If there is one irony about investing that too often goes unnoticed, it’s the practice of focusing on investment selection and portfolio management but failing to properly manage the simple details of one’s estate plan. I’m not talking about setting up complex trusts to get around the estate tax. Rather, I’m talking about ensuring your assets are handled in a manner you want them to be.

You’ll find a good example of what I’m talking about in the new September AAII Journal. Boilerplate language in Donald Sterling’s trust documents designated his estranged wife, Shelly, as the successor trustee were Donald to be found incompetent to serve as trustee. As many of you know, a court allowed Shelly to take control of the trust that owned the Los Angeles Clippers, based on a diagnosis for Donald of Alzheimer's disease. Shelly subsequently sold the NBA team over Donald’s objections.

A lot of the work to protect yourself and your estate can seem overly simple, but it is very important. I periodically see articles about the unintended consequences caused by someone who didn’t following through on their estate planning procedures. For example, the proceeds from a deceased man’s 401(k) went to his estranged wife because a spousal waiver was not signed before he passed. Simply put, just as you should periodically check your credit report, you should check everything related to your estate plans.

A good place to start is to look at how your accounts are titled. Who is listed, and who has access to which account? This is a good time to think about whether you want one of your children to have the ability to access your bank account and write checks on your behalf. If possible, get a second opinion (e.g., from your spouse) before giving someone new access to your accounts as a precaution against fraud.

Next, check the beneficiary information on all of your accounts, your insurance policies and your trusts. Are names and Social Security numbers correct? Are all addresses up-to-date? If there has been a change in the family (e.g., a divorce, a death, a birth), have the documents been updated accordingly? Spending the time to review this information can help your heirs avoid hassles and ensure your wishes are carried out.

Then look at the documents you already created. Is there anything in your will that needs to be changed? What about the power of attorney documents? Who is on them? Do they know they are listed on the documents, and do you still trust them? (Hopefully, the answer is “yes.”) Is there someone who should be added? If a trust is set up, who is the successor trustee?

Most importantly, think about whether the person you trust to step in and manage your affairs will know how you want your finances handled. A pre-written set of emergency instructions will greatly increase the odds of success. The instructions do not have to be formal or complicated, but they do have to be thorough enough that someone (e.g., your spouse, son or daughter) can step in and immediately know what to do.

We, as investors, spend a lot of time focusing on how to optimize our strategies and minimize our mistakes. In doing so, it’s easy to overlook the details of our account and estimate planning documents even though forgetting about them can have big implications for how our finances are managed.

Family and Finances: Start the Dialogue – Useful advice for how to discuss your estate plans and financial planning wishes with family members.

A Guide for Dealing with an Estate Planning Attorney – This 2002 AAII Journal article gives a good outline of the types of documents and family situations to discuss.

How Much Do Your Children Know About Your Estate Plans? – Tell us on the AAII.com Discussion Boards.

Just three S&P 500 member companies are scheduled to report earnings. They are Campbell Soup Company (CPB) on Monday, The Kroger Co. (KR) on Thursday and Darden Restaurants (DRI) on Friday.

We will not see any of the notable monthly economic reports until Friday, when August retail sales, August import and export prices, the preliminary September University of Michigan consumer sentiment survey and July business inventories are released.

The Treasury Department will auction $27 billion of three-year notes on Tuesday, $21 billion of 10-year notes on Wednesday and $13 billion of 30-year bonds on Thursday.

Federal Reserve governor Daniel Tarullo will testify before the Senate Banking Committee on Tuesday.

Optimism among individual investors about the short-term direction of the stock market pulled back, but remained above average, in the latest AAII Sentiment Survey. Bullish sentiment is now at a three-week low, while both neutral sentiment and bearish sentiment are at three-week highs.

Bullish sentiment, expectations that stock prices will rise over the next six months, fell 7.2 percentage points to 44.7%. Even with the drop, optimism remains above its historical average of 39.0% for the fourth consecutive week.

Neutral sentiment, expectations that stock prices will stay essentially unchanged over the next six months, rebounded by 2.5 percentage points to 31.4%. The increase puts neutral sentiment back above its historical average of 30.5% for the first time in three weeks.

Bearish sentiment, expectations that stock prices will fall over the next six months, rose by 4.7 points to 24.0%. The increase was not large enough to keep pessimism from staying below its historical average of 30.5% for the 41st time in the past 47 weeks.

A reversion to the mean occurred this week, with bullish sentiment pulling back from an unusually high level and bearish sentiment rebounding from an unusually low level. Even with the shift, it is important to realize that optimism is still nearly six percentage points above its historical average and pessimism is more than six percentage points below its historical average.

Keeping many individual investors optimistic about the short-term direction of stock prices are the S&P 500′s rise above 2,000, earnings growth, sustained economic expansion and the Federal Reserve’s tapering of bond purchases. Causing other AAII members to be pessimistic are prevailing valuations, the failure of the S&P 500 to set new highs, events in the Middle East and Ukraine, the pace of economic growth and Washington politics.

Bullish: 44.7%, down 7.2 points
Neutral: 31.4%, up 2.5 points
Bearish: 24%, up 4.7 points


Bullish: 39.0%
Neutral: 30.5%
Bearish: 30.5%

Portfolio allocations among individual investors were largely unchanged last month even as optimism about the short-term direction of stock prices swelled. The August AAII Asset Allocation Survey revealed only minor changes in equity, fixed-income and cash allocations relative to July.

Stock and stock fund allocations declined 0.2 percentage points to 67.3%. This is the 17th consecutive month and the 19th out of the past 20 months with equity allocations above their historical average of 60%.

Bond and bond fund allocations declined 0.1 percentage points to 16.6%. The historical average is 16%.

Cash allocations rose 0.2 percentage points to 16.0%. Even with the slight increase, cash allocations are at their third-lowest level since March 2000 (15%). August was the 33rd consecutive month with cash allocations below their historical average of 24%.

The 21-percentage-point rise in optimism towards stocks registered by our Sentiment Survey last month did not translate into higher equity allocations. This said, equity allocations were at their highest levels of the year in July, and August’s allocations were very close to that level. Fixed-income allocations also remain close to their 2014 highs as low yields have boosted bond prices. Cash allocations remain low as prevailing yields make the asset class look unattractive except to those investors who require cash reserves or expect market conditions to worsen.

• Stocks and Stock Funds: 67.3%, down 0.2 percentage points
• Bonds and Bond Funds: 16.6%, down 0.1 percentage points
• Cash: 16.0%, up 0.2 percentage points

• Stocks: 31.2%, down 2.1 percentage points
• Stock Funds: 36.1%, up 1.9 percentage points
• Bonds: 3.0%, down 0.2 percentage points
• Bond Funds: 13.6%, up 0.1 percentage points

Take the Asset Allocation Survey.

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