Sequence of Returns Risk: Why Timing Matters More Than You Think

Retiring in Ormond Beach or across Central Florida often means more than just “calling it a career”, it’s about designing a lifestyle around the beach, travel, family, and the freedom you’ve worked hard to earn. But that freedom depends on how long your money lasts. At AVL Advisory LLC, I help retirees and pre-retirees build tax-smart retirement income plans that can weather real-world market swings. One of the most overlooked risks in that process is something called sequence of returns risk, and understanding it can be the difference between a retirement that feels fragile and one that feels durable and confident.

When most people think about investing, they focus on average returns:

“If I earn 7% per year on average, I should be fine, right?”

The problem is that markets don’t give you a steady 7% every year. They zig and zag, some years are great, some years are painful, and many are somewhere in between.

Sequence of returns risk is the risk that those bad years show up at the wrong time, especially right before or right after you retire. And that timing can dramatically change how long your portfolio lasts, even if the average return is exactly the same.

What Is Sequence of Returns Risk?

Sequence of returns is simply the order in which you experience market gains and losses.

• If markets are strong early in retirement and weaker later, your portfolio has more time to grow before you start taking big hits.

• If markets drop hard in your first few retirement years, while you’re also withdrawing for income, those withdrawals can permanently shrink your nest egg and reduce its ability to recover.

The key insight:

Two retirees can earn the same average return, save the same amount, and spend the same amount, yet end up with very different outcomes, purely because of timing.

A Simple Example

Imagine two retirees:

• Both start retirement with $1,000,000

• Both withdraw $40,000 per year, adjusted for inflation

• Both earn the same average return over 25–30 years

The only difference?

• Retiree A experiences poor returns early and good returns later.

• Retiree B experiences good returns early and poor returns later.

Despite identical averages, Retiree A is much more likely to run out of money first, because early losses, and withdrawals taken during those losses, dig a deeper hole that later gains may not fully fill.

That’s sequence of returns risk in action.

Why It Matters Most Near and Early in Retirement

Sequence risk is always there, but it’s especially dangerous when:

1. Your portfolio is at its largest
   Late in your working years and early in retirement, your balances are usually the highest they’ve ever been. A 20% decline on $200,000 is very different from a 20% decline on $1,000,000.

2. You’re taking withdrawals
   During your working years, a bear market is mostly a “paper loss” if you’re still contributing. In retirement, you’re selling shares to fund your lifestyle, and selling into a down market locks in losses and leaves fewer shares to participate in the recovery.

3. There’s less flexibility to “just work longer”
   Going back to work or delaying retirement may not always be practical for health or lifestyle reasons. That makes proactive planning especially important.

How Sequence of Returns Risk Shows Up in Real Life

Here are a few real-world scenarios where timing can quietly derail a plan:

• Retiring into a bear market
  You retire in January, markets fall 20–30% within the first year or two, and you’re simultaneously drawing income from your portfolio.

• Big spending early on
  You front-load retirement with major trips, home projects, or gifts during a period of poor returns. Those larger withdrawals magnify the impact of early losses.

• Overly aggressive allocation
  You remain heavily equity-weighted into retirement without a cushion of more stable assets, making early-retirement volatility more painful.

Strategies to Manage Sequence of Returns Risk

You can’t control the market, but you can design a plan that’s more resilient to bad timing. Research and practice point to a few core strategies.

1. Spend Conservatively (Especially Early On)

Starting with a conservative, evidence-based withdrawal rate helps create a margin of safety.

• Classic research (like the “4% rule”) was built around the idea of avoiding portfolio failure when early returns are poor.

• More recent work suggests that dynamic, flexible withdrawals may support higher starting rates in some environments—but the principle is the same: don’t overspend early on.

A well-designed plan should stress-test different market environments, not just assume “average” returns every year.

2. Build Flexibility Into Your Spending

Static withdrawal rules (“I’ll take X% no matter what”) ignore reality. In practice, many retirees naturally adjust:

• Scaling back discretionary expenses (travel, large purchases, gifts) during bear markets

• Delaying big items, like a new car or kitchen remodel, if portfolios have just taken a hit

• Letting withdrawals tick up in good years and down in bad years

Even modest adjustments in difficult markets can dramatically reduce the impact of sequence risk.

3. Reduce Portfolio Volatility as You Approach Retirement

Shifting from an accumulation mindset to an income and risk-management mindset is crucial. That often means:

• Gradually reducing equity exposure as retirement approaches

• Holding a mix of stocks, bonds, and cash instead of an all-equity portfolio

• Avoiding concentration in a handful of stocks or sectors

The goal isn’t to eliminate growth, but to avoid the kind of sharp drawdowns that, combined with withdrawals, can permanently damage a plan.

4. Use “Buffer Assets” to Avoid Selling in a Crash

A very practical way to manage sequence risk is to create buckets or buffer assets you can draw from when markets are down:

• Cash reserves (e.g., 6–24 months of baseline expenses)

• Short-term bonds or bond ladders

• Stable value or money market funds in employer plans

When stocks drop, you draw from these buffers instead of selling equities at depressed prices, giving your growth assets more time to recover.

More advanced strategies might include guaranteed income products or contingent annuities to offload some risk, but those need to be evaluated carefully within your broader plan.

5. Coordinate Taxes and Withdrawals

Sequence risk is about more than just investment returns, it’s also about how efficiently you withdraw:

• Coordinating withdrawals across taxable, tax-deferred, and Roth accounts

• Using market downturns as opportunities for Roth conversions

• Managing capital gains and loss harvesting strategically

Thoughtful tax planning can help maintain portfolio longevity and give you more options for adjusting withdrawals without unnecessary tax drag.

When Should You Start Thinking About Sequence of Returns Risk?

It’s not just a “retiree problem.” Sequence risk becomes increasingly important when:

• You’re within 5–10 years of retirement

• Your retirement portfolio is becoming a major piece of your net worth

• You’re counting on that portfolio for a significant portion of your future income

Planning ahead gives you time to:

• Adjust your savings rate

• Fine-tune your investment mix

• Clarify your retirement lifestyle and spending expectations

• Stress-test your plan under different market conditions

The Bottom Line

You can’t predict whether the first five years of your retirement will be smooth sailing or a stormy bear market. But you can design a plan that doesn’t break if the timing isn’t perfect.

Sequence of returns risk is really a planning problem, not a forecasting problem.

A good retirement strategy will:

• Acknowledge that bad markets can show up at the worst time

• Build in buffers, flexibility, and tax awareness

• Adjust as life and markets change

Ready to Stress-Test Your Retirement?

Sequence of returns risk isn’t about predicting the next crash, it’s about making sure your plan can handle it. If you’re within 5–10 years of retirement (or already retired) and want to see how different market paths could affect your income, let’s run the numbers together.

I’ll help you:

• Stress-test your portfolio against bad-timing scenarios

• Coordinate withdrawals across taxable, IRA, and Roth accounts

• Build a flexible, tax-smart income plan you can actually live with

Money Map Monday: How to Choose a Custodian (and Actually Read Your Statement)

When most people think about investing, they focus on the fun stuff: which hot stock to buy and how much it’s grown (or not). While you should also evaluate whether you are on track to meet your goals, almost no one talks about where your investments are held or how to read the statements you get every month or quarter.

That could be a problem.

Your custodian and your account statements are the plumbing of your financial life. If the plumbing isn’t solid, or you don’t understand what you’re looking at, it’s hard to design a personal wealth plan you actually trust.

This Money Map Monday is about two things:

1. How to choose a custodian you can feel confident about

2. How to read your investment statement without your eyes glazing over

All through the lens of my Personal Wealth Design pillar: building a coordinated, intentional plan around your goals, not just your investments.

What Is a Custodian (and Why Should You Care)?

A custodian is the company that actually holds your investment accounts and keeps your money and securities safe. Think of them as the “vault and recordkeeper” for your:

• IRAs and Roth IRAs

• Brokerage accounts

• 401(k)/403(b) rollovers

• Trust and joint investment accounts

They:

• Safeguard your assets

• Process trades and transfers

• Send you statements and tax forms

• Provide online access and reporting

Your financial advisor (me, or someone like me) builds and manages your plan. Your custodian holds the accounts and keeps score.

You want both pieces working together.

Choosing a Custodian: What Actually Matters

You’ll see a lot of big brand names in this space, Fidelity, Schwab, Vanguard, etc., but the logo alone isn’t enough. Here are the key things I look at when I’m building a Personal Wealth Design for a client.

1. Safety & Protections

You want to know: What happens if something goes wrong?

Look for:

• Regulation & Oversight – Is the custodian properly regulated (e.g., SEC/FINRA for broker-dealers)?

• Asset Segregation – Client assets should be held separate from the firm’s own assets.

• SIPC Coverage – This helps protect against the failure of the brokerage firm (not market losses). Many custodians also carry excess coverage beyond SIPC.

You can’t eliminate investment risk, but you can avoid custodians that play fast and loose with client funds.

2. Transparency of Fees

Hidden fees eat into your returns. With custodians, watch for:

• Trading commissions or ticket charges

• Account maintenance or inactivity fees

• High internal expenses in “house brand” funds or cash products

• Transfer-out or closure fees

In a well-designed plan, you should be able to see what you’re paying, to whom, and for what, advisor fees, fund expenses, and any custodian-level charges.

3. Quality of Client Experience

This is your day-to-day interaction with your money:

• Is the online portal clean and easy to navigate?

• Can you see performance, contributions, and withdrawals clearly?

• How responsive is client service if you need help with a login, wire, or RMD form?

If it’s a headache to log in or impossible to find basic information, you’re less likely to stay engaged with your plan. Friction = avoidance.

4. Cash Management & “Sweep” Programs

Custodians love to hold your idle cash, it’s often where they make a good chunk of profit.

Look at:

• What interest rate are you getting on cash?

• Are there reasonable alternatives like money market funds if you want your cash to work a bit harder (while staying liquid)?

• Is it clear where your cash sits and how much you have?

In a Personal Wealth Design framework, cash has a job, such as an emergency fund, near-term goals, or “dry powder” for opportunities. Your custodian should make that easy to see and manage.

5. Investment Menu & Flexibility

Most high-quality custodians will offer:

• Individual stocks and bonds

• ETFs and mutual funds

• Certain alternatives or structured products

The question is: does the menu support your plan?

• If your strategy is low-cost, globally diversified indexing, do they offer strong ETF options?

• If you work with an advisor, can that advisor implement your agreed-on strategy without jumping through hoops?

The custodian should enable your design, not force you into a one-size-fits-all model.

6. Integration with Your Overall Life

A custodian works best when it integrates with:

• Your tax planning (easy access to 1099s, cost basis, gain/loss reports)

• Your estate plan (beneficiary designations, TODs, trust titling)

• Your business interests (SEP, Solo 401(k), or business retirement plan accounts)

Personal Wealth Design is about coordination. The custodian (and your advisor) should help you see the whole picture, not create silos.

How to Read Your Investment Statement (Without Going Cross-Eyed)

Now let’s talk about the paper (or PDF) you get monthly or quarterly.

Here’s a simple framework for a 5-minute statement review that aligns with your goals.

1. Start with the Cover Summary

Most statements begin with a one-page overview. Focus on:

• Beginning Value

• Net Contributions/Withdrawals

• Investment Gain/Loss

• Ending Value

The key question:

Did my account go up because I added money, because markets went up, or both?

This matters for your mindset. If you see a big jump but it’s all contributions, that’s different from strong investment performance, and vice versa.

2. Check Your Account Titles & Beneficiaries

Make sure the account type and ownership match your plan:

• Is this a Roth IRA, Traditional IRA, or Taxable Brokerage?

• Is the account titled as individual, joint, or trust?

• Are the beneficiaries up to date (this may show on the statement or in online settings)?

This is where Personal Wealth Design really shows up: Each account type should be chosen on purpose for tax and estate reasons, not by accident.

3. Review Holdings: What You Actually Own

You’ll see a list of securities (funds, ETFs, stocks, bonds) along with:

• Quantity (how many shares you own)

• Price per share

• Market value

• Cost basis (what you paid)

• Unrealized gain/loss

Look for:

• Diversification – Are you concentrated in one company, one sector, or one country?

• Drift from your target allocation – Has your stock vs. bond mix wandered too far from your plan because markets moved?

The question here: Does this mix of investments still match my risk tolerance and timeline?

If your personal design calls for, say, 70% stocks / 30% bonds, and you’re now at 85% stocks after a big run-up, it may be time to rebalance (strategically, and tax-aware).

4. Look at Fees (Don’t Ignore This)

Some statements show advisor fees, trading costs, or account-level fees. These may appear in:

• The activity/transactions section

• A fee summary

You’re looking for:

• How much was charged during the period

• Who it was paid to (advisor, custodian, funds)

• Whether that aligns with what you thought you were paying

Fees aren’t inherently bad, good planning and advice are worth paying for, but surprise fees are.

5. Scan the Activity Section

This is the running log of everything that happened in your account:

• Contributions and deposits

• Withdrawals and distributions

• Dividends and interest

• Trades (buys and sells)

• Fees and charges

You want to confirm:

• Contributions match what you planned to save

• Withdrawals are intentional and fit your spending plan

• No unexpected trades or transactions show up

Think of this as reviewing your “financial security camera footage.” It should be boring and predictable.

6. Tie It Back to Your Goals

A statement is just numbers unless you connect it to your Personal Wealth Design. Ask yourself:

• Am I on track for my target savings rate this year?

• Are these accounts aligned with specific goals (retirement, home purchase, college, early financial independence)?

• Does my risk level still feel appropriate, or have life changes made it too aggressive or too conservative?

If your life has changed, career moves, marriage, kids, business growth, but your accounts haven’t, that’s a red flag.

Putting It Together: Custodian + Statement + Design

When you choose a custodian thoughtfully and actually understand your statement, something big changes:

• You stop feeling intimidated by your investments

• You catch issues early (fees, drift, bad account titling)

• You’re able to make adjustments with confidence instead of guessing

That’s the heart of Personal Wealth Design, not just having investments, but having a coordinated system that supports your life.

A Simple Monthly Checklist

Once a month or quarter, set a 15-minute calendar reminder and run through this:

1. Log into your custodian’s portal

2. Open your most recent statement

3. Review:

   • Beginning vs. ending value

   • Contributions/withdrawals

   • Holdings and allocation

   • Fees and activity

   • Alignment with your goals

If there’s anything you don’t understand or that doesn’t look right, write it down as a question. That list becomes your agenda with your advisor or CPA/CFP.

Final Note & Disclaimer

This post is for educational purposes only and is not individualized investment advice, tax advice, or a recommendation to use any specific custodian or investment. Your situation is unique, and your choices should reflect your goals, risk tolerance, and tax picture.

If you want help:

• Selecting an appropriate custodian

• Designing a coordinated tax + investment strategy

• Or simply having someone walk through your statement with you and translate it into plain English

That’s exactly the kind of work that falls under my Personal Wealth Design plans.

For now, your Money Map Monday action step: Pick one account, pull up the latest statement, and walk through the checklist above. Getting familiar with the plumbing is a big step toward real financial control.

Goal-Based Buckets: Give every dollar a job. Put that dollar in the right bucket. Stop guessing.

Most people mismanage their money because they juggle too many priorities at once without a clear plan. They’ve got a 401(k) over here, a checking account over there, maybe a brokerage account “for extra investing”, but no clear connection between where the dollars are sitting and what those dollars are actually for. For this week’s Money Map Monday, we’re going to fix that with a simple framework I use in my personal wealth design plans: Goal-Based Buckets.

What Are Goal-Based Buckets?

“Goal-based buckets” is just a fancy way of saying: Organize your money by purpose and time horizon, not just by account type.

Instead of thinking in terms of “checking, savings, 401(k), Roth,” you think in terms of:

• Money for now

• Money for soon

• Money for later

Each “bucket” has:

• A clear goal

• A target balance

• A time horizon

• An appropriate investment or savings strategy

This is personal wealth design in action: aligning your money with your financial goals, instead of letting it collect dust in random accounts.

Step 1: Get Clear on Your Big 3

Before we build buckets, we need goals.

Take five minutes and write down your top 3 financial goals over the next 1–15+ years. For example:

• Build a 6-month emergency fund

• Buy a home in 3–5 years

• Hit work-optional or full retirement by age 60

• Fund kids’ college

• Start or expand a business

You don’t need every detail right now. Just a short list and rough timelines. Those timelines are what drop your goals into the right buckets.

Step 2: Build Your 3 Core Buckets

Think of this as your Money Map: three big destinations, with different rules.

Bucket 1: Now Money (0–24 Months)

This is your “now” bucket. Its job is to protect your lifestyle and keep you out of panic mode.

What goes here:

• Emergency fund (typically 6-12 months of baseline expenses; more if your income is volatile)

• Short-term known expenses:

  • Insurance premiums

  • Property taxes

  • Vacations in the next year or two

  • Small home or car repairs you know are coming

Typical fund vehicles:

• Checking for monthly spending

• High-yield savings for emergency + short-term reserves

• Maybe a short-term CD or money market account

Key rule:
This bucket is not about squeezing out every last bit of return. It’s about sleep-well-at-night money. If you’re constantly dipping into long-term investments to cover short-term surprises, this bucket probably isn’t big enough or you need to adjust your budget.

Bucket 2: Soon Money (2–10 Years)

This is your flexibility bucket. It funds goals that are important but not immediate.

What goes here:

• Down payment for a home in 3–5 years

• Major home remodel

• Starting or buying a business

• Kids’ education if they’re within a decade of enrollment

• Big lifestyle upgrades (boat, vacation home, extended vacay)

Typical vehicles:

• Conservative to moderate investment accounts

• A blend of:

  • Cash and short-term bonds (for stability)

  • Some stock exposure (for growth over multi-year periods)

Key rule:
You can’t afford to gamble here, but you also don’t want this money just sitting in cash losing purchasing power, or short-changing your goals for 5–10 years. Think measured risk to meet your goals, not all-or-nothing.

Bucket 3: Later Money (10+ Years)

This is your freedom bucket. It’s designed to support you when work becomes optional (or stops entirely).

What goes here:

• Retirement accounts (401(k), 403(b), 457, IRAs)

• Roth accounts

• Long-term taxable investment accounts

• Any assets earmarked for “future you” 10+ years down the road

Typical vehicles:

• Growth-oriented investment portfolios:

  • Higher stock allocation

  • Long-term focus

• Tax-smart strategies:

  • Using tax-deferred vs. Roth vs. taxable intentionally

  • Aligning investments with the tax treatment of the account

Key rule:
This is where you can accept more volatility because your time horizon is longer. The biggest mistake I see is people are not aggressive enough in their retirement accounts while they are still decades away from retirement.

Step 3: Add the “Tax Bucket” Overlay

Here’s where my CPA + advisor strategy kicks in.

On top of your time-based buckets (Now / Soon / Later), you also have tax buckets:

• Taxable (brokerage, bank accounts)

• Tax-deferred (traditional 401(k)/IRA, SEP, SIMPLE)

• Tax-free (Roth IRA/401(k), HSA if used strategically)

A strong personal wealth design plan doesn’t just ask: “Do I have the right buckets for my goals?”

It also asks: “Are these dollars in the right type of account to manage my lifetime tax bill?”

For example:

• Short-term “Now Money” usually lives in taxable accounts (you need access without penalties)

• Long-term “Later Money” often leans heavily on tax-deferred and tax-free accounts

• Strategic use of Roth and HSA can create powerful “future tax-free” buckets for your later years

Same goals, better tax positioning. That’s where real long-term efficiency shows up.

Step 4: Setting up your buckets

This is where most people get stuck. The idea makes sense but sometimes it doesn’t materialize because people have busy lives and may not have the time to work through the process.

Here’s a simple roadmap to implement setting up your buckets.

1. Name the accounts

   • “AVL Family Emergency Fund”

   • “2029 Home Down Payment”

   • “Lifetime Freedom Fund”

Renaming accounts in your online banking/investment platforms makes the purpose unavoidable.

2. Assign Targets

• Now Bucket: “I want 6 months of expenses = $30,000”

• Soon Bucket: “I want $100,000 for a down payment”

• Later Bucket: “I want $X by age 60 based on my retirement plan”

3. Automate contributions

• Direct deposits to checking and savings

• Monthly transfers to “Soon” accounts

• Percentage-of-income contributions to “Later” (401(k), IRA, etc.)

4. Set funding order
A common sequence:

1. Build emergency fund

2. Capture employer match in retirement plans

3. Pay off high-interest debt

4. Fund “Soon” goals

5. Increase long-term investing

You don’t need to make it perfect. You just need each dollar to know where it’s going and why.

Step 5: Your Money Map Monday Check-In

Once your buckets are set up, Money Map Monday becomes a quick review instead of a crisis meeting.

Each week (or at least once a month):

• Check balances in each bucket

• Confirm transfers are happening as planned

• Ask:

  • “Does anything about my goals or time horizons need to change?”

  • “Is any dollar sitting in the wrong place?”

Think of it like maintaining a garden. You’re pruning, not replanting the entire thing every week.

Bringing It Back to Personal Wealth Design

Goal-Based Buckets are one of the core tools inside my personal wealth design plans because they:

• Reduce anxiety (“I know where my next 6 months of expenses are coming from.”)

• Improve decision-making (“I can take some risk in my Later bucket because my Now bucket is solid.”)

• Create alignment (“My money, my taxes, and my timeline are finally working together.”)

If you’re a high earner juggling multiple goals and feeling like your accounts are just scattered, this is where I recommend starting.

Want Help Designing Your Buckets?

If you’d like a second set of eyes on your current setup, or you’re not sure how to align your buckets with your tax strategy and long-term plan, this is exactly what I do for clients.

We’ll:

• Clarify your top goals

• Map each goal to a time horizon and bucket

• Layer in tax strategy so you’re not just growing wealth, you’re keeping more of it

If that sounds like the kind of structure you’ve been missing, reach out and we’ll talk about what a personal wealth design session could look like for you.

Titling Traps for Couples & Business Owners

Most couples and business owners spend more time picking paint colors or logos than they do thinking about how their accounts and assets are titled.

But “who owns what, and how” quietly controls:

• What happens if you die or become disabled

• Who a creditor can come after

• Who actually controls an account or property

• How your tax and estate planning works (or doesn’t)

In other words: titling can either support your financial plan…or accidentally blow it up.

What “titling” actually means

Titling is simply how ownership is listed on:

• Bank and investment accounts

• Real estate deeds

• Business interests (LLC membership, S corp shares, partnership interests)

• Vehicles and equipment

• Beneficiary designations, POD/TOD registrations, etc.

The wording on those accounts and documents often matters just as much as what’s in your will or trust.

Titling traps for couples

Trap #1: Putting everything in one spouse’s name

I often see everything, house, retirement accounts, brokerage accounts, owned by one spouse. It usually happens because:

• One spouse handles the money

• One spouse earns more, or

• Assets slowly migrated to the path of least resistance

Why it’s a problem:

• If the “money spouse” dies or becomes disabled, the other spouse can be left navigating probate or delays just to access assets.

• It can concentrate liability exposure in one person’s name.

• It may not reflect what you actually want to happen if something goes wrong.

What to consider instead:

• Review which assets make sense to own jointly and which should be separate.

• Make sure each spouse would have access to enough liquidity if something happened to the other.

• Coordinate titling with your estate plan and any state-specific rules (marital property, tenants by the entirety, etc., which vary by state).

Trap #2: Making everything joint with rights of survivorship

On the other side, some couples put everything “Joint with Right of Survivorship” (JTWROS) and assume that solves all planning issues.

Why it can backfire:

• In blended families, JTWROS can unintentionally disinherit kids from a prior relationship (everything goes automatically to the survivor, regardless of the will).

• Joint accounts can expose assets to the creditors or lawsuits of either joint owner.

• It can undermine more nuanced estate planning using trusts.

What to consider instead:

• Decide where automatic survivorship is helpful (for simplicity and probate avoidance).

• For blended families or more complex situations, trusts and “Tenants in Common” structures may be better fits.

• Coordinate with your estate attorney so titling lines up with your will/trust rather than working against it.

Trap #3: Relying on beneficiary designations without looking at the big picture

Retirement accounts, life insurance, and many investment accounts allow you to name primary and contingent beneficiaries. Bank and brokerage accounts may also allow “Payable on Death” (POD) or “Transfer on Death” (TOD) designations.

The trap:

• Beneficiary forms are often filled out once and never updated.

• People assume “my will covers it,” but beneficiary designations override your will.

• Over time, people divorce, remarry, have kids, start businesses, and never circle back.

Result:

• Ex-spouses still listed.

• No contingent beneficiaries (assets may go to your estate and through probate).

• Beneficiaries that conflict with your actual estate plan.

What to consider instead:

• Review all beneficiary forms periodically, especially after major life changes (marriage, divorce, kids, business sale).

• Confirm that names, percentages, and contingents match your broader plan.

• Coordinate beneficiary designations with any trusts you’ve set up.

Trap #4: Adding kids or parents as co-owners “for convenience”

A very common one: adding an adult child or parent to a bank account or deed so “they can help pay bills” or “avoid probate.”

Why this can be risky:

• You may be making an unintended gift for tax purposes.

• Their creditors, lawsuits, or divorces might go after your asset.

• When you die, that asset may pass 100% to that co-owner, cutting out other intended heirs.

What to consider instead:

• Use properly drafted powers of attorney or authorized signer roles instead of ownership where appropriate.

• Use beneficiary, POD/TOD, or trust structures to avoid probate without creating other problems.

• Talk with an attorney and tax professional before adding anyone as a co-owner.

Titling traps for business owners

Business owners have an extra layer of complexity: personal and business titling can easily get tangled.

Trap #5: Mixing business and personal ownership

You might:

• Run the business through an LLC or S-Corp…

• But title real estate, vehicles, or key assets in your personal name

• Or, worse, run everything in your personal name and treat it “like a business”

Why it’s a problem:

• It can weaken liability protection (piercing the corporate veil).

• It muddies tax treatment and makes bookkeeping a nightmare.

• It complicates a future sale of the business or succession planning.

What to consider instead:

• Decide which assets truly belong to the business versus you personally.

• Title key business assets (equipment, IP, vehicles, etc.) consistently with your entity structure.

• Keep business accounts and personal accounts clearly separated.

Trap #6: Giving a spouse or partner ownership “just in case” with no plan behind it

Sometimes a spouse or partner is added as a co-owner of the business “to help,” “for income,” or “for protection,” but there’s:

• No operating agreement

• No buy-sell agreement

• No clarity on decision-making or what happens if you split, die, or sell

Why it can blow up:

• If the relationship changes, you may have an unintended business partner with legal rights.

• A death, disability, or divorce can freeze decision-making or trigger expensive disputes.

• It can complicate any future sale or transition.

What to consider instead:

• Be intentional about who actually owns equity vs. who’s on payroll.

• Work with an attorney to put a clear operating agreement or shareholders’ agreement in place.

• Use life and disability insurance, plus buy-sell provisions, to plan for “what ifs.”

Trap #7: Business real estate titled without a strategy

Common scenario: the business operates in a building you or your entity owns, but:

• The property is titled in your personal name,

• Or it sits in a separate LLC,

• With no clear tax or asset-protection strategy driving the decision.

Potential issues:

• Missed planning opportunities for rent deductions and long-term tax planning.

• Asset-protection gaps if a lawsuit targets the operating business or the property.

• Confusion around what actually gets sold if you sell the business.

What to consider instead:

• Decide whether real estate should live in a separate entity and be leased to the operating company.

• Make sure lease arrangements and titling coordinate with your tax strategy.

• Think ahead: if you sold the business, would you keep the building? Titling should reflect that plan.

Trap #8: Outdated business titling after you’ve “upgraded” your entity

Many owners start as a sole proprietor, then later create an LLC or elect S-Corp status. The trap is never updating:

• Bank accounts

• Vendor and customer contracts

• Licenses, permits, or insurance

• Domain names, IP, and other intangible assets

Result:

• Some things are still titled in your personal name or under the old entity.

• Liability and tax treatment may not match what you think you have.

• It complicates selling, valuing, or transferring the business.

What to consider instead:

• When you change entity type, create a checklist to update titling across the board.

• Work with your CPA and attorney to formally move assets and contracts to the new entity where appropriate.

• Maintain clean records of ownership, capital contributions, and transfers.

How to clean up your titling (without losing your mind)

You don’t have to fix everything overnight. Start with a simple process:

1. Inventory everything

   • List bank accounts, investment accounts, retirement accounts, real estate, vehicles, business interests, insurance policies, etc.

   • Note exactly how each is titled and who the beneficiaries are.

2. Highlight red flags
   Look for:

   • Everything in one spouse’s name

   • Outdated or missing beneficiaries

   • Assets co-owned with kids or parents “for convenience”

   • Business assets titled personally (or vice versa)

   • Ownership that doesn’t match your will, trust, or business agreements

3. Prioritize the high-impact items

   • Anything that could cause a big tax, estate, or liability issue moves to the top of the list.

   • Fix those first with your advisor team.

4. Coordinate with your “triangle” of advisors

   • CPA/Tax advisor – to understand tax implications of moving assets.

   • Financial planner – to align titling with your goals, risk management, and investment strategy.

   • Estate/business attorney – to update documents, deeds, and agreements correctly.

5. Revisit periodically

   • Marriage/divorce, kids, new business, selling a business, moving states, or major windfalls are all triggers to review titling again.

Where I come in

At AVL Advisory, I look at your entire picture, taxes, investments, business, and estate planning, so we can spot titling traps before they become expensive problems.

For couples, that means:

• Making sure each of you is protected and provided for

• Aligning account titling with your wills, trusts, and beneficiary designations

• Reducing surprises and “accidental disinheritance”

For business owners, that means:

• Cleaning up how business and personal assets are held

• Coordinating entity structure, titling, and tax strategy

• Building a plan that supports the business you have and the exit you eventually want

If you’re not sure how your accounts and assets are titled, or you have a nagging feeling something isn’t quite right, this is exactly the type of work I help clients with.

If you’d like a coordinated review of your titling, taxes, and financial plan, you can book a call directly from my website’s contact page or online calendar.

Useful references:

• Consumer Financial Protection Bureau – estate and housing guides

• FDIC – how different account types are treated

• Wells Fargo – TOD/POD overview

Own-Occupation vs Any-Occupation Disability Insurance: What’s the Difference and Why It Matters

Disability insurance replaces a portion of your income if an illness or injury prevents you from working. Policies can be short-term (often three to six months) or long-term (potentially to retirement age), and the most critical clause in any policy is its definition of disability, that wording controls when benefits get paid.

Quick refresher: how disability insurance works

Long-term disability insurance is designed to replace a set percentage of your earnings, commonly in the 50–70% range, and benefits begin after a waiting (“elimination”) period. Typical features to evaluate include: the disability definition, benefit period, elimination period, residual/partial benefits, COLA riders, renewability, and potential offsets with other benefits (e.g., Social Security).

The two key definitions of disability

1) Own-Occupation

You’re considered disabled if you cannot perform the regular and customary duties of your own occupation due to a covered illness or injury. Many long-term policies start with an own-occupation definition for the first year or two of a claim (some keep it for the full benefit period). Because it’s easier to qualify under this standard, premiums are typically higher.

2) Any-Occupation

You’re considered disabled only if you cannot perform the duties of any occupation for which you’re reasonably qualified by education, training, or experience. In many long-term policies, the definition shifts to any-occupation after an initial own-occupation period, making benefits harder to qualify for thereafter.

Note: Government programs like Social Security Disability Insurance (SSDI) use their own, very strict standard, disability must prevent you from engaging in any substantial gainful activity (SGA) for at least 12 months or result in death. That’s different from private insurance but helps illustrate how demanding “any work” tests can be.

Pros and cons at a glance

Own-Occupation

Pros

• Easiest path to benefits if you can’t do the core duties of your current occupation, even if you could do other work.

• Often pairs with residual/partial benefits, allowing part-time work while receiving proportional payments.

Cons

• Higher premiums relative to any-occupation.

• Some policies limit the own-occ period (e.g., first 24 months) before switching to any-occ, verify your contract.

Best fit (commonly)

• Specialists and higher-income professionals whose job-specific skills drive their earnings (e.g., surgeons, trial attorneys, executives). Rationale: protection is tied to inability to perform your specialty, not “some other job.” (General description based on regulator/industry guidance about how definitions operate; always check your policy.)

Any-Occupation

Pros

• Usually lower cost than true own-occupation coverage.

• Aligns with some employer group plans that integrate with public benefits (understanding offsets is important).

Cons

• Harder to qualify if the insurer shows you can do work consistent with your background (even at lower pay), benefits may be denied.

• When a policy converts from own-occ to any-occ after a set period, benefits can stop unless you meet the stricter standard.

Best fit (commonly)

• Buyers prioritizing affordability and willing to accept a stricter definition, or those supplementing other safety nets but needing basic protection. (General description; confirm details in your certificate/policy.)

Why many policies “mix” definitions

It’s common for long-term disability contracts to start with own-occupation for a limited period (e.g., 24 months) and then transition to any-occupation for the remainder. Understanding exactly when that switch occurs (if at all) is crucial to projecting how long benefits may last.

Other levers that change real-world outcomes

• Residual/Partial benefits: Let you work part-time and receive a partial benefit based on income loss—a key feature for gradual returns to work.

• Benefit amount & offsets: Private benefits are usually 50–70% of pre-disability income and can be reduced by other sources if the policy includes offset provisions.

• Elimination (waiting) period: Longer waits typically mean lower premiums; ensure you have cash reserves to bridge the gap.

• Renewability & COLA riders: Non-cancelable/guaranteed renewable provisions and cost-of-living adjustments help preserve value over time.

Putting it together: which definition should you choose?

• If maintaining your current profession (and income level tied to it) is critical, an own-occupation definition is generally considered more protective, hence why it often costs more.

• If you’re cost-sensitive and can accept a higher hurdle for benefits, especially after an initial period, an any-occupation definition (or a blended own-then-any policy) may suit your risk tolerance.

Regardless of choice, buy from a licensed insurer/agent, read the exact policy language, and confirm how residual benefits, offsets, renewability, and elimination periods work in your situation. State insurance departments and national organizations provide helpful consumer checklists.

Sources (reputable, regulator/industry)

• National Association of Insurance Commissioners (NAIC) - Consumer guidance on disability insurance, including how definitions vary and what to compare. NAIC

• North Carolina Department of Insurance - A Consumer’s Guide to Disability Income Insurance (clear definitions of own-occupation vs any-occupation and common policy structure). NC DOI

• Insurance Information Institute (Triple-I) - What to look for when buying disability insurance; explains own-occ vs any-occ and blended definitions; residual benefits. III

• Social Security Administration - SSDI’s strict “any substantial gainful activity” definition (for context on “any work” standards in public programs). ssa.gov

• NAIC MCAS Instructions (2025) - Regulator usage of “own occupation/job” vs “any occupation/job” terminology in disability reporting. NAIC

This article relies only on the sources cited above. If your policy language differs from these general descriptions, the policy controls.

Money Map Monday: The 3 Top Priorities For Your Money (Start Here)

If you want financial progress that actually sticks, stop trying to optimize everything at once. Win the big battles first. But before you begin diving into these priorities, you should first construct a budget. Creating a household budget can be a sobering exercise, but it serves two functions. The first is that it tells you exactly how much money is coming in vs how much is going out. The second is that it illustrates the cash flow needed to achieve your financial objectives. I typically recommend that my clients use RocketMoney or Simplifi when creating their household budget. You’re certainly welcome to go old school and use Excel and your bank statements, but these apps make it easier for you to track your spending as they sync up with your online bank accounts.

To construct your household budget, you’re going to want to use a minimum of 12 months of historical information. This way you can identify all recurring expenses that occur, weekly, monthly, and annually. You will also be more able to identify expenses to cut back on, and familiarize yourself with the flow of income into your household in the form of salary increases, bonuses, and investments.

Here are the three priorities I have clients tackle, every dollar you earn should flow through this sequence before anything else.

1) Fortify Your Safety Net (Cash First, Always)

Why it matters: Cash is your shock absorber. Without it, every setback (car repair, slow month, medical bill) turns into debt and derails your plan.

Target:

• Starter: $5,000+ immediately. I recommend keeping this amount in your checking account to cover immediate living expenses. Adjust this figure depending on your average months’ living expenses.

• Emergency Fund: 6-12 months of living expenses (business owners: 18-24 months). This is your emergency fund to be used for…well…emergencies. This fund guards against unforeseen events such as job loss, deteriorating health, or even death. It’s required to maintain your ability to pay the bills and continue to fund your goals.

• Storage: Your emergency fund should be kept in assets that are liquid. Liquidity is your ability to convert assets into cash quickly without incurring a loss to the principal amount of the asset. There is a common misconception that Certificates of Deposit (CDs) should be used for this purpose, however, they are not liquid assets since you can incur penalties upon withdrawal before their maturity date. It is recommended that households store their emergency funds in a money market or high-yield savings account (HYSA).

How to do it this week:

• Open/confirm a dedicated HYSA and nickname it “Emergency Fund.”

• Automate a transfer the day after each payday (e.g., $250–$1,000).

• Park irregular windfalls here first (tax refunds, bonuses, side income).

Avoid: Investing your emergency fund, mixing it with checking, or chasing credit cards as “backup.”

2) Kill Expensive Debt (Guaranteed Return)

Why it matters: A 20% APR can be one the loudest expenses in your life if you let it. Paying it off is a risk-free, after-tax “return” you can’t find in the market.

Order of attack:

1. Toxic debt: Credit cards, buy-now-pay-later, personal loans >8–10% APR.

2. Gray area: Car loans and private student loans 5–8%.

3. Strategic: Mortgages and federal student loans ≤5% (often keep, not rush).

How to do it this week:

• List balances, APRs, minimums.

• Pick a method: Avalanche (highest APR first) or Snowball (smallest balance first, behavioral win which motivates you to keep going).

• Automate extra payments on your target account; minimums on the rest.

• Consider 0% balance transfer ONLY IF you’ll pay it off within promo period and avoid new spending.

Avoid: Paying extra on low-rate debt before you’ve erased high-rate debt or funded your emergency cash.

3) Pay Your Future Self (Automatic, Tax-Smart Investing)

Why it matters: Compounding rewards people who start early and stay consistent. Automation makes you both.

Priority order:

1. 401(k) up to employer match (it’s free money).

2. HSA (if eligible): triple tax advantage; spend in retirement if not used earlier.

3. Roth IRA/401k (or Traditional Nondeductible IRA, depending on tax bracket & phaseouts).

4. Taxable brokerage for flexible goals (home, freedom fund, early retirement).

How to do it this week:

• Turn on auto-contributions on payday.

• Choose a simple, diversified allocation depending on your goals and risk tolerance (e.g., broad stock index + bond index) you can hold through cycles.

• Increase contributions 1% each quarter or after each raise until you hit targets.

Avoid: Timing the market, owning a dozen overlapping funds, or leaving cash idle once your emergency fund is set.

Your 60-Minute Money Map (Do This Today)

• 10 min: Set a recurring transfer to your HYSA.

• 15 min: List all debts (balance/APR/min). Start avalanche or snowball.

• 15 min: Log into your 401(k) and raise contributions to capture the full match.

• 10 min: Open/verify HSA or IRA if eligible; schedule a monthly contribution.

• 10 min: Create a simple “payday rule”:

• Dollar 1 → Emergency Fund until target met

• Next dollars → High-APR debt payoff

• Then → Investments (401k/HSA/IRA/brokerage)

• Finally → Lifestyle upgrades

How Much Should You Invest?

As a rule of thumb:

• Beginner: 10% of gross income (build the habit).

• On track: 15%—20% (typical for long-term goals).

• Aggressive/High earners: 25%+ (to buy flexibility and time).

If you’re a business owner, also build:

• Operating cash reserve: 6-12 months of business expenses.

• Quarterly tax set-aside: Separate account, funded automatically.

When To Go Beyond The Big Three

Consider layered strategies once the foundation is solid:

• Tax-loss harvesting & asset location (taxable vs. tax-advantaged).

• Mega backdoor Roth, cash balance plans (for higher earners/business owners).

• Insurance audits (life/disability/umbrella) and estate documents.

The Bottom Line

Most people spread themselves thin and stall. The Money Map keeps you focused: Cash → Crush high-interest debt → Automate investing. Nail those, and everything else becomes optimization.

Want help customizing this to your situation? Book a 15-minute intro and I’ll map your exact numbers into this framework and show you the tax-smart order for your contributions and paydowns. Be sure to subscribe to my newsletter for more money tips.

Educational only, this is not individualized financial, tax, or legal advice. Investing involves risk, including loss of principal.

Preview — 2025 Year-End Tax Playbook

Cover of 2025 Year-End Playbook

When high earners wait until March to “deal with taxes,” they miss the moves that only work before December 31. That’s why I built the 2025 Year-End Tax Playbook, a concise, actionable guide with 12 smart moves you can use now to legally reduce your federal tax bill if you’re a W-2 high earner or a Florida business owner.

What’s inside (and how to use it)

You’ll get: the 12 moves, quick-reference limits for 2025, a one-page checklist, and the exact documentation to keep. Start by skimming the checklist, marking what applies to you, and then book a 15-minute discovery call if you want the plan tailored to your numbers.

A few standout plays

• Max retirement savings, lower AGI: Increasing 401(k)/403(b)/457 deferrals reduces AGI (and may reduce exposure to the 3.8% NIIT).

• Backdoor/Mega Backdoor Roth: Use nondeductible IRA + Roth conversion (mind the pro-rata rule), and if your plan allows, consider after-tax 401(k) contributions with in-plan Roth or in-service rollovers.

• HSA “triple play”: Contribute (pre-tax/above-the-line), grow, and withdraw tax-free for qualified medical expenses—often worth investing for the long term.

• Harvest losses & rebalance: Offset gains (and up to $3,000 ordinary income) while keeping market exposure—avoid wash sales.

Your 2025 quick-reference numbers

A handy page in the playbook lists key limits, like 401(k) deferrals, overall additions, IRA and HSA caps, standard deduction, QBI phase-outs, and the NIIT thresholds, so you can act with confidence.

One-page checklist (so you actually do this)

The last pages boil the plan down into a punch-list, retirement contributions, conversions, HSA, loss harvesting, charitable moves, S-Corp items, QBI, Augusta Rule, and year-end withholding/estimate clean-up, plus a “what to keep” list for audit-ready documentation.

Ready to personalize it?

If you want this tailored to your exact income, benefits, and entity setup, book a 15-minute discovery call and we’ll turn the playbook into your plan.

This playbook is educational, not individualized tax, legal, or investment advice. See the important disclosures inside.

Welcome to AVL Advisory!

Lower Lifetime Taxes with Integrated Planning

When taxes, planning, and investments live in separate silos, you pay for the seams. AVL Advisory builds one coordinated plan that lowers lifetime taxes, funds what matters, and keeps the execution tight, every quarter.

I’m Anthony Lupoli, a lifelong Ormond Beach local, CPA/PFS, CFP®, and founder of AVL Advisory. After years of preparing returns and building plans, I saw how often good decisions in one area unintentionally created problems in another. Our firm exists to align your money decisions so they stop working at cross-purposes and start compounding in the same direction. Our Mission is simple, to bring clarity and confidence to your financial life through tax-smart, fiduciary advice delivered by a boutique team that knows you. No hype. No gimmicks. Just coordinated strategy and disciplined execution. As a graduate from UCF and Stetson University, I’m deeply involved and committed to the local community, and built AVL Advisory to blend rigorous tax expertise with practical financial planning, so clients can make smart, confident decisions without the noise.

What Makes us Different

1. Tax-First, Always: Every planning item runs through a “What’s the tax delta?” check.

2. Fiduciary Standard: As a fee-only CFP® and RIA, we’re legally and ethically obligated to put your interests first, full stop.

3. One Plan, One Team: Taxes, planning, and portfolios live in a single dashboard with owners + due dates. No email tennis or phone tag.

4. Owner Access: You get professional depth with white-glove responsiveness; no call-center feel.

5. Execution Rhythm: Quarterly cadences (estimates, reallocations, vesting events, Roth conversions) so nothing drifts.

Who We Serve Best

• High earners (W-2 + bonuses/RSUs): Net Investment Income Tax (NIIT) management, 83(b)/10b5-1 elections, bracket choreography around vesting.

• Business Owners (S-Corp/LLC): Reasonable comp, QBI optimization, accountable plan, retirement design (Solo 401(k)/Cash Balance).

• Estate planning for families needing tax-efficient strategies to pass on their wealth as intended.

• 5-year runway to retirement: Roth conversion windows, Social Security timing, withdrawal/sequence risk control.

If you value straight talk, transparency, and accountability, you’ll likely feel at home here.

The AVL Advisory Process

1. Intro Call (15–20 min): Mutual fit and goals.

2. Deep-Dive Discovery: Statements, taxes, benefits, risks, and constraints.

3. Plan Build & Strategy Session: Clear priorities, timelines, and trade-offs.

4. Implementation: We coordinate accounts, transfers, allocation, and tax actions.

5. Ongoing Rhythm: Quarterly check-ins + ad-hoc as life changes; annual tax and plan updates.

What We Won’t Do

• No promises about beating markets or “guaranteed” outcomes.

• No product pushing. Our advice isn’t tied to sales quotas.

• No jargon smokescreens. If we can’t explain it in a paragraph, we don’t ship it.

Getting Started

• Step 1: Book a brief Intro Call.

• Step 2: We’ll send a short checklist so we can make our time together count.

• Step 3: If we’re a fit, we’ll outline scope, fees, and next steps; no surprises.

Prefer to start with education? Subscribe to our social media channels (links on our homepage) for practical, tax-smart guidance with zero fluff.

When your taxes, planning, and investments finally point in the same direction, decisions get simpler and outcomes feel calmer. That’s the promise of our process, not guarantees, just clarity, coordination, and a fiduciary partner who knows your full picture. If you are someone who values straight-talk, tax-smart coordination, let’s connect!