Archive for 'Great Info'

A Good Advisor- The Conscious Difference

The question that many ask themselves is: “Who is a good advisor for me and should I trust them?”

I personally believe that the world of financial advising has gravitated too long around who is going to give us better returns or interest rates, and ignoring somewhat, the market uncertainties.

Our company’s belief is that at retirement age or just before (age 55-70), we need to change our perspective on investing and switch gears thinking about income instead of ½ a percentage more in return. Because it is the income that our investments are going to create that is important and will carry us through golden years. To not outlive this income is very important as well

Therefore, here is what a good advisor should do or be for you…

Advising should always be driven by “life changes.” Life changes determine in the early years how investments should be allocated and in the later years, how the income should be created and distributed. As advisors we need to know intimately the lives of our clients and the changes that life brings them. In the early stages we need to look at job changes, loss of a job, marriage, divorce, birth of children, death of a spouse of a parent. Later in life, we need to be concerned with the sale or purchase of a business, inheritance, addiction, special needs, sickness, death and many other important life changes.

All of these life changes bring inevitably money changes and the advisor should be there to coach and help you sort through all of it. These are events that affect your life. The advisor must assist in assessing the life choices first, than strategize the financial decision that will support that unfolding goals and objectives of the client’s life plan and its financial requirements. Therefore, in addition to financial planning there is a need for life planning, to meet life transition as they come up.

So, the financial advisor should help you plan your will, estate plan, and other needs such as Long Term Care. In the end, you should be a person to the advisor and client second. At PreserveFIRST we are looking forward to the rest of your life when you hire us to work for you!

Revocable Trusts

A revocable trust is a legal instrument used to transfer property at the event of a death.  Similar to a will it works in conjunction with one and allows to transfer the properties without going through the courts or “probate” as it is known.

The main reason for creating a revocable trust is to avoid probate and to have a say in the event you become incapacitated in the future and to keep your various investments private.  The word revocable will allow changes to be made as opposed to an “irrevocable” trust.

A revocable trust is similar to a will, created when you are alive however; with a trust it must be funded.  That means that the trust will own most or all of your properties.  In fact… your bank account, your investments, automobiles, home etc… are all owned by the trust and you become the trustee.  Meaning property is held in the name of the trust versus the trustee.  Most of the time they are the same.  This process may result to be time consuming since you have to remember to include every property or investment you ever make into the trust and remove them off the trust should you sell a property or close an investment.

The revocable trust benefits the person or couple that creates it.  Usually the couple that creates a trust names themselves as the trustee and the beneficiaries respectively.  At the event of death the last survivor the property is passed accordingly to what is specified in the document.  It is a good idea to name a trustee that will handle all of this at the inception of the trust and that has a competent lawyer to carry out the wishes of the trustees.  I would not suggest a trust web generated document because they may not be specific to the State requirements of the State in which you live in and therefore not acceptable.

Important Tax Changes & Information

There have been many changes at the end of 2012 when Congress said they solved the “Fiscal Cliff”. The only thing done was to impose a massive hike on all of us; not only on the “rich!” There were absolutely no cuts to any expenses… just what the doctor ordered!

One of the most important changes is the extension of the existing estate tax exemption to %5.25 million per person, except that the tax rose from 35% to 40%. We are slowly creeping back to the 50% taxation.

The 5.25 million exemptions are permanent and are also indexed for inflation. This means that it will increase each year. In addition, also the lifetime exemption for the gift and generation skipping transfer has increased to 5.25 million per person. Taxes to amounts exceeding these limits have also risen to 40% and the exemption is indexed for inflation as well.

Another thing that has been implemented is that the law made portability a permanent part of the estate tax. What it means is if a person with a taxable estate died and left his estate outright to the spouse, the survivor use to lose the ability to shelter property tax from the estate taxes upon his/her death. While the inheritance itself did not cause any estate taxes because of the unlimited marital deduction, the estate tax exposure of the heirs would have increase. Only a bypass trust would have been part of a proper estate planning and that would have helped the situation.

Now, when a spouse leaves property directly to the surviving spouse, that can be added to the survivor’s exemption potentially doubling the amount that can be given away during lifetime of let tax free at death. Even with portability, the creation of a bypass trust is still a better option for couples that have the possibility of having a taxable estate. In addition, a trust protects from creditors and can appreciate in value over time, whereas the unused exemption is a fixed amount.

The gift tax annual exclusion, in 2013, goes from $13,000 to $14,000 and is also indexed to inflation. That enhances the option available to people who want to make gifts while alive.

Whatever your situation is you should seek help of a professional estate planning attorney. You need to see if the changes in the law require a change to your current plan, and if you do not a plan, it is a great time to see if you need one. Our company is equipped to help you with that so please give us a call at (832)320-3311.

Taxes, Taxes, Taxes

It is that time of year when we have to meditate on the greatness of God and the birth of His Son, Jesus.  Let us be thankful for what He has brought into our lives and let us ask for what we want; and be thankful for his unconditional love.  To be grateful is essential to our well being and it will bring us what we desire for the future.  Along with the knowledge that if we ask for something in prayer and believe that we already have it; it will be ours to have. (Matthew, chapter 21 verses 21-22 and Mark, chapter 11 verses 23-24).  The truthfulness of those words resonates beyond any religion you may believe in.

One of the things that have been given to us by our benevolent central government that we did NOT ask for is… Obama Care.  Independently from going “down the cliff” or not, a new tax will be in effect as of January 1st.  3.8% tax on unearned income above $200,000 for individuals and $250,000 for families.  It is ONLY for the rich!  Think twice…it will affect anyone who that has income from sales of a home or home rentals; so it will easily hit middle and low income people even if they are only “rich” for one day!  It will include interest you receive on savings accounts, social security income, unemployment checks, child support and income from home sales.

The new tax is not indexed to inflation, so more people will fall under each year.  Seniors on fixed income and people with IRA’s and 401K plans will be hit particularly hard.

But if people will swallow 3.8%, why not raise it to 9%?  Or 15%?  Or maybe lower the threshold?  Do you expect any different from our government that should never have had these powers to begin with?  And there is more to come…Like Miss Pelosi said, “We must pass the bill so that we can find what is in it?”

Now, more than ever, it is time to write our senators and representatives and demand the demise of Obama Care and make them listen!  I believe it is going to affect everyone equally whether you are a democrat or a republican.  In time…

Now more than ever will you need someone to advise you financially.  True advice.  Advice aimed to show you tax efficiency and income planning.