Monthly Archives: February 2017

Financial Fact: So You Have a Living Will, But Do You Have a Power of Attorney Document?

Published: February 2017

What if you become incapacitated due to unforeseeable circumstances, who will make financial and medical decisions for you? 

Would you leave it up for the judge to make the decisions?

 

Having power of attorney (POA) documents in place can be just as important to an estate plan as having a living will, and in some cases even more vital.

 

The medical power of attorney and durable power of attorney are very simple documents that can save your family time, money, and emotional stress in the event that you become incapacitated. These documents will allow loved ones of your choosing to make your medical and financial decisions, and ensure that your day-to-day affairs can be taken care of with ease.  While a living will lets everyone know what your wishes are after death, a POA empowers an individual of your choice to assist you with your medical and financial affairs when you are no longer capable.

 

To illustrate this, let’s examine what would happen if you were to have a stroke and live. Even though you survived the stroke, the damage done causes you to become incapacitated and disables you from making financial and medical decisions for yourself. What happens now? If you have a medical and durable POA, then your spouse or whomever you elected to serve as your power of attorney can make medical decisions, discuss your treatment plan with doctors, pay your bills, transfer money from your savings account to your checking account to cover medical costs and many more decisions. They can ensure that all of your financial and medical affairs will be taken care of without any issues.

 

You may read this and think that the state law will cover any issue you may encounter if you become incapacitated and don’t have a medical POA. However, there are many reasons why leaving your medical decisions up to the state law may not be a good choice. Consider the following situations: 

 

1) What if your spouse dies before you?                                                                                          
2) What if your children cannot agree on a treatment plan?
3) What if your spouse becomes incapacitated as well and you have minor children?
4) What if your parents die before you?                        

 

What happens if you do not have these documents in place? For medical decisions, Texas state law dictates who has the power to make decisions for you. According to Section 313.004 of the law, the following people, in this order, are able to make medical decisions on your behalf:

 

1) Your spouse;
2) An adult child of the patient who has the waiver and consent of all other qualified adult children of the patient to act as the sole decision-maker;
3) A majority of the patient’s reasonably available adult children;
4) The patient’s parents; or
5) The individual clearly identified to act for the patient by the patient before the patient became incapacitated, the patient’s nearest living relative, or a member of the clergy.

 

There are many different scenarios where leaving your medical decisions to follow the Texas state law predefined order is not the best course of action. For financial decisions, there is no pre-determined order of people who are able to act on behalf of an incapacitated person. If a durable POA is not in place, then a court will appoint a legal guardian who will have the power to handle these matters. This can be a very time-consuming and costly process for your family. In addition, the court may appoint someone that you do not want handling your financial affairs.

 

In Texas, the POA documents are standardized and available online. While we recommend that you consult an attorney to review your overall estate plan, taking the time to execute these simple documents can save your loved one’s time, money, and emotional stress in the future.

 

Willis Johnson & Associates nor its investment advisor representatives do not offer tax or legal advice. For assistance with these matters, please seek your own legal counsel.
Source: http://codes.findlaw.com/tx/health-and-safety-code/health-safety-sect-313-004.html

What Nick’s Reading | 3 Must-Read Market Outlooks

Published February 13, 2017

Forecast for the Market Ahead and What’s in Store for 2017’s Economy

 

Many clients are asking me about our outlook for this year. Willis Johnson, President and CEO of Willis Johnson & Associates, recently released an insightful podcast in which he provides a recap of 2016 and our viewpoints for the year ahead. If you haven’t had a chance to listen to it, you can click here to listen to it now.

Oftentimes, clients will ask me how we develop our viewpoints or what material we are reading. However, clients don’t know how to separate the wheat from the chaff when they are bombarded with financial reading material, blogs, and opinions. In today’s post, I want to share my three favorite Market Outlooks for 2017. I’ll break down what I like about them and what to take with a grain of salt. Enjoy!

 

Outlook for 2017: Fade or Follow by Jurrien Timmer of Fidelity Investments

 

“’Fade or follow’ refers to whether one should let go of (sell into) the post-election rally, or continue to participate in it. ‘Fading’ (in the trading jargon) means taking the other side of the move. So, investors must decide whether to ‘fade’ the post-election’s upward moves in equities, interest rates, and the dollar, or to ‘follow’ the rally in hopes that it might continue.” says Jurrien Timmer, Director of Global Macro for the Global Asset Allocation Division of Fidelity Investments.

I’ve always thought of Timmer to have an impressive and analytical mind. When attending investment conferences, I find myself seeking out his presentations because I always walk away with a brand new perspective on our current economic situation. Not only does he understand the linkage between highly complex concepts that do not necessarily appear connected, but also breaks down these multifaceted notions so that they are simple and easy to understand. Likewise, his Outlook for 2017: Fade or Follow is a laid-back and enjoyable read. Timmer breaks down the trade-offs for whether investors should look for profit-taking opportunities as the markets rise (fade) or continue to bet on and participate in the post-election rally (follow).

Likes/Agreements:

  • There are less hard predictions and there is more focus on our current investment environment and risks.
  • “Despite potential valuation headwinds, I’m bullish on stocks based on where we are in the earning cycle…What does seem clear is that this will not be a ‘just close your eyes and buy’ market that we’ve seen in the past. It’s a more challenging and tactical environment in which there is still upside potential, but also more downside risks. To me, this kind of regime shift should be an ideal opportunity for active management.”

Dislike/Disagreement:

  • The outlook is primarily U.S.-focused and not very focused on global health or economy.

Favorite Quote:

  • “I’m struck by the trifecta of bullish magazine covers I’ve seen in the span of just two weeks. First, it was the “Mighty Dollar” cover of The Economist, then came Trump as Time Magazine’s Person of the Year, and now we have Barron’s boldly proclaiming Dow 20,000… In my experience, magazine covers can be contrarian indicators. In this case, they may suggest that sentiment is becoming a bit too exuberant.”

 

The Investment Outlook for 2017 by Dr. David Kelley of J.P. Morgan

J.P. Morgan’s Investment Outlook for 2017 is almost double the length of Fidelity’s. As such, Dr. David Kelley, Managing Director and Chief Global Strategist for J.P. Morgan Funds, dives much deeper into the economy in his outlook than Timmer. J.P. Morgan’s outlook is filled with statistics, predictions, sector outlooks, and a historical perspective; so this outlook contains much more breadth and depth. At the same time, the concepts are more complex; a certain level of knowledge of the markets and economics is assumed.  

Likes/Agreements:

  • Today’s economic situation is laid out in a historical perspective.
  • There are defined and strongly defended predictions, which include global and sector outlooks.
  • The charts and graphs break down technical concepts so that they are easier to visualize.

Dislike/Disagreement:

  • There is an overly large focus on emerging markets.

Favorite Quote:

  • “One risk is in the rise of an anti-trade populism across the developed world given Britain’s decision to pull out of the European Union and Donald Trump’s election as U. S. president on an anti-trade platform. While it is not clear, in either case, how trade arrangement may ultimately be altered, higher tariffs in general would hurt global economic growth and could boost inflation.”

 

2017 Q1 Market Know-How by Goldman Sachs Asset Management

Written by a team of managing directors, executive directors, vice presidents, and market strategists, the 2017 Market Know-How is the most technical piece by far. The analyst in me loves this particular whitepaper, but for most readers it can go way over their heads. Despite the majority of the material diving deep into the weeds, the team of seven makes a special effort to illustrate their points with summaries, charts, and graphs. Their viewpoints on U.S. valuation, alongside the social-political risks they see in the global markets this year, are quite interesting. If you have a strong investment and economic background, then I recommend reading this piece.

Likes/Agreements:

  • The discussion on monetary policy, expectations, and impacts on the market.
  • The expectation for global recession probability to remain relatively low.
  • An analysis of current valuations translating into projected returns.

Dislike/Disagreement:

  • The promotion of many products that Goldman provides, including low-volatile and beta-driven solutions.

Favorite Quote:

  • “We believe the macro backdrop remains supportive of moderately positive returns from risk assets, although both U.S. fiscal and trade policy have introduced new tail risks. We favor equity over credit, credit over sovereign debt, and emerging markets over developed markets.

 

 

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Past performance is not a guarantee of future results. This is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities. This presentation may contain forward-looking statements and projections. There are no guarantees that these results will be achieved. It is our goal to help investors by identifying changing market conditions; however, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the economy or the stock market.

 


nick

Nick Johnson, CFA®, CFP®

 

Nick Johnson believes that financial planning is more than numbers on a balance sheet and a standardized process. People are unique and should be treated as such.

 

As Vice President and a Wealth Manager at Willis Johnson & Associates, his goal is to really get to know his clients, all the while providing a proactive approach to comprehensive wealth management. 

 


 

 

The Markets (as of market close January 31, 2017)

Market Update 2016Investors were cautious for much of the month, likely waiting to see what President Trump would do during his first few weeks in office. After a slow close to December, equities picked up the pace during the early part of January as each of the indexes listed in the Full Update closed the first full week of the month posting gains of nearly 1.0% or more. The market moved very little for much of the month until January 25, when stocks surged. The Dow reached the magic 20000 for the first time while both the S&P 500 and Nasdaq reached all-time highs. The stock market rally proved to be short-lived, however, as investors pulled back from stocks and moved to gold and long-term bonds. Nevertheless, each of the indexes listed posted month-over-month gains, led by the Nasdaq, which closed the first month of 2017 over 4.0% ahead of its 2016 year-end value.

Despite OPEC’s agreement to cut production, oil prices have remained in the low $50s per barrel for the month, reaching a high of $54.87 early in January and a low of $51.70 a few days later. But by the close of trading on January 31, the price of crude oil (WTI) was $52.80 per barrel. The national average retail regular gasoline price was $2.296 per gallon on January 30, up from the December 26 selling price of $2.254. The price of gold climbed at the end of January, closing at $1,212.50 on the last day of the month, up from its December 30 price of $1,154.30.

Click for the Full Update

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