This is NOT a DIY project.

Dealing with Death is never easy. Making sure you have the proper instructions, legally done, is so important. I believe that a lot of succession problems can be avoided by proper titling of accounts. Most insurance policies and retirement accounts have places for you to designate primary and contingent beneficiaries. Bank and brokerage accounts allow for adding a Transfer on death designation, these will all help to avoid probate. You still need a proper Will, Living Will, and to designate someone as power of attorney. Here are some of the things that can go wrong when you try to put together estate planning paperwork by yourself:
Even if you don’t think you have enough assets to warrant it, a will can clear up confusion and costs, and make sure small things of sentimental value go where you want. I have seen more family fights over small trinkets than anything else.
The online services are cheap upfront, and that is by far the biggest appeal, but it is really a question of whether you want to pay now or have your heirs pay because you left a mess behind.
Another common problem with online services, or when a person tries to create a will on their own: failure to sign a will or have it properly witnessed following the laws of your state.
Hire a qualified Estate Planning Attorney. Don’t leave a mess for your family, leave loving memories instead.

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Did you retire or turn 65 last year? Here are a few tax breaks just for you.

Lifecycle events bring about change. Generally when a lifecycle event brings change associated with the IRS, we take a step back. These two changes are nice ones.
When you turn 65, the IRS offers you a gift in the form of a bigger standard deduction. For 2020 returns, for example, a single 64-year-old gets a standard deduction of $12,400 (it will be $12,550 for 2021). A single 65-year-old gets $14,050 in 2020 (and $14,250 in 2021).
Generally, you must have earned income to contribute to an IRA. However, if you’re married and your spouse is still working, he or she can contribute up to $7,000 a year to an IRA that you own. (We’re assuming that since you’re reading about breaks for retirees, you’re at least 50 years old.) As long as your spouse has enough earned income to fund the contribution to your account (and any deposits to his or her own), this tax shelter’s doors remain open to you.
Don’t let these breaks go to waste.

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Why won’t you listen to me?

I cannot tell you how many people come to my office, pull out their cell phone and just log on to their financial accounts without a second thought. I know that many people do this anywhere in public. Do you remember when you could sit in a coffee shop and work? I know that many times people sitting there would do the same thing. Log in to their bank and investment accounts just to look at something. 90% of the people doing this have no protection on their devices to protect from a random passerby collecting their data. Download a VPN! Do it now! Not sure what a VPN is? It is a Virtual Private Network. It can provide a safe mode for surfing the web as it gives you privacy and data security. When used correctly, a VPN helps keep your connections secure and protects your device from prying eyes. … Even your own internet service provider (ISP) can’t access your data or track your activities.
Do it!

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Spenders vs. savers in retirement.

One of the first questions I ask my clients as they approach retirement is, “What will you do with your time?” Often, if they do not know who they will spend their time, they will overeat and over spend, both of which may lead to an unhappy retirement, especially if your partner does not behave the same way.
How do you bridge the gap if one partner is a spender and the other is a saver? Try to attack the problem and not the person. A conversation may go as follows: “I’ve seen these credit card bills and I’m getting really scared. I’m concerned about our future together and I want to make sure that we are doing everything to make sure our financial future is safe.”
Focus on the big items such as your mortgage and house hold bills first, then agree that there will be a certain amount each partner can spend monthly without any explanation. Neither partner will feel as if every dollar must be accounted for.
Discussing your habits in a calm and rational manner can bring spenders and savers together for a happy retirement.

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Talk to me like I am a 5yr. old – Sharing is good.

Do you remember sitting outside in the summer with a double Popsicle? They had a groove down the center to break it in half. Picture yourself sitting on the porch, snapping that Popsicle in half, and giving the other half to your best friend. Didn’t it feel great to “share your wealth?” That is what gifting is all about.
Charitable gifting is a wonderful thing. You can help your community and yourself at the same time. If you gift directly from your IRA, and do this properly, it can also count toward your Required Minimum Distribution. If you make a gift with non-retirement assets you may or may not be able to take a deduction under current tax law due to the current Standard Deductions.
Gifting, in my opinion, should not be done primarily for that tax benefit. Gifting should be done because you can share your wealth. Just remember that great feeling of the sunshine on your face and your besties next to you eating that Popsicle.

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Talk to me like I am 5 – What is the difference between Equity & Income?

Let’s look at a conversation between Tommy & Jeff. Tommy has 5 Hot Wheels and Jeff has none. Jeff wants to play with the Hot Wheels so Tommy decides that Jeff can play with two of them for one month, but he has to give Tommy two candy bars over the course of the month, then return the cars.
Tommy owns the cars that is his equity. Equity = ownership. By lending the cars to Jeff, and charging him candy bars to be paid during the time Jeff can use the cars = income. By borrowing the cars and paying a return during the loan period, the cars end up acting like a bond. Jeff gets to use and pays interest.
Owning Hot Wheels = Equity. Borrowing Hot Wheels = income.

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Talk to me like I am 5 – Who gets the first cookie?

I love to bake, I even had a side gig for a while baking special cakes for people. Baking is something I have also done with my Daughter, now she loves to bake also. I always like to experiment with average recipes to make them more interesting and when you do this, someone has to sample the cookies. Who gets the first cookie? Is it the person that is sitting there watching you bake? Is it the person that heard you are baking and wants a cookie? It is the chef, the person who did the work gets the first cookie.
Here is the lesson – if you work hard, you have to remember to pay yourself first. Build up a cash reserves, then start depositing into a retirement account. If you always pays yourself first, you will have security knowing you can pay your bills and have a comfortable retirement.

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Talk to me like I am a 5yr. old – part 2.

I have watched kids try to build tall towers with wooden blocks. They place one block on top of another over and over trying to build a tower, which falls over each time. The kid will start again, never changing their pattern of construction. What they are missing is a wider base that will allow them to gradually build a taller tower.
In the world of investing, a solid foundation is important to success. Our foundation is cash reserves. Cash reserves are not exciting, and generally do not move very much – this is what a sound foundation looks like.
A solid foundation will allow you to build your tower high enough to reach the stars.

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Talk to me like I am a 5 yr. old.

Over the weekend I was asked to explain a basic financial concept to someone like they were a 5yr. old. I have decided to make this into a series. If you have a financial question or concept you do not understand, email me at nancy@financialgroup.com and I will put into terms a 5yr. old could understand.
I was asked to explain diversification, here it goes:
Let’s say you have a bag of milk chocolate M&M’s that you pour on the table. You see brown, green, and blue M&M’s, but inside they are all milk chocolate. They are all actually the same thing = no diversification. If some of the M&M’s were dark chocolate or almond, there would be diversification.
I see this in the mutual fund portfolios people bring to me. They may have 3 different funds with 3 different companies, but all of the securities within the funds are Large Cap Growth stocks. There is no diversification here. If one fund was Small Cap Value, and the other was a Bond fund, there would be diversification.
Send me you questions, I will put them into 5 yr. old language.

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