Category: Featured

When it comes to finances, it can be challenging to find the right balance as a parent. How much should you talk about money with your children, and what information should you share?

If you want your kids to become financially savvy adults, you may want to start discussing a few basics with them when they’re younger, or at the very least, don’t avoid the topic altogether.

Want to help set your kids up for success? Here are a few best practices to keep in mind and five things to watch out for. 

5 Common Mistakes to Avoid

1. Never discussing money. Money can be a sensitive topic, even within a family. Never talking about income, budgeting, savings or expenses can make it difficult for kids to get started when it comes to managing their finances effectively later in life.

2. Setting a less-than-great example. Do you regularly set goals and track your progress? Do you have life insurance? Making strategic financial decisions for the future can help set a good example for your kids.

3. Splurging too often or failing to set limits. Spending money on your kids is a natural desire, but it can be a mistake not to set limits. For example, some parents end up overspending on their child’s wedding at the expense of their own retirement goals. 

4. Lifestyle creep. Lifestyle creep can happen to anyone. In families with children, it’s possible to fall into the habit of “keeping up with the Joneses” and purchasing expensive items and activities for kids that might stretch the budget.

5. Not planning for financial independence. Being able to provide for your kids financially is a wonderful feeling, but some parents find themselves in the position of paying for their child’s lifestyle indefinitely. Having upfront conversations about money and timeline expectations can help build a bridge for your kids to become financially independent.

Have questions or need to check in? Reach out today.

Do you have an investment property you’re thinking of selling? Or are you thinking of downsizing soon?

It’s important to understand the costs associated with selling a property. Specifically, how will this step impact your taxes?

If you’re planning to sell soon or just wondering how it will work when you do, here are a few things to keep in mind.

Preparing to Sell

Whether you’re selling your primary residence or an investment property, gearing up for sale has a price. Some properties may need maintenance and repairs before you list them. You also may need to invest in professional staging to attract buyers.

Capital Gains Taxes

Short-term and long-term capital gains taxes have the potential to come into play, depending on how long you have owned the investment property. If you are flipping the property, you will likely pay a short-term capital gains tax on the profit from the sale. Any short-term capital gains from your investment property sale are taxed as regular income.

If you own the property for more than a year, you can expect to incur long-term capital gains taxes; the rate will be determined by your tax bracket.

Depreciation Recapture

When you own an investment property, you have the option of claiming a depreciation deduction when you file your taxes each year. The IRS can recapture those deductions when you sell; the rate of this tax will vary and depends on several factors.

While the sale of your investment property does come with tax implications, you can take a few different paths to reduce or defer your taxes. For example, you can defer capital gains taxes by rolling the proceeds of the sale into a similar investment via a 1031 exchange.

Do you have questions or need assistance? Reach out today.

Financial security brings peace of mind. When you don’t have to worry about paying bills or lagging behind on retirement savings, you have time and energy to focus on other things.

And when you’re in this position, it can be tough to see loved ones struggle with money.

Are you thinking of loaning money to a family member or friend, or have you ever been approached about a loan? Here’s what to keep in mind.

Do consider your financial situation first. Emergencies happen. Maybe a loved one is sick or out of a job. Your first instinct could be to leap in to offer financial support. First, take the time to consider how much you can afford to loan, keeping in mind repayment will likely take time.

Don’t be vague. Clearly communicating about the loan amount and repayment timeline before money ever exchanges hands can save a lot of hurt feelings in the future. Try to avoid allowing emotion to dictate your actions. Instead, put the agreement down in writing, like you would any other kind of deal.

Do think about giving a gift. You probably want to extend the loan because you care about your relationship with that person. Gifting the money, rather than loaning it, may sometimes be better (as long as you’re in the position to do so). A gift means you don’t have to worry about following up with the recipient for repayment. And, they don’t have to feel guilty that they aren’t paying you back fast enough.

Don’t forget to keep your spouse in the loop. If you’re married or share finances with a partner, talk to them about the loan (or gift) before offering it. You don’t want anyone to be surprised or upset about the money you lend.

Do you have questions or need assistance? Reach out for guidance today.

Financial security brings peace of mind. When you don’t have to worry about paying bills or lagging behind on retirement savings, you have time and energy to focus on other things.

And when you’re in this position, it can be tough to see loved ones struggle with money.

Are you thinking of loaning money to a family member or friend, or have you ever been approached about a loan? Here’s what to keep in mind.

Do consider your financial situation first. Emergencies happen. Maybe a loved one is sick or out of a job. Your first instinct could be to leap in to offer financial support. First, take the time to consider how much you can afford to loan, keeping in mind repayment will likely take time.

Don’t be vague. Clearly communicating about the loan amount and repayment timeline before money ever exchanges hands can save a lot of hurt feelings in the future. Try to avoid allowing emotion to dictate your actions. Instead, put the agreement down in writing, like you would any other kind of deal.

Do think about giving a gift. You probably want to extend the loan because you care about your relationship with that person. Gifting the money, rather than loaning it, may sometimes be better (as long as you’re in the position to do so). A gift means you don’t have to worry about following up with the recipient for repayment. And, they don’t have to feel guilty that they aren’t paying you back fast enough.

Don’t forget to keep your spouse in the loop. If you’re married or share finances with a partner, talk to them about the loan (or gift) before offering it. You don’t want anyone to be surprised or upset about the money you lend.

Do you have questions or need assistance? Reach out for guidance today.

The new administration has proposed tax changes that could affect estate planning for the wealthy. 

While these proposals may not pass, they offer an important reminder. No matter what, it’s important to remain alert to how the tax code can affect investments and the assets we want our families to inherit. 

And while it’s hard to act in the face of uncertainty, keeping tabs on your estate planning can help. Here are a few things to keep in mind.

Estate Tax Proposals

For 2021, the lifetime federal estate tax exemption is $11.7 million per person. Beyond those thresholds, the estate tax rate on most assets is 40%.

In 2026, the exemptions will reset to $5 million if the rules don’t change. But one proposed bill would cut the exemption to $3.5 million and raise the estate tax rate in 2022.

Setting Up a Trust

An irrevocable trust requires you to give up control over the assets you place in it, but it exempts them from estate taxes. Trust assets also stay out of probate when you die. Avoiding probate will save your heirs money on court fees and keep your finances private. 

Because some politicians have proposed limiting gifts to irrevocable trusts to $30,000 per donor per year, establishing a trust this year could be an important tax-saving move.

Selling Appreciated Assets

Another proposal would increase capital gains tax rates. Accordingly, some may consider selling appreciated assets such as stocks or a family business in 2021 to avoid higher capital gains tax rates in 2022 and beyond.

Here to Guide You

Wealth preservation can be a complex topic, especially when laws are in flux. Please stay in touch and reach out with any questions. We can help you prepare to accommodate any changes the next couple of years may bring.