Inheriting wealth can be unexpected or something you’ve known about for a long time. Either way, it can be life changing. Beyond the emotional component, your head may be spinning with questions about what to do next. How will this change my life? Will this change my life? Beyond the technical components of inherited wealth, receiving a large gift can spark a lot of existential questions that are important to address within the context of your financial plan.
As your children grow into adults, your relationship with them naturally evolves. You love them and may want to continue to support them in various ways but, when it comes to supporting them financially, things can get complicated.
Welcome to a new year! With the holidays and celebrations behind you, it’s time to plan for the year ahead. If you have one or more retirement accounts and are over the age of 70 ½, taking your required minimum distribution (RMD) will be on the “to do” list for you and your financial advisor.
What’s an RMD and why do I have to take money out of my retirement accounts?
The biggest benefit of saving in retirement accounts is tax-free growth, meaning you never pay capital gains tax as the assets increase in value over time (motivation to start saving early!). The IRS, however, doesn’t want you and your beneficiaries to receive this benefit for eternity so, at the age of 70 ½, you must start taking money out of the account. Roth IRAs are an exception in that distributions aren’t required during the original owner’s lifetime but, after the owner’s death, beneficiaries are required to take annual distributions over the course of their lifetimes.
The Social Security system can be complicated to navigate. Whether you’re in the early years of your career or nearing retirement, it’s important to understand how social security works and how to maximize your eventual benefit, especially if you are divorced or widowed.
Giving back to your community feels great for several reasons and many of us living in the United States are fortunate to have the relative prosperity to do so. For some, it’s an inherent part of their value system or they’ve had a personal experience that connects them to a particular cause and for others, there are financial benefits driving their decision to give. Whatever the motivation, charitable giving can be an important part of your overall financial plan and it’s important to understand how the recent tax law changes affect the financial impact of donating cash and securities to your favorite causes.
The most significant change to the tax code for most taxpayers is the increase in the standard deduction. The amount nearly doubled to $12,000 for single filers and $24,000 for couples beginning in 2018. This means that unless your total itemized deductions are over these amounts, you will no longer be able to deduct the amount of your charitable donations. As with any tax law change, it’s best to consult your CPA to assess the impact to your personal situation but there are steps you can take on your own to get started.