Estate Planning and Charitable Giving Options:
You might be thinking about incorporating charitable giving into your financial planning.  Your reasons may be altruistic–to give back, to support a worthy cause, to uphold the teachings of your faith–or they may be motivated by personal gain–to lessen your tax burden, for instance.  Your motives for wanting to give charitably are yours alone, and although we are not going to delve into them in this forum, you should be able to define them for yourself and your financial advisor before planning your giving.

AllFinancialAdvisors.com recommends working with your personal financial advisor to create your giving plan.  There are many ways to give, and an independent registered investment advisor (RIA) can help you determine which is right for you.  A financial advisor will also be able to help you figure out how much you can afford to give, work this ‘giving’ component into your budget, while taking tax issues into consideration, and evaluate giving opportunities.

That said, let’s take a look at some of the ways in which you can build charitable giving into your financial plan.

• If you want the tax benefits associated with charitable giving, be sure you and your financial advisor are following the Internal Revenue Service (IRS) guidelines.
• Donate assets like vehicles, art, real estate, retirement accounts, household goods and other items of value; all can be tax-deductible.
• Set up a charitable remainder trust.  A charitable remainder trust is your own private fund to which you can contribute cash, investments and tangible assets. It will provide a designated taxable income for life, payable to yourself or to your beneficiaries. After the income is paid or all beneficiaries have died, the money remaining in the trust is given tax-free to the charities you name. 
• Give appreciated stocks. If you’ve held stocks or a mutual fund for at least 12 months, you can gift those assets to a charity and receive a tax deduction of their fair-market value.
• Bequeath money to charity. When you write or revise your will or living trust, you can include instructions to distribute a portion (or all) of your estate to specific charities. Assuming those charities are qualified according to the IRS, your bequest can be deducted from the federal tax on your estate.
• Name a charity as the beneficiary of a life insurance policy.
• Give to a pooled income fund. These are similar to charitable remainder trusts, but the charity is in charge of the fund, and you simply contribute to it. The charity pools all contributions to the fund, invests them, and pays you a taxable income. When you die, your interest in the fund reverts to the charity.
• Volunteer.  Many charities need the time and talents of people from all walks of life.  When you volunteer, you can deduct some of the expenses associated with that volunteer work–including the mileage you drive to volunteer.
• Give good old-fashioned cash.  It’s quick, it’s not complicated, and you can deduct the amount you give from your taxable income, provided you donate to a qualified charity and get a receipt.

 
Your financial advisor and/or financial planner can explain these and other ways of giving to charities (including gift annuities, donor-advised funds and private foundations) and help identify ways to make the most of your contributions, such as employer matching funds.  Financial advisors have varied views on the appropriate fashion to give, so check in with your current financial advisor and ask these questions.

If you don’t currently have a financial advisor, simply SEARCH HERE for qualified financial advisors who have various specializations in Estate Planning, Charitable Giving and/or Money Management — or start by entering your Zip code in the space provide above — to begin your search.  Best wishes. 

Today’s blog is in honor of Martha Brogley’s lifelong charitable giving of herself and her artistic talents.  MB

The Basics of Will and Trusts:

You know you need a will, but do you need a trust?  And what does either of them have to do with a financial plan?  Does your financial advisor have the right experience to most effectively help you?

To answer those questions, let’s back up a little.  If you die without a legal will or trust, then the state will decide what happens to your property–and to your minor children, in the event their other parent is not able to care for them. No one wants to think their wishes won’t be honored after they die, and that’s where wills and trusts come into play.

A will, as you probably know, is a legal document stating your wishes in regard to your property and guardianship of your minor children after you die. A living trust, on the other hand, is a legal arrangement you create yourself while you’re alive; under a living trust, a trustee holds legal title to the beneficiary’s property. You can be both the trustee and the beneficiary while you are alive. Upon your death, the trust passes to a successor trustee you have determined, and he or she is responsible for the disposition of your property according to your wishes.

So what’s the point of putting all your property into a living trust for which you are the trustee and the beneficiary?

Simple:  A living trust keeps your estate out of probate.  When you die with a will in place but without a living trust, the will goes into probate.  In probate, all your property must be inventoried and appraised, debts and taxes must be paid, and only then can the remaining assets be allocated according to your will.  A living trust completely eliminates that costly and time-consuming legal process (unless you have property you haven’t put into your trust, in which case, only that property will go into probate).

Your attorney can help you decide whether you need a revocable or irrevocable living trust, and he or she can also help you with your will.  Once those are established, keep the paperwork in a safe place–and make sure your successor trustee and executor both have access to it.

Disclaimer: AllFinancialAdvisors.com does not give legal advice. 
Always consult your attorney before making any legal decisions.

Search by STATE for Financial Advisors with Estate Planning expertise.  These financial planning professionals will be able to review your personal situation and help you connect with a local attorney (if you do not currently have one).

Buying U.S. Treasury Securities As A Way To Diversify Your Investments

If you are new to investing, you may want to look for ways to invest within a reduced risk format.  Good news: There are low-risk and risk-free investments available to everyone.  We recommend that you check all options with your financial advisor…  One of the safest is:

Treasury Securities. The U.S. government sells securities to raise the money it needs to pay off debt. There are many positives to purchasing Treasury securities.

Because they are backed by the government, which guarantees principal and interest will be paid on time, many consider Treasury securities to be free from risk. Most Treasury securities are liquid, or easily sold for cash, which should be a consideration if you think you might need to access the money you have tied up in them. What’s more, the interest earned on Treasury securities is exempt from state and local income tax, making Treasuries that much more attractive for those hoping to make money on their investments without substantially impacting their tax liability.

You can invest in various types of Treasury securities, including:

• Treasury bills, or T-bills. T-bills are short-term securities you buy at less than face value, determined at auction; when your T-bills mature (in less than one year), the government pays you face value for them. You can also sell T-bills at market value before they mature.
• Treasury Notes and Bonds. These pay interest every six months and, like T-bills, can be sold any time at market value, whether they’ve matured or not. If you hold them until maturity, the government will pay you face value for your Treasury notes or bonds. Treasury notes mature between one and ten years from date of issue, while Treasury bonds mature more than ten years from their issue date.
• Treasury Inflation-Protected Securities, or TIPS. TIPS pay interest every six months; their principal value is adjusted for inflation according to the Consumer Price Index. The government determines TIPS’ interest payments and maturity value according to that inflation-adjusted principal.
• Electronic or Paper EE Bonds.  EE bonds pay a fixed rate of return. You can purchase electronic EE bonds for face value and sell them for face value anytime after one year later.  Paper EE bonds, on the other hand, can be purchased for half of face value, but you can’t sell them for face value until they have matured.  If you sell your EE bonds less than five years after the purchase date, you’ll forfeit the last three months’ interest. 
• “I” Bonds. Both paper and electronic, “i” bonds are purchased and sold at face value.  Like EE bonds, they pay fixed interest.  If you sell them less than five years from the date of purchase, as with EE bonds, you’ll lose your last three months’ interest.

 
There are other types of low-risk investments out there, but only you and your financial advisor can determine which “safe” investments are right for you!!!  We invite you to browse AllFinancialAdvisors.com to find a financial advisor that can meet your needs and help you determine whether low-risk investments should be part of your financial plan right now.  Thanks for visiting AFA!

If you are not currently working with a financial advisor or wealth manager and you would like to search for financial advisors with a specialization in Money Management… just ENTER YOUR ZIPCODE in the Search Bar NOW (at the TOP of our Home Page).   Best wishes in finding the most qualified Financial Advisor in your area.

Grow Your Money Without Risk: CDs, Money Market Accounts etc.

If you’re new to investing, or if you’re getting close to meeting major financial goals like retirement, you may be looking for ways to invest without much–or any–risk of loss.  Good news: There are low-risk and risk-free investments readily available to you.  Check these options with your personal financial advisor first…  Some of the safest are:

• Certificates of Deposit.  CDs don’t give you a huge return on your investment, but you’re not likely to lose money on them unless the bank or credit union goes belly-up.  With a CD, you earn money through interest, just as you do with a regular savings account.  But CDs pay a higher interest rate because you agree to let the bank hold the money you’ve invested for a specific amount of time. The longer the term of the CD, the higher the interest you’ll earn.  Once the CD matures, the bank or credit union will automatically roll the money over into a new CD, unless you give instructions that it’s to be deposited into your savings or checking account or mailed directly to you. 

 
The drawback to a CD is that you’re tying your money up for the term of the CD. If you need to get your hands on it quickly before the CD matures, you can count on paying a penalty.  But if you know for sure you won’t need the money, a CD is a safe investment that can produce decent returns. 

• Money Market Accounts.  A money market account is a way to keep your cash safe and growing, but it is more readily accessible than a CD in case of an emergency. When you deposit funds into a money market account, the bank uses it to invest in fairly safe financial instruments like CDs and Treasury bills.  In exchange for the privilege of using your money to make its profitable investments, the bank pays you a higher interest rate (in the form of a dividend) than it would on a standard savings account.  But because of that higher rate of return, a money market account typically has a minimum balance requirement and a limit on the number of withdrawals you can make from it. As long as you open your money market account at a bank, it is FDIC insured. 

 
Our next Blog Post on AllFinancialAdvisors.com will focus on additional ways to conduct lower-risk investing.  An example Treasury Securities.  Make sure to ask your current financial advisor or financial planning professional what steps you should take to reduce your investment risks.  Thanks for checking back with us… Cheers.

If you are not currently working with a financial planner and would like to search for financial advisors with a specialization in Money Management  ENTER YOUR ZIPCODE in the Search Bar ABOVE.  Best wishes in finding the most qualified Financial Advisor in your area.

Obama Signs The Financial Reform Act Into Law

“I proposed a set of reforms to empower consumers and investors, to bring the shadowy deals that caused this crisis into the light of day, and to put a stop to taxpayer bailouts once and for all. Because of this law, the American people will never again be asked to foot the bill for Wall Street’s mistakes.” -President Obama (Wednesday: July 21, 2010)

With those words, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law.

Most Americans and their financial advisors and/or financial planners would generally agree the American consumer’s taxes shouldn’t be used as a safety net by big business, but can we count on the new law to ensure Main Street never again has to pay for Wall Street’s risk-taking?  It appears so, although we won’t feel the effects of the law until it is put into practice—and that will have to wait until the creation of the new Consumer Financial Protection Bureau (CFPB).  Whoa… another federal “Bureau”.  Yikes.

The U.S. Chamber of Commerce, however, warned the new law could further weaken American businesses: “Such a broad, sweeping bill epitomizes a law with unintended consequences that creates more uncertainty for American businesses,” said Chamber President and CEO Thomas J. Donohue.

So let’s look at what we do know:  Under the new law, the government will have the ability to liquidate large financial institutions that fail, and other large institutions will pick up the tab.  From a consumer standpoint, that certainly sounds better than a taxpayer bailout.  Financial institutions that bundle mortgages and then sell them off will now have to keep a 5% interest in those bundles, which should discourage them from making and immediately dumping risky loans.  Maybe the percentage should have been 15-20% interest…

Finally, the new law creates a Financial Services Oversight Council (FSOC), a watchdog group composed of existing government officials…  Its primary job: to watch for gathering storm clouds on the horizon of the financial services marketplace, sound the alarm when regulatory gaps are identified, require supervision of non-bank financial companies whose imminent failure threatens U.S. financial stability, and shut down risky operations by large financial institutions.

We’ll keep the spotlight turned on the new financial reform law here on the AllFinancialAdvisors.com blog in the coming weeks and months, so bookmark us and check back to learn more about the law, all the palyers involved and its expected positive and negative effects.

NOTE: If you are already working with a financial advisor, wealth manager or financial planning professional – ask them what’s their take on this new law and its implications for your personal financial planning.   If you are not currently working with a money manager or financial advisory firm – you can start your search now — by entering your Zip Code at the top of our home page.   Best wishes in finding the best financial advisor for you.