209-956-7100
2291 W. March Lane
Suite A-102
Stockton, CA
209-956-7100 95207
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Retirement Management and Investing
Taxes: Avoiding the Pitfalls in Retirement
Understand Cash flow, Growth and Income
Estate Planning
Estate Planning Checklist
Ten Common Estate Planning Mistakes
Living Trusts
Retirement Investing
Reverse Mortgage
Annuity
Internal Changes requireing review of your trust and estate plan
Funding
IncomeTaxes: Avoiding the Pitfalls in Retirement
Retirement is a time to kick back and enjoy life. However, retirement may have its shares of taxation potential issues. Some common errors that are avoidable are:
Understand Cash flow, Growth and Income
Cash flow is the amount of money after taxes you need to live on. Growth is what you need from your investments to make sure your money can last you through life with a consideration for the impact of inflation. Income is the money you earn and upon which you are required to pay taxes.The goal during retirement must be to achieve as much cash flow as necessary while paying the least amount in taxes, and allowing the accumulation in your overall accounts to grow at rates that keep pace with inflation.
Other pitfalls include dealing with the required minimum distributions, tax impact on social security income, tax impact on your estate, titling of qualified accounts with appropriate beneficiary, conversion of regular IRA to more tax advantaged alternatives.
A key pitfall is not naming appropriate beneficiary for qualified account. For most qualified accounts, an individual needs to be named as a beneficiary. In the event that a beneficiary is not designated, the asset reverts back to the estate.
For more information on how to avoid a lot of the pitfalls associated with retirement speak with to an Advisor at TMP Capital. Call 209-956-7100.
Estate Planning:
A minimum of 50% of Americans at age 55 do not have a will and 70% of all adults have no documents With no documents, incorrectly titled assets, probate, and lack of cash to pay transfer taxes a challenging estate situation is an impending worry in retirement.There are tools to minimize worries creating a trust is a common tool. Trusts are multi-varied and can serve specific use. For an example, a Dynasty Trust a form of irrevocable trust could be used to transfer wealth to multiple generations of beneficiaries with minimal estate and gift tax consequences. The key objective of the Dynasty Trust is to insulate trust property from Federal Estate and generation skipping transfer taxes. It could be used to preserve capital and distribute income.
Are you aware that the court could easily take control of your assets before you die if you become physically or mentally incapacitated? To avoid such occurrence, millions of older Americans and their families use revocable living trust. Revocable living trust avoids probate, (Probate cost could be up to 10% of assets) and lets you keep control of your assets while you are living; during incapacitation or after your death.
What is a living trust? It is a legal document that contains your instructions for what you want to happen to your assets when you die. Unlike a WILL, it avoids probate at death, can control your assets and hold the courts at bay to gain control or dwindle state value through delays and cost.
While trust is a component of Estate Planning, Estate Planning is a comprehensive life long process that provides for the orderly and systematic transfer of wealth to your heirs and beneficiaries. A good Estate Plan can save you hundreds of thousands or millions (for large estates) of dollars in administrative costs and taxes, besides helping you to achieve your distribution objectives. The following are some steps to get your Estate in order:
The following are some of the common mistakes made in Estate Planning:
- Determine your objectives use our checklist
- Speak to an attorney, your financial Advisor, your accountant and if necessary a Trust Manager to clarify your objective and action steps
- Determine the trust that suits you
- If you have an existing will or trust, identify needed changes
- Have an attorney draft or amend your trust instrument
- Be careful in selecting who will be your Trustee
- Failing to take inventory of assets and their values:
Most people underestimate the size of their estate An estate consists of everything you own or have ownership in. For an example, life insurance policy, business interest and any personal assets. Proper valuation could help to shield assets from estate taxes using the unified credit provision.- Not funding the trust once drafted:
Do not fund the living trust Most people do the legal drafting of the trust, but fail to re-title assets into the trust. It's like building a house with nothing in it!- Omitting foreign-owned assets
- Updating and coordinating plan
- Overlooking bypass trust to take advantage of the unified credit
- Using plans that uses the marital deduction when it is not available
- Not maximizing gifts
- Making educational or medical gifts to individuals rather than direct payments to providers
- Wrong titling
- Not properly structuring life insurance
- Inadequate funding with life insurance:
Do not plan for the payment of estate taxes Estate payments are generally due within nine months of death. This deadline could force the family to borrow, liquidate or sell assets like business interests, stocks, or make withdrawal from a retirement plans. The untimely liquidation of assets could result in the erosion of set value from taxes or fire sale depressed pricing.- Improper valuation of assets
- Inadequate record keeping
- Wrong Executor and Trustee
- Wrong Guardian or Custodian
- Oversight of special need children or loved ones
- Static trust that are not reviewed or adjusted:
Do not keep estate plan current We all live an ever changing life, major changes or transitions in our life may be a trigger to revisit and update our estate plans; otherwise, we may risk the improper disposition of property to heirs, higher levels of taxation, or a disintegration of family relationship due to feud on estate settlement.
Estate Planning Checklist
The following questions can help you focus on some of the major aspects of estate planning. Keep these important questions in mind as you formulate your plans. You should review these and related considerations in greater detail when you meet with your legal and financial advisors to tailor a plan that suits your and your family's needs and objectives.For more information, speak to an Advisor at TMP Capital Call 209-956-7100.
- Do you have an updated will or living trust? Does your spouse?
- How are your assets owned? Jointly? Individually?
- Is your spouse comfortable managing money, or should funds be left in trust?
- Have you arranged for your long-term care needs or those of your spouse or parents?
- Have you decided who should inherit your property after your death and the death of your spouse?
- Have you used your generation-skipping tax exclusion?
- Are there any other beneficiaries? A university? A charity?
- Have you chosen guardians for any minor children?
- Have you planned for your children's or grandchildren's educations?
- Should all your children or grandchildren be treated equally, or are there special medical or educational requirements to consider?
- Have you chosen an executor for your estate?
- If you own a business, have you planned for its continuation after your death?
- Are you sure your estate plan is up-to-date and takes into account potential tax-saving strategies?
Ten Common Estate Planning Mistakes
- Most people don't think of themselves as having an estate
Everything you own is part of your estate and proper planning will ensure that its use is in line with your wishes.- Most people underestimate the size of their estate An estate consists of everything you own or have ownership in. For an example, life insurance policy, business interest and any personal assets. Proper valuation could help to shield assets from estate taxes using the unified credit provision.
- Rely on a will for estate planning A will does not prevent the court from controlling assets for heirs that are minor or incapacitated. Nor does it control assets that are jointly owned or have designated beneficiaries.
- Think revocable living trust will save on taxes A common misconception is that assets in a living trust will pass estate tax-free. Assets placed in a living trust are still include-able in a grantor's estate, and thus subject to estate taxes.
- Do not fund the living trust Most people do the legal drafting of the trust, but fail to retitle assets into the trust. It is like building a house without having anything in it!
- Leaves everything to the spouse Special planning is required to ensure that each spouse benefit from the available credit, otherwise, a significant tax consequence may occur. Up to $1,500,000 couple be exempted from taxes!!!
- Own majority of assets jointly While it builds confidence in a relationship, it may be poor planning to hold all assets jointly. Joint assets could not be used to fund credit exemption.
- Own life insurance in its own name Life insurance proceeds can dramatically inflate an estate value especially if insurance is owned by the individual. An alternative will be to own it in an irrevocable trust, thus by-passing the estate avoiding being included in the estate.
- Do not plan for the payment of estate taxes Estate payments are generally due within nine months of death. This deadline could force the family to borrow, liquidate or sell assets like business interest, stocks, or make withdrawal from a retirement plans. The untimely liquidation of assets could result in the erosion of asset value from taxes or fire sale depressed pricing.
- Do not keep an estate plan current We all live an ever changing life, major changes or transitions in our life may be a trigger to revisit and update our estate plans; otherwise, we may risk the improper disposition of property to heirs, higher levels of taxation, or a disintegration of family relationship due to feud on estate settlement.
Many types of personal trusts are available to you. They are designed to help you protect your assets and provide for their eventual distribution to the people and organizations of your choosing. Some of the specific benefits vary. The following are some of the goals for using trusts:
- Reduce Estate taxes Placing assets in an irrevocable trust can be a way to reduce your taxable estate.
- Make provisions for family members Establishing trust can be a useful way to ensure that families are provided for in the future and also that assets left behind are protected.
- Confidentiality Trusts are private agreements as such, only the parties involved need know the specific terms of the trust.
- Avoid the cost associated with settlement.
- Avoid unwanted publicity.
- Providing for guardianship or conservatorship This assumes that your wishes will be carried out if you become suddenly incapacitated.
- Simplicity and control Want to make sure the timing and distribution of assets are seamless, timely, and appropriate.
- Avoids will contest.
For more information, speak to an Advisor at TMP Capital Call 209-956-7100.
Make sure your future will be there when you need it. Everybody dreams of a great retirement, doing the things they love to do, in the places they love to do them, when they want to do them That is retirement in grand style. However, savings, college funds, medical expenses, and long-term living expenses are just a few of the critical considerations that can turn your Golden Years into a nightmare. Slaying the dragons such as Taxes, Long Term Care, Health Care Cost, and Funding Legacy Issues
Reverse Mortgage is a government sponsored program for people 62 years and older. IT allows you to tap into the equity in your home in form of a no monthly payment loan on a tax-free basis.
Repayment is only required when you no longer reside in the home as your principal residence.
Who is eligible?
All homeowners 62 years and older who occupy the home as a principal residence. Properties eligible include single family homes, condominiums, town homes or a 2-to-4 unit dwelling. It is important that the home has very little or no mortgage balance. To qualify, you require no credit, on income or employment.Some of the benefits of a Reverse Mortgage include:
- You retain full ownership of your home.
- You live you home for as long as you want.
- You can use the proceeds for any purpose.
- Proceeds are not considered income, as such, not subject to taxes.
- It does not affect your social security, Medicare, SSI or Medicaid benefits.
- Your heirs can keep the home once the reverse mortgage is repaid.
For a free AARP Guide to Reverse Mortgage and to find out if Reverse Mortgage is right for you, speak with a TMP Capital Advisor call 209-956-7100.
Annuity — A way to receive income you cannot outlive.
When you are safe and secure, you feel like you can do almost anything this gives you the freedom to grow, stay flexible, and make choices. When your retirement money is secure, you are secure. Today, it is not unusual that most people retiring at age 65, will spend 18-25 years in retirement. What is a better way to spend those years without having to worry about money? An annuity can make that happen for you.
Annuity gives you all the growth, the guarantees and the confidence that your retirement income will not disappear before you do. The next pages explain how annuity works to guarantee you income you cannot outlive.
To get income for life and to stay secure knowing your retirement income will not disappear before you do, speak with an Advisor at TMP Capital call 209-956-7100.
Internal Changes requiring review of your trust and estate plan
If any of the following events occur, you should review the potential effect on your Trust and your general estate plan to determine whether or not they should be amended or revised. (NOTE: This is not an all-inclusive list)
- Changes in family relations:
- Marital separation or dissolution;
- Death of a spouse;
- Marriage of a single person, including remarriage;
Changes regarding child, grandchild, or other beneficiary;
- Birth of a beneficiary;
- Marriage of a beneficiary;
- Marriage, separation or dissolution of marriage of a beneficiary;
- Adoption of a beneficiary;
- Illness of a beneficiary:
- Death of a beneficiary;
- Economic changes, good or bad fortune of a beneficiary;
- Beneficiary's attitude change toward testator;
- Financial irresponsibility of beneficiary:
Changes in economic and personal condition of testator:
- Increase or decrease in asset values;
- Change in insurability life insurance;
- Change in employment;
- Change in business interest new partnerships or corporations;
- Property acquired in a different state;
- Change in health of testator or spouse:
- Retirement from business or profession.
- External changes
Changes in laws state and Federal income tax, estate and gift tax, property tax, trust, probate, etc.
- Change of residence to different state;
- Death of executor, trustee, or guardian named in Will and/or trust.
Critical questions about your retirement financial future Are you saving enough? Are your investments too risky? Will you run out of money? Will you have enough monthly income? Will bills drain your retirement dreams? How do you maximize your retirement account distribution? These and many other important questions must be answered in order to create a worry free retirement. Two main concerns of retirees are:
- Having enough money to last through retirement
- Having enough money to maintain their lifestyle in retirement.
Before retiring, you generated income in some fairly standard ways. There are many sources of income in retirement. Social Security; Pension; Personal Savings; Other.
Plan for Success
© 2009 TMP Capital, Inc.