Estate planning is a crucial part of any financial plan. One of the first discussions we have with new clients is about whom they want to oversee their financial and health decisions if they are unable to do so themselves. It is crucial to have primary and contingent people identified for each role. There is a lot of confusion about the various estate terms, so we have put together this primer.
Setting New Year’s resolutions is a common practice for millions of Americans. Although we all know the stats about how frequently we fail to live up to them, it doesn’t mean we shouldn’t try. If we don’t set goals, then there is a 100% chance we won’t meet them. With that in mind, we have some typical, and not so typical, financial New Year’s resolutions to consider adding to your list for 2022.
Financial and tax planning advice is relatively easy to find online for married couples and single individuals. However, according to the U.S. census, about 8% of adults live with an unmarried partner. When you are living with a long-term partner, you may think of yourself as married for most purposes, but the law treats you very differently than it does a married couple. It is important to understand these differences, as they can have a dramatic impact on your lifetime taxes paid. It used to be that if you were LGBTQ+ and in a relationship, you were going to be an unmarried couple, as the federal government did not recognize same-sex marriage. This all changed in 2015, when gay marriage was made legal by a Supreme Court decision. However, many LGBTQ+ couples were long disgusted by the lack of marriage equity and chose to remain unmarried even after the court decision. This means there are still many unmarried LGBTQ+ couples.
Second marriages can be complicated, especially if you have children from your first marriage. You want to protect your current spouse, but also want to make sure your children inherit assets at some point. If you leave everything to your current spouse, there is the possibility that they can change their beneficiaries to someone other than your children in the future, leaving your children without an inheritance. Below, we will discuss two ways to pass on your assets in a second marriage situation.
Many people aren’t aware of what an estate tax is. Most of us are familiar with other forms of taxes. Estate taxes are taxes levied at your death. United States citizens currently receive a lifetime exemption from estate taxes that is high - $11.7M in 2021. – While that may seem like a lot, estate taxes are levied on any assets a person owned or controlled at death, including small businesses, life insurance proceeds, their house, cash and investments, 401(k), other retirement accounts…etc. There are deductions for debt, final expenses such as a funeral, and certain charitable bequests or other giving.
On April 28th President Biden pitched his American Families Plan to select group of members of Congress. Near the end of the proposal was a section entitled “End capital income tax breaks and other loopholes for the very top.” The first part of this section covered changes to capital gains tax rates that we covered in a previous blog article. The second part covered closing the “step-up” loophole (see text below) which is what we’re going to cover in this week’s blog.
The financial planning considerations when entering your 50s can be quite extensive. Between retirement rapidly approaching, life changes, and estate planning issues, there's a lot on the to-do list! For many, this is their last full decade before retirement. It is one of the last chances to save, plan, and make sure you are on track to meeting your long-term financial planning goals. While there are many topics to review, some of the big ones are: - Overall retirement planning considerations - Big life changes - Reviewing your insurance - Updating and reviewing your estate plan
As financial planners we are always stressing the importance of a complete estate plan. This goes beyond just having a will. You'll also need a power of attorney for financial affairs and healthcare, if you are unable to make decisions for yourself. In some cases, a trust is another key component. But, if you're on Medicare, the government requires an additional form to provide information about your coverage to others.
Health and finances are likely the only two topics on most people's minds these days. How can you keep yourself and your loved ones safe and healthy through this pandemic? And what should you do with your investments during this recent market drop? Managing your investments prudently and resisting the urge to sell stocks while the market is down are certainly important financial planning considerations. However, as financial advisors, we wanted to highlight other crucial financial planning areas that often don't get as much attention in the news media.
Buying a home is an enormous financial decision. How much should you put for a down payment? How long should the loan be for? What is the interest rate? The list goes on and on. A home purchase is a complex financial decision for married couples, and more so for unmarried couples. If you're in a situation where you're considering buying a home before saying "I do", here are a few considerations before you pull the trigger.
Since the SECURE Act became law in December 2019, there has been a lot of talk in the press that the “Stretch IRA era is over”. The “Stretch” referring to the ability of the beneficiary of an IRA to stretch out Required Minimum Distributions (RMDs) from the IRA over the beneficiary’s lifetime. It is true that the SECURE Act has changed the rules for some beneficiaries of IRAs who now have only 10 years to fully distribute the funds inside inherited IRAs. But there are notable exceptions that impact LGBTQ estate planning when it comes to choosing beneficiaries.
After much deliberation in Congress, the SECURE Act has made its way through and is likely to be signed into law this week. For those who missed it, we wrote a post back in June about the proposed changes to the retirement saving landscape. Now that the law has been finalized, we wanted to highlight some of the key changes and how it might impact you and your retirement savings.