Author Archives: Nancy Hecht

Often, doing nothing initially is the best decision.

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Who hasn’t thought about what they would do or buy if they suddenly came into a lot of cash? There is the trip, or the car, or the debts to pay off, or the charity to support that we all think of. Most often, we come into these sudden large sums of cash through the death of a loved one. Sudden wealth, no matter how it comes to you, can be overwhelming. Generally, there is no need to do anything or make decision quickly. Generally, the best thing to do initially is nothing. Leave the accounts as they are for a moment and do your homework.

In the past week I have had this very conversation with the families of two of my clients who passes well into the 80’s. Their children are the surviving heirs and are at various stages of life. The two families felt comfort when I told them they did not have to do anything with their Parents’ account immediately. With both families there will be tax returns to file and Required Minimum Withdrawals to be taken. After that we can address the needs and dreams of each of the children as they feel fit to deal with this emotional and financial change in their lives.

Yes, there has been conversation about a car and a trip, but initially, both families have decided to do nothing. They are grateful for what they have received and the memory of their loved ones.

disclosures:http://www.hechteffect.net/?page_id=31

Affordable Health Care?

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This is the actual notice my Husband received last week regarding our new coverage post Affordable Health Care Act. We are both self-employed so there is not a group for us to have health insurance through. Here is what we received:

This is just for Male age 55-64; we also have 2 Females adding additional cost.

Monthly HealthPlan Cost before Federal Health Care Reform $380
Monthly HealthPlan Cost after Federal Health Care Reform $883

Portion of cost due to Health Care reform:
Cost of new benefit $193
Cost to cover everyone $269
New tax $ 46
Percentage difference in Health Care Costs 132.2%

We did not pick the top of the line plan. We picked a plan that would allow us to keep most of our Doctors. Our total premiums right now are $1900/month. If we wanted to take a plan that would only cost $1500/month, our total out of pocket for 3 adults would have gone from $5000/year to $15,000/year.

I say again: affordable?

disclosures:http://www.hechteffect.net/?page_id=31

Which comes first – me or my kid?

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Q: What should I be saving for first, my retirement or my child’s education?

A: Anything you can do for your retirement needs to be first. If you have the ability to save pre-tax through a 401k or 403b, do it. Pre-tax saving puts whole dollars to work for you and will have a smaller impact on your spendable dollars vs. after-tax savings. With potentially more spendable dollars, you can then start an education savings account for your child.

disclosures:http://www.hechteffect.net/?page_id=31

To roll or not to roll, that is the question.

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Generally, I am not a fan of leaving assets with a former employer. There are a few circumstances when leaving some cash in a former employer’s 401k may be the right thing to do. Here is one instance:

If you are between ages 55- 59 and may need some cash, you would not want to rollover your full 401k.

Here is why: at age 55 or older, many 401k plans allow for cash withdrawals without the 10% early withdrawal penalty. If you are in transition – you may need to keep this option available to you.

Disclosures:http://www.hechteffect.net/?page_id=31

Is a Living Trust for you?

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Many people think they need a Living Trust so their assets will pass to their heirs easily and without tax. Here are a few facts to ponder when deciding if you need a Living Trust.

There will be no delay or expense of probate with a Living Trust.
True enough but if your titling of assets is done properly, everything may pass without going through probate. Any account with a beneficiary attached avoids probate, as do accounts that are joint or have the addition of “in trust for”, or “Payable on Death” after the joint designation.

You will save on all of the administration costs associated with probate.
A Living Trust does avoid the filing and court fees; however, the Trust may still be subject to an Executor’s fee and Lawyer’s fees. Many Executors are family members and will waive the Executor fee if there is not too much work to be done in settling the Estate. If an Attorney’s advice is needed, you will not be able to avoid those fees.

Your heirs can receive their distributions faster with a Living Trust.
Perhaps, assuming that your assets are not very complicated or your Trust does not establish a Postdeath Trust that dictates the distribution.

You will save taxes with a Living Trust.
If you have a Revocable Living Trust, you will not save anything in taxes. You still technically own and have the rights to the assets in the trust. These assets will still be subject to any federal and/or state death tax that may apply. Tax saving provision may be written into your trust to offset the tax.

A Living Trust can be a wonderful tool. Make sure it is written as you wish it to be and that you and your heirs understand the trust.

disclosures:http://www.hechteffect.net/?page_id=31

Don’t leave $3000 on the table.

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Your 2014 tax planning starts now. While you are receiving all of your W-2’s and 1099’s, you have the opportunity to rebalance your portfolio and do some tax planning at the same time. Take a close look at the cost basis on the holdings in your non-retirement accounts. As you rebalance, you can sell off some losses and harvest some gains. You can match your gains and losses against each other but what if you have more loss than gain? Each year you can write off up to $3000 in losses against ordinary income. So please, don’t leave that $3000 on the table.

disclosures:http://www.hechteffect.net/?page_id=31

What growing sunflowers can teach us about reallocation.

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I have no problem selling gains from investments in order to keep them and reallocate them into other opportunities. Recently, I met with a client for a review appointment who claims “she can’t understand this stuff that is why she has me.” I know that she likes to garden, I walked down that path with her. This is what I had her visualize:
I said, Imagine planting a sunflower. It grows tall and strong throughout the season. Harvest time comes and you love looking at this tall, strong plant. Dilemma, right? This is how you enjoy the flower and many more like it in the future, you cut it down.

By cutting down the sunflower you can enjoy it two ways. First, you can put the flower in a vase and enjoy its beauty. Second, you can take the gain of many, many new seeds from the flower and plant them. Next season you will have many different flowers from the growth of the original one.

My client easily understood why we take some gains off the table and diversify. Go out there and look at your own sunflowers.

disclosures:http://www.hechteffect.net/?page_id=31

Listen to 96.5 FM the Saturday from 9-10am, call me with a question.

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This Saturday hear
Nancy Hecht CFP® and
Jim Hachadorian CFP®
co-host our program
“On The Money”!

They’ll be discussing . . .
• What is this 4% withdrawal rate
I keep hearing about?
Is it the best way to withdraw?

• It’s Tax Time – Changes to Your 2013 Return
You Need To Know About.

• Listener Question: I am 80 yrs. old and have never filed for Social Security.
How do I find out what I can get and how do I file?

Call or eMail
Your Questions:
407-290-0058 OR
1-800-328-5858

Nancy@FinancialGroup.com
Jim@FinancialGroup.com

These changes may impact your 2013 tax return

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It’s that time of year – tax time. There have been some important changes to the 2013 tax return that you must be aware of. Here are a few of them:

New 3.8% Medicare surtax. If you are single with an AGI over $200k, married filing joint AGI over $250k, you will have to pay an additional 3.8% surtax on capital gain for Medicare purposes. This brings the long term capital gains rate to 23.8% vs. 15% for those to whom this will apply.

New Medicare surtax for those of us who are self-employed. If your salary and/or Self Employment income is over $200k single, $250k married filing joint, you will now pay and additional .9% on top of the 2.9% we are currently paying.

Itemized deductions have a new threshold. If, for example, your medical expenses exceeded 7.5% of your AGI, you were good to deduct. Now, that threshold is 10%. That is a 25% increase in what you have to spend in order to deduct those expenses.

These are just a few of the big changes to the 2013 tax return. If you do your own taxes, please make sure you are up to date on all of the changes.

disclosures:http://www.hechteffect.net/?page_id=31