A Tax-Deductible Buy-Sell Agreement

One of the critical needs of a small business is to protect against the untimely death of an owner. This is important because the family of the owner may face a large tax bill, and may not have the liquidity to pay the tax. To make matters worse, it may not be desirable for the deceased owner’s family to have a hand in running the business and surviving owner may not have enough cash for a buyout.

This problem can be solved with a well designed buy-sell agreement. Although there are a variety of ways to structure such an arrangement, the two most common approaches are the stock redemption and the cross-purchase plans. Because of leverage and tax efficiency, these plans are often funded with life insurance. Insurance can provide both the liquidity needed by the family to meet its tax obligations and the ready cash for the surviving owners to purchase the interest of the deceased shareholder.

In a stock redemption plan, the business agrees to purchase or retire the stock of a deceased stockholder. Typically, the business purchases life insurance on each stockholder to fund the arrangement. In a cross-purchase plan, the owners agree to buy the stock of a deceased partner. To fund a cross-purchase agreement, each owner buys life insurance on each of the co-owners. In both cases, life insurance guarantees that funds will be available if and when they are needed.

A frequent obstacle to funding a buy-sell arrangement is a lack of sufficient cash to pay for the required insurance. For example, in a 28% tax bracket, it takes $3,472 in pre-tax earnings to support a $2,500 life insurance premium. So, it’s not surprising that many owners ask if there is a way to deduct the cost of the insurance premium. Can this be done?

In fact, there is a way . . . by purchasing life insurance through a profit-sharing plan sponsored by the business. When properly structured, the funding of a cross-purchase plan in this manner has all the advantages of a traditional buy-sell agreement, with the added benefit of income tax leverage to reduce the owners’ out-of-pocket costs.

A Little Background. . .

The Internal Revenue Service (IRS) defines a qualified profit-sharing plan as a plan of deferred compensation. This definition creates flexibility that is not available with a qualified pension plan.

Amounts allocated to the profit-sharing account of a participant may be used to provide incidental life insurance protection for himself or anyone in whom the participant has an insurable interest [Treasury Reg. 1.401-1(b)(1) (ii)]. The IRS has agreed in private letter rulings that this regulation supports the purchase of life insurance on the life of a co-shareholder, to fund a cross-purchase agreement. (See PLRs 8108110 and 8426090.)

Generally, in designing such an arrangement the following conditions should be met:

1. The plan must be a tax-qualified profit-sharing plan.

2. The plan should allow each individual participant to direct a portion of his or her account toward the purchase of life insurance.

3. The plan should provide that participants may purchase life insurance on themselves, or on the life of any individual in whom they have an insurable interest.

4. The purchase of insurance must meet the so-called “incidental death benefit” limitations.

5. Taxable insurance costs (“PS-58 costs”) must be reported by the participant whose account is supporting the cost of the life insurance.

6. If the participant is married, the spouse of the participant should consent in writing to the use of the profit-sharing funds in this manner.

7. At death, the amount at risk under the policy may be distributed immediately to the surviving shareholder. This amount is received free of income tax and may be used to satisfy the buy-sell agreement. The cash value portion of the policy should remain in the profit-sharing plan.

The funding of a cross-purchase agreement through a profit-sharing plan in this manner may work best for small, closely-held businesses with two or three owners. But, it can work in larger businesses as well, and this approach may provide a cost-effective means of purchasing life insurance. This is an important consideration for any business that may not otherwise have the ability to fund the buy-sell plan.

If you need help setting up a buy-sell agreement, choosing appropriate insurance coverage, or help reducing your tax liability exposure, please contact us at (312) 554-5889 or at ivan@otbfinancialplanning.com.

Partnering with Outside The Box Financial Planning offers numerous benefits for individuals seeking retirement planning, small business support, wealth management, and beyond.  With their fiduciary duty, comprehensive approach, unbiased advice, transparent fee structure, and ongoing support, OTBFP act as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations. 

However, if you would like to take a shot at building a financial plan on your own, we offer our financial planning software, RightCapital, free of charge. Click here to get started.

We will spend almost $20 billion in 2018

When we were in elementary school, most of us have fond memories of receiving cards and candy on every February 14th. We would bring a decorated shoe-box to school and by the end of the day, it would be filled with sweet notes from our classmates and lots of candy.

But how many of us knew then, or know now, the history of Valentine’s Day? Or how big Valentine’s Day business really is? Let’s explore.

A Muddled History of Valentine’s Day

The history of Valentine’s Day is shrouded in mystery – and some would say its origins are anything but romantic. But most historians agree that today’s holiday can trace its roots through both Christian
and Roman history.

Many historians suggest that the ancient Romans are responsible for our modern Valentine’s Day because Emperor Claudius II executed two men – both happened to be named Valentine – on February 14th
of different years in the 3rd century. Legend suggests that one of the Valentines, a priest, performed marriages in secret despite the fact Claudius had outlawed marriage for young men because he decided that single men made better soldiers than those with wives. When Claudius discovered that Valentine was performing marriages, he was put to death.

Other historians suggest that the Christian church
may have decided to place St. Valentine’s feast day in the middle of February to “Christianize” celebration of Lupercalia, which was a fertility festival – as well as a pagan one – dedicated to the Roman god of Agriculture, Faunus.

The Business of Valentine’s Day

No matter your historical perspective, no one can argue that in 1913, Valentine’s Day forever changed when a Kansas City-based firm named Hallmark
Cards began mass producing Valentine’s Day cards.

And today, Valentine’s Day is huge business:

• According to the National Retail Federation, consumers in the U.S. will spend an estimated $19.6 billion on gifts for Valentine’s Day, up from $18.2 billion the previous year.
• More than 10 percent, or $2 billion, will be spent on flowers. And this one day represents 13% of the annual flower sales.
• According to the Greeting Card Association, an estimated 1 billion Valentine’s Day cards are sent each year, making Valentine’s Day the second largest card-sending holiday of the year (2.6 billion cards are sent during Christmas).
• Women purchase approximately 85% of all valentines. But men spend almost twice as much as women on Valentine’s Day gifts.
• $143.56 is the average amount we will each spend on Valentine’s Day in 2018
• $3.7 billion is the total amount spent by couples planning a night out on Valentine’s Day.
• 94% of Americans want chocolate as a gift.

Valentine’s Day & Financial Planning

So, you’re probably wondering, “what does
Valentine’s Day have to do with financial planning?”

Well, I could suggest that the amount of money we spend each Valentine’s Day is reflective of the overall economy, much like Black Friday signifies the health
of the upcoming shopping season. Or I could suggest that the $20 billion is a big part of our consumer spending, which makes up 2/3 of our GDP
(but remember U.S. GDP is about $18 trillion).

But truthfully, Valentine’s Day really has nothing to
do with financial planning at all.

So, how about instead I promise if you sign up for my newsletter, I’ll send you a box of chocolates? Happy Valentine’s Day!

Organization, efficiency, and discipline are the three primary steps of financial planning. Organization is knowing where your money comes and goes. An efficient portfolio means a better chance of profits, and discipline keeps you on the right track.

Statistics tell us that the average credit card debt per person - including all people who pay off their cards each month - is over $5,500. Folks don’t have a handle on the big picture of their personal financial world.

If you are one of these folks, you should know what the steps of financial planning are and get started today, either on your own, using resources on the Internet, or by hiring a financial planner.

The first and most important step of financial planning is organization. You can be a lot closer to your financial goals in life by organizing your finances and understanding money flows, both inflows (like your paycheck) and outflows (bills).

If your financial life isn’t terribly complicated, an Excel spreadsheet may suit your needs perfectly. However, using something a little more sophisticated, such as Mint, Quicken or other online budgeting tools may become necessary, as you and your financial life continue to evolve.

There are a million ways to approach organization, but the “how?” is nowhere near as important as “when?” Of course, the answer to when to start organizing is now.

Whatever method you choose, once you set up the system you should enter historic information as far back as 12 months (if you have it). This requires digging out the old bank, investment and credit card statements. It’s not as intimidating as it sounds. In today’s connected world, you can simply download the transaction history from your bank, investment or credit card companies, and import it directly into your Mint or Quicken file. You still need to go through things, but much of the data entry is done for you.

If you don’t have the time, the facility or the patience to enter this historic information, don’t give up. Tracking your information from today forward is valuable as well. Think about it: In a year, you’ll have 12 months’ worth of history in your system.

As you generate this history (or review the old history), patterns of your spending habits emerge. Perhaps you spend much more on golfing than you realized, or maybe your home decorating expenses were greater than your mortgage payments over the last year. Each of these patterns helps you to understand where your money goes. Once you know that, you can begin to control it.

Quicken or Mint.com also organizes your investments, which takes us to the next step: efficiency.

If you have a couple of old 401(k)s from former employers, you can look at all investment accounts from a top-down perspective, using these tools. For many folks, it may be the first time you see all your investments in one place.

This is when you adjust your allocation for a more efficient portfolio. You might think your investments were diverse enough but find that you bought the same investments in multiple accounts. An efficient allocation is about spreading your money across many different broad asset classes.

Now we’re into the place where the rubber meets the road. After you organize everything in an efficient manner, you need to maintain this organization over time. This requires discipline.

You need to balance your checkbook at the end of the month and keep your information up-to-date when you receive the credit card and investment statements. The automated tools help a lot, but you can’t just let it go on autopilot. You need to sort through the information to understand what’s going on with your cash flow and investments. You might need to change your spending habits or rebalance your investments if they get out of line.

But what takes the most discipline is maintaining your investment allocation as planned when the market is very volatile. You might be tempted to pull out of the market after a big loss or start buying in when the market has a huge run-up. Keeping you disciplined is quite often the major benefit of having a financial advisor, who can help you maintain the proper long-term perspective of your investment allocation and not let emotions rule the actions.

Like most businesses, CrossFit box owners providing health care benefits to employees find their budgets strained by spiraling medical insurance premiums. One solution, the Health Savings Account (HSA), which was created as part of the 2003 Medicare Act, is a relatively affordable—and tax efficient—alternative to traditional managed-care group plans.

The HSA is the more flexible successor to the Archer Medical Savings Account, which was introduced several years ago to help employees of small businesses get health coverage. Available since January 1, 2004, HSAs are being offered by a growing number of banks and insurance companies. While experiences among employers vary, early adopters of HSAs have generally found the plans to be effective in lowering or arresting health benefit costs.

An HSA may be opened by anyone who has a qualified health insurance policy with an annual deductible of not less than $1,300 for individuals, or $2,600 for families. A box owner may choose to offer a high deductible health plan (HDHP) to coaches and staff, or employees can be encouraged to sign up for policies on their own. Employers are permitted to contribute to the accounts of individual employees or may offer staff incentives to put money in themselves.

Since HSA funds are intended to pay for out-of-pocket medical expenses not covered by insurance, participants are permitted to make tax-exempt yearly contributions equivalent to the annual deductible of the insurance policy, up to a maximum of $3,450 for individuals and $6,900 for families in 2018. HSA enrollees age 55 or older may make additional contributions of up to $1,000 a year. The accounts are owned by the individual and are fully portable from job to job.

The tax advantages of the HSA are substantial. Contributions to and withdrawals from an HSA are tax-free, provided the funds are used to pay for qualified medical expenses. The investment earnings within the account also grow tax-free.

Any funds left over in an HSA at the end of the year can remain in the account, and the participant may start all over with contributions the following year. Enrollees who use little of the money in the account while continuing to make deposits could end up with substantial savings in retirement. Prior to age 65, non-medical distributions are taxed as part of gross income and are subject to a 10% penalty. After age 65, however, account holders are permitted to withdraw funds from an HSA for non-medical reasons by simply paying the income tax due.

Like any insurance plan, HSAs may not be the best choice for everyone. Lower income employees may find it difficult to contribute the funds necessary to cover the insurance deductible. And employees who use medical services frequently, such as young families or people with chronic health conditions, would derive little benefit from the tax advantages associated with the HSA. For these types of employees, traditional managed-care plans may be preferable. To meet the varying needs of coaches and staff, box owners may want to provide several health insurance options.

When launching an HSA plan as a benefit offering, it is essential that practice managers explain to employees how the accounts work. Some employees may initially balk at the high insurance deductibles associated with HSAs, but may be persuaded to sign up if the box owner(s) assumes part of the cost. Higher earning staff, in particular, may be drawn to the considerable tax breaks provided by the HSA. Over time, employees should come to appreciate the advantages of having greater control over their health care spending, and possibly seeing their account balances grow through regular saving.

If you’re like most taxpayers, you have no clue about the most effective tax strategies for these financial vehicles - especially if you lack access to expensive accountants and attorneys. Here’s some guidance.

Here are two common situations and innovative solutions that might help.

1.     You are self-employed and want to save tax. You feel you pay too much in taxes and want at least $17,500 of deductions. You are not an employee with a company that offers a 401(k) retirement plan but you still need more deductions than the $5,500 annual contribution ($6,500 if 50 or older) limit for a traditional individual retirement account.

Solution: a solo 401(k), aka an independent, one-participant or family 401(k). Using this vehicle in this case hinges on your being a sole proprietor or operator of the business with your spouse, and have no non-family employees.

Let’s say your spouse works in the business with you and is younger than 50. He or she can contribute up to $17,500 annually to the solo 401(k) plan, and this is called employee salary deferral of up to a full year’s compensation. If your spouse earns $17,500 this year ($18,000 in 2015) he or she can put all of $17,500 into the solo 401k(k) plan.

Assume you are 50 or older and now also contribute a maximum $23,000 (the maximum $17,500 contribution for 2014 tax year plus the $5,500 catch-up amount) employee salary deferral to a solo 401(k) plan. With an eye to even further deductions, you can also kick in the employer contribution - remember, you are both the employee and the employer - of 20% of your net earnings if you are a sole proprietor and 25% if your business is a corporation.

If you are 50 or older by this Dec. 31, you can save up to $57,500 in the solo 401(k), a combination of the employee salary deferral and the employer contribution. For 2015, the total maximum contribution increases to $18,000 salary deferral plus $6,000 catch-up plus $35,000 employer contribution, or $59,000 total.

Additional points:

You can still contribute to an IRA in addition to your solo 401(k) contribution.

Setting up a solo 401(k) can be inexpensive and easy. A reasonably priced independent 401(k) administrator can cost as little as $500 for set up and $500 in annual fees. Brokerage firms can offer lower costs but you then are tied to their investment choices.

If you have non-family employees and want to offer a workplace retirement plan, your normal 401(k) plan may come with potentially higher set-up and maintenance fees. You will also be subject to non-discrimination rules, meaning that you must allow your permanent employees into the plan and that your employer profit contribution must treat all employees - including you the owner - equally.

2.     You want to leave a tax-free legacy. In one excellent example, a retired nurse, married, 75, wants to leave a legacy to her 9-year-old twin grandsons. The most tax-effective strategy: Combine the Multi-Generational (MGIRA) strategy with a Roth IRA conversion.

The MGIRA, aka an extended or stretch IRA, allows you to designate a successor beneficiary to pass on funds you saved for retirement. Converting other kinds of IRAs to a Roth IRA offers many advantages, including eventual tax-free withdrawals of qualified distributions.

We structured a Roth conversion of the nurse’s $385,000 traditional IRA and paid the conversion tax with non-IRA funds. The two grandsons will each get slightly more than $2 million tax-free over their lifetimes in annual checks without ever raiding the principal.

Let’s hope they raise a glass to the grandma who will still be looking after them.

Early in the morning of December 20, 2017, the Senate passed the "Tax Cuts and Jobs Act" by a party-line vote of 51 to 48; (Republican Senator McCain was absent for medical reasons). Irrespective of your political affiliation, most would agree that this legislative achievement is the most sweeping overhaul of the US tax system in more than 30 years.

Naturally, the question we are all asking is “how does this impact me and my family?”

Well, that’s a challenging one to answer because everyone is different, but let’s examine the changes from 30,000 feet. Please remember, however, that this summary is by no means meant to be considered tax advice – you should consult your advisor to determine how it might impact you personally.

Implications for the US Economy?

By almost all accounts, the Tax Cuts and Jobs Act is predicted to raise the federal deficit by billions of dollars – and perhaps as much as $2 trillion over the next 10 years.

The big question is how much economic growth the new bill will create, thereby offsetting the increase to the federal deficit. The short answer is that no one knows with any certainty. Here are three perspectives:

• The Congressional Budget Office's analysis suggests that the cuts would add $1.4 trillion to the deficit by 2027. That estimate does not include the amount that would be offset by the economic growth spurred by tax cuts.
• Treasury Secretary Steven Mnuchin predicts a “net reduction” to the national debt as a result of the new bill.
• Speaker Paul Ryan told NBC’s Savannah Guthrie that “nobody knows” if the tax bill will create enough economic growth to negate its cost.

The answer is probably somewhere in the middle.

Highlights of the Bill

The bill is complicated and long – at least 400 pages at last count. In addition, many of the changes, especially the personal tax breaks, are considered temporary – meaning they go into effect in 2018 but expire after 2025. The reason for this expiration date is because it allows the Senate to comply with what we might consider odd "reconciliation" rules that block a Democratic filibuster, which the Republicans would not have enough votes to overturn. The good news is that the Republicans have vowed to make the changes permanent – but let’s wait and see what happens – 2025 is a long way away…

Here is a quick summary of other provisions of the tax bill:

• The bill would create a single corporate tax rate of 21%, beginning in 2018, and repeal the corporate alternative minimum tax. Unlike tax breaks for individuals, these provisions would not expire.
• The bill would retain the current structure of seven individual income tax brackets, but in most cases, it would lower the rates:
• the top rate would fall from 39.6% to 37%;
• the 33% bracket would fall to 32%;
• the 28% bracket to 24%;
• the 25% bracket to 22%;
• the 15% bracket to 12%; and
• the lowest bracket would remain at 10% and the 35% bracket would remain unchanged.
• The bill would raise the standard deduction to $24,000 for married couples filing in 2018 (from $13,000 under current law), to $12,000 for single filers (from $6,500), and to $18,000 for heads of household (from $9,550). These changes would expire after 2025.
• The bill would end the individual mandate, a provision of "Obamacare" that provides tax penalties for individuals who do not obtain health insurance coverage, in 2019. While the mandate would technically remain in place, the penalty would fall to $0.
• The bill would temporarily raise the child tax credit to $2,000, with the first $1,400 refundable, and create a non-refundable $500 credit for non-child dependents.
• The bill would limit the application of the mortgage interest for married couples filing jointly to $750,000, down from $1,000,000.
• The bill would cap the deduction for state and local taxes at $10,000 through 2025.
• The bill would temporarily raise the exemption amount and exemption phase-out threshold for the Alternative Minimum tax – for married couples filing jointly, the exemption would rise to $109,400 and phase-out would increase to $1,000,000.
• The bill would temporarily raise the estate tax exemption for single filers to $11.2 million from $5.6 million in 2018, indexed for inflation. This change would be reversed after 2025. 

Final Thoughts

There are a ton of other changes to the tax bill as well as changes that were proposed in earlier versions that were nixed in the final bill. For example, the original version proposed changes to Health Savings Accounts, but the final version does not.

There were discussions that the traditional 401(k) contribution limits would fall, but the final bill leaves those limits unchanged (currently $18,000 or $24,000 for those aged 50 or older).

The point is that it’s critically important that you consult your advisor to determine how this new tax bill might impact you and your family.

Since the advent of the “dual income with children” generation, employer-sponsored flexible benefit plans have become very popular with employees who appreciate the opportunity to choose options addressing their specific needs and budgets. Employees are able to select, within certain limitations, a variety of benefits without duplicating existing coverages and to tailor options to their cash flow constraints. With the Internal Revenue Act of 1978, employers are able to attract and retain employees with a cost-effective method called Section 125 cafeteria plans.

Because individual and family needs are so diverse today, as a business owner, it is imperative that all available options are reviewed with a qualified professional to determine, based on your census of eligible employees, which items you should include on your menu. Among the choices usually offered are:

1. Medical and dental insurance at various premium costs and coverages

2. Spending accounts for unreimbursed medical benefits and dependent care

3. Savings accounts

4. 401(k) retirement plans, including deferred profit sharing and stock bonus plans

The employee’s portion of the cost of benefits is typically made with pre-tax dollars in the form of a salary reduction. This type of arrangement additionally benefits employees by reducing their taxable income, because costs associated with cafeteria plans are not considered wages. However, you may decide to “bonus” the employee’s portion of the cost rather than use a salary reduction plan.

Employee’s Added Value

Employees often consider cafeteria plans a big plus because an employee covered under a spouse’s health plan with another employer will not need health insurance and may choose another benefit in its place. On the other hand, a single employee might not select the same options as an employee who is married with children. In addition, younger and older age groups have different goals and lifestyles.

Employer’s Added Value

Employers equally benefit from cafeteria plans because the reduction in payroll associated with such plans may also substantially reduce FICA (Federal Insurance Contributions Act) and FUTA (Federal Unemployment Tax Act) taxes. Taxation is avoided as long as plan participants make their selection of qualified benefits before any cash benefit can be received.

A Win-Win Situation

Some employees may lack a complete knowledge of insurance and retirement plans. Offering your employees a Section 125 cafeteria plan may provide you with an opportunity to help your employees become better educated to make wise selections, as well as communicate to them the dollar value you are providing with the plan. You might wish to consider acquiring the services of an employee benefit specialist to counsel your workers, discuss the options available, assist in the enrollment process, and continue to walk with you while the plan is in force at your business.

We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.

This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Small Biz owners should conduct an annual assessment of their personal finances. Owners of small businesses have much the same concerns as everyone else, except they are personally responsible for the fortunes of their enterprise. In a sense, a small business is like a family. And these are important families in American economic life. After all, small business is vital to the U.S. economy, employing half of private-sector workers and creating two-thirds of net new jobs, according to federal data.

Here are 10 tips to follow in weighing a small business owner’s financial plan:

Budget/Saving. The general financial planning rule is that you should save AT LEAST 10% of your income on an annual basis. You should also review short-term and long-term goals to ensure you are saving enough to meet your objectives. 

Maximize Contributions to Retirement Plans. Depending on the size of the company and number of employees, there are many different methods to save for retirement. On an annual basis, business owners should work with their advisors to determine the most appropriate savings vehicle. Retirement plans include: 401(k)s, individual 401(k)s, individual retirement accounts, Simplified Employee Pension (SEP) IRAs, Roth IRAs, defined benefit and defined contribution plans. This will not only help achieve the goal of saving 10% of your income, but it also can help minimize taxes.

Create/Review Estate Planning Documents. It is important to create wills, living wills, medical and financial power of attorney documents. These documents should be reviewed annually as your personal goals and estate laws change.

Life Insurance. Various types of life insurance are available, including whole life, variable life, universal life, universal variable life and term policies. They provide a death benefit when the owner of the policy passes away. It is important to review your policies yearly to ensure the coverage is adequate to protect your loved ones. Also, financial situations may change, and you may no longer need the full amount or type of coverage you own.

Disability Insurance. Statistically, you have a greater chance of premature disability than premature death. Therefore, it is very important to own adequate coverage to provide for you and your dependents if you are not able to work. Annually, you should review your policy for the type and amount of coverage. 

Business Insurance. As a business owner, it is important to own insurance that will allow your company to run if you are unable to actively participate in its daily operations. This insurance may be used to hire a person to substitute for you or to replace income from your business if the company no longer exists.

Long-Term Care Insurance. Due to the increasing costs of health care, long-term care insurance policies are evolving to deal with them. Many older policies have become more expensive to maintain or no longer provide enough coverage to meet long-term care expenses.  Each year, review the costs and necessity of these policies.

Education Planning: 529, Coverdell, Uniform Gift to Minors Act (UGMA), Uniform Transfer to Minors Act (UTMA) Plans. Much like health care costs, college education expenses have increased well beyond average inflation levels throughout the past decade.  Several college savings vehicles are available to provide tax advantages and an array of investment options for college saving. These savings plans require thorough annual review of performance and expense levels. 

Tax Planning. Annually, you should meet with your accountant to discuss tax-planning strategies. Tax laws frequently change. In addition, there may be changes to your business that could affect your taxes both at the business and individual level.

Investment Allocation. Review your entire investment portfolio to ensure it is allocated to meet your current and future goals. As your goals and needs change, your portfolio allocation should be readjusted accordingly.

We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.

This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Sometimes it’s hard to tell if you need professional help for a problem or if you can handle it yourself. Whether it’s taking care of a common cold, fixing the sink, changing the oil in your car or doing your own taxes. The same question often arises about finances.

It happens all the time - financial questions pop up that you consider silly or stupid so you feel like you must handle alone and you don’t seek help. This is not the best course. As happens often in life, not reaching out to a professional can delay you reaching your goals and cause you to incur more out-of-pocket expenses and lots of headaches.

Here is the thing: there are no stupid questions when it comes to your finances. Don’t ever sit on the sidelines and fear asking a question or think you’re unqualified to go to a planner. Solid and respectable planners let you know if they can’t help you and refer a professional who can. They also let you know if they think you can plan your finances yourself.

Here are signs you may need a financial planner:

You recently married

To merge or not to merge finances is a huge question: emotions to contend with, forms to update, cash flow to track, debts to pay down, goals to lay out and spending habits and needs to reorganize and prioritize.

Communication during this transition helps you navigate possible questions about taxes, investment allocation updates, selecting benefits, joint roles in management of the household, deciding whether to maintain separate bank accounts and more.

You own a business

Whether considering starting your own business or a long-term entrepreneur, you likely need to know how to prioritize goals, pay yourself while keeping the operation running and the best way to manage cash flow on an income that fluctuates monthly.

Not to mention saving for retirement, obtaining health insurance and protecting you and your family against a loss in income from death or disability.

You want to make a big purchase

Simple budgeting often enables you to handle large purchases. If you look to buy a first home or make another sizeable investment, understanding the overall effect on your cash flow, lifestyle and future goals looms large.

How much home can you afford? What’s your budget for home maintenance? What other goals go on the back burner? What about your future savings?

You make a career change

Job or career transitions also bring changes in income and benefits. Make sure you maximize your company benefits, leave no retirement accounts behind and ignored, plan appropriately for income fluctuations, take into account future job growth or career prospects and consider the transition’s overall influence on your lifestyle.

Your family’s growing

A baby comes with a slew of considerations: ensuring you have an emergency fund of three to six months’ expenses adjusting your spending for child care, groceries and medical costs and updating your estate plan and insurance coverage in case something happens to you, among many other needed updates.

At the End of the Day

The first step in asking for help always seems the hardest. The assistance and feedback may surprise you when you open up to the idea that you need not handle all financial questions solo.

And it makes the experience much more enjoyable.

We are not permitted to offer, and no statement contained herein shall constitute, tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.

This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.