Relocating for Retirement? Connecticut Tax Laws You Should Know

Agemy Financial Strategies

September 06, 2022

Connecticut is a state with a lot to offer. As you near retirement, your mind may wander to fulfilling your life’s dreams; and for many, that involves relocating. Here’s what you need to know about taxes if you’re moving to the Nutmeg State. 

Connecticut is a small state in the New England region in the northeastern part of the United States. Although a part of New England, it is considered a part of the ‘Tristate area’ along with New York and New Jersey because of its proximity to both. The state is known for its rustic beauty, brilliant history, amazing landscape, and of course, Yale University. When the time to retire comes, many people consider retiring in Connecticut with the dilemma of whether to stay in their current city or move somewhere new.

There are many factors to consider when deciding where to retire, including the cost of living, climate, access to healthcare, and recreation. Depending on where you currently reside, you may need to pay a little more if living in Connecticut. But is it worth it? If you’re looking for reasons to retire in this state, you should become aware of its tax laws. With our office HQ residing in Guilford, CT, we know a thing or two about what you’ll need to retire here. Here’s what you should know.

Connecticut Income Tax

Connecticut’s state income tax structure is graduated, meaning that the amount people are taxed increases as their earned income increases. This is similar to the federal government’s income tax system and differs from states that use a flat tax rate.

Additionally, while Connecticut has a higher sales tax rate than the national average, there are no local sales taxes charged, which produces a balancing effect for the net amount of taxes collected.

Connecticut personal income tax rates
Tax rate Single, married filing separate Married filing jointly
3.0% $0-$10,000 $0-$20,000
5.0% $10,001-$50,000 $20,001-$100,000
5.5% $50,001-$100,000 $100,001-$200,000
6.0% $100,001-$200,000 $200,001-$400,000
6.5% $200,001-$250,000 $400,001-$500,000
6.9% $250,001-$500,000 $500,001-$1,000,000
6.99% $500,001 or more $1,000,001 or more

While the state doesn’t have a standard deduction, the personal exemption is $15,000 for single taxpayers and $24,000 for married couples.

Connecticut Sales Tax

The State of Connecticut has a single, statewide sales tax. Because there are no additional sales taxes imposed by local jurisdictions in Connecticut, the rate of 6.35% applies to the retail sale, lease, or rental of most goods and taxable services. 

However, there are exceptions:

  • The tax on the rental or leasing of a passenger motor vehicle for a period of 30 consecutive calendar days or less is 9.35%.
  • A tax rate of 7.75% applies to the following: the sale for more than $50,000 of most motor vehicles, the sale for more than $5,000 of jewelry (whether real or imitation), the sale for more than $1,000 of an article of clothing.
  • The sales and use tax rate is 4.5% on the sale of motor vehicles to a nonresident member, or a member and his or her spouse jointly, of the armed forces of the United States stationed on full-time active duty in Connecticut.

Connecticut Property Tax

Connecticut homeowners pay the fourth highest property taxes in the U.S., with an average effective rate of 2.14%. The state’s average effective property tax rate is double the national average, which is 1.07%.

The state is unusual in that counties are not responsible for administering property taxes. Instead, cities and towns set rates and collect the taxes.

Connecticut Inheritance and Estate Tax

Connecticut does not have an inheritance tax, but that doesn’t mean you can avoid paying state-level taxes on the property you inherit. If your grantor lived in a state that has an inheritance tax, it will probably apply to you as well.

This is especially true if your grantor lived in Kentucky, where all in-state property is subject to inheritance tax even if the inheritor lives out-of-state. If someone who lives out-of-state leaves you something, make sure to check the local laws in your grantor’s state to see if you owe inheritance tax.

If you’re looking to relocate to Connecticut for retirement, check out our guide for tips on estate and inheritance taxes.

Last Thoughts

If you’re interested in starting your retirement in Connecticut, check out our pros and cons series here. It’s important to look at your retirement plan and see if retiring here would benefit you. 

Once you have estimated the amount of money you may need for relocating in retirement, a sound approach involves taking a close look at your potential retirement-income sources and seeing how far they will stretch in your chosen state.

At Agemy Financial Strategies, we want you to know we’re here to help you navigate retirement and any questions that come up during your retirement process, including relocation opportunities. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs.

For more information on our retirement and financial planning services, contact us here today.

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relocating-for-retirement-colorado-tax-laws-you-should-know

Agemy Financial Strategies

August 30, 2022

The unique benefits of retiring in Colorado are never ending. If you’re planning on spending your golden years in this stunning state, here’s what you need to know about the tax benefits.

If you’re planning on retiring in Colorado, the Centennial State has a lot to offer. Colorado is home to some of the most beautiful landscapes in the country, with mountains and plains stretching as far as the eye can see. And if you’d like to live at or near those majestic peaks, Colorado is a tax-friendly place to do it.

Colorado’s rate income tax is one of the lowest in the nation, and property taxes are also on the low end, with a median rate that ranks among the lowest in the country. Gas taxes are also low, which means your day-to-day travel will be easier on your savings than it might be elsewhere.

Before we start, it’s worth noting that even though taxes are better in Colorado, you may notice a bump in the cost of living. Depending on where you currently reside, you may need to pay a little more for some things. Here’s a look at Colorado tax laws you should know about.

Colorado Income Tax

Colorado has a flat income tax rate of 4.5% for the 2021 fiscal year, which started in July of 2020 and will end in June of 2021. The rate was lowered from 4.55% to 4.5% because of a high fiscal year revenue growth rate. The rate for 2022 is 4.55% and has proved it will be able to maintain this low tax rate throughout the remainder of the year.

In Colorado, federal Social Security benefits are fully taxable. However, up to $24,000 of Social Security benefits are excluded from your federal income tax. Additionally, up to $20,000 of retirement income is also excluded from your Colorado income tax.

In 2022, the cap on federally taxable Social Security benefits will be removed for all taxpayers 65 and over. This change will effectively make all federally taxed Social Security income deductible for taxpayers 65 and over.

Colorado Sales Tax

According to the Tax Foundation, the state levy in Colorado is 2.9%. Localities can add as much as 8.3%, and the average combined rate is 7.77%. Here are a couple other items that are taxed and tax exempt:

  • Groceries: Exempt
  • Clothing: Taxable
  • Motor Vehicles: Taxable
  • Prescription Drugs: Exempt

Colorado also includes a tax on items such as beer, wine, and liquor. These items are known as “sin-taxes”. Here is a list of some of those items and the tax that comes along with them:

  • Cigarettes: $1.94 per pack; additional local taxes may also apply
  • All other tobacco products: 50% of manufacturer’s list price
  • Beer: $0.08 per gallon
  • Wine: $0.32 per gallon
  • Liquor: $2.28 per gallon
  • Marijuana: For retail purchases, 15% state retail marijuana sales tax and 15% excise tax, plus state and local sales taxes

Overall, Colorado has one of the lowest sales tax rates in the U.S. With a 2.90 percent state sales tax rate, a max local sales tax rate of 8.30 percent, and an average combined state and local sales tax rate of 7.77 percent.

Colorado Real Property Tax

According to the Colorado Division of Property Taxation, in Colorado, the median property tax rate is $505 per $100,000 of assessed home value. This is great news for Colorado residents 65 and older who may be eligible for a property tax exemption on their primary residence. The first $200,000 of the actual value of the home is exempt, and applicants must have owned and lived in the property for at least ten years.

For those who don’t qualify for this exemption, an income tax credit of up to $1,000 is available for those age 65 or older with a federal adjusted gross income of $75,000 or less who don’t claim the property tax exemption. Senior citizens may also qualify for a deferral of their property tax payments that can be paid off when they sell or otherwise transfer their property.

Full-year Colorado residents age 65 or older may qualify for the Property Tax/Rent/Heat Rebate if they are single with an income less than $15,831 or married with a combined income less than $21,381 for 2021 (income limits are updated every year).

Please visit Tax.Colorado.gov/PTC-rebate-forms to learn more.

Individuals who do not have a Social Security Number or Individual Taxpayer Identification Number (ITIN) may still be eligible for the PTC rebate. These individuals can use the Application for Alternate Identification Number (DR 0019) to apply for an alternate ID.

Colorado Inheritance and Estate Tax

Even though there is no estate tax in Colorado, you may still owe the federal estate tax. The exemption for that tax is $11.70 million for deaths in 2021 and $12.06 million in 2022. This tax is portable for married couples. That means that if the right legal steps are taken, a married couple can protect up to $24.12 million when both spouses die.

Planning an estate, in Colorado or elsewhere, isn’t easy. If you’re beginning this process – or in the midst of it – you might want to consider getting professional advice in the form of a financial advisor. You’ll want to make sure, though, that the financial advisor you are using is the right one for you.

Final Thoughts

Colorado is consistently named one of the best places to retire when it comes to taxes, financial opportunity, and health.

As you can see, colorful Colorado has a lot to offer when it comes to taxes. If you’re interested in starting your retirement in Colorado, check out our pros and cons series here. It’s important to look at your retirement plan and see if retiring here would benefit you. Once you have estimated the amount of money you may need for relocating in retirement, a sound approach involves taking a close look at your potential retirement-income sources and seeing how far they will stretch in your chosen state.

At Agemy Financial Strategies, we want you to know we’re here to help you navigate retirement and any questions that come up during your retirement process, including relocation opportunities. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs.

For more information on our retirement and financial planning services, contact us here today.

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Women’s Equality Day: Women and Retirement Planning

Agemy Financial Strategies

August 17, 2022

Happy Women’s Equality Day! In the 100 years since the ratification of the 19th Amendment, women have made substantial gains in educational attainment, employment, and earnings. However, the gender gaps persist — especially when it comes to retirement.

On August 26, 1920, the 19th Amendment was ratified, giving women the right to vote. One hundred years later, women still strive for equality in many areas, and retirement planning is one of them.

Women are less prepared for retirement and often have fewer resources available to them. This can mean a lower standard of living during the retirement years. There are many reasons why women fall behind on planning. A prominent reason is that they are more likely than men to pause their careers to raise children or care for aging parents. This pause often results in lost work time and lower income levels. Women also live longer than men, so they need more savings for a longer retirement period.

As for financial know-how, researchers found that on average, women correctly answered 45% of financial-related questions, compared with 55% among men, according to a survey conducted earlier this year by the TIAA Institute and the Global Financial Literacy Excellence Center (GFLEC) at the George Washington University School of Business. While baby boomer women correctly answered 51%, that share is 41% and 38% among millennials and Gen Z women, respectively.

Here, Agemy Financial Strategies has put together some helpful steps for women to help them better prepare for retirement.

Work Longer

If you are falling behind on saving for retirement, the first question to ask yourself is “how can I make up for shortfalls”. The obvious answer here is to keep on working.

Abundant job opportunities may help women rejoin the workforce or find better-paying opportunities. Available job openings hit a record 11.55 million in March, according to the latest government data. If you are still in the workforce, consider a phased retirement. A phased retirement is just like it sounds – a path towards retirement where you slowly begin taking more vacations, working fewer hours and essentially becoming part-time on your own time.

During phased retirement, workers can still collect a paycheck, just for less money. They can supplement their pay with withdrawals from company-sponsored retirement plans if necessary.

  • Continue accumulating wealth. If your employer offers a phased retirement plan, there may be provisions that allow you to continue saving for retirement or earning retirement benefits through a pension. That means you don’t miss out on opportunities to add to your wealth, even if you’re working less.
  • Mental/emotional health. One of the negative side effects of retirement is that workers may feel lost or without purpose once they’re no longer on the job. Working on a part-time basis during a phased retirement can yield mental and emotional benefits if it makes older employees feel fulfilled.
  • Prepare for the real thing. Phasing retirement and continuing to work reduced hours can give you an idea of what life might be like once you fully retire. This can help you decide how you want to use your time or even whether retiring is what you truly want to do.

Part Time Work Counts, Too

If you want more stability and a steady income stream, part time work can help bring in some cash. When you’re planning your retirement, it’s important to remember that Social Security benefits are calculated based on the 35 highest-earning years in your career. That means that if you worked part time in any of those years, those years will be counted as zero income. This has two effects: there are zero quarters for eligibility and zero income counted toward the benefit. Part-time work – like a phased retirement – can provide quarters for Social Security eligibility and some income, which is better than none at all.

Spousal IRA Contributions

As you get older your needs and wants change. Earlier in life perhaps you got married and had kids. And as you near retirement, you’ll have grandkids with whom you want to spend time with. You know that staying at home with your grandkids is no vacation. It’s work—important and essential work—which means you should have a retirement savings plan that goes with it.

A spousal IRA is a type of individual retirement account that allows a working spouse to contribute to a nonworking spouse’s retirement savings. A Spousal IRA creates an exception to the provision that an individual must have earned income to contribute to an IRA. Spouses with some earned income, but not enough to fund an IRA fully, can also qualify for the Spousal IRA.

To qualify, the couple must file a joint tax return. Spousal IRAs can be either traditional or Roth IRAs, and are subject to the same annual contribution limits, income limits and catch-up contribution provisions as traditional and Roth IRAs. While IRAs cannot be held jointly in both spouse’s names, spouses can share their account distributions in retirement.

Play Catch-Up

If you’re 50 or older, you can take advantage of additional contributions to your retirement accounts.

Workers who are younger than age 50 can contribute a maximum of $20,500 to a 401(k) in 2022. That’s up $1,000 from the limit of $19,500 in 2021. If you’re age 50 and older, you can add an extra $6,500 per year in “catch-up” contributions, bringing your total 401(k) contributions for 2022 to $27,000.

Catch-up provisions are especially helpful for women who entered the workforce late, have a checkered job history, or delayed saving for retirement to pay for the kids’ braces or college tuition.

Plan NOW for the Future

Many women are saving for retirement, but they have not yet started engaging in financial planning with a professional. About 28% of women never talk about retirement, versus 17% of men, according to Transamerica. Moreover, just 17% of women frequently discuss saving, investing and retirement planning, compared to 28% of men. Women who aren’t afraid to ask questions and seek the advice of financial advisors tend to thrive in their journey to financial independence.

No matter at what stage of life you may be, you can start looking for the best professionals to help you with financial planning for women. There are plenty of sources for help and advice. You can do some research online, talk to industry experts, and make the right decision for investment.

With a commitment to financial literacy and the ensuing confidence that stems from increased knowledge about money through an experienced financial advisor, women can make significant strides to increasing their retirement savings and planning for life events that could place stress on the money they do have saved.

Why Agemy Financial Strategies

Women deserve to retire comfortably. So, let’s make that happen!

Women’s Equality Day is a great time to remind yourself and others of the importance of planning for retirement. Women are often less prepared for retirement than men are, but it doesn’t have to be that way.

Here at Agemy Financial Strategies, we know how important it is for women to plan now for a comfortable retirement that they deserve and will enjoy. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs.

For more information on our retirement and financial planning services, contact us here today.

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how-to-save-more-money-for-retirement

Agemy Financial Strategies

August 08, 2022

We all know it’s important to save for retirement. So why is it that when it comes to saving, most Americans fall short? If you’re worried about your retirement savings game, this blog is for you.

Retirement can be a time of great joy, but it can also be a time of great stress. Many people spend their whole adult lives anticipating the independence of retirement, but saying goodbye to one’s constant source of income may be frightening when the time comes. According to the Federal Reserve, about a quarter of Americans have no retirement savings at all, and almost two-thirds of non-retired adults are concerned about being able to meet their retirement savings goals.

The COVID-19 pandemic has caused a lifestyle shift that is having an immediate effect on finances and planning. In addition, if you’re retired, market declines and economic uncertainty may induce concern as you assess your financial situation.

While there are many factors that affect your overall financial health, it is important to consider how your retirement plans may change in light of recent circumstances. Here are a few considerations to keep in mind as the ticking clock to retirement nears.

Set Your Retirement Savings Goal

Retirement planning is a big, intimidating goal—but it doesn’t have to be. There are so many variables to consider. How much will you need for vacations? Could you end up facing big medical expenses? What age will you stop working entirely? How long will you actually live? Research has found that those who have written goals and a written plan for achieving those goals are 1.2–1.4 more likely to succeed. Other studies have shown that having a plan can double your savings rate.

If you start saving early, with small amounts of your income, you’ll be able to fund a comfortable retirement and still enjoy life along the way. The more time your money has to grow, the more money you’ll have when it’s time to stop working.

Here are some ways you can help your nest egg grow:

  1. Contribute as much as you can to your employer-sponsored account—401(k), 403(b), 457(b) or Thrift Savings Plan. In 2022, you can contribute up to $20,500. If you’re at least 50 or will be by year’s end, you can also make a catch-up contribution of $6,500, for a total of $27,000.
  2. Make sure your employer is contributing enough to cover their share of matching funds. If not, ask them if they’d consider increasing their contribution rate so that more of your salary goes toward investment growth than toward fees and expenses associated with managing those investments.

If you’re trying to catch up on a previously set goal, your money moves and savings rate need to be more aggressive. Use our free online calculators to get a good estimate of how much you need to save in order to alleviate the stress of living on a fixed income.

In addition to being aggressive with how much you save, you’ll want to be fairly aggressive in how you invest those savings. You should meet with your financial advisor to discuss riskier investments in order to compound at higher rates of return over an extended period of time.

Plan for Social Security

Social Security is a great tool for retirees. It’s important to understand how to get the most out of your benefits, though.

You can start taking Social Security as early as age 62. But you’ll receive a smaller check each month than you will if you wait until your full retirement age. If you wait until after your full retirement age, your Social Security income will increase up to 8% for every year you delay, up to age 70. After age 70, there’s no further increase for delaying. If you want to maximize your benefits, it’s important to know when to start taking them and how much they’ll be worth if you do so.

Consider Tax Strategies Early On

One of the most important things to consider while you’re still saving for retirement, is how to minimize taxes down the road. While tax laws and rates are likely to change, there are ways to plan for these unknowns and set yourself up for a potentially better tax outcome.

One way that many people do this is by using an IRA or Roth IRA. An IRA is a tax-deferred account, which means that your money grows without being taxed until you withdraw it in retirement. Withdrawals from an IRA are also taxed as income, so it’s important to consider whether or not you’ll need some of your money before retirement and make sure that you’re taking withdrawals accordingly (you may need to pay penalties if you take withdrawals before age 59 1/2).

A Roth IRA works in reverse: contributions are made with after-tax dollars, but any growth within the account is tax free when it’s withdrawn in retirement. This can be a great option for those who expect their tax rate will be higher during retirement than it was when they were working full time.

Spreading your savings across a diverse selection of accounts with a variety of tax strategies is another way to grow your retirement savings. Consider an appropriate mix of tax-deferred Roth accounts based on your tax bracket. For example, if you’re in a high tax bracket (32%-39%), you would want to consider diversifying your accounts, i.g. 401(k), 403(b), and others.

Use the Backdoor Roth IRA to Increase Savings

For 2022, the AGI phase-out contribution range for Roth IRAs for married couples filing jointly is $204,000 to $214,000 and for single taxpayers and heads of households is $129,000 to $144,000. If your current income is too high and makes you ineligible to contribute to a Roth IRA, there’s another way in. First, contribute to a traditional IRA. There is no income ceiling for contributions to a non-deductible traditional IRA, although there is a limit to what can be contributed.

The IRS caps the contribution limit to $6,000 or $7,000 if you are 50 or over. After the funds clear, convert the traditional IRA to a Roth IRA. That way the funds can compound for the future and be withdrawn tax-free, as long as you meet the withdrawal guidelines.

Don’t Forget HSAs

With healthcare costs growing and the proliferation of high-deductible health plans (HDHP), the health savings account (HSA) is a golden retirement planning opportunity. This tool can not only be used to pay for healthcare expenses but can also be used to squirrel away additional funds for retirement.

Regularly Review and Increase Savings

While many start off saving 15% of their income for retirement, you may not be able get there right away. Or you could be living a little “too” comfortably and decide you’re ready to stash away more. 

For the former scenario, you can start small to take advantage of the crucial role that time plays in compounding your investment returns. Try increasing the amount you contribute to your retirement accounts by 1% every year until you reach at least 15% of your salary. For those who are ready to up their savings game, instead of upgrading to a larger home or purchasing a new car with your extra cash, try to make do with what you have to minimize your expenses and funnel your extra cash to your savings.

To Summarize

Remember: Retirement isn’t an age. It’s a financial number. Keep that goal in mind and remember that saving for the future is a marathon—not a sprint. The name of the game when it comes to saving money for retirement is starting early.

It’s important to look at your finances and see if any of the above strategies could help you in the long run. If you’re like most people, qualified-retirement plans, Social Security, personal savings and investments are expected to play a role in growing your retirement nest egg. Once you have estimated the amount of money you may need for retirement, a sound approach involves taking a close look at your potential retirement-income sources and making amendments where needed.

At Agemy Financial Strategies, we want you to know we’re here to help you navigate retirement and answer any questions that come up during your retirement process. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs. 

For more information on our retirement and financial planning services, contact us here today.

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3 Topics to Cover With Your Financial Advisor as You Near Retirement

Agemy Financial Strategies

August 03, 2022

Are YOU ready to retire? As you get closer to retirement, it becomes increasingly important to have in-depth conversations with your financial advisor about the years ahead. Here are some important questions to consider in your financial planning journey.

As soon as you transition from your working years to life as a retiree, you’ll need a plan for how to turn the money you’ve saved (along with other sources of income like Social Security or an annuity) into a steady paycheck that will allow you to live the retirement you want.

When you meet with your chosen financial advisor, it’s natural to want to discuss the rate of return on your investments and the progress you’re making on your financial goals. But don’t let the conversation end there — especially if you’re nearing retirement. At Agemy Financial Strategies, our financial advisors are equipped to help you design a strategy for creating income in retirement based on your unique needs and goals.

Here’s three topics you should cover with your financial advisor as you countdown to a work-free future.

What Does My Ideal Retirement Look Like?

As you get closer to retirement, you’ve likely started to think more specifically about what you want this new time of your life to look like. Where will you live? How will you spend your time? What hobbies or activities do you plan to pursue? And if you’re part of a couple, hopefully you and your partner have started having these conversations to make sure you’re both on the same page.

The first step in making sure your retirement dreams come true is very simple: talk about them! Discussing your goals for retirement early on can help ensure that both of your visions are aligned and that there aren’t any potential obstacles down the road. But if you wait too long or don’t discuss it at all, things can get complicated quickly.

In order to avoid disagreements and hurt feelings, it’s important for couples to talk about their expectations for how much time they want to spend together once they stop working full-time.

Once you have established your roadmap to retirement, it’s a good idea to share your vision with your financial advisor. They can help you translate that vision into dollars and cents by helping you determine the following:

Your cost of living (including property, income and estate tax implications) and any of the following:

  • Potential relocation costs
  • Health care costs
  • Potential long-term care costs
  • Discretionary expenses, such as travel, new hobbies, etc.

How Can I Maximize Income From My Savings?

Once you know how much you’ll need to achieve your retirement goals, crunch some numbers to see if you’re on track financially. If you need to course correct, your financial advisor can walk you through a range of options to help you get closer to your goal.

This might include things like:

  • Looking at all of your options for generating income
  • Debt Management and see how you can eliminate any outstanding debt
  • Taking advantage of Social Security and maximizing your benefits
  • Taking advantage of tax-advantaged accounts like IRAs or 401(k)s

What Kind of Legacy Do You Want To Leave Behind?

As you approach retirement age, you may feel a greater urgency to make sure your estate planning documents are in place and that your legacy goals are covered. While an estate planning attorney can draft or update your will or trust and powers of attorney for health care and finances, your financial professional also plays a role. They can help to ensure that your financial assets are aligned with your desire to leave your wealth behind as part of your comprehensive financial plan.

For example, if you want to leave money to a charity but also want to provide for your children’s education, the financial professional can help you consider the best way to accomplish both goals through careful asset allocation and investment management strategies. They can also discuss the best practices to save on taxes.

Your financial professional should be able to provide assistance with developing an estate plan that includes a will, revocable living trust, powers of attorney for health care and finances, beneficiary designations for retirement accounts, life insurance policies, trusts, annuities and other investments. They should also assist you in determining what assets need to be transferred out of your name following death.

Why Agemy Financial Strategies

If you are like most Americans, your retirement plan is likely to be a combination of personal savings, 401(k) plans and Social Security. Once you have estimated the amount of money that you may need for retirement, a sensible approach involves taking a close look at your potential retirement income sources and making amendments where needed.

For over 30 years, we’ve helped our clients plan and prepare. This way, when the unforeseen occurs, their clients are uniquely positioned for success. We work hard to deliver a dependable retirement income strategy, in any market, so that clients can enjoy the “best” of their lives during retirement. We are ready and waiting for all your retirement questions! Tune into the Financial Strategies podcast each week or drop us your question online here.

At Agemy Financial Strategies, we want you to know that we are committed to helping you achieve your retirement goals. As Fiduciary advisors, it is our duty to act on your behalf by finding the right solutions for your individual wants and needs.

For more information on our retirement and financial planning services, contact us here today.

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National Mountain Climbing Day: What is a Financial Sherpa?

Sherpas are the guardian angels of the Himalayas. So what do these protectors of the east have to do with financial planning? Let’s find out!
Sherpa |ˈsher-pə | NOUN |
– a member of a Tibetan people living on the high southern slopes of the Himalayas in eastern Nepal and known for providing support for foreign trekkers and mountain climbers.

Happy National Mountain Climbing Day!

Did you know that some of the world’s greatest mountaineers relied on sherpas? Sherpas have been credited with high achievements for assisting mountaineers throughout history. In the financial world, we often see the same correlation with retirees trying to reach their goals at a certain age. But without the guidance of experienced financial advisors they end up running out of money during their retirement.

When you bring on a trusted financial advisor, you’re not handing off your nest egg and the control that comes with it. Instead, you can think of it as having a financial sherpa by your side to guide you through planning for retirement. Financial sherpas can help you reach the summit in all financial aspects.

Here’s what you need to know about Financial Sherpas with Agemy Financial Strategies.

Financial Sherpas

A Financial Sherpa is a financial services professional who believes in a contrarian philosophy of how to grow and protect your wealth. Wealth you will ultimately need for your retirement, hence the importance of protection.

Throughout life, you may need more help or more focus towards a certain aspect of it. For example the older you become the more likely you will need to have a will and estate plan in place so your family has a roadmap to your finances, should the unexpected occur.

You may need a portion of your wealth to fund your children’s education, invest in your business or to purchase a piece of property. Hence the importance of liquidity. It is our belief that you are ultimately better served focusing your attention on Distribution & Protection strategies as opposed to simply Accumulation ones.

We are Your Helping Hand

Sherpas need to liaise with the clients, support them along the track and then run ahead to make sure the tea is on the boil when clients arrive at camp. As a financial sherpa, we are here to be your first point of contact on all things financial planning. We will be on hand to answer your questions, look ahead to potential risk and strategize to help ensure you have a financial safety cushion when you reach retirement.

For over 30 years, Agemy Financial Strategies has helped our clients plan and prepare. This way, when the unforeseen occurs, their clients are uniquely positioned for success. We work hard to deliver a dependable retirement income strategy, in any market, so that clients can enjoy the “best” of their lives during retirement.

Our Fiduciaries provide retirement planning services designed to educate clients as to their best options for meeting their current financial needs, achieving their long-term financial goals, avoiding common retirement-planning mistakes, and enjoying a lifetime of financial stability.

Our goal is to give clients confidence in a custom developed robust retirement portfolio and provided investment options designed to generate interest and dividends regardless of market conditions. This is income that can be spent or reinvested for dependable “organic” portfolio growth.

  • Educating retirees and pre-retirees to make smart financial decisions
  • Purpose-based investing
  • Implementing generational wealth transfers
  • Generating income (a retirement paycheck), you can depend on in all market conditions

As a fiduciary and Registered Investment Advisor, you can be confident we will recommend only what is in your best interest.

Let’s Get Climbing

Specializing in retirement income planning, or as we like to say, “helping you make it down the mountain.” Many financial advisors and financial planners will help you to build your assets and “get up the financial mountain.” However, Mr. Agemy, “a financial sherpa,” and his team focus on helping investors who have already “climbed the wealth accumulation mountain, plan and strategize to have enough income in retirement to have a safe and pleasurable journey “back down” and enjoy the best of life. Agemy Financial’s objective is to see that their clients can retire and stay retired.

Our purpose is to educate retirees – whether that be planning for retirement, legacy planning, wealth management, or just holding your hand when it’s time to leap into retirement. Celebrating 30 years in business, and we remain steadfast in our dedication to serve and educate retirees.

Working with the advisors at Agemy Financial Strategies can help you get ready for sinking markets—and stay grounded when they show up. We can explain ways to rebalance and help protect your accounts moving forward and even suggest a few investments we might consider making while the markets are down. Creating a retirement checklist with us is a great way to pinpoint your main goals, compare them to retirement realities and make a plan of how to connect the two.

Click here to instantly book the day and time you’d like to connect with us for your complimentary 30 minute consultation. Our financial advisors in Guildford, CT and Denver, CO are looking forward to speaking with you.

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Five Things You Never Knew About Estate Planning.

Agemy Financial Strategies

July 20, 2022

If you hear the phrase “estate planning” and immediately tune out, you’re not alone. If you don’t think estate planning is a priority, here’s five reasons you might change your mind.

Think estate planning isn’t for you? Think again.

Estate planning is often overlooked when it comes to preparing for retirement. Effective estate management enables you to manage your affairs during your lifetime and control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes and ensure that they’re carried out – even if you are unable to communicate. It can even designate someone to manage your financial affairs should you be unable to do so.

Being intentional with your estate planning is a gift to your loved ones. Doing so not only benefits them, but it can also provide a great deal of peace for you, too. Consider these five tips below to determine whether you feel your estate planning is up to speed and to help ensure a seamless transition of assets once you’re gone.

1. You Should Begin Estate Planning Early

A lot of people put off or wait to plan for their estate until they get a little older. However, life can be cruel and unfair, and tragedy strikes every day. If you have an accumulation of assets of any size, you should be planning your estate. The earlier you begin, the easier it will be to continue to grow your estate and keep a detailed record of your wishes.

Planning your estate is extremely important because it helps you to avoid probate court when you pass away. This is a lengthy process that can cost your heirs thousands of dollars in legal fees (as well as the obvious stress). If you have a will in place at the time of your death, the probate process is much quicker and less expensive for your family members.

2. Estate Planning is for Everyone

Maybe it’s the word “estate.” It sounds fancy and, well, it sounds like money, but some people assume that you only need to undergo estate planning if you have numerous assets worth a lot of money. However, there is no minimum amount that you need to make estate planning worth it. In reality, those with less should be focusing on estate planning more, as it allows them to be as cost effective as possible. Since estate planning consists of determining how everything you own will be divided amongst your family or friends, it’s essential for everyone to complete as a part of their retirement plan.

If you do not want your family members fighting over your belongings after your death, then it is best for you to plan ahead and figure out what goes where. This can be done through the process of making a will or trust. A will is a document that names who receives your assets after you pass away, while a trust is an arrangement by which someone else manages your assets until they are passed onto someone else.

Whether or not a person has any assets does not matter when it comes down to how important estate planning really is for everyone involved!

3. You Can Make Changes to Your Estate Plan

If you are like most people, you will be in a very different place in life than you are now when you first create your estate plan. This is why it’s important to have an estate plan that can easily adapt to your changing needs.

Changes like marriage, divorce, the birth of a child, or even new laws can make your old estate plan inadequate. As your situation changes throughout your life, you can easily make changes to your established estate plan. You’ll be able to change beneficiaries as needed, adjust the amount of assets that each beneficiary receives, or add in new beneficiaries if your family or close circle grows. Up until the day you pass away, estate plans can be legally changed, if the changes are done so without coercion and under the right frame of mind.

Reviewing your plan on a regular basis – and keeping your estate planning advisor up-to-date on any life changes – will help ensure your plan continues to work.

4. Plan Ahead if You’re Giving to Charity

It’s not uncommon to feel like the world is moving too fast, and you’re constantly being pulled in a million different directions. That’s why it’s so important to take time to plan ahead. If you have any loved ones who depend on you, it’s crucial that they know what they can expect from you when the time comes. This means having conversations about your end-of-life care and what kind of care you’d like to receive if you become incapacitated.

Planning ahead also gives you time to decide whether you want any of your assets to go to charity. If this is the case, having the conversation early will give peace of mind there’s no surprises to come after you die. Do you want part of your estate to go to a favorite charity? Intestacy laws leave no room for charitable contributions. So, the only way to be charitable in death is to create an estate plan. And, if you have concerns about taxes, charitable estate planning can afford you tax breaks you otherwise wouldn’t qualify for.

5. You Don’t Have to do it Alone

Estate planning can be intimidating, and it can also involve some complex rules and laws, creating pitfalls for those less experienced. A full-service Fiduciary advisor can help you navigate the process and put an effective plan in place.

Final Thoughts

Estate planning is not simply who gets your stuff when you die. Sure, that’s a part of it and an important part. But estate planning also includes planning for yourself in the event of your incapacity.

Working with a financial planner is a great way to ensure that your finances are in good standing now and in the future. It’s important to have a trusted advisor at your side when it comes to your family’s finances—someone who can help you make informed decisions about estate planning, retirement planning, and everything else in between. At Agemy Financial Strategies, we’re here for you! We’ve been helping our clients live better lives for over 30 years and we’re ready to help you, too.

Our mission is simple: we want our clients to feel confident knowing they have someone looking out for them and their estate planning needs. To schedule a consultation and discuss your options for estate planning, contact Agemy Financial Strategies here today.

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The Financial Side of a Gray Divorce.

Divorce is hard, but a divorce later in life presents a unique set of challenges. Understanding how your finances are affected by your gray divorce can save you a great deal of worry and stress.

Experiencing a gray divorce may not have been in your retirement plans, but if you’ve found yourself in the middle of one, you’re not alone. Bill and Melinda Gates were separated after 27 years of marriage. And now experts say ‘gray divorce’ is on the rise. According to Pew Research Center, divorce rates for those 50 and older have more than doubled within the past 25 years.

What is a Gray Divorce?

A gray divorce, or silver divorce, is a divorce between two individuals 50 or older. The term was coined as research showed the phenomenon of the overall divorce rate going down while the “gray-haired” demographic’s rate of late-in-life divorce was on the rise. The 50+ crowd currently makes up a quarter of all divorces and 1 in 10 is 65+.

AARP conducted a study titled The Divorce Experience: A Study of Divorce at Midlife and Beyond. Some of the findings consisted of:

Who initiates divorce in later life?

  • 66% of female participants initiated divorce
  • 41% of male participants initiated divorce

Participants’ age when divorced

  • Age 40–49, 73% of participants divorced in their 40s
  • Age 50–59, 22% of participants divorced in their 50s
  • Age 60 and older, 4% of participants divorced in their 60s or later

Gray Divorce Reasons

There are a multitude of reasons why people decide to get divorced later in life. Some of these reasons are the same for younger couples deciding to split — infidelity, lack of intimacy or unrealistic expectations, to name a few. However, many gray divorces have more unique causes.

  • Financial independence
  • Lifestyle changes during retirement
  • Financial struggles
  • Female autonomy and independence
  • Empty nest syndrome
  • Falling out of love

No matter your reasoning for getting a gray divorce, you’ll need to determine the best way to legally separate from your spouse in the most financially beneficial way.

Collecting Financial Information

Ending a marriage can be a difficult process for both spouses involved. However, it can be significantly beneficial for you to collect your financial information early within the divorce process in order to know the entirety of your financial situation. By doing this, it can help you maintain some control during this stressful time.  

When a couple divorces, they have to come to an agreement about how to divide their marital estate. Marital estate includes all assets and debts acquired during the marriage. Unless divorcing spouses agree on how to divide everything, a judge will evaluate and divide the marital estate using the state’s property division laws. Some states divide the estate equally (community property states), while others use an equitable distribution method, which means a fair but not necessarily equal division.

In order to resolve the allocation of your assets the court and your ex-spouse has to have a complete picture of your assets, debts, and expenses. Having all of your financial information readily available to you will put you at an advantage. The sooner you know what you’re dealing with, the better prepared you’ll be to resolve it. Being prepared will essentially allow you to move quickly through the disclosure process.

Try To Cooperate

Divorce is never easy, but it’s easier when spouses work together. If both parties are willing to cooperate and work toward a resolution, dividing the marital estate can go more smoothly and reach a resolution faster. But cooperation between divorcing spouses isn’t always possible, and sometimes, as the divorce progresses, spouses become less willing to work with one another.

Regardless of the relationship you have with your ex-spouse you should try and work together as much as possible. Having a divorce financial checklist is a great way to tackle this head one. Here’s a look at what information you’ll need to gather.

Assets

Take inventory of all your property and belongings, and make copies of all documentation related to these items. The following categories can help you keep track of this information:

  • Cash
  • Information on wages, salaries, and other income
  • Bank accounts such as checking and savings
  • Retirement accounts
  • Stocks, bonds, CDs and other investments
  • Life insurance plans
  • Insurance for property, vehicles, and other personal items
  • Any other assets your own including inheritances

Debts

Before the court can divide your estate, the judge must have a complete picture of your debts as well as your assets. If you and your spouse took on debt during your marriage, the court will evaluate it alongside your disclosed assets and assign it according to state law. In general, when a spouse has a debt that is considered separate or unique to that spouse—such as a student loan—the court will assign it to the spouse who acquired it. Gather information about the following even if the debt is in your spouse’s name:

  • Mortgages
  • Credit cards
  • Car loans
  • Personal loans
  • Rent obligations
  • Tax debts and liens, and
  • any other debt acquired by you or your spouse during the marriage.

Expenses

One of the most challenging parts of calculating your expenses is the fact that outgoings vary from month to month. For example, one month you might have only your car payment and fuel costs; the next month, though, you could be faced with hundreds of dollars in repairs when your battery dies, or worse. Don’t worry about getting everything exactly right; estimate as best you can while disclosing every expense you can think of.To help prepare for your divorce and plan your future budget, use this checklist of common expenses you might need to track:

  • Rent/ Mortgage payments
  • Medical Insurance
  • Child care
  • Groceries / Household supplies
  • Utilities
  • Goods such as clothes, or going out to eat
  • Savings and investments
  • Education and Tuition
  • Gifts or vacation
  • Transportation expenses, (gas, repairs, transit fees for the bus or train)

If any of the expenses above were paid by third party contributors, you must make a note of the amount and frequency that the payments were made.

Create a Divorce Budget

Divorce can create financial instability, especially if you depend on your spouse’s income to cover some/all expenses. One of the best ways to become financially independent from your spouse during and after your divorce is to create a budget. By estimating your post-divorce income, you can use the information you’ve gathered about your expenses and debts to see how it balances against your income and assets.Asset management and budgeting can be crucial when planning for divorce-related expenses such as court costs and lawyer fees. A good financial advisor can assist you in finding ways to save money where you can while strategizing a new retirement plan for you.

Retirement Accounts

Besides a home, retirement accounts are often a couple’s most valuable assets—particularly for those who’ve been married a long time.  Whether you live in a community property state or one that uses equitable distribution, retirement accounts are considered property that can be divided in a divorce—but only the portion of those accounts that is marital property.

Calculating the marital portion of retirement accounts can be complicated. It depends on the type of account or plan and when contributions went into the account:

401(k)s, pensions and other qualified plans: These accounts are split through a qualified domestic relations order (QDRO), which is based on the order of a judge and in accordance with the terms of the qualified plan and applicable law.

IRAs — Roth and traditional: These accounts are divided under what’s called a transfer incident to divorce. Even though money will leave the account, the account owner doesn’t owe income taxes because it’s part of a divorce settlement.

Social Security: Aspects of Social Security payments can change after divorce—your former spouse can receive Social Security benefits based on your record. Before applying for Social Security benefits based on a former spouse’s record, the two people must have been divorced for at least two years. However, Social Security benefits can’t be included as a marital asset, by law, and the actual benefit can’t be divided.

After you’ve divided up your various retirement accounts and the divorce is finalized, it’s important to revisit, and revise, the beneficiary designations on the accounts you still own. A common mistake is to leave an ex-spouse as the beneficiary.

How Agemy Financial Strategies Can Help

A gray divorce can be complicated, costly and emotional. Having a trusted financial advisor by your side when you’re going through a divorce is a great benefit, especially if you’re retired and looking for ways to save money while protecting your nest egg.At Agemy Financial Strategies, we value the time we take to get to know you and your situation so we can create a plan specifically tailored to you.

Our purpose is to educate our clients so that we can help you get a clear picture of the assets and debts that make up your marital estate.Whether navigating a revised estate plan, looking to split investment assets or in need of a new retirement income plan, we want you to know we’re here to help you navigate any questions you have regarding these financial aspects of divorce. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs.

Recovering from a divorce can take time, but having others there to help you through the process can get you back on your feet quicker.For more information on our asset management and financial planning services, contact us here today.

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5 Financial Planning Moves to Make Turning 50

Agemy Financial Strategies

July 06, 2022

From retirement security to living debt-free, turning 50 is your chance to make big moves in reaching your financial goals.

Reaching 50 is a huge milestone for many reasons. Your children have left home and may have a family of their own (hello “bank of mom and dad”).Your parents may need your help too, while your own future care is a looming worry. Retirement, which has seemed far in the future for decades, suddenly seems more real. 50 is an age where people reassess their financial life and aspects. You could even have your heart set on an early retirement. It’s time to make financial moves that will pay off in the future.

If you are in your 50s, are you set for retirement? Have you thought about how sturdy your financial plan is? Meeting with your trusted Fiduciaries at Agemy Financial Strategies can help you work through these items if you feel like you’re not fully prepared for retirement.

Pay Down Debt

Debt is probably the last thing you want to be dealing with before you retire. Calculate your current debt load and start paying off your larger debts first. Debt includes car loans, mortgages, credit card balances and personal loans.

A majority of retirees who have paid off their homes find it financially liberating to live without having a mortgage. By entering retirement without a big mortgage payment, you can live on less. If you’re in a situation where you can’t eliminate your mortgage, you could consider other options to reduce the cost.

Refinancing your home loan could give you a lower interest rate. If you decide to refinance your home, it’s important to look at the terms and conditions. Some people end up refinancing for what they think is a better deal, and end up having their refinance term be longer than their current mortgage.

Turn Savings into Income

You’ve saved for retirement for years. Now that retirement is approaching, how can you create a regular stream of income from these savings to help pay your outgoings? The first step in creating retirement income is to picture how you’d like to spend those years. This way you can understand how much money you’ll need and prioritize what’s most important. Next, create a list of goals to determine which things you might add or eliminate depending on your unique situation.

Based on your goals, create a realistic budget and find out how to revise it for different phases of retirement before making your withdrawal strategy. A withdrawal strategy helps you know how much you can take out of your savings and investments each year to cover your needs and wants. It should also outline which funds you’ll withdraw from during retirement and in what order, i.e., retirement accounts, taxable accounts, etc.

Most financial advisors will suggest the following order (least to the most tax-efficient accounts) because of tax implications and the assumption that your taxes will be lower later in retirement:

  1. Taxable accounts – Non-Retirement Accounts

  2. Tax-deferred accounts – Traditional IRAs and 401(k)s

  3. Tax-exempt accounts – Roth IRA

The traditional approach has been that you can safely withdraw about 4% of the initial value of your retirement savings and increase that amount each year with inflation. However, it may no longer be safe with the current combination of low bond rates and high stock valuations. Add in the possibility of even higher inflation and longer average life spans, and you could face a significant chance of running out of money in retirement using the traditional 4% “safe” withdrawal rule. In which case, you can discuss other options with your advsor such as the 7% rule or r Annuitization. Be sure to discuss this method of retirement income with your Fiduciary. By purchasing an income annuity, you trade a lump sum of money for an income that’s guaranteed by an insurance company for as long as you live.

Life Insurance

If you don’t have a life insurance plan or have been living underinsured, now more than ever is a good time to consider you and your family’s needs.  A general rule of thumb when it comes to life insurance is that your individual needs may vary based on such factors as:

  • The amount of debt you would want paid off
  • The number of charitable contributions you’d like to make upon your death.
  • How much money (if any) you’d want to leave your spouse, children or relatives.

The need for life insurance doesn’t start or end when you reach a specific age. Oftentimes, when people reach their 50’s their insurance may be reaching its expiration date. When this happens, it could mean that their life insurance could go up.

One option to consider is converting your term policy into a whole life insurance policy. Whole life policies, while significantly more expensive than term insurance, offer the flexibility of tapping into the policy’s cash value while you’re still alive.  You can borrow against the cash value of a life insurance policy or simply elect to take money from it, which will lessen the death benefit payout. However, be careful if you make that move.

If your children have left home, you may also need to review your life insurance requirements. Do you need life insurance or can your spouse financially support him–or herself? It also could be time to think about long-term care insurance. Long-term care is often needed by older people and can be expensive without insurance. While Medicaid can be available, it often requires that people drain their own assets first. It’s always important to discuss long-term care insurance with your trusted Fiduciary or financial advisor.

Review Your Estate Plan

Effective estate management enables you to manage your affairs during your lifetime and control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes and ensure that they’re carried out – even if you are unable to communicate. It can even designate someone to manage your financial affairs should you be unable to do so.An estate plan generally includes a Last Will and Testament, as well as powers of attorney for medical and financial affairs. It is wise to have an estate plan early in life, particularly if you have any assets or property worth protecting.

If you die without a will, your estate may be tied up in probate for months or even years. This includes all accounts—checking, savings and retirement—unless they are held jointly by your family members. Probate can also include your home (or other real estate) and personal property until the will goes through probate.

The best way to ensure that your assets are passed onto the people you want is to include them in your will. If you become incapacitated or ill, having a power of attorney in place will simplify both your life and the lives of your family members. Your full-service retirement planning firm can assist you in this area.

Review Your Risks

Risk management helps you ensure that your assets are protected.

In your 50s, you need to learn how to manage risk successfully. Failure to do so can be detrimental to your retirement. You always have the option to help avoid investment risk by choosing only safe, guaranteed retirement income investments. Choosing to avoid risk is one of the smartest decisions you can make until you have learned the skills you will need to manage risk appropriately.

However, ALL investments, even the most conservative, come with different types of risk. Understanding these risks (from Intrust Bank) will help you make educated choices in your retirement savings plan mix:

  • Market risk: The risk that your investment could lose value due to falling prices caused by outside forces, such as economic factors or political and national events (e.g., elections or natural disasters). Stocks are typically most susceptible to market risk, although bonds and other investments can be affected as well.
  • Interest rate risk: The risk that an investment’s value will fall due to rising interest rates. This type of risk is most associated with bonds, as bond prices typically fall when interest rates rise, and vice versa. But often stocks also react to changing interest rates.
  • Inflation risk: The chance that your investments will not keep pace with inflation, or the rising cost of living. Investing too conservatively may put your investment dollars at risk of losing their purchasing power.
  • Liquidity risk: This is the risk of not being able to quickly sell or cash-in your investment if you need access to the money.
  • Risks associated with international investing: Currency fluctuations, political upheavals, unstable economies, additional taxes–these are just some of the special risks associated with investing outside the United States.

Don’t forget about personal and family risk, too:

  • Death: Losing a spouse can reduce pension benefits or may add to the retiree’s financial burdens, especially if there are medical bills or other debts that need to be paid.
  • Risks related to longevity or outliving your assets: The longer people live, the more money they’ll need. Retirement income can only last a certain length of time, so the longer you live, the less money you’ll have in your nest egg.
  • Change in marital status: Separation or divorce can significantly reduce your retirement income as there’s a good chance you’ll have to split your pot.
  • Financial assistance to family members: There may come a time when your children or other dependents may need some financial help, and they may turn to you. If you ch

These risks tend to affect the personal lives of retirees.

Diversify Your Portfolio

All investors–whether aggressive, conservative, or somewhere in the middle–can potentially benefit from diversification, which means not putting all your eggs in one basket. If something were to happen to that basket, you’d lose all of your eggs. To mitigate that risk, it’s wise to spread out your assets. When applied to investing, this proverb directly speaks to the value of portfolio diversification.

When you reach your 50’s you’ll want to try and minimize the amount of mistakes you can make financially – especially ones that could derail your retirement plan. It’s important to review your portfolio with a trusted financial advisor to make sure you’re on the right track when it comes to diversification strategies.

At Agemy Financial Strategies, we will sit down with you and discuss how you can diversify your portfolio for maximum retirement income. Once you reach 50, you want to be able to reap all of the benefits from your investments, especially if you’re planning on an early retirement.

Let’s Get Started

Your 50s are a pivotal decade. Capitalize on these years by firming up plans and feathering the nest for a secure retirement.

It’s important to look at your financial plans and see if any of the above strategies could help you in the long run. If you’re like most people, qualified-retirement plans, Social Security, personal savings and investments are expected to play a role. Once you have estimated the amount of money you may need for retirement, a sound approach involves taking a close look at your potential retirement-income sources and making amendments where needed.

At Agemy Financial Strategies, we want you to know we’re here to help you navigate retirement and any questions that come up during your retirement process. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs.

For more information on our retirement and financial planning services, contact us here today.

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Who Should Inherit Your Wealth?

Agemy Financial Strategies

June 28, 2022

Many people put off estate planning because they assume everything will work out fine if they die unexpectedly. But this isn’t always the case. One of the most important factors to consider in your financial plan is who is going to inherit your wealth. Here, we cover everything you need to know before choosing your beneficiaries.

When it comes to inheritance, there are no fool-proof guides to help you objectively determine who should get your money and assets when you’re gone. It’s a decision every person should have a right to make for themselves. Depending on the assets and people you care about, you might be forced to make some hard decisions. Divorce, children from multiple marriages, grandchildren and personal philosophies on charity or generational wealth can pull you in multiple directions.

So when you’re gone, who gets what? It’s a question every person should have the right to answer for themselves. But without a legally binding plan, your wishes may not be carried out.

With Agemy Financial Strategies, you can create a legally binding plan that clearly lays out who gets your assets and how they are distributed—so there’s no confusion when it matters most. Here’s what you need to know.

Assets & Trusts

When it comes to planning your will, it’s best practice to speak with your trusted financial advisor – or even better, Fiduciary – about what your requests are. At times, financial advisors will suggest putting your assets into a trust.

There are two kinds of trusts, revocable and irrevocable. Under the two categories are there a number of different classes of trusts. Each trust serves a specific purpose. Some options include charitable trusts, generation-skipping trusts or special needs trusts for a dependent or family member.

A trust can be a useful tool for your family and beneficiaries to ensure that your wishes are carried out as you intend. When you create a trust, you are creating an entity that will manage your assets according to the terms of the trust.

Trusts are managed by a trustee regardless if you’re living or deceased. The trustee can be a person or an organization and they are responsible for carrying out your i.e. the trustor’s wishes. When you pass away, the trust is immediately passed on to beneficiaries or can continue to be managed by co-trustees.

Unlike wills, bequeathing through a trust can prevent your family or beneficiaries from needing to go through the traditional probate process. Which can be easier to ensure your wishes are followed as you intend with a carefully designed and properly executed trust.

Trustees and Executors

There are two primary types of individuals who can serve as trustees: a trustor, and an executor. The trustee is responsible for managing the trust and can be the trustor themselves, or an executor. An executor can be named in a person’s will as the individual who will handle the dissolution of their assets and liabilities.

An executor is solely in charge of administering a person’s estate after their death and can also be a co-trustee and/or the one to disburse assets according to the decedent’s wishes. Be sure your will and trust documents include specific instructions on who you want in charge and what you want them to do after your death.

Choosing Beneficiaries

For some, gaining sudden wealth could mean finally being able to buy a home, pay back student loans, save for retirement or start a business. For others, it could mean achieving financial freedom for the first time in their lives. However, passing on your assets to an individual could adjust their income negatively. This could negatively impact the benefits they may be receiving such as supplemental security income, disability or medicaid. It’s important to make sure that the person you choose to inherit your wealth does not suffer any consequences.

This also means doing your due diligence and checking the beneficiaries you have listed on your estate planning documents, annuities, life insurance policies, and retirement savings accounts are aligned to avoid any additional disputes. Making a trust of your beneficiary could be ideal if your goal is to leave assets to minors, an adult child with questionable judgment or a dependent with a disability. Estate planning is all about being prepared for the unexpected. So when you choose who you want to inherit your estate, we’ll also ask you to name back-ups in case your chosen beneficiary dies before you. These are known as secondary beneficiaries.

Lastly, you can leave specific assets to different beneficiaries in your estate plan. Compare it to leaving a specific piece of property to a child from a past marriage or a bank account to a grandchild.

Considerations

Effective estate management enables you to manage your affairs during your lifetime and control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes and ensure that they’re carried out – even if you are unable to communicate.

Once you have decided who will inherit your wealth, it’s important to keep open lines of communication so your family can properly prepare. When the time comes to review your will or estate plan, you are looking to ensure that your intentions have not changed, that the right people are included, that major life changes are reflected, and that all other major changes are notated.

If you’re looking for a firm that handles estate planning and ways to reduce your taxes in life and death, look no further! Agemy Financial Strategies can help you look for ways to fortify your finances and get a properly prepared plan in place. For more information on our Estate Planning and Financial Advisory services, contact us here today.

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