Higher Tax Rates for Trusts

6a017c332c5ecb970b01910219a734970c-320wiThe taxpayer relief act – I love that name since tax rates went up – raised the top tax rates that trusts pay on income.  So, for 2013, new rates apply when trust taxable income goes over $11,950.  And, in case you didn’t know, the 3.8% Medicare contribution tax also applies to trust income above that figure.

Remember:  Even though the tax law is supposed to be permanent, it means it will be permanent only until the next change. Continue reading

Counting on Your Business To Finance Retirement?

6a017c332c5ecb970b01901c238330970b-320wiNot so fast.  It’s common for a 60-something business owner to count on finding a buyer, selling for an attractive figure, then live off the proceeds for the rest of his/her life.   But, when you look at real-world cases, it often isn’t true.

The fact is most business owners soon learn they may not be able to afford retirement after all; and, it can affect those with companies worth $20 million as easily as the smaller business owner.

Some reasons involve the economy, credit, and changing industries; but, sometimes there’s another wrinkle:  The owner was counting on supporting a pre-retirement lifestyle; and, often, that just isn’t the case. Continue reading

How to Get Money From An Illiquid Asset and Not Pay Uncle Sam

6a017c332c5ecb970b01901c236980970b-320wiYou own an illiquid asset (land, buildings, etc) and you’d like to sell; but, you don’t want to get hammered with capital gains taxes (now at 20% in 2013).   That’s a situation many people find themselves in.

One solution worth discussing with your CFP® professional and an estate planning attorney is a charitable remainder trust (CRT).

Here’s the short version:  You can gift the property into the trust.  This lets you sell the building without paying taxes on the increased value and invest the sale money – all of it – into passive investments (stocks, bonds, mutual funds, ETFs, etc.), and take a large charitable deduction in the process, because the assets will ultimately go to charity; but, in the meantime, you can increase your cashflow.

Not bad:  You’ve achieved a huge charitable deduction, sold your property and avoided taxes, increased your cash flow, and helped a charity! Continue reading

Should You Invest in Real Estate?

6a017c332c5ecb970b017eeab50e0a970d-320wiHey, they ain’t making any more of it! 

Unlike the dollar, the government can’t print real estate; so, I’ve been a long proponent of real estate investing.   But, then, I’m also a proponent for investing in stocks.  I also like commodities. What do they all have in common?   They all have had their ups and downs.

There have been times when people have made money – or been hurt – in all of them.  That’s why we diversify.  You see, you don’t diversify investments; you diversify risk!

Because the real estate market is composed of non-interchangeable, unique, illiquid properties, it might be considered as less efficient than the stock and bond markets; but, that inefficiency is probably what creates exploitable opportunities for skilled investors.  But, because each investment is unique and non-liquid, it’s important that real estate investments be adequately diversified. Continue reading

Ten Tips for Happiness

6a017c332c5ecb970b01901b938b2c970b-320wi1. LOVE YOURSELF – It is the nucleus for all motivation. You have to feel good about yourself!  A good place to begin is your physical appearance.  Take care of yourself!  When you look good, you feel good.

2. SEEK THE LOVING LIFE –  Helping people also makes you feel good!  When you can focus your attention on others, you feel better about yourself as a person.  Besides, it always comes back.

3. JOIN THE WORK WORLD – Many people complain about work – some retirees claim they don’t miss it – but most feel work is essential to happiness.   Money isn’t the only motivation…consider volunteer work. Here, I consider myself very fortunate:  My profession is all about it.  Sometimes people ask me if I’m retired; I tell them, “I don’t know!” Continue reading