most important components of a solid financial plan. We know that estate planning is not the most joyful conversation topic and it is typically avoided due to its morbidity, but if you are reading this, we want you to take this opportunity to revisit your estate plan and avoid these common mistakes. 

The most common mistake you can make around estate planning and your will, is NOT having one. Everyone knows they should have a will, but many either think they are too young for it to make sense or think they do not have enough assets to need one. However, this misconception has been proved wrong time and time again. In fact, we recorded a podcast episode with Head of Trusts and Estates Practice, Adam Moskowitz on why it’s never too early to establish a will, medical directive, and power of attorney. Many also believe that they only need a will, and forget about their power of attorney and medical directive, that plays a crucial role in your wishes should anything happen to you. 

Another common mistake we see is not updating your will as your life becomes more complicated. Whether it’s a new house, more children, marriage, or complexities within your familial situation, updating your will as your life becomes more complex is extremely important. Making regular updates to not only your will, but also the beneficiaries on your retirement and other investment accounts is a great way to make sure you remain protected as your life goes on. Make sure that when you make changes to your will or living trust, that you are reflecting and updating those changes on your beneficiary designations as well. 

Depending on your financial and life situation, creating a will, medical directive, and power of attorney can include many moving parts, which is why we encourage you to at least speak with a professional who can help guide you through it or in the right direction. Another common error many individuals make when it comes to their will is losing their original copy, so make sure you are holding onto your original copy somewhere safe. 

As you can tell from above, drafting a will, medical directive and power of attorney is a crucial player in your financial plan. Not only do you want to protect yourself should anything happen to you, but you also want to think about your heirs and make sure that they are taken care of as you wish. If you have any questions for us regarding your need for a new or updated estate plan, let us know and we are happy to set up a conversation to head you in the right direction. If you have any questions, email us at

Here Are Some Signs To Re-Visit Your Estate Plan

We know that thinking about estate planning can be daunting and is not the most exciting conversation to have with your spouse; however, it’s extremely important. As we’ve been talking about discussing money with your spouse, estate planning conversations are a great one to throw in the mix. So, what are some triggers that should facilitate you and your partner updating your will or trust? Here are a few key factors to look out for when deciding whether or not to update your will or trust. 

Changes in marital status, health status, tax code, and having children might be obvious reasons for revisiting your will, but keep in mind that you can update your will at any time, and not solely due to one of these triggers. You may want to change the beneficiaries of your trust, alter the designated guardian of your children and powers of attorney, or just make sure you are protected in accordance with the laws of your particular state. Even though these decisions are quite tough to make on the surface, working with an estate and trusts attorney will make this process much more seamless. 

Another factor that is oftentimes overlooked is forgetting to update your will when your bank is bought by or sold to another firm. If you had chosen a bank to be your executor, and the bank was sold, you may have a new executor that you are not familiar or comfortable with. It is crucial to stay on top of who is in charge of your financial choices in the event you and your partner are unable to do so yourselves. Another trigger is a change in your family situation. As life goes on, circumstances change and someone who was once fit to make these decisions may no longer be the right choice. Remember, open communication is key and will help make these changes and updates operate smoothly. 

If you need to get started on your estate planning or even just want to make sure you are on the right track, check out our estate planning checklist that will guide you in getting started. Digitizing your financial life and some of these tasks will help you stay on top of your estate planning and financial plan. We recently recorded a podcast episode with Head of Trusts and Estates Practice at BBS&G, Adam Moskowitz, as he shared the ins and outs of estate planning and how it is NOT just for the “wealthy”. If you have any further questions or would like to be connected with someone to help you and your family work through this process, email us at as we are happy to help and get you to the right place. If you would like to schedule a complimentary 30-minute intro call, you can do so here

Get Started On Your Estate Planning Checklist

We’ve seen and learned a lot over the past year and living thru a pandemic. One action taken out of the pandemic has been estate planning and writing wills. Most of us might not think we have enough money to be eligible and qualified to have an estate plan.

According to a 2020 survey by online legal documents company LegalZoom, “Thirty-two percent of the adults under 35 who wrote a will said it was because of the Covid-19 pandemic.” While many think they don’t have “enough” assets or are too young for a will, keep in mind that medical directives and powers of attorneys are great to have in place from a young age. Just know that it’s never too early to plan to protect your assets and estate. Your estate plan will help clarify your wishes for after your death and simplify an already difficult time.

While these decisions are often-times difficult and not always top-of-mind, we have created a checklist that will help simplify the process for you. In addition, we have recently recorded a podcast episode with Head of Trusts and Estates Practice at BBS&G, Adam Moskowitz. Click here to check it out. 

  1. Last Will and Testament 

A last will and testament is a legal document that states one’s wishes as to how their assets and property is to be distributed after their death and as to which person is to assume and manage those responsibilities.

  1. Powers of Attorney

Choosing your powers of attorney is a crucial part of estate planning, as you are deciding who will be handling your affairs for if and when you become incapacitated. For example, if you are no longer able to handle your assets, you can designate that role to someone else for them to act on your behalf.

  1. Advance Directive 

An Advance Directive or a Living Will, is a document that allows you to chose the more medical related decisions for once you are incapacitated. By establishing this, whoever you chose will know how to respond to your doctors based on your health care wishes. 

These are just a few documents and matters you should be familiar with as you start thinking about estate planning. To explore all of the estate planning documents you will need in your specific situation, we recommend contacting an estate planning attorney or professional to assist you. Estate planning is not something you should take lightly; it takes thoughtful consideration about who will respectfully live out your wishes once you are gone. If you have any questions about how to make these decisions for your future, email us at and we are happy to discuss your options with you. 



What’s Ahead For Your Taxes If Biden Takes The Presidency

With the election around the corner and recent news of Joe Biden’s running mate, Kamala Harris, we wanted to take a look at his proposed tax plan and what impact it may have on the finances and current tax plans of Americans.

As Biden accepts his party’s nomination for president this week at the Democratic National Convention, high-income earners are beginning to wonder if it’s time to revisit their tax plans. Indeed, taxpayers with taxable income over $400,000 could see their individual income taxes tick up under a Biden presidency. The former vice president has also called for raising taxes on wealth transfer.

Below we will outline Biden’s proposed tax plan, which CNBC has sliced into two categories, income taxes and estate planning. 

Income Tax 

On the income tax side, Biden calls for raising the top individual income tax rate to 39.6% from 37%, and applying it to taxpayers with taxable income over $400,000, according to an analysis from the Tax Policy Center.

He’s also talking about an increase to payroll taxes. Biden would apply the 12.4% portion of the Social Security tax — which is normally shared by both the employee and employer — to earnings over $400,000, the Tax Policy Center found. Currently, the Social Security tax is subject to a wage cap of $137,700 and is adjusted annually.

Finally, Biden would also boost rates on long-term capital gains and qualified dividends to 39.6% — the same top rate as ordinary income — for those with income over $1 million, according to theTax Foundation.  The long-term capital gains tax rate in 2020 is 20% for single households with more than $441,451 in taxable income ($496,601 for married-filing-jointly).

Estate Planning 

Last month, the Democratic presidential contender collaborated with Sen. Bernie Sanders, I-Vt., and the two formed six task forces to release a 110-page policy document. The document gives some insight on what we might expect from a Biden administration. “Estate taxes should also be raised back to the historical norm,” the task force wrote in the policy plan.         

Indeed, the Tax Cuts and Jobs Act roughly doubled the amount that you can transfer to other people — either at death or as a gift during life — without facing the 40% estate and gift tax. The gift-and-estate tax exemption is $11.58 million per individual in 2020.

Biden has set his sights on the “step-up in basis,” a provision in the tax code that allows an individual to hold onto an asset for years, watch it appreciate and then bequeath it to an heir at death. The owner’s basis — the original investment in the asset — steps up to market value at death, which means the heir is subject to little to no capital gains taxes if he sells it. Biden proposes taxing the unrealized capital gains in the asset at death, which essentially does away with the step-up. Wealthy households are likely to use gifting strategies to head off this change, said Bertles of Tiedemann Advisors. “This can be as simple as giving assets to a trust or outright to kids or grandkids while using the exemption,” he said.

Make sure to take a look at Biden’s proposal and think about how that may impact your situation. In just a few short months, this plan could be put into effect, so start thinking about any changes you could make to your tax plan and talk to an advisor for some guidance. As always, we are here to help if you have any questions regarding what these changes could mean for you. 


You’re Running out of Time to Reverse this Retirement Withdrawal and Save on Taxes

Required Minimum Distributions (RMDs) are the annual withdrawals you must take from your individual retirement account and 401(k) plans after you reach age 72 (or age 70 ½ if you turned 70 ½ prior to January 1, 2020).  The CARES Act, the coronavirus relief act that took effect this spring, allowed retirement account holders to bypass required minimum distributions for 2020. Those that inherited IRAs are also allowed to skip the RMD this year.  (

For those of you who have taken a Required Minimum Distribution (RMD) from your retirement savings at some point in the year, the clock is ticking for you to put that money back. If you already took the money out, you have until August 31st to put it back.  However, you shouldn’t wait much longer than August 20th, as there are several steps and contacts involved in the process. In order to avoid any errors in the transaction, it is advised to return any RMD funds as soon as possible. It’s important to note that this RMD waiver only qualifies for 2020, meaning next year you’ll be required to take your distribution as per usual. 

RMDs from traditional IRAs and 401(k) plans are subject to income taxes, so waiving the distribution or returning the funds could help you save on levies. But, make sure to give back the income taxes your custodian may have withheld, not just the net amount you may have received.

In other cases, some retirees opt to split their annual RMDs into 12 monthly disbursements, which means they have to return their monthly RMDs. In this scenario, you may have taken multiple distributions over the course of the year. Therefore, you’ll have to contact your custodian and have them hold the payments for the remainder of the year. You are allowed to replace the payments you have already received, too, but just ensure you cover the taxes withheld and act quickly.

Lastly, since the tax rules changed so rapidly this spring amid the coronavirus pandemic, savers should ensure that their custodians are marking the transaction as a “return of funds” and not a “contribution”, where you’d essentially be getting additionally taxed. 

Make sure to talk with your custodian to see if you are squared away and eligible to return your mandatory distribution for the year. If you have any questions or concerns about your RMDs, please reach out to us at and we’d be happy to assist you in any way. 

Ways To Build Wealth And Boost Your Savings While You’re Stuck At Home

We’re all spending more time at home these days and it’s likely that money and finances are a stress for many during this pandemic. As the markets continue to be extra volatile,  many people are feeling a lack of control when it comes to their money.  Even though there isn’t much we can do about the state of the overall economy, there are some small-scale things you can do right now, from the comfort of your own home, to help you feel more in control of your finances. If it is all you can do right now to keep up with your bills, that should continue to be your main priority.  However, if you’re in the fortunate position of having an income or some extra cash, the following tasks take 30 minutes or less and might just have you feeling a little better about the state of your finances.




Every solid financial plan starts with a good budget, and now is a great time to go over yours. You should review your spending habits and try to determine which areas of your spending are relatively fixed — such as monthly rent and insurance coverage — and those that are discretionary, like your lattes, subscriptions and eating out. 

Since you’ll likely be spending a lot of time at home this month, most of your convenience purchases will probably trail off. Comparing last month’s expenditures to this month, you will see where you are spending your money and you will be better positioned to make changes to your spending habits in order to prioritize saving money and spending on what you deem essential for your household.




Write down all the things that you want to do in your future – you can do this by yourself or with a significant other. Break it down into five-year segments. What do you want to do, where do you want to go, and what do you want to accomplish during each five-year segment? If you have career goals that include starting a business, making more money, or changing your job, you might need to learn some new skills to start down that path. 

Being confined to our home offices gives us a great opportunity to focus on learning something new and developing plans for the next steps in life, whether it is signing up for an online class or doing some research on what it might take to take your career in another direction.




If you’ve been considering a college savings plan for your child, setting one up online is quick and easy. You should start by reviewing the 529 plan options where you live, since they often provide tax benefits while you save for your child’s college education. Just remember to keep your own future financial goals in mind, as well. Saving for your children’s education is very important, but should come second to saving for your own retirement.




You should make a list of your financial accounts that include beneficiary designations —  like your IRA, 401(k), or life insurance — and make any necessary beneficiary information adjustments. Since these designations determine who will receive your account upon your passing, if they are left blank or not updated, your wishes could be ignored and assets could go to an ex-spouse, or state law could become applicable and decide how to split your accounts.




Now is the perfect time to set up a separate online high-yield savings account for your specific goals, whether it be for a vacation, saving for the holidays or possibly a new car. To make things even easier, you can also set up a direct deposit so that you put a little bit away from each paycheck towards that objective. However, remember that these “extras” should take a backseat to your emergency fund.  Having three to six months of expenses set aside in a money market or high-yield savings account can provide peace of mind and can be a lifesaver in times of temporary job loss or medical costs.




Now might be a good time to do some overall bookkeeping.  This can include reviewing your insurance policies to see if you still have sufficient coverage for your needs, or working on your estate plan (are your medical directives all updated?).  If your kids are old enough, this could even be a good opportunity to teach them how to balance a checkbook by showing them how you do yours.



If you have money in the market that’s earmarked for retirement, you might be a little worried about how current events will impact your goals. Now is a good time to have a call with your financial planner to determine if your portfolio is still meeting your long-term goals, or if it needs to be adjusted based on current events. 


Even though we may not have expected to be spending this much time in our homes over the past few months, it’s important to take advantage of the time while we can.  These unprecedented times have given us the opportunity to slow down and focus on our families, as well as other important aspects of our lives like our finances.  Taking just a half hour each day or week to go over these tasks can help us to feel more in control and less stressed about our money as we deal with the uncertainty of the times.  As always, if you have any questions about any of the suggestions above or any other concerns about your finances, please contact us.  We are here to help and we are all in this together!

Your Next-to-the-Last Will and Testament: Estate Planning When You’re Young

There was an excellent article in the WSJ last week about a topic most of us don’t really want to think about (but really need to:) how to prepare in case you die young.

No one likes to think about dying and absolutely no one likes to think about the possibility of dying young. Lately it’s hit home for me, though, because two of my high school friends were diagnosed with cancer over the last year. Both are in remission now, thankfully, but it brings home the fact that it never hurts to be prepared.

The bottom line is: if you’re old enough to be filing your taxes this month, you’re old enough to take basic steps to create basic estate documents. And yes, things will evolve and there will be adjustments to make over your – hopefully – long and prosperous life. But it’s never too early to get started.

  • The single most important thing we all need is a will and/or account beneficiaries, so that it’s clear where you want your assets to go. Statistics show that not only do most young people not have a will, but that most young parents who do have wills haven’t updated them when they had a second or third child. At the very least make sure you’ve named beneficiaries for all your bank and investment accounts (also known as TOD or  “transfer on death” provisions), to prevent having the courts probate and decide how to transfer your assets. If you need help we can connect you with our excellent network of Washington area professionals who can advise you about making the best choices for you and your loved ones.
  • If you have kids, naming guardians for them is critical, to protect them should the unthinkable happen.
  • And don’t forget yourself! My mother just had knee replacement surgery about two weeks ago and, just before she did, she handed me her advanced medical directive. I was grateful she did (she’s fine!) and your loved ones will be grateful to know what your preferences are if they ever need to make decisions for you. In addition to a life insurance policy, don’t forget disability insurance in case for some reason you can’t work. I’ve never had to use the policy I took out in my 20s but I’m glad it’s there.
  • And finally, why not create a notebook or file where all your important documents are handy? It’s a great habit to get into when you’re young. Or you could gather your documents in a tool like the online document vault our clients have access to. So take a moment and get organized – most likely you wont need it for a long time but you’ll have created a great habit for yourself.

April is a great time for an overall financial check-up: you have all your tax documents organized, which means it will be that much easier to get these important personal documents organized as well. April is also Financial Literacy Month so, as always, call us if you have questions or for a free consultation and financial check-up.

6 Questions to Ask A Financial Advisor

6 Questions for Financial Advisor

Finding a financial advisor who is right for you is an important process. A good financial advisor is there to prevent you from making decisions that would have a negative, unintended impact on you. Who wouldn’t love to have a financial coach to keep you on track to achieve your financial goals?

Just like with any working relationship, it’s a good idea to interview advisors until you find the one who is the best fit for you, your life, and your financial goals. Since you are entrusting your financial well-being to someone, you should get to know them and their financial planning and investing philosophy before committing to a long-term relationship.

As you may have heard the Department of Labor (DOL) has just released its new fiduciary rule in its final form. We previously wrote about the reasons why someone would oppose this rule considering it was created to improve financial transparency and eliminate conflicted advice from advisors. While this rule would still allow advisors to keep their “conflicted” commissions in some instances, it would require advisors to act as fiduciaries (a.k.a. “best interests contract”) when handling client’s retirement accounts.

We have long been proponents of more transparency and conflict-free advice and feel this is a step in the right direction.

So how does this affect your search for the right financial advisor? Here are 6 questions to ask to help with finding a financial advisor.

1. Are You a Fiduciary? (Are You ALWAYS a Fiduciary?)

As we mentioned earlier, this new rule will only require financial advisors to act as a fiduciary for client’s retirement accounts. A fiduciary is regulated by federal law and must adhere to strict standards. They must act in the client’s best interest, in good faith, and they must provide full disclosure regarding fees, compensation, and any current or potential conflicts of interest.

Until now, broker-dealers, insurance salesman, bank and financial company representatives, and others were only required to follow a Suitability Standard. That means they only had to provide recommendations that are “suitable” for a client – based on age or aversion to risk for example – but this may or may not be in that client’s best interest.

The brokerage industry, as you can probably imagine, and all those who earn their compensation from commissions are strongly against these new rules.

Even with this new law passed, we feel it is important to make sure your advisor is acting as a fiduciary when dealing with ANY of your finances, not just retirement accounts.


2. What is Your Fee Structure? (Difference Between Fee-Only, Fee-Based and Commission)

Advisors throw out terms like “fee-based” and consumers assume that is the same as
“fee-only.” That is not the case. At Sherman Wealth Management, we are fee-only which means that we are paid exclusively by our clients, so we are completely conflict-free. We do not get commissions from the investments or products we recommend. We do not get bonuses based on how many clients we get to invest in company products. We are paid an hourly or quarterly fee by our clients who retain us because we are making their money work for them with only their best interest in mind.

Think of it this way: would you want to work with an accountant who also gets commissions from the IRS? Of course not. You want your accountant to represent your best interests. Would you go to a doctor who makes money each time he prescribes penicillin? No, you want your doctor to prescribe what is right for you.

Do not assume that an advisor is following a fiduciary standard with their compensation now. The new rules will not be enforced until 2018. Ask your financial advisor to clearly specify their fees. With many layers of diversification that can be applied to your portfolio, you want to be aware of whether you are exposed to up-front charges, back-end fees, expense ratios, and/or whether a percentage of your returns will be deducted.


3. Why Are They Right for YOU?

A financial advisor should be able to tell you their strengths and what sets them apart. Some advisors will advise on investments while others specialize in comprehensive financial planning. While you may think all advisors are the same, and it certainly may seem like that on the surface, by now you should be seeing that is not the case.

Ask how involved they are with their client’s portfolios. Are they hands-on in their approach? How available are they for their clients’ needs?

For us, we enjoy serving a wide-range of clients, from young first-timers who are just getting started with investing and financial planning, to experienced savers, to high-net-worth investors who are well on their way to financial independence.

We strive to understand our clients wants and needs. We help our clients plan for the long term while simultaneously working to avoid short-term roadblocks. We do so by making it a point to SHOW you that you are not alone. We’re just like you, we’ve been there, and we know that financial planning can be an anxiety provoking activity for many. We use a fluid process to help set clear, realistic goals with an easy to understand roadmap of what you need to do to get there. We are right there with you every step of the way.

In today’s world you don’t just want a trusted advisor, you want instant access to your accounts and the progress you are making. That is why we offer some of the best in new financial services technology tools.

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The relationship with your financial advisor is an important one. You need to feel comfortable with whom you are working with.


4. What is Your Investment Philosophy?

Every financial advisor has a specific approach to planning and investing. Some advisors prefer trying to time the market and actively manage funds versus passive investments. Others may seek to gain high returns and make riskier investments. Your goals and risk tolerance need to align with the advisor’s philosophy.

When anyone invests money, they are doing so with the hopes of growing it faster than inflation. While some traditional investment managers not only want to generate a profitable return, they aim to beat the market by taking advantage of pricing discrepancies and attempting to time the market and predict the future. Some investment companies offer “one-size-fits-all” investment management solutions that only take into account your age and income.

We have a different approach. We believe an individuals best chance at building wealth through the capital markets is to avoid common behavioral biases in the beginning and utilize a well thought out, disciplined, and long-term approach to investing. We create a well diversified, customized portfolio that focuses on tax efficiency, cost effectiveness, and risk management. Read more about how we do this.

Make it a top priority to understand the strategy your advisor uses and that you are comfortable with it.


5. How Personalized Are Your Recommendations for Your Clients?

It is important that your financial advisor tailors your financial plan to your specific goals. Your retirement plan and investment strategy should be customized to take into account your risk tolerance, age, income, net-worth, and other factors specific to your situation. There should not be a one-size-fits-all approach to managing your money.

Some traditional brokers and insurance companies are so big that it becomes impossible for them to give you a truly individualized experience. They have a corporate agenda that they must follow and it can restrict the service they provide to you.

As frustrating as the requirement for a high minimum balance is for first-time investors, it has also inspired a new breed of smaller independent Registered Investment Advisors (RIAs), like Sherman Wealth Management. What our clients all have in common is that they appreciate the focus on their own individual goals and best interests that we guarantee as a boutique, independent, fee-only fiduciary.

We know that each client is unique.  We don’t look for “market efficiencies” or work for sales commissions on the products we recommend. Our focus is different. We strive to help investors build a strong foundation and grow with them, not by profiting off good or bad trades. This gives us the opportunity to create individual strategies and plans that are uniquely suited to each client, not just a cookie-cutter plan based on age, income, or broadly assessed risk tolerance.


6. Do You Have Any Asset or Revenue Minimums?

Some have argued that the proposed DOL rule will end up hurting the small investor because larger institutions will not be willing to serve small accounts. This logic is fundamentally backward and flawed, as those clients were never on their radar to begin with. In fact, the ability for these large institutions to generate commissions and thus charge more to these small investor clients have driven that business, without regard to the best interests of the individual investor.

For example, In a company statement quoted by Janet Levaux in Think Advisor, Wells Fargo, the most valuable financial institution in the world according to the Wall Street Journal, said that in 2016, “bonuses will be awarded to FAs with 75% of their client households at $250,000.”

Wells Fargo isn’t the only large institution effectively ignoring Millennials and other smaller and entry-level clients. Most of the corporate institutions prefer high-net-worth clients because it creates “efficiencies of scale” and a higher profit margin on larger trades.

The complaints against the new DOL rule have nothing to do with protecting the little guy. Rather, the complaints are driven by the desire of commission-based large institutions, insurance companies, and broker-dealers who are trying to protect their ability to generate commissions and charge clients unnecessary fees.

Make sure you understand your advisor’s motivations. If they don’t want you, why should you want them?


The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
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