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.
Considering the multiple security breaches recently disclosed by LastPass, we thought we would dust off and repost a prior blog regarding online security. While some people are calling for users to ditch LastPass entirely, a password manager is often much more secure than other methods of storing sensitive data. In addition, if your account is protected by 2-factor authentication and password best practices, your data is much less likely to be compromised.
If you use Venmo, Cash App, PayPal, eBay, etc., to send or receive payments, this may apply to you! U.S. tax law states that “gross income is ALL income received from whatever source derived.” Some people are under the false impression that if you do not receive a Form 1099 or federal W-2 form, you do not need to report the income. That is a dangerous perception, considering the severity of tax penalties for knowingly underreporting your income to the Internal Revenue Service (IRS). The “tax gap” in the U.S., defined as the difference in the taxes owed versus the taxes that were paid, was estimated at over $600 billion in 2020. The IRS has taken steps to reduce the tax gap, and one way is by reducing the threshold at which businesses and individuals must file Form 1099-K to report payments.
Stock and bond markets are falling, inflation is persistent, and the media keeps talking about a recession…what portfolio changes should you make? Should I Sell My Stocks? The current volatility in the stock market has many people asking the same question. The answer is no, you should not sell your stocks. Let’s remember that the average intra-year decline (drop at some point during one calendar year) is about 14%. We simply forget about this after the markets have recovered again. When your portfolio falls steeply, it is normal to have an emotional response. Do not react to it! By far the most powerful emotion in investing is long-term regret, and if you sell now, you will certainly regret it later.
You have worked very hard all your life and are now interested in slowing down, but you just do not know if you can afford to not have a paycheck coming in. This blog is aimed at the frugal among us — you know who you are. You diligently saved 15%-20% of your income most of your life, kept your lifestyle below your income, hate debt and are paying down your mortgage. Your goals include spending money on experiences, not things. You do not want to worry about your day-to-day living expenses, including medical costs and health insurance. In my 18+ years as a financial advisor working with individuals and couples, the one thing everyone who can afford to retire has in common is…not their net worth. Not their income. Not their demographics (single, married, divorced, widowed…). Not their occupation.....
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.
My colleague Nick Prigitano, CFP®, wrote about when you should file for Medicare, but what happens to your Health Savings Account (H S A) after you retire? We love HSAs due to the triple tax benefits associated with contributing to an HSA. To summarize, you can take a tax deduction for the contribution (which never phases out at any income level), the money can be invested and grows tax-free, and there is no tax when you withdraw the money to pay for qualified medical expenses. Of course, to be able to contribute to an HSA in the first place, you must be enrolled in an HSA-eligible health plan that has “HSA” in its name.
What makes people happy, content and fulfilled? More money and more stuff can give a temporary boost to someone’s mood, but it can’t make them truly happy. Financial contentment is understanding that money and things are not what provide fulfillment. What makes most people happy is having a sense of purpose, having a sense of contentment, spending time with family and friends, and making a difference in the world. Today we are going to discuss why you should give—and how to give—to individuals in a tax-efficient way.
Many people like to donate to charity. Often, people will write checks or make an online donation to a variety of charities throughout the year. Since most people now take the standard deduction instead of itemizing their deductions on their tax return, they usually don’t get the maximum bang for their buck by donating in this fashion.
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.
From fraudulent transactions to identity theft, securing online accounts is a hot topic in financial planning discussions in today’s cyber-connected world. There are some things you can do to protect yourself. Just like locking your doors and installing a security alarm and security cameras can protect your physical assets, there are similar approaches that can protect your online accounts.