​A will is an important document most people don’t want to think about, but it’s crucial to have in place to protect your assets and ensure your loved ones receive what you want them to.
It can be wise to have a lawyer write up the documents in your will to keep everything legally sound and eliminate any confusion. Before approaching a lawyer and putting pen to paper, think through the items below. Keep in mind your will won’t come together in a day because it can take time to make these critical decisions.
 
Financial assets
Unless you explicitly specify who it should go to, your money will most likely go to the state. To prevent this, account for every penny. Make sure to cover all your accounts and investments. Speak with your financial advisor and have them compile a thorough list of your financial assets so you don’t forget anything. Here are examples of what to cover in your will:

• Checking accounts
• Certificates of deposit
• Cash value life insurance
• Medical savings accounts
• Retirement accounts, including employer plans
• Savings accounts
• Taxable investment accounts

Property
Real estate can be tricky to outline in a will. Property isn’t as cut-and-dry as a trail of financial assets. Some people have multiple property investments or multiple beneficiaries, which can complicate the equation. The more specific you are in the will, the less likely it will be there are complications in your absence. Here are questions to ask your lawyer about including real estate in your will. Be aware that state laws can vary on this topic.

• If my property isn’t going to a spouse, who can it legally go to?
• How should the proceeds of my home sale be distributed between multiple heirs?
• What if one of my heirs wants to retain the property as a residence?
• Can I assign different percentages of the property to multiple beneficiaries?
• How will my outstanding debts affect this process?

 
Debts
Managing outstanding debts after a death of can cause a lot of anxiety, but it doesn’t have to be that way. First, debts are not always the legal obligation of your heirs. Oftentimes the proceeds from an estate sale will go toward paying off your debts first. Here is a helpful breakdown of what kind of debt will still need to be paid off and what will go away upon your death. Work with your financial advisor to pay off outstanding debt so that your estate sale proceeds can go directly to your beneficiaries.

• Auto loans: Your vehicle will be sold if there are outstanding loan payments. Otherwise, the lender reserves the right to seize the vehicle until the loan is paid off by next of kin or an outlined beneficiary.
• Credit cards: Debt will be paid out of an estate sale prior to the distribution of assets.
• Student loans: Federal loans are discharged upon death, but private loans will need to be paid out by the estate.
• Mortgages: If your property is worth less than the amount left on your loan, your heirs will work out a short sale agreement with the lender, otherwise the property goes into foreclosure. However, if an heir chooses to reside in the home, they may be allowed to take over your remaining mortgage payments.

Personal possessions
Most people think about large items, such as financial assets and property, but don’t forget about your personal possessions. Take inventory of your jewelry, furniture, and other items that you want to be left to a loved one. It’s important to do so because your assets could be taken and auctioned to repay your debt unless you specify who you want them to be left to. Have any high-value items appraised if you want the proceeds from the sale of your possessions to go to someone specific.

Executor or witness
An executor of a will is the person you choose to administer your estate. They do not need to be a beneficiary, just someone who can take care of your estate after you die. This is not the same as a power of attorney, which is someone who can take care of your estate while you are alive if you become unable to care for yourself. It’s often advised that you name someone with no personal interest in the matter, such as an estate planning attorney.
If you choose to write your own will, which is not often advised, you will need someone present to witness you signing and agreeing that the document is correct. Be sure to research the law in your state because some states do not allow heirs to be witnesses.

Documents
Alongside your will, you should keep these important pieces of paper handy and accessible for your executor so that they can more easily access your accounts and assets.

• A list of utility companies, phone companies, and other service providers you use with the corresponding account number
• An updated list of financial institutions, lenders, bank account numbers, and insurance contracts
• Copies of recent financial statements
• Legal agreements, such as leases, divorce decrees, and private loan agreements
• Social Security and pension award letters
• Tax returns for the last five to ten years

 
No one wants to think about drafting a will, but it’s important to be proactive so you can rest assured that everything will be handled properly in your absence.
 
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
This article was prepared by ReminderMedia.
LPL Tracking #1-05366689

The thought of retiring may be intimidating for anyone—but if you own your own business, handing your "baby" to new owners might be enough to stop you in your tracks. What might you do to set your successor up for success? What should all business owners know before they go?
 
Set Specific Retirement Goals
When you retire, you want to be running to something—not from something. And after years of operating your business, moving to a slower-paced, less-structured lifestyle might seem very appealing.
However, you probably need some structure, and setting specific goals may be the way to get there. For example, you may decide you want to spend more time on your hobbies. Instead of letting that wish stagnate, you might make a point to set aside a day or two each week to devote to your hobbies.
 
Plan to Turn Your Business Over
One of the biggest potential dangers during a business transition is failing to cut the cord when warranted. If the business founder/seller remains overly involved in the business, this might stifle growth and send mixed messages about who is in charge. Though there is nothing wrong with staying close for a few years to answer questions, once you exit, it is probably wiser if it is clean. Make—and stick to—a succession plan to manage complications.
 
Set Up Your Support Team
Adjusting to retired life may be tough, especially if you also wind down your involvement in a business. You may need a strong team of professionals—retirement, tax, legal, and possibly others—to help you stay on track and manage any financial trouble. Working with financial professionals may help ease the transition to retirement, even if you do not require the services of all these financial professionals every year.
 
Ensure Your Savings are on Track
Many business owners re-invested their retirement assets back into their businesses. This strategy might make retirement tricky, especially if these assets need extraction first. This example gives a good reason for adequate diversification of non-business retirement savings. Your portfolio might benefit from sufficient diversity by holding growth and value investments. If you have the financial capacity to contribute to a Roth IRA, this type of retirement account may be a good way to manage taxes on income and growth on all invested assets.

​Important Disclosures
 
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
 
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
 
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
 
The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax-free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
 
This article was prepared by WriterAccess.


LPL Tracking #1-05361931

Small businesses may often find themselves struggling, and there are many situations in which business owners may find themselves weathering a storm and hoping to make it through. While the strength and fortitude of those who run small businesses can be an asset in helping them succeed when times are rough, there are a few strategies that can make survival a little easier.

Reduce Costs Strategically
When things start to go awry, one of the first things most business owners look for is ways to cut down on expenses to improve cash flow. Unlike widespread significant cuts that large corporations often employ, small businesses must be more strategic with their trimming. For example, if you cut your staff down too drastically, you may find your company spread so thin that you are not able to recover. Likewise, if the cuts are too minor, they may not be enough to make a difference. Take time to make a well-researched analysis of how proposed cuts can affect your business in the present and the future.

Find Low-Cost Marketing Solutions
Even when times are tough, you need to continue to promote your company so that you are able to keep your current customers and try to obtain more, which can help increase your cash flow. The good news is that marketing your business is still possible even with a small budget. Put your company’s focus on types of marketing that may have a low initial cost and a higher return rate. Content marketing and social media marketing are great ways to draw in new business and get your name in front of potential customers without spending a lot upfront.2

Expand Your Network
When times are tough for your business, they are likely hard for other businesses as well. There is strength in numbers, and connecting with other companies or industries may be the answer to some of your problems. You could cross-promote your business with other peers that provide complementary services, recommend each other's businesses, or see if there are other ways for you to help each other out.

​Don't Dwell on Past Mistakes
When things start to go wrong, it is easy to get caught up in past mistakes. Dwelling on the past may make you continue to replay issues and situations that you believe brought you to the current point in your business. This may leave you wondering how the outcome would be if you had changed something. Unfortunately, the past is not able to be changed, and living with regret may prevent you from pushing forward and doing what you need to keep your business afloat.

Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
LPL Tracking #1-05361929
Footnotes:1”The Small Business Hard Times Survival Guide,” Live About https://www.liveabout.com/the-small-business-hard-times-survival-guide-2951407
2A 10-Point Small-Business Survival Plan for Dealing With the Coronavirus, Entrepreneur, https://www.entrepreneur.com/living/a-10-point-small-business-survival-plan-for-dealing-with/347913

​Overview: In the language of life insurance, a beneficiary is the recipient of the policy’s proceeds when the named insured dies. The owner of a life insurance policy has a great deal of flexibility in naming beneficiaries and, generally, can name anyone as beneficiary. The most important considerations in naming beneficiaries are making sure that the wishes of the policyowner are fulfilled and that legal complications are avoided.
 
How much do you know about life insurance beneficiary arrangements?
Test your knowledge with this short quiz.
 

1. True or False. Generally, a contingent (or secondary) beneficiary is entitled to the policy proceeds if the primary beneficiary has predeceased the insured.

 

1. True or False. Per capita means “branches of the family,” and per stirpes means “by heads.”

 

1. True or False. If a beneficiary designation is irrevocable, the policyowner reserves the right to change the beneficiary.

 
 
 
Read here to learn more about life insurance beneficiary designations.Beneficiaries are typically categorized as primary and contingent. A primary beneficiary is entitled to the proceeds of the policy upon the death of the insured, but such rights expire if he or she dies before the insured. A contingent (or secondary) beneficiary is entitled to the policy proceeds if the primary beneficiary has predeceased the insured. One fairly common arrangement might stipulate that, if policy proceeds are being paid over time to a primary beneficiary who dies before collecting the entire amount, the remaining proceeds will be payable to the contingent beneficiary. It is often desirable to have several levels of contingent beneficiaries.
 
A beneficiary can either be specific (a person identified by name and relationship), or a class designation (the naming of a group of individuals such as the “children of the insured”). While the naming of specific beneficiaries is usually clear-cut, unintended complications may arise when designating classes of beneficiaries.
 
For example, if you plan to name your children as beneficiaries, is it your intention to include adopted or stepchildren? If your children are minors, will the insurance company pay the proceeds to a minor beneficiary? (Generally, insurers will insist on paying proceeds to a legal guardian, rather than to a minor.)
 
Consider the following hypothetical situation in which the policyowner’s intentions appear straightforward, but could become complicated. Margaret, who is 70 years old, planned for the proceeds of her life insurance policy to be paid to her children (Dan, Sara, and Marybeth) or her grandchildren. Now, what would happen if Dan and Sara were to die before Margaret, with Dan leaving four children and Sara having no children? How should the proceeds of the policy be distributed when Margaret eventually dies?
 
Per stirpes and per capita are terms that describe methods of distributing property to family members and heirs. Per stirpes means “branches of the family,” and per capita means “by heads.” In the example above, under a per stirpes distribution, Marybeth (one branch) would get one-half of the proceeds and Dan’s surviving children (the other branch) would divide the remaining half among themselves. Under a per capita distribution, Marybeth and Dan’s four children would each receive one-fifth of the proceeds. Remember, there might be complications if any of Dan’s children are still minors when Margaret dies and legal guardians have not been appointed.
 
There are also different consequences to beneficiary designations being revocable or irrevocable. If a beneficiary designation is revocable, the policyowner reserves the right to change the beneficiary. A person designated as a revocable beneficiary has only an “expectation” of benefits, because the owner of the policy can exercise any of the policy rights without the consent of the revocable beneficiary.
 
On the other hand, an irrevocable beneficiary designation cannot be changed without the consent of that beneficiary. While this may sometimes be desirable for estate planning purposes, the legal status of an irrevocable beneficiary is uncertain. One position regards an irrevocable beneficiary as a “co-owner” of the policy; the beneficiary’s consent is needed to exercise any policy rights. At the other extreme of legal opinion is the position that an irrevocable beneficiary’s consent is needed only for exercising a change of beneficiary.
 
The latter position can create the somewhat puzzling effect of having the beneficiary’s rights compromised if the policyowner exercises other rights, such as surrendering the policy or permitting it to lapse. Because of the vague legal status of an irrevocable designation, it is usually preferable to use revocable beneficiary designations. A further complication can arise when one’s estate is named as beneficiary, because the proceeds of the policy can be tied up in the probate process or reduced by the claims of creditors. 
 
These potential pitfalls make it clear that the distribution desired by the owner of a policy should be clearly set forth in the beneficiary designation. Changes in family circumstances after policies are first written (for example, divorce) could leave the policyowner with unintended beneficiaries. Therefore, it is important for insurance policies to be reviewed regularly to help ensure beneficiary arrangements are in concert with the wishes of the policyowner.
 
 
Quiz Answers: 1) True; 2) False; and 3) False.
 
Important Disclosures
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.
This article was prepared by Liberty Publishing, Inc.
LPL Tracking #1-05258205
INLN6UU-X

Your Social Security retirement benefit may be taxable?

Did you know that you might have to pay federal income tax on your Social Security retirement benefit? If the only income you had during the year was Social Security income, then your benefit usually isn't taxable. However, if you earned other income during the year or had substantial investment income, then you might have to pay federal income tax on part of your benefit if your total income exceeds a certain base amount.

Is your benefit Taxable?
If you have earned income or investment income over the base amount, you can use certain strategies to minimize (or even eliminate) the amount of tax you have to pay on your Social Security benefit. These strategies include changing your filing status and reducing your modified adjusted gross income (MAGI). However, before using these strategies consult your tax advisor for information on your individual situation.

Determining whether your Social Security retirement benefit is taxable
Before you consider ways to minimize taxation of your Social Security retirement benefit, you must determine whether your benefit is taxable at all. Your benefit is taxable if one-half of your Social Security benefit plus your MAGI exceeds the base amount for your filing status.

Your MAGI includes taxable pensions, wages, interest, dividends, and other types of taxable income. It also includes tax-exempt interest income plus normally excludable income such as interest from Series EE savings bonds (which may also be called Patriot bonds) and the foreign earned income of U.S. citizens and residents.

Your filing status
When you fill out your federal income tax return, you choose your filing status based on your marital status. You can file in one of five ways: single, married filing jointly, married filing separately, unmarried head of household, or qualifying widow or widower (with a dependent child). For Social Security purposes, your filing status is important because the amount of income you can have before your benefit is taxable depends partly on your filing status.

The base amount for your filing status
How much income you can have before your Social Security benefit becomes taxable is known as the base amount. The base amount is determined by law and is not adjusted annually for inflation. The base amount that you use to determine the taxability of your Social Security benefit depends upon your filing status. Your base amount is:

• $25,000 if you file as single, head of household, or qualifying widow(er)
• $25,000 if you file as married filing separately and you lived apart from your spouse for all of the tax year
• $32,000 if you file as married filing jointly
• $0 if you file as married filing separately and you lived with your spouse at any time during the tax year

How much Social Security retirement benefit you received.
At the end of each tax year, the Social Security Administration (SSA) will send you a form (SSA-1099 or RRB-1099) showing the amount of benefit you received during the year. You can use this to figure out whether any of your benefit will be taxable.

Adding it all up
You can use Worksheet A in IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits to calculate whether your total income (as defined above) exceeds the base amount for your filing status. This worksheet has the following steps:

• A. Enter the amount from box 5 of all your Forms SSA-1099 and RRB-1099. Include the full amount of any lump-sum benefit payments received in the current tax year, for the current tax year and earlier years. (If you received more than one form, combine the amounts from box 5 and enter the total.)
• Note: If the amount on line A is zero or less, stop here; none of your benefits are taxable this year.
• B. Enter one-half of the amount on line A.
• C. Enter your taxable pensions, wages, interest, dividends, and other taxable income.
• D. Enter any tax-exempt interest income (such as interest on municipal bonds) plus any exclusions from income.
• E. Add lines B, C, and D.
• Note: Compare the amount on line E to your base amount for your filing status. If the amount on line E equals or is less than the base amount for your filing status, none of your benefits are taxable this year. If the amount on line E is more than your base amount, some of your benefits may be taxable. You need to complete Worksheet 1.

How much of your benefit is taxable?
What percentage of your retirement benefit is taxable?
​Even if you determine that your Social Security retirement benefit is taxable, you won't have to pay tax on your whole benefit. Either up to 50 percent or up to 85 percent of your benefit will be taxable, depending on your filing status and whether the total of your MAGI and one-half of your Social Security benefit exceeds a certain limit.

What is your modified adjusted gross income?
On IRS Form 1040, adjusted gross income (AGI) is your gross income minus certain "above-the-line" deductions allowed by law. These include:

• Certain business expenses of reservists, performing artists, and fee-basis government officials
• IRA deduction
• Student loan interest deduction
• Health savings account deduction
• Deductible part of self-employment tax
• Self-employed health insurance deduction
• Self-employed SEP, SIMPLE, and qualified plans
• Penalty on early withdrawal of savings
• Domestic production activities deduction

Your MAGI is your AGI, minus (or not including) the taxable amount of your Social Security benefits, plus income that is normally not included in AGI (such as foreign earned income and income from qualified U.S. savings bonds).When up to 50 percent of your retirement benefit will be taxable

When Up to 50 percent of your retirement benefit will be taxable
if the total of one-half of your benefits and your MAGI is more than the following base amount for your filing status:

• $25,000 if you're filing as single, head of household, or qualifying widow(er)
• $25,000 if you're filing as married filing separately and you lived apart from your spouse for the whole tax year
• $32,000 if you're filing as married filing jointly

When up to 85 percent of your benefit will be taxable
Up to 85 percent of your retirement benefit will be taxable if one-half of your Social Security benefit plus your MAGI exceeds the following base amount for your filing status:

• $34,000 if you're filing as single, head of household, or qualifying widow(er)
• $34,000 if you're filing as married filing separately and you lived apart from your spouse for the whole tax year
• $44,000 if you're filing as married filing jointly
• $0 if you're filing as married filing separately and you lived with your spouse at any time during the tax year

Calculating your taxable benefits
Because the calculation is complex, you need to use a worksheet to compute your taxable benefit. Several worksheets are available from the IRS. What worksheet you use depends upon your situation. In general, you can use the worksheet available in the instructions for IRS Form 1040 (or 1040A) or Worksheet 1 in Publication 915. However, you must use a worksheet specified by the IRS if any of the following situations apply to you:

1. You contributed to a traditional individual retirement arrangement (IRA) and your IRA deduction is limited because you or your spouse is covered by a retirement plan at work. In this situation, you must use the special worksheets in Appendix B of Publication 590 to figure both your IRA deduction and your taxable benefits.
2. Situation (1) doesn't apply and you take an exclusion for interest from qualified U.S. savings bonds (IRS Form 8815), for adoption benefits (IRS Form 8839), for foreign earned income or housing (IRS Form 2555 or IRS Form 2555-EZ), or for income earned in American Samoa (IRS Form 4563) or Puerto Rico by bona fide residents. In this situation, you must use Worksheet 1 in Publication 915 to figure your taxable benefits.
3. You received a lump-sum payment for an earlier year. In this situation, also complete Worksheet 2 or 3 and Worksheet 4 in Publication 915.

Tax considerations
You may be able to deduct the amount of Social Security retirement benefit that was taxed from your state income tax return.

Check with your tax advisor or state tax official to find out if your state allows this deduction.

​Questions & Answers
If your child receives Social Security benefits but the check is made out to you due to his or her age, do you need to include the amount of benefit your child receives in the calculation to determine whether your own Social Security benefit is taxable?
No. Your child's benefit doesn't affect whether your benefit is taxable, even if the check is made out in your name.

When will you receive your annual statement from the Social Security Administration showing how much benefit you were paid during the year?
You should receive your annual statement by January 31 of the year following the year of benefit payments.

If you know that you're going to owe income tax on your Social Security benefit, can you have that tax withheld?
Yes. You can fill out IRS Form W-4V, Voluntary Withholding Request, and choose to withhold a specific percentage of your total benefit payment. If part of your benefit is taxable, you may have to make estimated tax payments or request additional withholding from other income next year.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional.
LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
This article was prepared by Broadridge.
LPL Tracking #1-276503

There are out-of-pockets, limitations and gaps that Medicare doesn’t cover

Medicare is a federal health insurance program for individuals aged 65 or older and certain younger people with disabilities.

​And despite being a widely used program, there are several misconceptions surrounding Medicare, one of the most pervasive being that it will cover all healthcare costs.

Myth or Fact: Medicare Will Cover All Health Care Costs
Medicare is a comprehensive health insurance program that covers a range of healthcare services, including hospital stays, doctor visits, preventive care, and prescription drugs. However, it does not cover all healthcare costs, and there are several out-of-pocket expenses that individuals may be responsible for.

One of the most significant gaps in Medicare coverage is the lack of coverage for long-term care. Long-term care refers to the ongoing assistance with daily activities such as eating, bathing, and dressing, which is typically provided in nursing homes or assisted living facilities. Medicare will only cover a limited amount of skilled nursing care following a hospital stay, and only under certain conditions.

Another area where Medicare coverage falls short is with dental, vision, and hearing services. While some preventive services are covered, such as glaucoma tests and hearing exams, most routine dental, vision, and hearing care is not covered by Medicare.

Furthermore, there are deductibles, copayments, and coinsurance that individuals are responsible for under Medicare. These costs can add up quickly, especially for individuals who require frequent medical care. While there are several programs available to help individuals with low incomes cover some of these costs, such as Medicaid and Medicare Savings Programs, many individuals still face significant out-of-pocket expenses.

Medicare’s Limitations
There are also limitations on the types of healthcare providers and services that are covered under Medicare. For example, individuals may be limited to seeing healthcare providers who accept Medicare and may not have access to all types of medical procedures or technologies.

Despite the limitations of Medicare coverage, it is still a critical program that provides essential healthcare services to millions of Americans. It is also important to note that there are additional insurance options available that can help fill some of the gaps in Medicare coverage.

One option is a Medicare Supplement plan, also known as Medigap. These plans are sold by private insurance companies and can help cover some of the out-of-pocket costs associated with Medicare, such as deductibles, copayments, and coinsurance.

Another option is a Medicare Advantage plan, which is an all-in-one alternative to original Medicare. These plans are also sold by private insurance companies and often include additional benefits, such as dental, vision, and hearing care, that are not covered by original Medicare. However, Medicare Advantage plans may come with certain limitations, such as a restricted network of healthcare providers.

Make Sure You Plan
Medicare is a critical program that provides essential healthcare services to millions of Americans. However, it is a myth that Medicare will cover all healthcare costs.

While there are insurance options available that can help fill some of these gaps, individuals should be aware of the limitations of Medicare coverage and plan accordingly to ensure they have adequate healthcare coverage.

The Medicare website (medicare.gov) can be a valuable resource. Every year, Medicare also mails Medicare & You to beneficiaries and makes this fact-filled publication available online. You may want to review it to make sure you have an accurate understanding of the Medicare program.
Your financial professional can help you plan appropriately for your needs.
 

​Important Disclosures
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.
This article was prepared by FMeX.
LPL Tracking #1-05361628

​When discussing multigenerational wealth it is common to come across proverbs that acknowledge the fact that generational wealth typically won’t make it past the third generation. In the United States the saying goes, “from shirtsleeves to shirtsleeves in three generations.” [i] In China it is said, “rags to rags in three generations.” [ii]
 
Generational wealth encompasses financial assets with a monetary value. These include investments, real estate, land, cash, collectibles, etc., that are passed from generation to generation.
 
Why does wealth seem to disappear within three generations? Several reasons include:

• Mismanagement of wealth leading to an inheritance tax burden
• A growing family
• Spendthrifts
• Lack of financial education for those who are receiving the inheritance

 
If you have concerns about assets being passed down, please view our checklist and determine where you stand.
 
☐  Do you participate in effective gifting?
Using the annual gift exclusion and lifetime exemption is an effective strategy for passing on wealth to beneficiaries without being subject to significant tax responsibilities. The gift tax exclusion for 2023 is $17,000. That means both parents are allowed to give someone up to $17,000 per year ($34,000 per person), to as many people as they want. Should any of their gifts happen to exceed the gift exclusion limit, the amount in excess will go toward the lifetime exclusion amount which is currently $12.92 million in 2023. [iii]
 
☐  Are you familiar with how trusts work to preserve generational wealth?
Trusts are legal entities that preserve wealth and allow the issuer of the trust to distribute the wealth as they see fit. They mitigate the risk of beneficiaries losing assets through lawsuits, divorce, or unexpected occurrences, and trusts also provide certain tax incentives. They can help you avoid probate, provide for a disabled beneficiary, establish a spousal trust, and other benefits. There are a variety of options to choose from and it is encouraged that you consult a financial professional to help you determine what works best for you and your family. Some of these trusts include:

• Living trusts
• Charitable and Charitable Remainder trusts
• Testamentary trusts
• Dynasty trust
• Spendthrift trust
• Irrevocable trust

 
☐  Are you teaching financial skills to the children who will inherit your wealth?
It is critical to teach children the value of saving and how to invest. This can help to preserve the wealth they will one day inherit. It is a common theme that beneficiaries who inherit wealth will be tempted to spend it. However, this may stem from the fact that they don’t understand how to make the money work for them. Parents can educate their children and grandchildren on investing in financial instruments like stocks, bonds, CDs, annuities, and real estate interests. They can walk them through preparing a budget, provide them with financial literacy books, and even consider granting them a small sum of money to practice money management (while the parents monitors their progress).
 
☐  Do you know how taxes affect generational wealth as it is passed down?
Depending on the amount of assets distributed to beneficiaries, and the manner in which they are passed down, the act of giving may trigger a gift tax. There are several methods of giving that can help to lessen the tax burden including:

• Annual gifting
• Lifetime gift exclusion
• Charitable giving
• Taking capital losses to offset capital gains
• Deduct medical expenses that exceed 7.5% of your adjusted gross income
• Tax credits can be more beneficial than tax deductions as they lower your tax bill dollar for dollar as opposed to reducing your taxable income, like the plug-in electric vehicle credit and residential energy efficient property credit [iv]

 
☐  Do your beneficiaries understand the value of compounding wealth?
The earlier they begin investing money, the more beneficial the compounding interest will work on their behalf. The idea is long-term growth. To take full advantage of compounding wealth you have to be patient. A few common ways of investing where your interest compounds over time include:

• Dividend stocks
• High-yield savings accounts
• Bonds and bond funds
• Certificates of deposit (CDs)
• Real estate investment trusts (REITs)
• Simple interest annuities

 
It is highly encouraged that you enlist the help of a financial professional to learn which investments would be appropriate for you and your family’s generational wealth distribution goals.
 
☐  Is there a family member you want to help with education expenses?
A popular way to transfer wealth is by paying for a family member or friend’s education. With this strategy, the tuition is paid directly to the institution, which permits the giver to be exempt from gift taxes. Money used for books, room and board, and other educational expenses is not tax exempt.
 
If the preservation of wealth over multiple generations is a plan that you are interested in exploring, consider consulting a financial professional who can help you design a strategy to pursue your financial goals.
 
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
 
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
 
Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.
 
An increase in interest rates may cause the price of bonds and bond mutual funds to decline.
 
CD’s are FDIC Insured and offer a fixed rate of return if held to maturity.
 
Non-traded Real Estate Investment Trusts (REITs) invest in commercial real estate or real estate related debt, but unlike exchange-traded REITs are not listed on a national securities exchange. Non-traded REITs differ from exchange-traded products with similar strategies, and can carry significant risk that should be understood prior to investing. Significant risks include, but are not limited to: sector concentration, geographic, illiquidity, interest rate, change in governmental, tax, real estate, and zoning laws, and debt. Alternative investments, including REITs, may not be suitable for all investors, and the strategies employed in the management of alternative investments may accelerate the velocity of potential loss.
 
Fixed and Variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.
 
LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
 
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
 
This article was prepared by LPL Marketing Solutions
 


[i] How to beat the third-generation curse (smu.edu.sg)

[ii] Why wealth lasts 3 generations ? - Entrepreneur Post

[iii] IRS bumps up estate-tax exclusion to $12.92 million for 2023 (cnbc.com)

[iv] 9 Best Ways to Lower Your Taxes - Experian
 
 
LPL Tracking # 1-05361300
 

Due to recent increases in the price of fuel, the IRS has increased the optional standard mileage rates for computing the deductible costs of operating an automobile for business purposes for 2023. However, the standard mileage rates for medical and moving expense purposes remain the same for 2023. The standard mileage rate for computing the deductible costs of operating an automobile for charitable purposes is set by statute and also remains unchanged.
For 2023, the standard mileage rates are as follows:

• Business use of auto: 65.5 cents per mile (up from 62.5 cents for the period July 1, 2022, to December 31, 2022*) may be deducted if an auto is used for business purposes. If you are an employee, your employer can reimburse you for your business travel expenses using the standard mileage rate. However, if you are an employee and your employer does not reimburse you for your business travel expenses, you cannot currently deduct your unreimbursed travel expenses as miscellaneous itemized deductions.
• Charitable use of auto: 14 cents per mile (the same as for 2022) may be deducted if an auto is used to provide services to a charitable organization if you itemize deductions on your income tax return. Your charitable deduction may be limited to certain percentages of your adjusted gross income, depending on the type of charity.
• Medical use of auto: 22 cents per mile (the same as for the period July 1, 2022, to December 31, 2022*) may be deducted if an auto is used to obtain medical care (or for other deductible medical reasons) if you itemize deductions on your income tax return. You can deduct only the part of your medical and dental expenses that exceeds 7.5% of the amount of your adjusted gross income.
• Moving expense use of auto: 22 cents per mile (the same as for the period July 1, 2022, to December 31, 2022*) may be deducted if an auto is used by a member of the Armed Forces on active duty to move, pursuant to a military order, to a permanent change of station (unless such expenses are reimbursed). The deduction for moving expenses is not currently available for other taxpayers.

*Last year, in a rare mid-year adjustment to the standard mileage rates, the IRS increased the rates for the second half of 2022.
 
This article was prepared by Broadridge.
LPL Tracking #1-05356623

​A Health Savings Account (HSA) is a type of savings account designed to help individuals and families save money on their health expenses and reduce their future tax bill. To be eligible for an HSA, you must be enrolled in a high-deductible health plan (HDHP), which is a type of health insurance that has a higher deductible but lower monthly premium.
An HSA offers several tax benefits, including tax-deductible contributions, tax-free investment growth, and tax-free withdrawals for eligible medical expenses.
The following are some of the key benefits of an HSA and how you can use it to help reduce your future tax bill.
Tax-Deductible Contributions
One of the primary tax benefits of an HSA is that contributions to the account are tax-deductible. This means that you can lower your tax bill by the amount you contribute to your HSA, up to the maximum contribution limit for the year.
For the tax year 2023, the maximum contribution limit for an individual is $3,850 and $7,750 for a family. If you are over the age of 55, you may also be eligible to make catch-up contributions of up to an additional $1,000 per year.
Tax-Free Investment Growth
Another benefit of an HSA is that any interest or investment growth in the account is tax-free. This means that you can grow your HSA balance without having to pay taxes on the investment earnings, which can help you build up your savings faster.
Tax-free Withdrawals for Eligible Medical Expenses
When you use the funds in your HSA to pay for eligible medical expenses, the withdrawals are tax-free. This includes expenses such as deductibles, copays, coinsurance, and certain prescription drugs. It is important to keep receipts and documentation of all medical expenses you pay for with your HSA, as you may need to provide proof if you are audited by the IRS.
In addition to the tax benefits, an HSA also provides other benefits, such as:

• Portability: An HSA is an individual account, so you own it and can take it with you from job to job.
• Flexibility: You can use the funds in your HSA for eligible medical expenses whenever you need them, regardless of the time of year.
• Cost savings: Using an HSA can help you save money on your health expenses, as you can use the funds in your HSA to pay for eligible medical expenses that your insurance does not cover.

To maximize the benefits of an HSA, it is important to plan ahead and be strategic in how you use your HSA. The following are some tips for utilizing your HSA to help reduce your future tax bill.
Make the Max Contribution to Your HSA
Each year, contribute the maximum amount allowed to your HSA to take advantage of the tax savings. Keep in mind that contributions must be made by the tax-filing deadline, which is usually April 15th of the following year (April 18th in 2023). If you are over the age of 55, you may also be eligible to make catch-up contributions of up to an additional $1,000 per year.
Invest the Funds in Your HSA
If you have a high-deductible health plan, you may have a large balance in your HSA, especially if you have been contributing to it for several years. Consider investing some or all of the funds in your HSA to take advantage of the tax-free investment growth. Many HSAs offer investment options such as mutual funds or ETFs, so you can choose the investment strategy that best fits your goals and risk profile.
Your Financial Professional Can Help
Utilizing a Health Savings Account (HSA) to help reduce your future tax bill is a smart and beneficial strategy for individuals and families. With:

• tax-deductible contributions,
• tax-free investment growth, and
• tax-free withdrawals for eligible medical expenses,

a HSA provides several tax benefits that can help you save money and work towards your financial goals. Talk to your financial professional for more guidance.
 
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
Investing in mutual funds involves risk, including possible loss of principal.
An investment in Exchange Traded Funds (ETF), structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. An investment in ETFs involves additional risks such as not diversified, price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and index tracking errors.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
This article was prepared by FMeX.
LPL Tracking #1-05359893

The Old Age and Survivors Insurance (OASI) benefits, known as Social Security, pay retirement and survivors benefits through The Social Security Trust Fund. The U.S. Social Security Administration oversees this fund. Social Security (SS) taxes and other income are deposited into the trust fund accounts, and SS benefits payout from them. The only purpose for which these trust funds are used is to pay benefits and program administrative costs.
The Trust Fund’s Problem
The fund faces insolvency with fewer SS payroll taxes collected due to a declining workforce and longer life expectancy. With less collected, The Social Security Administration has been spending more on benefits than bringing in from payroll taxes.
Initially designed for retired workers and survivors, the program's funds depletion date is 2035. The Social Security Administration anticipates paying only 75% to 78% of benefits to retirees and beneficiaries at that time. The Social Security Administration continues to sell Treasury bonds to keep the fund afloat. However, the fund will significantly deplete in the next twelve years. Some proposed solutions from the fund's board of trustees include:

• Increasing payroll taxes to help fund the Social Security program.
• Reducing or eliminating annual increases in Social Security payments.
• Increasing the full retirement age from 67 to 69.
• Increasing the required number of years participants must work before receiving Social Security retirement benefits.

The 2023 OASDI tax rate is 6.2% each for employers and employees; self-employed individuals pay the full 12.8% themselves. The tax is collected on wages up to $160,200.
A poll conducted by Gallup found that 38 percent of working U.S. adults thought Social Security would be a significant source of their income. Today, 57 percent of retirees rely on Social Security as their primary source of income. Here are additional strategies to help you get the most out of your Social Security Retirement Benefits:

• Work 35 or more years and earn a higher salary year after year.
• Do not claim Social Security retirement benefits until your full retirement age.
• Use a Social Security spousal benefits strategy.
• Maximize Social Security survivor benefits and claim survivor benefits for your children.
• Estimate your longevity before taking Social Security Retirement benefits.

Those retiring after 2035 must rely more on other retirement savings and less on their Social Security retirement benefits. Here are some ways to help you save for retirement:

• Participate in your employer's retirement savings plan and contribute enough to receive the match.
• Automate your retirement savings contributions to increase yearly to maximize your savings.
• Contribute to a Traditional or Roth IRA and invest in stocks, bonds, real estate, mutual funds, and other strategies in addition to your employer’s retirement savings plan.
• Work with a financial professional to help you plan for retirement and evaluate your current retirement savings, goals, and timeline.

Whether Social Security retirement benefits are available at the current levels or not, planning for your future is essential.
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.
Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
Investments in real estate may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector. Other risks can include, but are not limited to, declines in the value of real estate, potential illiquidity, risks related to general and economic conditions, stage of development, and defaults by borrower.
Investing in mutual funds involves risk, including possible loss of principal.  The funds value will fluctuate with market conditions and may not achieve its investment objective. Upon redemption, the value of fund shares may be worth more or less than their original cost.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by Fresh Finance.
LPL Tracking # 1-05359383
Sources:
https://www.ssa.gov/news/press/factsheets/WhatAreTheTrust.htm
https://www.ssa.gov/policy/trust-funds-summary.html
https://news.gallup.com/poll/350048/retirees-experience-differs-nonretirees-outlook.aspx
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