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Digital Assets and Your Estate Plan

Digital Assets and Your Estate Plan

In today’s high-tech world, technology has produced a new form of property that we need to think about in our estate documents. Digital assets are now an essential part of the estate planning process, but some people may still overlook them! It’s important to not only remember your digital assets when working with your estate planner, but also understand the unique intricacies they introduce to the process. What are Digital Assets? From email, to banking, to social media, so much of what we do relies on the digital world. Technically speaking, digital assets are any “electronic record” that you own or control. With the world’s ever-growing number of technological advances, the list of digital assets people can possess is always changing. As of right now, here are some of the most common digital assets: Email accountsOnline banking, PayPal and other financial accountsSocial media accountsPhotos, videos, etc. stored on an electronic device or cloud-based systemDocuments, spreadsheets, and other text filesEntertainment, including music, books, movies, etc.Blogs or websites By no means is this list exhaustive, but it’s a good place to start when thinking about your digital assets. Why include Digital Assets in an Estate Plan? Without detailed instructions on how to access digital assets and the way they should be dispersed, you run into issues with estate administration and risk the possibility of identity theft. Estate owners who do not provide executors with clear access to their digital assets run the risk of identity theft, as executors would be unable to monitor these assets. It is crucial that the account holder does their research on access rules for their digital assets. Some providers only require the correct username and password, while others may require a letter of testamentary – a court issued document giving the executor control. Leaving detailed instructions behind will also make the estate administration process run much more smoothly. Digital asset planning is still only in its “pioneer” stage, so there is a lot of legal uncertainty around the issue. A proper plan can help avoid this uncertainty. Preparing an Estate Plan for Digital Assets We’ve narrowed down the planning...

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5 Things to Never Do with an Inherited IRA

5 Things to Never Do with an Inherited IRA

Inheriting an individual retirement account can be a very fortunate thing, if done correctly. The majority of us are left to our own devices when preparing for retirement, so the additional income from an inherited IRA can provide some relief. But be forewarned, inherited IRAs come with a lot of rules – more than your own IRA. It is important that you take the time to learn about your new inheritance before you make any costly mistakes. While we advise doing nothing before meeting with your financial advisor, here are 5 things you should never do with your inherited IRA. Non-spouse Beneficiaries Not Using the Stretch Out Option If you inherit an IRA and were not the spouse of the deceased, you have two options for liquidating the account. One option is you can choose is to “stretch” your distributions, which allows you to take required minimum distributions over your life expectancy. This leaves the funds in the IRA as long as possible, and could allow them to grow tax-deferred for decades. But just like a traditional IRA, you will still have to pay taxes on distributions and earnings from an inherited IRA. If you inherit a Roth IRA, you must still take RMDs, but these withdrawals will be tax free. The second option is choosing to liquidate the account within 5 years of the owner’s death. While it might seem appealing to have the money right away, if you’re dealing with a traditional IRA you’ll likely be stuck with a huge tax bill, not to mention a long-term loss of earnings potential. Distributions from an inherited Roth IRA on the other hand will be tax free, unless the account wasn’t established at least five years prior to the owner’s death – then the earnings could still be subject to tax. Not Taking RMDs If you are a non-spouse inheriting an IRA and wish to “stretch” the IRA over your own life expectancy, you must take yearly required minimum distributions. Your RMDs must start the calendar year following the year that the owner died. If you miss that date, you will...

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Am I Too Old to Take Out a Long-Term Care Insurance Policy?

Am I Too Old to Take Out a Long-Term Care Insurance Policy?

Long-term care is certainly a significant concern for people over age 65. According to the U.S. Department of Health and Human Services, 70% of those over age 65 will need some type of long-term care services during their lifetime. More than 40% will require care in a nursing home for some period of time. For a normally healthy and active person, the simple act of growing older does not really alter the likelihood that one might some day need long-term care coverage. But given the relatively high possibility that someone will eventually claim benefits under a typical long-term care policy, it may help to consider a policy as a combination of insurance and a saving plan. So it stands to reason that the less time between starting to save and drawing benefits, the greater the premium needed to ensure that enough resources are accumulated to pay those benefits. Consider that a policy which might cost less than $1,000 per year for someone taking it out at age 50 might cost twice that if the person waits until age 65, and it could triple again if the person waits until age 75. In other words, the key issue may not be your age when you initiate coverage, but your ability to finance the cost at whatever age you begin. Of course, this is only a rough guidepost drawn from national averages. Actual policy cost depends on the total amount of coverage offered in the policy, the types of services covered, the application of deductibles, and whether or not the policy includes periodic inflation adjustments. Also keep in mind that this applies only to people who continue to show no signs of degenerative disease or disability when they apply for coverage. People who do have significant symptoms (at any age) can be excluded from coverage or required to pay significantly higher premiums.     Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible...

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Don’t Lose Your Money to Escheatment Laws

Don’t Lose Your Money to Escheatment Laws

Escheatment is the process by which a state government assumes ownership of unclaimed or abandoned accounts. Its intended purpose was to help handle situations in which the owner of an account had died and had no heirs or beneficiaries – but it has evolved into something more complicated. After a specified period of inactivity, which for many states is only five or even three years, the state government can then use this unclaimed money towards their own budget, which is particularly appealing for states in a financial bind. Escheatment isn’t Rare Escheatment happens on more occasions than you might think. There are a number of ways in which an account can become abandoned. Uncashed checks, a lack of communication with your financial institution for your state’s defined period of time, failing to respond to a proxy statement – all can lead to what a state considers “abandonment”. A financial institution should contact you should any of your accounts reach this abandonment status, but that contact may simply be in the form of one letter. Should your address not have been updated, or should you not open the letter, then the escheatment process will begin. Some states put an ad in local newspapers reminding people that they “may have unclaimed property” and count that as contact! States can find out about abandoned accounts in a couple of ways: either through an audit or through the yearly filing from the financial institution holding the account. In turn, this has created an industry of auditing firms that work to find abandoned accounts, then keep a percentage of what the property once it’s been converted to state revenue. Getting Your Money Back Once you realize assets of yours have been escheated, the ease at which you can get those funds back will depend on the state. No matter what the state, you’ll have to make a claim on the escheated property and fill out paperwork to prove your identity. After that, the state should return your property. But some states may have already sold the escheated property and therefor have to write you a check...

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The Risks of Investing

The Risks of Investing

Risk and investing go hand in hand – no matter how safe you think your investments may be. A good investor will try to minimize their risk as much as possible without also reducing their potential rewards – but even the wisest investors must face the occasional downfall. What exactly is risk? It is any uncertainty in your investments that has the potential to negatively affect your finances – and it comes in all shapes and sizes. Before making any investment, it’s important to evaluate the different levels of risk that are involved, and determine what level you can tolerate. Market Risk Market risk, or volatility, is risk that affects all securities in the same way. This type of risk is caused by events that are out of one’s control and affect the entire market, not just a single company or industry type. This means that while the quality of your investments may not change, an outside event causing a market decline could crush your portfolio’s performance. Outside events could be geopolitical – such as the recent Brexit vote, economic, inflation-related, and any other event that cannot be controlled by diversification in your portfolio. Inflation Risk Inflationary risk is the chance that the value of your investments may diminish as inflation diminishes the value of a country’s currency. Ideally, shares should offer some protection against inflation, as companies can usually increase their prices in accordance with the inflation. What really takes a hit are investments like bonds or longer-range CD’s with locked-in return rates. These are especially susceptible to inflation risk because even though interest and principal may be guaranteed, the purchasing power of the principal and interest could be significantly reduced due to inflation. Business Risk Business risk is probably one of the best known types of risk and is pretty straight forward. It is the risk that something unfavorable may happen to a company and cause your shares in the company to lose value. These risks include things like a disappointing earnings report, changes in personnel, or bankruptcy. Business risk can be a major risk for those who invest...

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5 Living Trust Mistakes to Avoid

5 Living Trust Mistakes to Avoid

For most people, a living trust can be a helpful estate planning vehicle with numerous benefits – including avoiding probate court at death and incapacity. But if not careful, a small mistake can keep your trust from working the way it was intended. These mistakes can lead to costly probate proceedings or even a transfer of your estate to the wrong beneficiaries! Here is a look at five common mistakes people make when creating their living trust: 1. Not properly funding your living trust A living trust can only control the assets you put it in. This seems pretty straightforward – but the problem lies here: you can have an incredibly well-written trust that contains all of your instructions, but unless you go and change title and beneficiary designations to the name of your trust, it means nothing! It’s important to be sure you don’t stop short in the funding process, otherwise the assets that you missed will end up going through probate, defeating the point of using a living trust. 2. Having a poorly prepared living trust Though it’s hard to deny the appeal of saving a buck, cheap online or DIY living trust forms are not always worth it. This is not to say you shouldn’t ever use them – others have created their own living trusts quite successfully. But if you’re unwilling to do the full extent of research that is required, you could end up with improperly prepared documents that either don’t work the way you intend, or don’t work at all. Going with an experienced estate planning attorney in your area can provide you with well-prepared documents as well as their counsel. Spending more upfront could help your trustees avoid an even costlier probate process. 3. Not carefully choosing your successor trustees Many people name one or more of their children as successor trustees and consider the job done. But this might not always be the best answer. It’s important to consider all possible options, as not everyone is up to the task of managing and eventually distributing the assets from your living trust. Know what...

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Fixing Our Nation’s Retirement could come at a Cost to the Wealthy

Fixing Our Nation’s Retirement could come at a Cost to the Wealthy

After two years of work, the Bipartisan Policy Center (“BPC”) has released a 146 page report1 jam-packed with ideas on how to improve our nation’s retirement plans. The report goes over everything from improving workplace retirement savings plans to modernizing the Social Security program – and we can tell you right now, high-earners are not going to like the changes. Strengthening the Social Security Program Some of the proposed Social Security changes from the report include raising the taxable level of earnings for Social Security, more taxation of benefits, a cap on spousal benefits, and a 0.5% hike in the employee and employer payroll tax. The following two Social Security reforms are particularly detrimental to high-earners. Currently, the maximum taxable earnings level cap is $118,000. The report, however, recommends raising the cap to $195,000 by 2020. The justification is that currently, the maximum is indexed to average wage growth – but earnings for workers at the top of the wage distribution have grown faster than average wages meaning the number of earnings above the taxable maximum have increased. The Commission believes we are not currently taking advantage of enough of the income spectrum. The Commission has also proposed to cap and re-index the spousal benefit, claiming that currently, spousal benefits favor the more affluent households where typically the wife does not have to work because of the husband’s high income. Their recommendation is to cap the spousal benefit at a level equal to that of a spouse of a worker in the 75th percentile earning distribution. In 2022, this new maximum spousal benefit would equal $843 per month, versus the current maximum for 2016 which is $1,320. Facilitating Home Equity One of the concerns mentioned in the report is the level of mortgage debt among America’s older population. To help remedy this situation, the BPC targets the federal tax deduction for mortgage interest payments – a deduction that usually applies to wealthier taxpayers who itemize their taxes. They propose that by no longer applying tax deductions when home equity decreases, it will encourage homeowners to store up home equity that can be...

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Walsh & Associates Attends Prestigious LPL Financial Private Wealth Symposium

Walsh & Associates Attends Prestigious LPL Financial Private Wealth Symposium

– Exclusive Event Held This Year at St. Regis Monarch Beach, Dana Point, CA – –Brings Together Top LPL Financial Advisors Serving Affluent Families and Institutional Clients – Sarasota, FL – May, 2016 – Walsh & Associates, an independent wealth management firm announced today that Joseph Walsh, Jr., CEO Wealth Advisor and Joseph Walsh, III, Wealth Advisor of Walsh & Associates attended LPL Financial’s Private Wealth Symposium, held May 2-4, 2016 at St. Regis Monarch Beach in Dana Point, CA. This invitation-only symposium brought together LPL’s finest advisors serving affluent families and institutional clients to participate in a focused curriculum addressing advanced planning, practice management and investment topics specific to this client segment.   Gary Carrai, Senior Vice President, LPL Private Client said, “We congratulate Joseph Walsh, Jr. on his selection to represent Walsh & Associates at this exclusive event. The goal of the Private Wealth Symposium is to truly challenge our best advisors to strengthen and grow their practices by featuring an agenda which focuses on how to effectively market to, win, and serve today’s high-net-worth investors.” Joseph Walsh, Jr., CEO Wealth Advisor at Walsh & Associates said, “The Private Wealth Symposium provided an outstanding mix of the high caliber general sessions and purposefully curated breakout sessions, discussing the tools and tactics that will help to most effectively serve our clients’ needs. Additionally, the ability to connect and interact with other advisors and LPL home office leaders made it an amazing experience. The knowledge we gained at this gathering from industry-leader experts will certainly empower our team to better serve our clients.” Walsh & Associates is a branch office of LPL Financial, the nation's largest independent broker-dealer,* an RIA custodian, and a wholly owned subsidiary of LPL Financial Holdings Inc. (NASDAQ: LPLA). *Based on total revenues, Financial Planning magazine, June 1996-2015 About Walsh & Associates Walsh & Associates is an Investment Advisor registered with the Securities and Exchange Commission, with locations in Sarasota, FL and DeKalb, IL. Joseph Walsh, Jr., MBA, CFP®, CFA®, CPWA®, AIF®, CTFA®, is President and CEO of Walsh & Associates and has more than two decades...

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5 Financial Decisions you should never make

5 Financial Decisions you should never make

In a world overflowing with financial advice, like when you should start contributing to a 401(k), or how much you should be saving now to become a millionaire by 60, and so on and so forth – sometimes it’s good to get a new perspective. That’s why we’d like to present you with some financial advice from the other end of the spectrum: the financial moves you should be avoiding at all costs! • Taking a Payday LoanEven if you’re in a tight financial situation, we still recommend holding out on going to a payday advance location. We can almost guarantee that the resulting fees are not worth the advance. While the initial fee to borrow the money may only be about $15, it’s the interest rates that catch people off guard. Every two weeks that you do not pay back your loan in full, you get slapped with an additional $15 finance fee, making the average annual interest rate about 391 percent according to the Federal Trade Commission. If you’re really in a bind, consider a small loan company or a loan from your credit union instead. Their interest rates are much more competitive than your typical payday loan location. If you are not habitually coming up short on funds, you can also try contacting your creditors to ask for more time. Credit companies are usually willing to help customers that they believe are acting in good faith. • Not Having an Emergency FundWhile putting money into a fund that you may never use might not seem very appealing, the relief you’ll feel in the event of an emergency will make it all worthwhile. Having three months’ worth of living expenses for your family is a good start, while six months is ideal. These funds should only be touched in the case of an actual emergency, such as unexpected medical expenses or the loss of one’s job. • Not InvestingWe know why investing can be hard for some people: you’re entrusting others with your hard earned money or perhaps you are scared by the volatility of the stock market. But...

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Social Security FAQS

Social Security FAQS

  1. How big of a benefit is it really?It would cost a 66 year old man approximately $575,000 to purchase a joint life immediate annuity that generates $2,000 per month in income with 3% cost of living increases according to a CANNEX quote I ran in 2015. Social security can be one of your largest assets and getting it right is very important. 2. What is my Full Retirement Age?The current full retirement age is 66 for people born between 1943 and 1954 and it gradually increases to age 67 for people born after 1960. Your full retirement age (if born between 1955-1959) is listed on your social security statement. This is different than Medicare which starts at age 65 for everyone. 3. I used to get a social security statement but haven’t seen mine in years?Paper social security statements used to be mailed out annually. But budget cuts have since changed that to once every 5 years to age 60 and then annually once you turn 60. If you do not want to wait for a paper statement you can set up an account online at http://www.ssa.gov/myaccount. We encourage everyone to set up an online account. 4. Can I still work if I am collecting Social Security Benefits early?Of course you can still work but you will forfeit $1 in benefits for every $2 you earn over $15,720 in 2015. You can earn whatever you want after you reach your full retirement age. Of course your benefits are always taxable no matter when you earn them. (Subject to income limits on how much of benefit is taxable. 0% to 85% of benefits become taxable). 5. I have a government pension; will I get any Social Security Benefits?If you have at least 10 years of substantial earnings years accumulated you WILL receive some sort of social security benefit. This benefit will be reduced by the windfall elimination provision. You will receive a reduced social security benefit due to the fact that you did not contribute to social security and were covered by a government pension. We can help calculate your...

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