October 2002 Newsletter

Quality of Life

At Silver Oak, we consider one of the main goals of financial planning to be achieving and preserving a client's quality of life. Many goals come under that broad heading: educating children; insuring against catastrophes; working less or changing careers; and of course retirement.

For many clients older than 50, quality of life issues often include a period of reflection when one asks, "Is there more to it than this?" Bob Buford, author of the book Half Time: Changing Your Game Plan from Success to Significance, notes that "significance" reflects a vision of a legacy during lifetime and after death where character counts and net worth means nothing. Clients may wish to fund trusts, endow causes, create foundations — in some way, to leave a legacy of core values.

Another aspect of quality of life impacts our older clients. I recently attended a presentation by Wes Fitzwalter, an attorney with Fitzwalter & Meyer in Portland. His topic was "Planning for Elders Approaching Incapacity and People with Disabilities." Not something many of us enjoy thinking about, but definitely important for life planning.

Many people have set up living trusts for their financial assets, and appointed a successor trustee that can handle matters if they can't do it for themselves. Most of these documents have language that authorizes the successor trustee to pay bills, manage property, and the like. Usually the income from the trust goes to the parent or parents and children are named as beneficiaries of any principal that is left after the parents die. Sometimes a trustee can be faced with a difficult choice of spending principal from the trust during the lifetime of the parents, thus depleting any inheritance for the children.

Wes spoke of the need to include specific language in trust documents dealing with quality of life issues after incapacity. For example, clearly stating that the primary purpose of the trust is to provide the parent(s) with the highest possible quality of life, and instructing the trustee to be liberal in making distributions of income or principal to accomplish that purpose.

Other provisions that Wes's firm can include in their trust documents at the client's request:

Including language such as this accomplishes several goals. The successor trustee is given permission to do all things possible to preserve and improve the person's quality of life, and not be in conflict with the remainder beneficiaries. With specifics about monitoring care, recreation and companionship, the parent is less likely to be neglected. Preparing this list of quality of life instructions may also reassure the older generation that life after incapacity will not be bleak and lonely.

You may want to review your living trust document with your attorney and consider including quality of life provisions for yourself and your spouse.

Investment Boot Camp

The next workshops have been scheduled as follows:

Saturday, Nov. 2, 2002, 9:30 - 11:30 am - This workshop is currently full, but we have started a waiting list and are also looking for a larger space to accommodate more people.
Wednesday, Jan. 8, 2003 3:30 -5:30 pm

Please contact Mary Barr to reserve your space(s).

Recommended Reading

There is a fascinating article in Money's October 2002 issue by Jason Zweig called "Are You Wired for Wealth?" Zweig reports on the neuroscience of investing -- the way the brain itself works on the cellular, electrical and chemical levels -- that impact our decisions and emotions about investing. He writes:

"‘Our modern skulls house a Stone Age mind,' evolutionary psychologists Leda Cosmides and John Tooby have written. The human brain is a superb machine...when it comes to solving ancient problems like recognizing short-term trends or generating emotional responses with lightning speed. But it's not so good at discerning long-term patterns or focusing on many factors at once — challenges that our early ancestors rarely faced but that we investors confront every day."

The article concludes with practical applications of the research; now that we know "it's impossible to change how your brain works, you must learn to make the most of its strengths and limitations alike. Whenever possible, you need to develop automated, irreversible investing habits that are tailor-made for neutralizing your brain's worst liabilities while optimizing its greatest assets."

We would only add one more suggestion: working with a financial advisor can help protect you from your brain's wiring, if they provide a level of discipline and non-emotional perspective to the investment process.

Honor Roll

We are pleased to honor Paul Braghero, who is beginning his 9th year with Silver Oak. Paul recently passed his Series 65 investment exam and has been added to our SEC registration.

Also celebrating an anniversary this month is Steve Hewitt, who has been with Silver Oak for six years.

Silver Oak would not be able to provide its high level of service to clients and colleagues without these key individuals. Thanks, guys!

"Regret is asymmetric. It is more painful to suffer the consequences of your actions than your inactions."

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