Help safeguard your assets from a beneficiary's divorce

How a careful and intentional trust will help ensure your intentions are upheld.

Smart estate planning doesn’t just take into account what you’ll pass down to your heirs, but how you’ll do it. There are numerous ways to make the transfer, and some offer more protection than others. If one of your heirs gets divorced down the line, you don’t want to risk your wealth ending up in unintended hands.

One of the simplest ways to transfer your wealth to your family is by naming beneficiaries on your accounts. But even assets solely in your child or grandchild’s name might be up for debate in a divorce proceeding. At the very least, the asset can be used in consideration when determining alimony or child support.

Here are some ways you can help protect your estate from an heir’s divorce.

Wording is everything

First, enlist an estate planning attorney to advise you on the correct wording when it comes to trust documents. Be sure to express your concern about assets becoming vulnerable in the case of an heir’s divorce. The attorney should include language that helps protect your beneficiaries from an ex-spouse claiming entitlement to any of the inheritance.

Be painfully clear in trust documents by explicitly stating that nonbeneficiaries are not entitled to receive any assets from the trust even if they’re married to a beneficiary. Make your intentions specific to reduce the possibility they come into question during a divorce proceeding.

While trusts often use language that specifies absolute requirements for payments – in other words, conditions for the distribution of assets – they can become a conflict point in a divorce. If a court determines the distribution of assets was guaranteed, the court may consider dividing assets between the couple.

You may also want to think about indirect distribution of assets. You can allow the trust to make payments to third parties instead of distributing them directly to your beneficiary. Examples include declaring the trust will pay college tuition or fees, or for repaying your beneficiaries’ loans.

Think about structure

Some states are better for protecting assets in a divorce than others. Alaska, Nevada, South Dakota and Tennessee currently allow courts to shield assets in a trust from divorce claims, including alimony and child support. You should know the laws that govern your trust, which will depend on where it originated.

As the trust grantor, you have the power to decide what a trustee can do. It’s possible to expand the trustee’s powers to allow for specific changes to the trust if it becomes compromised by an heir’s divorce. This might include authorizing your trustee or successor trustees to remove a beneficiary completely if there’s an impending divorce, or move assets into a completely new trust for the divorcing beneficiary.

If you know exactly what you want to pass on to an heir who you’re concerned may get divorced, you can create an irrevocable trust for that express purpose. Unlike revocable trusts, the terms of an irrevocable trust cannot be changed. Once the trust is funded and the assets are transferred to the control of the trustee, it’s permanent. You could create a second trust that’s revocable for the purpose of transferring your other assets to other family members.

Most importantly, speak to your advisor about your heirs’ inheritance in the case of divorce. Consulting an estate attorney and even a divorce attorney in some instances may be helpful when creating or revisiting your estate planning documents. There are provisions that can be put in place to help ensure your wealth, family and intentions are protected.

Sources: blg.com; smartasset.com; schwab.com

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Raymond James Trust, N.A. is a subsidiary of Raymond James Financial, Inc. Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. are affiliated with Raymond James Trust.

Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Document shredding and food drive

Clean out your cabinets and drawers of those old documents and bring them to be safely shredded, on site, by the professionals of Shred it™ and enjoy some good food and live music!

When: May 11th

Where: Outside of the Merritt Island office 2395 N. Courtenay Parkway

Time: 11:00am-2:00pm

Please consider bringing a non-perishable food item for our Food Drive to benefit Harvest Time International

Please Donate:

Low sodium canned vegetables - Canned meats - Canned soups - Boxed oatmeal or grits - Canola or olive oil - Peanut butter - Nuts - No sugar added fruit cups - Canned beans - Granola/Protein bars - Pasta - Beans - Rice - Dry powdered milk

Questions please contact

Karin@crossleyshear.com or call 321-452-0061

Raymond James is not affiliated with Harvest Time International, Shred-it, or 4th Street Fillin Station.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

From the Desk of Dale Crossley and Evan Shear

I hope this newsletter finds you and your loved ones well. The markets were off to a strong start the first quarter of 2024. In fact, during the first quarter of 2024, the S&P 500 climbed an impressive 10.6%. As always, we’re watching some events that may or may not impact the markets during the rest of 2024 – recent geopolitical developments, federal monetary policy decisions, and of course, 2024 is an election year. That’s precisely why we develop long-term financial plans to ensure you have well-balanced portfolios designed to help mitigate losses during the inevitable ups and downs in the market.

Holding the line on interest rates

The Federal Reserve's recent decision to maintain interest rates can send some uncertainly throughout financial markets, often sparking a flurry of reactions from investors and institutions alike. With the Feds continuing to opt not to reduce interest rates, it signals that the central bank deems the economy stable enough to withstand current conditions without the stimulus of lower rates. While some market sectors react to the growth and stability this represents, other sectors are affected. For example, sectors that typically benefit from lower borrowing costs, such as housing and manufacturing, may suffer from decreased consumer spending. Overall, the Federal Reserve's continued position of not reducing interest rates can prompt reactions across various sectors and markets. Ongoing inflation will continue to impact this.

Geopolitical Events

Recent geopolitical events in Israel and Gaza, as well as the ongoing conflict in Ukraine, can significantly impact global financial markets due to their potential to escalate tensions and disrupt regional stability. In the case of Israel and Gaza, heightened violence or the prospect of prolonged conflict can lead to increased uncertainty in the Middle East, a region crucial for global energy markets. Any disruption in oil supply from the area could lead to price spikes, impacting energy-sensitive sectors and potentially causing volatility in equity markets worldwide. As the Ukraine conflict continues, it has implications for markets beyond the region, particularly in European markets. Concerns about potential economic sanctions, trade disruptions, or heightened geopolitical tensions between major powers could impact global economic growth prospects.

The 2024 Election

Lastly, the 2024 election cycle can have a significant effect on the financial markets due to the uncertainty and potential policy changes associated with a new administration or changes in congressional leadership. Leading up to the election, market participants may exhibit heightened caution as they assess the potential impact of different electoral outcomes on various sectors and industries. During election years, market volatility often increases as investors react to changing political dynamics and policy proposals put forth by candidates. Uncertainty about future government policies regarding taxes, regulations, trade, and fiscal stimulus can lead to fluctuations in stock prices, bond yields, and currency exchange rates. Additionally, specific sectors, such as healthcare, energy, and financial services, may be susceptible to election-related developments due to potential changes in regulatory environments or government spending priorities.

Monetary policy, geopolitical events, and politics, among other factors, will always create ups and downs in the markets. Although we have an eye on these events and others, our role is to create diversified financial plans that help position your investments well for the long term. If you haven’t already scheduled a yearly appointment to discuss your portfolio, please do so at your earliest convenience. It’s the best time for us to discuss any changes in your circumstances and rebalance your portfolio, but it’s also a regulatory requirement. You can schedule an appointment here.

Any opinions are those of CrossleyShear Wealth Management and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. All opinions are as of this date and are subject to change without notice. Past performance is not a guarantee of future results.

Analyzing the U.S. economy post-pandemic

Chief Economist Eugenio Alemán and Economist Giampiero Fuentes note that while they expect economic growth to slow, they do not foresee a recession in 2024.

To read the full article, see the Investment Strategy Quarterly publication linked below.

We are normally reluctant to use trendy phrases to explain either our good and/or bad calls regarding the U.S. economy. However, saying that ‘this time is different’ is more than fitting today to understand what has happened to the U.S. economy since the recovery from the COVID-19 pandemic. U.S. economic growth surprised friends and foes during 2023 as both the post-pandemic normalization process continued and the Federal Reserve’s (Fed) attempt to bring down the surge in inflation contributed to the asynchronous performance of the U.S. economy.

During a typical economic cycle, as the economy hits the peak of the cycle, the Fed increases interest rates to slow economic activity to avoid inflation becoming a problem down the road. That is, at the peak of the cycle, resources are fully utilized and thus any further pressure on the utilization of these resources typically puts upward pressure on the price of these resources. However, this is not what happened at the end of the pandemic. The truth is that prices started to increase for several reasons, but none related to the actual workings of a typical economic cycle.

Navigating the perfect storm

First, the total collapse of global production during the pandemic reduced the supply of goods while at the same time supply chain issues made the remaining goods very scarce and the acquisition of them extremely expensive. This meant that the increase in the price of the goods was not due to high economic growth but more to the inability to acquire goods cheaply and in a timely fashion. Second, the decline in the labor force participation rate due to the fear of contagion plus all the extra help given by the federal government meant that firms needed to entice workers to return to the labor force through increases in salaries/wages, especially in the service sector of the economy. This also contributed to a further increase in the cost of production and thus in the price of goods and services.

Enter the Federal Reserve

Since price stability is one of the two mandates the Fed has, the other being low unemployment, and one of the only instruments the Fed has to bring down prices is by conducting monetary policy to slow down economic activity, the Fed embarked on one of the most aggressive interest rate campaigns in history to rein in prices.

However, the truth is that traditional monetary policy did not work, and it is still not working. The reason for this is that this wasn’t a normal cycle where a reversal in monetary expansion, i.e., higher interest rates, would help keep economic growth contained or slow down economic growth to keep inflationary pressures at bay. This cycle was created by the COVID-19 pandemic recession as well as by a massive fiscal expansion.

But monetary policy has not been benign during this tightening campaign. The housing markets felt the pain and real residential investment remained in recession territory for nine consecutive quarters. Furthermore, last year’s banking crisis was also triggered by the inability of some banks to adapt quickly to much higher interest rates by adjusting their investments appropriately. Thus, regulators had to intervene and provide liquidity to stop runs on vulnerable institutions.

Waterfall of fiscal spending

As if this was not enough, after the end of the COVID pandemic, the federal government engineered an industrial policy that would keep non-residential investment surprisingly afloat even under otherwise very high interest rates. Both the passing of the Creative Helpful Incentives to Produce Semiconductors (CHIPS) Act, as well as the Inflation Reduction Act (IRA) and, to a lesser extent, the Infrastructure Investment and Jobs Act (IIJA), helped reduce the impact of much higher interest rates on non-residential investment and have contributed to keeping the U.S. economy afloat.

Conclusion

The fiscal policies implemented during the pandemic recession helped individuals and firms survive some of the most perilous times in more than a century and helped keep the economy going during the recession. However, many individuals could not spend the funds due to lockdowns and supply chain disruptions, pushing the personal savings rate higher than 30% during the early stages of the pandemic. However, as the limits imposed during the pandemic were lifted and supply chains normalized, the U.S. consumer roared back with lots of excess savings ready to be deployed.

After inflation reared its ugly head during the recovery from the pandemic recession, the Fed could not stand idle and, while late, started raising interest rates. However, few sectors reacted to the increase in rates—mostly residential investment and the housing market—while other sectors were rescued by the three federal government acts that helped keep non-residential investment from reacting to higher interest rates.

The stimulus payments in the hands of individuals and firms, coupled with the effects of the three government acts, rendered monetary policy ineffective. The Fed has increased interest rates to stall and prevent a new monetary cycle from reigniting the inflation fire, but it is currently refraining from further actions until all of these excesses are flushed out of the system.

Consequently, our outlook no longer anticipates a mild recession for the U.S. economy. However, we still expect economic activity to slow down considerably over the next several quarters as high interest rates will continue to keep lending contained. Therefore, while our revised expectations have moved from the mildest recession in U.S. history to a soft landing, our full-year GDP for 2024 has only moved from 1.7% to 2.1%.

Read the full
Investment Strategy Quarterly

All expressions of opinion reflect the judgment of the Chief Investment Office, and are subject to change. This information should not be construed as a recommendation. The foregoing content is subject to change at any time without notice. Content provided herein is for informational purposes only. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Asset allocation and diversification do not guarantee a profit nor protect against loss. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Investing in small cap stocks generally involves greater risks, and therefore, may not be appropriate for every investor. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets. Investing in the energy sector involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors. There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices rise. If bonds are sold prior to maturity, the proceeds may be more or less than original cost. A credit rating of a security is not a recommendation to buy, sell or hold securities and may be subject to review, revisions, suspension, reduction or withdrawal at any time by the assigning rating agency. Investing in REITs can be subject to declines in the value of real estate. Economic conditions, property taxes, tax laws and interest rates all present potential risks to real estate investments. The companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Market downturns are inevitable, and the most successful strategy during these times is to take advantage of potential values and keep your eye on your long-term financial plan.

1. "If you wait for the robins, spring will be over.” – Warren Buffet  
2. “Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down.” – Warren Buffet
3. "You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." — Peter Lynch
4. “In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.” – Warren Buffet 
5. "Bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price.” – Warren Buffet
6. "In investing, what is comfortable is rarely profitable." — Robert Arnott
7. "Never bet against America. That is as true today as it was in 1789, during the Civil War, and in the depths of the Depression.” – Warren Buffet
8. “The true investor welcomes volatility… a wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses.” – Warren Buffet
9. “How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” — Robert G. Allen 
10. "When hamburgers go down in price, we sing the "Hallelujah Chorus" in the Buffett household. When hamburgers go up, we weep.” – Warren Buffet
11. “Invest for the long haul. Don’t get too greedy and don’t get too scared.” – Shelby M.C. Davis
12. “I will tell you how to become rich. Close the doors, be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffet
13. “A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” – Warren Buffet
14. “All intelligent investing is value investing. Acquiring more that you are paying for. You must value the business in order to value the stock.” — Charlie Munger
15. “The best chance to deploy capital is when things are going down.” – Warren Buffet
16. “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.” – Warren Buffet
17. “I love quotes… but in the end, knowledge has to be converted to action or it’s worthless.” — Tony Robbins