National Women’s History Month: Women’s Guide to Investing – Week Three

National Women’s History Month: Women’s Guide to Investing – Week Three

Happy National Women’s History Month! This month we want to take the time to celebrate the numerous accomplishments and contributions of women throughout history. With each passing year, women continue to break more barriers and shatter more glass ceilings than ever before. For our part, ML&R Wealth Management would like to propel women of today forward by answering your financial planning questions each week in our special month-long series, “Women’s Guide to Investing”. We asked the women in our community what they would want to hear from a Financial Advisor as a woman. Each week we will share a variety of questions and provide answers and explanations to help you feel more empowered and confident as you navigate through your financial journey. This week we will explore options beyond a 529 to save for your child’s future, discuss when it is the right time to hire a Financial Advisor when going through a divorce, highlight easy ways for women to be financially savvy in order to prioritize their financial health, and provide guidance on how to think about investing for an upcoming inheritance.

What other options are available besides a 529 if you would like to save for your child’s future?
Answered by Carli Smith, CFP®, Wealth Management Advisor

For most, the use of a 529 college savings account is by far the most tax advantageous way to save for your child to attend college or a trade school. They allow for a substantial amount of money to be stashed away, provide tax deferred growth, and the distributions are tax free if the funds are used to pay for qualified educational expenses. Seems like a win-win! In most cases it is. However, what if you know your child will not attend college or go to a trade school? Are there other options to save towards your child’s future? YES!

Custodial Accounts

The first option is to open a custodial account (UGMA or UTMA). While there aren’t the same tax advantages as the 529, both offer standard tax breaks for individuals under age 18. The first $1,100 in investment income is tax-free, the second $1,100 is taxed at your child’s income tax rate, and the remaining is taxed at the parent’s income tax rate. As of 2021, each parent can gift up to $15,000 per child (for a total of $30,000 per child) each year without having to file a gift tax return. The great news is that there are no restrictions on how the funds can be used if it benefits the child. The downside is that once your child reaches age of majority (18 or 21 depending on which state the accounts are set up in), the account becomes theirs and they have full rights and access to the money in that account. It legally becomes their account. If the account value is predicted to be substantial by age of majority, it is important to help your child become financially responsible, so they do not squander it away. Click here to learn more about teaching your kids about money.

Brokerage Account

If you are looking to have a little more control over the account, even after age 18 or 21, opening a regular brokerage account in your name, but nicknamed for the child, may be a better option. You can contribute as much as you like to this type of account since it belongs to you. It is a taxable account which means any investment income will be reported on your tax return. In addition, the reality is this account is yours and not your child’s. This means you are subject to gifting rules once your child starts to use funds from the account. To ensure the account goes to your child should you suddenly pass, you can name your child as the beneficiary. This is only recommended once they are an adult. While they are young, an alternative is to place the investment account in a trust. At the time of your death, the investment account passes to your child according to the terms of the trust. If this is the route you decide to explore, we highly recommend seeking out an estate planning attorney. They can help you think through the pros and cons of this as it relates to your specific estate plan as well as draw up any required documents. Click here to learn about additional estate planning documents.

I am about to go through a divorce. When is the right time to initiate a relationship with a Financial Advisor?
Answered by Carli Smith, CFP®, Wealth Management Advisor

Going through a divorce can be terrifying and even crippling for a woman, especially if your spouse has managed the finances and investments for most of your marriage. Aside from the obvious emotional distress that a divorce causes, it can also be financially devastating if not handled properly. Shockingly, a recent study finds that over 95% of women do not use a Financial Advisor when going through a divorce even though the top concern among women who divorce is financial stability.

In many cases, women seek out a Financial Advisor after the divorce is finalized. However, by initiating a relationship with a good Financial Advisor at the beginning of your divorce, it can mean the difference between reaching your financial goals or not in the coming years or even decades. This is especially true for women who have not been involved in making financial decisions for the household. A good Financial Advisor will become your advocate and help you put a plan in place to make sure you get your fair share and then build out a comprehensive financial plan just for you.

Professional Assessment of Assets  

Often, when it comes to splitting assets, the thought process is to split everything right down the middle. However, NOT ALL ASSETS ARE CREATED EQUAL. For example, let’s say the investment portfolio you and your spouse shared included $1 Million of invested stocks or bonds and $1 Million of private illiquid real estate holdings. The initial proposal would more than likely be to split both equally so that each of you ended up with $500,000 of each. But the big question is, are those assets going to serve you well as you transition to the next stage of life? If you are going to need cash flows and flexibility from the investments in the near future whereas your spouse won’t, holding real estate may not be the ideal solution. Rather, negotiating for the stocks and bonds while he or she takes the real estate would better serve you in the short and long term.

Another example is if there is a business involved. If you are entitled to 50% of your spouse’s business, it may be more advantageous for your spouse to buy out your share, rather than staying involved, so that you can wipe your hands clean and move on with your life. As a side note, if there are businesses and other types of private investments, it is imperative to get proper third party valuations for any of these types of holdings before you agree on an asset split. A Financial Advisor can connect you with the proper resources for this type of work.

Creating a Clear Path Post-Divorce  

A Financial Advisor can play a significant role in helping you think through important financial decisions that will come as the final negotiations occur and the divorce gets finalized. A great example of this is thinking through the terms of alimony if that is part of the equation. By working with an Advisor that does comprehensive financial planning, she will be able to take your financial goals and current financial status to help you maximize your post-divorce financial life all the way through retirement.

Getting a divorce requires adjustments in many aspects of life and can be overwhelming. Having the right professional team on your side is key in making sure you receive what you deserve and are set up for long term financial success.

What is an easy way for women to be fiscally savvy and prioritize their financial health?
Answered by Kira Scott, Wealth Management Associate

As Advisor Carli Smith explained in her article The Hierarchy of a Meaningful Financial Plan, financial success is more dependent on levers we have control over, such as spending and saving, than we would expect. Much of the focus from the industry and media is on investments. While investments are absolutely important, one of the easiest things women can do for themselves is sit down and review what they are spending and saving once or twice a year.


Review your recurring costs. Pull out the last few months of bills. Research where you may be able to negotiate better rates on car and home insurance, cell phones and cable service, etc. Sometimes providers are able to offer you a better rate instead of losing you to a competitor.

Additionally, you may notice recurring subscriptions for games, apps, websites, etc. that you don’t even use and can easily remove costs that way. Recurring subscription services are very sticky from a business standpoint; these companies are counting on the fact that you may not notice your bill or realize you are not using something when you don’t have to pull out your checkbook or pay an invoice online.


If your employer offers matching on your retirement amount contributions, this is another easy way to be fiscally savvy. It is essentially free money going towards your retirement – how could you not take advantage of that? And yet many do not. If you are not able to max out your 401k contribution every year, at a minimum try to contribute whatever percentage you need to get that employer matching contribution in there.

During your working years, build an emergency reserve of 3-6 months of expenses to fall back on should any unforeseen circumstances happen. As an example, not many people would have anticipated a global pandemic and the many repercussions it would have on our lives and the economy this past year.

Go to your state’s unclaimed property website and look to see if you have any unclaimed money out there.  Every year tons of businesses have assets that have been abandoned or forgotten about, such as savings accounts, payroll checks, insurance payments, orphaned 401k accounts, etc. These assets are turned over to state treasuries as unclaimed property, and most states have an easy to search website where you can put your name in and see if you have any unclaimed money out there. It’s also common to have unclaimed property in multiple states if you have moved around. This is another easy way to find extra money out there that you can move into savings or your investments portfolio.

While these are just a few examples, sitting down to review your spending and saving once or twice a year is an easy way to be more financially savvy. A trusted financial advisor and/or CPA can also help you with additional high level aspects that take into account tax consequences and your long term goals.

I have never invested outside of my 401k but know I will have an inheritance coming my way. Where do I begin?
Answered by Kira Scott, Wealth Management Associate

If you know you will have an inheritance coming your way, you can first begin by taking time to review current debts, as well as dreams and goals you may not have been able to achieve previously due to finances. You may also want to give some of it to people you care about or causes you believe in.

Don’t Spend It Before You Have It

It’s also wise not to spend money before you have it, or live outside of your means because you are counting on an inheritance. You may not know what type of assets you will be receiving yet. Many people receive assets in the form of real estate, personal assets, inherited IRAs or other retirement assets. Some assets can be liquidated with no tax consequences while other assets have embedded income tax costs.  You should understand the tax consequences of the assets received in an inheritance and maximize the after-tax value of the inheritance through proper planning of liquidation or disbursement of those assets. As mentioned in our previous article, So You’ve Inherited Some Money, Now What?, it is very common for people to quickly spend an inheritance or make irrational decisions when they inherit or win money, as opposed to when they earn money.

Make A Financial Plan

It’s important to have money invested in different buckets depending on your time horizon if and when you may need to tap into it. We’ve previously stressed the importance of having an emergency reserve of 3-6 months of expenses in a savings account just in case. You won’t be able to tap into your 401k until you are at least 59 ½, so you will need other assets to bridge the gap. Aside from the emergency funds in a savings account, we recommend opening a taxable brokerage account for medium to long-term goals, as interest will not keep pace with inflation.

Consult an Independent Third Party You Trust

Consulting a Trusted Advisor can help you prioritize your goals and dreams, consider tax and legal consequences or advantages along the way to create a financial plan to get you to where you want to be. Taking the time to plan before you receive your inheritance will help you get rid of any emotional bias and allow you to make decisions with intention and confidence.

“Women’s Guide to Investing” Week Three Wrap Up

We hope you enjoyed this week’s topics for our “Women’s Guide to Investing” special blog series. In the final blog post for Women’s International History Month, you can expect more questions on a variety of topics that impact women. If you have missed the first two weeks, you can find those here and here. If you have a question for one of our Advisors at ML&R Wealth Management, please contact us. We would love to hear your questions!

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About Author

Carli Smith, CFP®

Carli Smith is ready to embark with you on your financial journey. She will take the time to understand your values and listen to your goals. With this solid foundation, she will build out a long-term investment strategy and a dynamic portfolio based on the comprehensive financial planning built out around what matters most to you. Her attention to detail, love of problem solving, and compassion for clients allows her to be an ideal investment management advisor.

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