Commentary

This is some blog description about this site

The #1 Reason You Need An Estate Plan

The #1 Reason You Need An Estate Plan

Several reasons to create a good estate plan as well as the number one reason plan your estate: personal peace of mind.

Death. It happens to us all. 

Chances are death is not the first thing you think about every morning, but that doesn’t mean you should never think about it.

A good plan will help make the transition as easy as possible for your family and everyone who depends on you when you’re gone. The resulting peace of mind can help you enjoy the rest of your life, no matter how long you live.

Several Reasons To Create An Estate Plan

There are many reasons to create an estate plan. Minimizing taxes is just one of these reasons.   In fact, a good estate plan could net your family a potential $0 tax liability. That’s one goal, but a well-designed plan will include much more.

Another reason estate planning is helpful is that your wishes have the best chance of being followed if they’re in writing. Recording your intentions will help ensure they’re followed. A comprehensive plan includes instructions for your affairs in the event you are incapacitated or disabled – not just when you die. You can make sure your wishes for medical care, family matters, business continuity, and asset disposition are clear even if you are comatose. So estate planning is not just planning for death.

Moreover, estate planning addresses assets for your children, grandchildren, and your favorite charities. Blended families add another layer of complexity if that’s your situation.  There are numerous ways to do this and the right plan isn’t always obvious. But a good estate plan will make your wishes clear – and help your family avoid unnecessary strife when you pass.

But Isn’t A Will Enough?

The classic “Last Will & Testament” is also a part of an estate plan, but it’s not comprehensive. Retirement accounts require you to designate a beneficiary ahead of time and that designation may override your legal will. The same goes with insurance policies. Your estate plan should encompass all your assets and make sure they are distributed according to your wishes. That’s why having a will isn’t the only component in a good estate plan.

The #1 Reason To Plan Your Estate

There are many reasons for estate planning, but the number one reason to do it is for your own personal peace of mind. 

You’ve worked hard for your family, usually for many decades. You’ve provided for your family, sometimes have grown a business, saved assets, bought properties, and invested in worthwhile causes. Your estate plan is one of your final statements to the world about who you are and what you care about. By creating a good estate plan, you are not only giving your spouse and your family what you’ve worked hard for, you’re also giving yourself the peace of mind that you’ve finished the race well. 

Next Steps In Estate Planning

Estate planning is an important part of a broader financial plan. 

We can help direct you to the right resources and experts based on your own unique goals and circumstances. We are not attorneys at Republic Wealth Advisors, but we’ve been through this process with many clients. We’ve seen how smooth the process can be for well-prepared families, and how difficult it can be for those who didn’t plan.

We recommend consulting with a board certified estate planning attorney in your area. If you need a referral, please reach out and we’re happy to make an introduction!

 


 

IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Republic Wealth Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Republic Wealth Advisors.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Republic Wealth Advisors is neither a law firm nor a certified public accounting firm and no portion of this blog content should be construed as legal or accounting advice.  If you are a Republic Wealth Advisors client, please remember to contact Republic Wealth Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Republic Wealth Advisors’ current written disclosure statement discussing our advisory services and fees is available upon request.

 

Continue reading
91 Hits
0 Comments

Estate Planning, Death & A Good Financial Strategy

Estate Planning, Death & A Good Financial Strategy

Estate planning basics, one family’s experience, and how to get your financial affairs in order.

Estate planning can be an uncomfortable process.

While no one likes talking about death, it is one of the few certainties in life.  It is a “when” not “if” proposition, and it is important to plan ahead so that you can control how your assets pass to your heirs (and also not leave a burden to someone else to sort through your affairs when they can’t consult you).  

Estate Planning Basics

There are several things you can do to prepare for your inevitable passing (or your disability). For instance, we recommend you…

  • Identify all individual (and spousal assets) and determine who should receive them.
     
  • Include instructions for your care if you become disabled before you die.
     
  • Name a guardian for minor children.
     
  • Locate and safeguard all life insurance policies.
     
  • Review and update beneficiaries on assets and policies.
     
  • Understand pensions and retirement plans.

Although this isn’t a comprehensive list, it should help you start thinking about the importance of estate planning today. Planning can save weeks and months of heartache in an already taxing time. But with proper planning, the death of a spouse doesn’t have to be as stressful on you personally or financially. 

One Couple’s Experience with Estate Planning: The Lupos 

In a recent story in the The New York Times, one couple’s estate planning helped tremendously.

One couple who went through this exercise, Erika and John Lupo of Sparta, N.J., did so sooner than most, and it paid off. When Mr. Lupo died of cancer last year at age 57, Ms. Lupo, 51, who runs an acting school, was extraordinarily well prepared — unlike many widows.

In his final days, Mr. Lupo, a former salesman, did everything he could to prepare his estate and make sure his wife knew where his assets were — and how they could be bequeathed to her and heirs. There was a bit of complex estate and financial planning involved, because Mr. Lupo had a daughter from a previous marriage, and the couple has a teenage son.

Working with Mark Germain, a certified financial planner with Beacon Wealth Management in Hackensack, N.J., Mr. Lupo had several documents in order just a few weeks before he died.

“We made out wills, durable powers of attorney and a trust” for Mr. Lupo’s daughter, Mr. Germain said. “We also made some arrangements for the son in the will. We had to do some sophisticated planning.”
 

In this instance, the Lupos’ estate planning was complex. There was a previous marriage, another child, and a teenage son in the mix. But with the help of a good financial planner, the Lupos were able to order their financial affairs to help sustain the family when the patriarch passed on. 

Getting Your Estate In Order

Each individual’s (and family’s)situation is unique. What may have been true for the Lupos may have nothing to do with your circumstances. That’s why it’s important to connect with the right professionals to complete your estate planning.  Even if you have previously completed estate planning, the plan should be reviewed periodically to determine if changes are needed.

We recommend consulting with a board certified estate planning attorney in your area. If you need a referral, please reach out and we’re happy to make an introduction!

 


 

IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Republic Wealth Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Republic Wealth Advisors.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Republic Wealth Advisors is neither a law firm nor a certified public accounting firm and no portion of this blog content should be construed as legal or accounting advice.  If you are a Republic Wealth Advisors client, please remember to contact Republic Wealth Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Republic Wealth Advisors’ current written disclosure statement discussing our advisory services and fees is available upon request.

 

 

Continue reading
89 Hits
0 Comments

10 Biggest Estate Planning Mistakes

10 Biggest Estate Planning Mistakes

Here are some of the most common estate planning mistakes we see in the business. 

Estate planning may be a difficult topic to discuss, but it’s vital. How you will distribute assets after death or plan for incapacitation is an important component of every financial plan.

The Financial Planning Association recently published a helpful article on common estate planning mistakes by Caroline Demirs Calio, J.D.  Here are some of the most common estate planning mistakes we see in the business.

Mistake #1: Not developing an estate plan.

If you don’t direct how your assets will be distributed at your death, your state will decide. Formalizing your wishes may also save your family some heartache after you are gone and could help prevent inter-family arguments, which could cost more in legal fees.

Mistake #2: Failing to create a complete list of assets and keep good records.

A complete list of your assets and an approximation of their value will aid in crafting an appropriate estate plan that takes into account potential estate tax exposure and other issues that arise in estates of your size.

Mistake #3: Failing to update beneficiary designations.

Life insurance proceeds and retirement plans can comprise a large portion of a person’s wealth. Life insurance, IRAs, pensions, and other employee benefits do not pass under your will or trust but are governed by beneficiary designation. Update all your beneficiary designations to make sure they match your current wishes and are consistent with your other estate planning documents.

Mistake #4: Failing to name appropriate fiduciaries.

Acting as a fiduciary is oftentimes consuming and complex. As your life and circumstances change, your views of who would be best in each capacity may change. An essential aspect of creating and updating your estate plan is regularly reviewing the individuals and institutions you have appointed in fiduciary roles to take on these responsibilities after you are gone.

Mistake #5: Failing to correctly title assets.

Incorrect or haphazard titling of your assets can have unintentional consequences. For example, certain ownership arrangements (such as trusts) will avoid probate on your assets at your death.  In addition, as part of the estate planning process, your assets can be titled to take advantage of any state estate tax exemptions and federal estate tax exemptions that are available.

Mistake # 6: Failing to consider incapacity.

When most people consider estate planning, they automatically think of death. However, in addition to covering the distribution of your assets, your estate plan should set forth who will make decisions for you if you are incapable of making them yourself. Things to consider: durable power of attorney, medical power of attorney, and living will.

Mistake #7: Failing to structure gifts and inheritances appropriately.

Estate plans are not one-size-fits-all. Your estate plan should not be cookie-cutter, but rather designed for the state in which you live and to consider your beneficiaries’ needs and circumstances. For example, minor children’s assets may be managed in a trust or a special needs beneficiary may need special consideration. Make your estate planning fit your family structure.

Mistake #8: Failing to properly administer an irrevocable life insurance trust.

Life insurance proceeds will be includable in your estate if you own the policy at the time of your death. If the value of your estate (including the life insurance proceeds) exceeds the applicable estate tax exemption amounts, it may be prudent to create an irrevocable life insurance trust to hold the policy, thereby sheltering the proceeds from estate taxes at your death.

Mistake #9: Failing to consider gifting techniques during life.

It is not uncommon for an older person to ask for estate planning advice. Although some techniques can be employed at older ages, in most cases better results (for example, lower estate taxes) could have been achieved through an earlier gifting program. Properly implemented, this technique can save tens of thousands in taxes later.

Mistake #10: Failing to review and update your estate plan.

It is tempting to prepare an estate plan and put it on a shelf and forget about it. However, because of various changes, estate plans should be reviewed after significant changes in federal or state estate tax laws, when life events occur (marriage, divorce, birth of children and/or grandchildren).  And, in any event, every three to five years.

If you have any questions about the above or need specific advice regarding estate planning, we recommend speaking to a board certified estate planning attorney. If you need a referral to one, our team at Republic Wealth Advisors is happy to help you find someone who can meet your needs.

 


 

IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Republic Wealth Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Republic Wealth Advisors.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Republic Wealth Advisors is neither a law firm nor a certified public accounting firm and no portion of this blog content should be construed as legal or accounting advice.  If you are a Republic Wealth Advisors client, please remember to contact Republic Wealth Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Republic Wealth Advisors’ current written disclosure statement discussing our advisory services and fees is available upon request.

Continue reading
229 Hits
0 Comments

Skip the Purple Rain and Write Your Will

Skip the Purple Rain and Write Your Will

Fans everywhere are mourning Prince, the artist who tragically left us at the height of his fame last month. We should both mourn his passing and draw an important lesson from it.

The lesson: Everyone needs a will because everyone, at some point, will die. Prince didn’t have one and now his family and business associates face a major and completely unnecessary ordeal.

People die “intestate” (without a will) all the time. Some estimates say as many as six in 10 Americans fail to create a will before dying. This leaves their property and obligations in the hands of a court that may or may not follow their wishes. It may not even know their wishes. So why would someone as wealthy and famous as Prince not have a will?

We can’t know for sure, of course. Prince no doubt had many lawyers supporting his various businesses. Maybe they urged him to develop an estate plan and he simply refused, or thought he would get to it later. 

Confronting our mortality isn’t high on anyone’s priority list. Yet doing it is actually an act of great love for your family. It will help ease the pain they feel at losing you and save them the need to make important decisions under great stress.

Remember, also, that your estate plan covers more than death. What happens if you become disabled or stricken with dementia? What sort of life-extending medical treatment would you want or not want? A good estate plan will make sure your family knows your wishes even if you can’t tell them.

In Prince’s case, his only survivors are a sister and five half-siblings. A Minnesota court may award them ownership of his very substantial estate and business holdings. At least part of Prince’s estate – his song library – will remain a very valuable asset for decades. Are the siblings prepared to manage it effectively? If they each get only a share, can they work together in harmony? We don’t know, but an estate plan would have arranged a solution.

We also learned that Prince had deep charitable interests that he kept private during his lifetime. He missed the chance to include them in his will. It is quite possible that money he would have left to charity will now go to pay estate taxes.

Estate and inheritance taxes can take a huge cut of estate taxes. The top federal rate is 40% and the $5.43 million lifetime exclusion won’t be much help for Prince’s reported $700 million estate.

Many states have death taxes as well, including Minnesota where Prince died. His estate may have to pay an additional 16% tax on top of the federal tax. Add in legal fees other final expenses, and it is entirely possible that government will take more than 60% of Prince’s wealth.

 
[Chart source: Ritholtz.com]

So what should Prince have done? The Purple Rain would have left the sky blue had he taken three simple steps.

First, he should have asked his accountants, or whoever prepared his tax return, to keep him informed of potential estate tax liabilities. Seeing those numbers might have spurred him into action.

Second, Prince should have hired a board-certified estate planning attorney to review and restructure his wealth, then execute a will to implement it.

Third, Prince could have slashed his estate tax liability by simply moving to another state than his native Minnesota. He could have done this and still stayed close to home. Wisconsin is only a few miles away from Minneapolis and has no estate or inheritance tax.

While it’s too late for Prince to make these moves, it’s not too late for you. Here are some estate planning stories we’ve prepared for Republic Wealth Advisors clients.

•    Why You Need an Estate Plan
•    How to Pay No Estate Tax
•    Planning for When You Can't Plan
•    Leaving Your Estate to Charity
•    Planning for Your Own Disability
•    Estate Planning for Special Needs Children 
•    Your Estate Plan Should Take Care of Business, Too
•    Trusts: Key Estate Planning Tool
•    A Will and a Way: What to Tell Your Survivors

At Republic we aren’t attorneys, but we can refer you to some we know and trust. We can then coordinate with them to integrate your financial plan and estate plan so they work together.

Having a comprehensive estate plan isn’t something we think about often, but it may be one of the greatest gifts you can leave your loved ones.


IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Republic Wealth Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Republic Wealth Advisors.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Republic Wealth Advisors is neither a law firm nor a certified public accounting firm and no portion of this blog content should be construed as legal or accounting advice.  If you are a Republic Wealth Advisors client, please remember to contact Republic Wealth Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Republic Wealth Advisors’ current written disclosure statement discussing our advisory services and fees is available upon request.




Continue reading
1035 Hits
0 Comments

2016 Key Financial Data Card

We have a newly updated 2016 Key Financial Data card for you. It is a handy resource to have as you plan the year ahead and prepare for tax filing time. You can download the PDF here.

The Key Financial Data card includes current tables for:

  • 2016 Tax Rate Schedule
  • Standard Deductions & Personal Exemptions
  • Tax Rates on Long-Term Capital Gains and Qualified Dividends
  • Exemption Amounts for Alternative Minimum Tax
  • Gift and Estate Tax Exclusions and Credits
  • Education Credits & Deductions
  • Tax Deadline Dates
  • Retirement Plan Contribution Limits
  • Individual Retirement Account Contribution and Income Limits
  • Health Savings Account Limits
  • Deductibility of Long-term care premiums
  • Medicare Deductibles
  • Social Security Benefits and Taxation Amounts
  • FICA and Medicare Tax Rates
  • Medicare premiums
  • Life Expectancy Table

Feel free to share the Key Financial Data card with any family and friends who can use it. Click here to download the PDF.

 

 

Continue reading
8029 Hits
0 Comments

Five Useful Year-end Investment Tips

Five Useful Year-end Investment Tips

Soon we will flip our calendar pages to the last month of 2015. Now is a great time to give your financial plan a quick review, before holiday parties and vacation time intervene.

If you are a Republic Wealth client, we review your plan regularly and consult with you on any moves we think would help. Here are five questions we always ask as year-end approaches.


Is your asset allocation plan still suitable?

The assets you own – your home, other real estate, stocks, a small business, etc – add up on the asset side of your balance sheet. Do you have the right mix, considering your personal situation and long-term goals?

Everyone should ask this question each year. Circumstances change. If nothing else, you are now a year closer to retirement age than you were twelve months ago. You might have made significant changes that would affect your plan. Events like marriage, new children, buying or selling a business, receiving an inheritance, changing jobs, moving to a new city are all important to consider.

You want to consider both your liquid and illiquid investment. By “liquid”, we mean those you can easily sell, like stocks or mutual funds. The portfolio should be diversified and have an appropriate risk profile

Your illiquid investments, like real estate or privately held businesses, are equally important. They may have great potential, but don’t let yourself become “land poor.”


Do you want to make any charitable gifts?

Once you and your family are secure, you may want to use part of your wealth to help other worthy causes. Using tax advantages strategically can enhance your donation’s value to the charity while reducing your own tax liabilities.

Donations to “Donor advised funds” can be an excellent move at year-end. You can decide later exactly which charity receives your gift, but receive the tax deduction right away – for tax year 2015 if you donate by Dec. 31.

Most donor advised funds can accept either cash or “in-kind” securities. Donating a stock in which you have an unrealized long-term capital gain offers a double benefit. You avoid capital gains tax on the gain while also receiving a deduction for the stock’s full value.


Can you harvest any capital losses to reduce this year’s tax liability?

Active investors know that occasional losses are inevitable. The best response is to acknowledge any mistakes, learn from the experience and move on. At the same time, you don’t want to be impatient and give up too soon. The result can be a portfolio of unrealized losses.

While such stocks might recover eventually, they can offer immediate value when paired with realized gains. If you booked a capital gain in 2015 and have unrealized losses as well, selling them by year-end can help reduce or even eliminate your capital gains tax liability.

We call this “tax loss harvesting” because it truly is a harvest. Just as farmers harvest food from bare ground, you can harvest tax benefits from your unprofitable investments. (As always, consult your CPA before making any important tax decisions.)


Have you made the maximum yearly contribution to your retirement plans?

Contributing as much as possible to tax-advantaged retirement plans like your 401k is the best way to insure your older years are comfortable. Maximum contribution limits vary by plan type. We listed them all for you back in January, so check out 2015 Brings Expanded Retirement Saving Opportunities to learn more.

If your contributions so far, plus whatever is scheduled by year-end, are less than the limit, try to find additional cash you can move into the retirement vehicle. Once there, it can grow either tax-free or tax-deferred, boosting your retirement income down the road.

Incidentally, most of the 2015 contribution limits will be the same in 2016. This year’s unusually low inflation means there is no need to bump them up to keep pace with living costs.


Should you move assets outside your estate?

Investors with sizable assets should already have a detailed estate plan that ensures minimum tax liability or other problems for your heirs. One way to do this is to “gift” assets to family members long before you die.

Under current law, an individual taxpayer can give up to $14,000 per person, per year, without incurring gift tax. A married couple can give up to $28,000 per person, per year. This is a simple way to move assets out of your estate and reduce estate taxes in the future.

Many wealthy investors find that giving assets to children and grandchildren in this way teaches them how to manage money and make good financial decisions. The sooner you do this, the better, so you can be here to watch the results.


Conclusion

While the five points above don’t include everything you should consider at year-end, they are a good start. You still have plenty of time to make any necessary moves. We suggest doing it now so you can then relax and enjoy the rest of 2015. Feel free to call on Republic Wealth if you have any questions.




IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Republic Wealth Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Republic Wealth Advisors.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Republic Wealth Advisors is neither a law firm nor a certified public accounting firm and no portion of this blog content should be construed as legal or accounting advice.  If you are a Republic Wealth Advisors client, please remember to contact Republic Wealth Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Republic Wealth Advisors’s current written disclosure statement discussing our advisory services and fees is available upon request.




Continue reading
11155 Hits
0 Comments

Financial Security and the Three Bears

Financial Security and the Three Bears

Hard work can make you financially successful, but it won’t necessarily keep you there. Threats to your wealth lurk everywhere. They can strike at any moment and destroy the security you spent years building.

In working with hundreds of families over the years, I’ve noticed three main threats to financial security. I call them the Three Personal Bears, and they’re just waiting to tear your savings apart.

A little planning will keep the bears at a safe distance, but first you have to know how dangerous they can be.


Personal Bear #1: Bear Markets

Any financial advisor will tell you stocks have been a great long-term investment. That’s true as far as it goes, but there’s a devil in the details.

Experts who advocate long-term “buy & hold” stock market strategies make a very big assumption: that investors will patiently sit through the occasional bear market, watching their account values drop by 20%, 30%, or even 50% without running for cover.

I can tell you from experience that very few investors have that kind of patience. This is not a character flaw; it’s human nature. Moreover, avoiding losses actually makes sense. This is because making up a loss is harder than avoiding it in the first place.

If you lose 20% of your money one year and then gain 20% on it the following year, are you back where you started? No – you’re still in the red. You need a 25% gain to recover from a 20% loss.

Recovery is exponentially more difficult as losses deepen. This table has the numbers for you.

b2ap3_thumbnail_150805-loss-chart.png
It’s far better to avoid these kind of losses in the first place, but that’s not what most people do. Undisciplined investors tend to buy into the market after it goes up, and then give up and sell after it falls - a recipe for disaster.

All our smart devices make being a patient investor even harder. Our phones and tablets give us such quick access to news that many people feel they have to react and “do something,” even when the best move is to do nothing.

Severe losses can be catastrophic if you are already retired or near retirement age. It’s true that your investments might come back in time, but your age clock won’t stop ticking. You may not have time to recover.

The best strategy varies for everyone, based on your goals, situation and personality. Many investors tell me it helped just to talk to someone and think through the issues. This is what we always do at Republic Wealth. We help clients develop an investment strategy that matches their unique circumstances.


Personal Bear #2: Taxes

Taxes may be necessary, but no one should have to pay more than their fair share. Many people do pay more than they have to, though, simply because they don’t know any better.

This can be a serious problem. If you are in the top tax bracket and you realize a 10% short-term capital gain, it might be only 6% or less after you pay federal and state income tax. The drag from high tax rates and fees makes compound growth significantly harder to attain.

I can’t tell you how many people overlook very simple steps they can take to minimize their tax burden. They pay thousands of dollars a year more than the law requires. The government gladly takes it, too, and rarely gives it back.

It doesn’t have to be this way. Here are three ways to keep the tax bear out of your money.

First, the best way to control your tax liability is to work with an expert Certified Public Accountant. You want someone who does more than fill out forms for you. Your CPA should work with you long before tax filing time, helping you structure your affairs in the most tax-efficient way.

Having a good accountant is especially important if you are self-employed or own a business. Structuring your business in a tax-efficient way can reduce your tax liability in many ways. You should also get an estate-planning attorney involved if your assets are significant.

Second, grab every opportunity to stash your savings in tax-advantaged investment programs. A Traditional or Roth IRA, 401K, 403B or other retirement programs let you defer taxes until you reach retirement age and/or deduct your contributions from current income. If you’ve invested the maximum allowed in those accounts, consider contributing to a variable annuity for additional savings.

Don’t forget that taxpayers over age 50 can make additional “catch-up” IRA and 401K contributions. Non-working spouses can open IRAs as well, potentially taking advantage of a Back Door” Roth IRA contribution.

Third, work with your advisor to use tax-efficient strategies with your remaining investments. Simple moves like “harvesting” capital losses in the same year as you realize gains can reduce your tax liabilities significantly. You can also give yourself an advantage by using your tax-advantaged accounts for investments that generate short-term capital gains and current income, while holding long-term investments outside them.


Personal Bear #3: Inflation

Inflation is a silent thief. Year after year, it reduces your money’s purchasing power. Even if you manage to keep your dollars safe from bear markets and taxes, inflation can sap their value so they are worth less in the future. You might have more dollars, but each dollar will buy less than it used to.

Inflation’s impact on you depends on the way you spend your money. Prices rise and fall at different rates. Inflation is especially hard on retirees because they spend a bigger part of their income on health care and housing.

A recent government study found an alternative “elderly” inflation rate ran 6.5% over wage-earning citizen inflation after 29 years.

b2ap3_thumbnail_150805-inflation.png
The Federal Reserve Board is supposed to keep inflation under control, but even they think inflation at 2% a year is acceptable. They actually think the inflation rate is too low right now.

Suppose you do everything right and manage to grow your portfolio at 8% a year after taxes, and that the Fed gets its way and inflation runs at 2% annually. Your “real” return after inflation will be just 6%. Inflation stole 25% of your investment growth. Over 10-20 years, this can add up to a huge lost opportunity.

Read more about inflation from Mauldin Economics.

How do you stop inflation? You can’t stop it but you can try to keep pace with it. Many different strategies can help. I think the best “inflation hedge” is a well-managed stock portfolio. Because stocks represent ownership in businesses that must themselves outpace inflation, their value tends to grow in line with inflation and the broader economy.

Bear markets, taxes and inflation aren’t the only bears that can hurt you, but I think they are the three biggest threats to long-term financial success. Every family’s financial plan needs to consider these hazards and have ways to counteract them. If you don’t know if you are ready for them, Republic Wealth can help. Call on us anytime.



IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Republic Wealth Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Republic Wealth Advisors.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Republic Wealth Advisors is neither a law firm nor a certified public accounting firm and no portion of this blog content should be construed as legal or accounting advice.  If you are a Republic Wealth Advisors client, please remember to contact Republic Wealth Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Republic Wealth Advisors’s current written disclosure statement discussing our advisory services and fees is available upon request.


Continue reading
2114 Hits
0 Comments

Leaving Your Estate to Charity

Leaving Your Estate to Charity

People fortunate enough to amass a sizable estate often want to leave part of it to charity. You can do this in many different ways, each of which has advantages and disadvantages.

Of course, charity begins at home. Think first about those you will leave behind: spouse, children, extended family, employees, or close friends. If you feel close to someone in life, you may want to consider him or her in your estate plan.

Once you’ve done this, you can think more broadly about using your assets to help society’s broader needs. Here are some of the possible routes.

Option 1: Give before you die. This may seem obvious, but people often overlook it. If you’ve planned for your other future needs and risks like disability, and still have money left, you don’t have to wait. You can give the money to a charity now.

Making donations now allows you to target your giving more specifically and have more influence than is possible in an estate plan. You may also have the joy of seeing it help people.

Option 2: Specify donations in your will. Your last will and testament is a legal document that directs the disposition of your estate. You should prepare it in consultation with an estate-planning attorney. Your will can leave specific assets to specific charities in whatever combination you like.

Giving through your will also has a downside. The instructions in your will may or may not reflect what you wish when you die, possibly many years later. You will need to review and possibly amend it at regular intervals. This can become bothersome and expensive, so ask your attorney about other methods.

Option 3: Establish a Charitable Remainder Trust. A CRT is an irrevocable trust from which you can draw income during your lifetime, with the principal to a designated charity upon your death. These are popular vehicles because you can take a charitable donation deduction and reduce the size of your estate when you transfer assets into the trust

The drawback of a CRT is that you normally can’t change the terms after establishing it. The charity you designate will get the money eventually, even if you no longer want them to have it.

Option 4: Use a Donor Advised Fund. A DAF is a “master charity” that accepts donations, and then holds them until the donor recommends a gift to another charity. Some DAFs allow you to designate one or more final beneficiaries to receive the assets in your account when you die.

The DAF can be a very useful charitable giving tool. Because the DAF itself is a charity, you get the tax deduction immediately but can decide later on the gift’s ultimate disposition. Changing your instructions is usually simple, too.

Some estate planners recommend leaving assets to a DAF in your will, and then giving the DAF separate instructions for their disposition. This lets you revise your plans without have to redraw your will.

However you do it, leaving assets to one or more charities is an excellent way to build a legacy that outlives you. Your gift can continue making a difference long after you are gone. There is no better way to leave your mark on this world.


IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Republic Wealth Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Republic Wealth Advisors.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Republic Wealth Advisors is neither a law firm nor a certified public accounting firm and no portion of this blog content should be construed as legal or accounting advice.  If you are a Republic Wealth Advisors client, please remember to contact Republic Wealth Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Republic Wealth Advisors’s current written disclosure statement discussing our advisory services and fees is available upon request.



Continue reading
1976 Hits
0 Comments

Planning for Your Own Disability

Planning for Your Own Disability

A solid estate plan may well help you and your family long before you die. That’s because events other than death can leave you unable to make legal decisions. Planning for your own disability can help save your family from big problems.

Here is a startling fact: an estimated one-third of senior adults have some form of dementia when they pass away. Some live with Alzheimer’s or other conditions for many years.

During this time, someone else had to make financial and legal decisions for all these people. That could be you someday. Wouldn’t you like to be part of those decisions? The estate plan is your chance.

In fact, making an estate plan while you are still legally capable may be your only chance. Waiting to show signs of dementia can leave doubt about whether you were really “of sound mind” when you approve the plan. A court could step in and override your wishes.

A plan made while your mind is still indisputably clear is more likely to withstand such challenges. You can bet there will be challenges, too. You and your family will face medical, legal, financial and tax-related challenges while you are disabled and unable to deal with them yourself.

The best place to start is with an estate-planning attorney. He or she should have experience in the state where you reside, since state laws that govern the process can vary.

The plan will likely include some basic legal documents: power of attorney, advance health care directives and a will. The attorney may recommend trust arrangements for persons with substantial assets.

Financial planning may be a bigger challenge. Long-term care in a nursing home or memory care center is astonishingly expensive. Expect to pay $8,000 per month or more for around-the-clock care.

Medicare and private health insurance usually offer only limited benefits. Long-term care insurance purchased well in advance may be the best option for those unable to pay out of pocket.

People with dementia can live for decades in good physical health, but eventually their bodies will start to fail. This is where advance planning can help the most. By deciding ahead of time what degree of care you want to receive will take difficult decisions off your family’s shoulders.

The Alzheimer’s Association has an excellent online planning resource called the Alzheimer’s Navigator. It will lead you through short surveys on different topics and build a personalized action plan. Click here to go to the Alzheimer’s Navigator.

Alzheimer’s is by no means the only disability-causing condition. Accidents and many other disorders can leave you unable to care for yourself. The planning process is similar, though, and equally important no matter the cause. Make your plan now – while you still can.


IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Republic Wealth Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Republic Wealth Advisors.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Republic Wealth Advisors is neither a law firm nor a certified public accounting firm and no portion of this blog content should be construed as legal or accounting advice.  If you are a Republic Wealth Advisors client, please remember to contact Republic Wealth Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Republic Wealth Advisors’s current written disclosure statement discussing our advisory services and fees is available upon request.



Continue reading
2012 Hits
0 Comments

Estate Planning for Special Needs Children

Estate Planning for Special Needs Children

Parenting is hard in the best of circumstances. Those whose children have severe health problems face an even greater burden.

Estate planning may be the last thing on your mind in this situation, but it is still critical. Depending on the particular condition, the child may well outlive you. You could also have an accident or be disabled yourself. Planning for these possibilities can make living with them far easier for everyone.

Here are six tips to consider if you or someone you know is in this situation. Many will also apply if you are caring for an adult relative or elderly parent.

Care for Yourself. Parents naturally think of their child’s needs first. That’s a good instinct, but sometimes we carry it too far. You can’t care for your child if you don’t care for yourself. Keep yourself healthy, see your own doctor and follow his or her advice, and take periodic respites. Even a weekend at a hotel in your own city can be a welcome break – and do wonders for a marriage.

Control Expenses Carefully. Navigating the health insurance, school and government benefit maze can be a full-time job these days. In fact, it is a full-time job for some people. An independent “case manager” can review your bills and help you reduce costs.

Maximize Benefits. Parents with significant assets often assume their child would not qualify for government benefits. Sometimes that’s right, but not always. Many programs aren’t means-tested and are available to everyone. Your local school district might provide help even if your special needs child is in private schools, for instance.

Establish a Trust. Ask your estate-planning attorney if a “Supplemental Needs Trust” would be appropriate. This is a trust designed to keep assets available to help your child while preserving eligibility for Medicare/Medicaid or other programs.

Whether you have a supplemental needs trust or not, be very careful about having assets titled in the child’s name. Even very small amounts can affect benefit eligibility and you never know when the child may need extra assistance.

Write a Letter of Intent. This letter should outline your plans, goals and dreams for your child for whoever takes on their care when you are gone. Be detailed and specific. If you are like most parents of special-need children, you hold a huge amount of important information locked up in your head.

Of course, no one can ever take your place – but if someone has to try, you want to give them every possible advantage. The Letter of Intent is your chance to do it.

Establish Guardianship. Your child will eventually be an adult – at least legally. If you fell they are still unable to make important life decisions, see an attorney about establishing guardianship. This will allow you to continue making decisions for them as if they were a minor child.

The guardianship process is different in every state. Typically, you will file documents with a judge who considers your request. The judge will need to know why you think this “adult” is incapable of adult decisions. You might need to provide physician statements. If the judge does grant guardianship, expect to go through a process to renew it every few years.

Many parents of special needs children say it is the most difficult and the most rewarding experience of their lives. Whatever his or her condition, your child is yours alone and no one can take your place. Good planning will help you keep caring for the child long after you are gone.


IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Republic Wealth Advisors), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Republic Wealth Advisors.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Republic Wealth Advisors is neither a law firm nor a certified public accounting firm and no portion of this blog content should be construed as legal or accounting advice.  If you are a Republic Wealth Advisors client, please remember to contact Republic Wealth Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Republic Wealth Advisors’s current written disclosure statement discussing our advisory services and fees is available upon request.



Continue reading
2038 Hits
0 Comments

Newsletter Sign Up


Austin | Houston | Bartlesville
Tel: 512-506-9395 | 281-408-2538
Toll-free: 866-453-6565
discovery@republicwealthadvisors.com