Categories ArchivesPersonal Finance

Tax Law Changes (Summary) image

Last month, President Trump signed into law a package of tax cuts (or changes to some).  While I'm not a CPA and each person should contact their own accountant, below are the highlights of the changes that have gone into effect for next year.  The bill is long and there will be new strategies coming out over the coming months as it is digested for how to best take advantage of the new rules.  As those strategies become publicized, I'll create an update post with that relevant information.   Individual Income Tax Rates The bill maintains seven individual income tax brackets, but changes the tax rates and thresholds. See the charts below. Previous law: These are the tax brackets that individual taxpayers will use ...

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Why Hire A Wealth Manager? image

Why Founders & C-Level Executives Still Need a Wealth Manager What are you good at, and what do you most enjoy doing? The reason I ask the question this way is because the answer may not always be the same. Also, at least one can change over time; perhaps as you age and your interests shift, or the focus of your life is altered by circumstance. The point I’m trying to make is, if you're wealthy, managing your money is rarely either of these two things, which is why you should hire a wealth manager. After all, skill sets and interests differ from person to person and it would be unreasonable to think otherwise. It could also be harmful; for example, ...

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Selling Real Estate Without Paying Taxes image

Rental real estate can add diversification and income to an investors portfolio.  What some people aren't aware of is there's a way for you to sell one property and buy another without paying capital gains.  This is a called a 1031 exchange and it's incredibly common among real estate investors.  Effectively, if you own a rental property on one side of town, instead of selling it and paying taxes and then buying another property, you could exchange one for the other.  There are very specific rules within the tax code (section 1031) which highlight the rules, but you should consult your CPA or someone who's in the 1031 business (there are many people). There was a great article in Financial ...

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What is a Fiduciary and Why It’s Important? image

              Above is the textbook definition of a fiduciary and it's obvious why an investor should work with a professional who's a fiduciary.  Would you want someone who's in a position of being a trustee or someone who simply arranges for the buying and selling of assets (a broker).  To be clear, I am a fiduciary since I don't earn commissions on investments that I recommend to clients.  What this means is I have a fundamental obligation to act in the best interests of your clients and to provide investment advice in your clients’ best interests.  I owe my clients a duty of undivided loyalty and utmost good faith and will not engage in any activity in conflict with the interest ...

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Investment Allocations for Todays Era image

  In today's world, there's been a big push towards passive investments and away from active management.  I've discussed in a previous post, Perhaps The Biggest Bubble Ever?, how much money has flowed into passive investments and the potential repercussions.  Whether you use a human advisor or a digital advisor, investment allocations appear to be converging and are incredibly similar.  They tend to use modern portfolio theory (MPT) which was developed in 1952 by Henry Markowitz.  In reality, there's not a lot modern about it.  I believe there's a better way to engineer investment allocations in today's environment, but lets first start by exploring the basics and assumptions of MPT. What is 'Modern Portfolio Theory - MPT'? Modern portfolio theory (MPT) is ...

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Personal Contingency Planning: A Critical & Overlooked Area image

  My father used to tell me that in the past when someone passed away, all you had to do was wait for the mail to arrive.  He is a CPA and has been the executor on many estates through the years.  Times have changed and things don't always come in the mail anymore.  Most people opt for e-delivery for credit cards, investment accounts and a variety of other financial related information.  And getting access to someone's email after they die can be very difficult.  So what is someone to do in the digital age to ensure a loved one or executor is able to sort through everything?  Contingency planning can be the answer to the challenges in today's cyber ...

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Top Estate Planning Mistakes image

Estate planning is a crucial element of wealth management that our firm assists our clients with.  While we don't get paid to provide and write estate plans, we're very involved in this process for clients.  After countless meetings, conversations and research, below is a list of the most common mistakes in estate planning.   Failure to Create a Bypass Trust When First Spouse Dies:  In past years, the estate tax exemption was wasted when assets were left to the surviving spouse.  But under the current system, the deceased spouse's unused estate tax exemption can be used by the surviving spouse. Joint Tenants with Right of Survivorship Account Titling:  This designation is common when opening bank and brokerage accounts, but prevents ...

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Life Insurance Basics image

Purpose of Life Insurance People or entities purchase life insurance for various reasons, and the reasons can change over time. A newly married couple, for example, may purchase insurance for income replacement; high-earning professionals may purchase it to build supplemental retirement income because they have maxed out contributions to their 401(k) and other qualified plans; parents may purchase it to fund education or to provide incentive or reward “pensions” for their children; grandparents may purchase it to provide legacy gifts to their children, grandchildren, or charities; high-net-worth individuals may purchase it for tax-advantaged cash accumulation; risk-taking entrepreneurs may purchase it for asset protection purposes. Under a life insurance contract, a person or entity (the policy owner and/or applicant) purchases insurance coverage on the life of a person (the insured) for a stipulated ...

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Investing 101 image

We think it's important to understand the basics of investment and terms you've probably heard, but might not know what they mean.  Below are a list of commonly used terms, phrases and jargon. What are stocks? Shares of stock are pieces of ownership of a corporation. The idea behind owning shares is to participate in the growth and profits of the company. A company first issues shares through an initial public offering — IPO. The IPO makes the founders of the business rich and generates capital – money – the company can use to grow its business. Investors make money as stock prices increase and the companies pay dividends. Stock Exchanges The New York Stock Exchange – NYSE – and the NASDAQ are ...

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