2021 could present certain trends and implications that our financial planning clients may find worth noting. Now that the Democratic party has the oval office and majorities in both the Senate and House, some portion of the federal estate tax exemption for those with a certain net worth could be on the chopping block and there seems to be no end to the pandemic’s effect on the health of the economy.
It’s time to speak with us now in order to weigh your options and position your portfolio. Here’s what’s on the line…
Interest rates under a new administration
Tax policy changes under a more progressive government
Pandemic considerations in spite of vaccinations
Cash for savings, money markets, short-term Treasuries, and CDs to cover short and long term situations
Stock investments in an uncertain market ahead
More targeted charitable giving during Covid-19
Advance directives, such as a living will, health-care proxy, and do-not-resuscitate order
Considerations based on where you are in your life (raising a family, heading for retirement, currently retired, employment situation)
Financial planning, wealth management and investment planning work together to help you reach your financial goal regardless of what may come in 2021. Call today.
We hope you had a happy Thanksgiving. It’s always a special holiday. Rooted in connection, harmony, and unity during adversity. And isn’t this all what we’re going through in 2020? After a difficult first year, the remaining Plymouth colonists in 1621 were just glad to be alive.
There are many stories of that first Thanksgiving celebration in 1621. The European colonists and the Indigenous Wampanoag tribe gathered in Plymouth, Massachusetts, to share a meal and thank God for a bountiful season of good crops. But historians argue that the first Thanksgiving actually occurred 60 years earlier!
Near the Matanzas River in St. Augustine, Florida, Spanish soldiers, sailors and settlers broke bread with the indigenous Timucuans following a Mass of Thanksgiving in June of 1564.
Had it not become the American tradition to celebrate the Plymouth meal, we’d be gathering with friends and family for Thanksgiving in the Summer. There’d be no Black Friday (which was pretty much true this year anyway) and Americans would lack that all-important calendar reminder to start the mad rush toward Christmas with all its gift buying, decorating, cookie making, elf pleasing, card sending, trip planning, do-gooding, and merry making!
We like the autumn Thanksgiving because it’s a reminder for our clients to schedule a year-end review. Celebrating holidays, and having regular financial reviews with your advisor, are both important for our mental and physical well-being. So do both.
Have you had your financial plan review this year? If not, give us a call now before the year runs out. Call (614) 800-7985 or email us.
If your charitable giving is limited to cash donations to organizations and causes you love, you may want to take a more strategic approach. Who wouldn’t want to pay less in taxes while at the same time making your charitable giving go further and do more than you ever dreamed!
The TOP 4 Charitable Giving Strategies
#1 Beneficiary Designations
Donors can designate a charitable organization as a beneficiary of their will, retirement plan, individual retirement account (IRA), life insurance policy, annuity, or any other asset that passes by contract, such as a payable on death account. The charity can be the primary beneficiary or one of several beneficiaries. Accounts with named beneficiaries are generally not subject to probate; however, designating a charitable beneficiary under a will is subject to probate. Distributions of retirement assets that would be subject to income tax, such as from a traditional IRA, are also exempt from income tax when passing to a charitable organization.
#2 Charitable Remainder Trust
If you want to make a future gift while retaining the right to income from the assets during your lifetime, you could consider a Charitable Remainder Trust. This is an irrevocable trust funded with either cash or property. You retain the right to an income stream that is either a fixed amount or a fixed percentage, such as with a Charitable Remainder Annuity Trust (CRAT) or Charitable Remainder Unitrust (CRUT). Income is paid for a number of years or for the life of the income beneficiary. When the trust ends, the assets pass to the charitable entity. You may be entitled to a tax deduction when you transfer assets to the trust. Also, by donating highly appreciated property to the trust rather than selling it and donating cash, you avoid incurring capital gain tax on the sale of the property since the trust, not you, owns the property. Keep in mind that such a trust is irrevocable, so you cannot terminate it or change the terms (other than retaining a power to change charitable beneficiaries). Also, the assets in the trust will not be available for your heirs.
#3 Charitable Lead Trust
Like the CRAT or CRUT, the Charitable Lead Trust makes periodic payments for a term of years or for life, but the payments go to a charitable entity rather than to the donor or another individual. When the trust ends, the remaining assets return to you or pass to other noncharitable beneficiaries, such as your children. Depending on how the trust is structured, you may be entitled to an income tax charitable deduction when assets are transferred to the trust.
#4 Donor-Advised Fund
If you would like to make multiple gifts but are tired of the paperwork, consider creating a donor advised fund. This is a charitable fund managed by a community foundation or a charitable entity created by a bank or other organization.
Contributions to a Donor-Advised Fund are tax deductible; however, assets transferred to the fund do not need to be immediately distributed to a charity. You may retain the ability to make recommendations for distributions to charitable beneficiaries; helpful if you want to take a charitable deduction but are not yet sure which charities you want to support.
These charitable giving methods may allow you or your heirs to benefit from your assets while providing needed funds to charity during your lifetime. If any of these options interest you, contact us now email@example.com to see if which of these planned gift strategies can benefit your overall estate plan.