Spring 2023 | Business Dimensions

Spring 2023

What business leaders should know about the nonprofit sector

Before you pursue your interest or opportunities in the nonprofit sector, discover what business leaders should know about this potentially unfamiliar world.

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Quiet quitting: what it means, whether it’s real and what you should do

Whether or not quiet quitting is a trend or just a trendy name for a long-standing issue, learn how you can improve employee engagement without alienating your workers.

How business owners can navigate inflation

These five strategies help business owners effectively manage cash flow during inflation and more favorable economic conditions.

August 2023 | Business Dimensions

Summer 2023

Retain top talent and maintain tax efficiency

 

Maximize the compensation you pay top talent with non-qualified deferred compensation plans.

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Intellectual property in your business

Facts and issues about ownership of intellectual property in your business.

 

 

 

Navigating generational shifts in the workplace

The presence of five generations in a single workforce is shaking things up for business owners.

 

 

 

 

 

Material created by Raymond James for use by its advisors.

Thrive in all of life’s stages | Longevity Ever After

VOLUME 6 – DECEMBER 2022

Thrive in all of life’s stages

 

As life expectancy rises, how can we ensure we are making the most of the additional years gifted to us? I encourage you to take care of your holistic self. Your financial well-being is, of course, a priority. But we should discuss what it looks like to take care of your social, mental and physical health as well.

Did you know loneliness is the main reason people seek counseling support? Strong social connections not only combat loneliness and improve our mental health but can also lead to increased longevity, stronger immune systems and create a positive feedback loop, supporting overall health.1 Deepen your connection to your community by attending local events, taking classes or engaging with loved ones in new ways.

Our physical health matters just as much as our social, mental and financial health. We are greatly impacted by our sleep patterns, dietary lifestyle, exercise routine, and more. Living well means establishing a routine that makes it easy to take care of yourself. Did you know high cholesterol and blood sugar in your 30s may raise your risk for Alzheimer’s disease decades later in life?2

It’s never too late to start prioritizing yourself or establish and maintain your healthy habits. If you’d like access to more motivation and ideas, please explore our collection of resources built to help you THRIVE, redefine your passions and pursue a life full of wellness and purpose.

Click here to learn more or get started.

Related articles

Connectedness & Health: The Science of Social Connection

Gene discovery may explain why more women get Alzheimer’s disease

This material was created by Raymond James for use by its advisors.

Navigating life’s many housing phases | Longevity Ever After

Volume 6 – October 2023

If you are having trouble reading this email, read the online version.

Navigating life’s many housing phases

 

Life’s continuous journey is full of twists and turns, and housing transitions come with their own set of unique opportunities and obstacles. Whether you are moving into your first starter home, downsizing after children have moved out, or moving closer to grandchildren in retirement, you may move many times throughout your life.

Especially as we age, decisions about where to live can become more complicated as we address competing needs and adapt to future possibilities. What was important to consider when looking for your first home may not be what you are focused on when thinking about your next stage in life. Proactive planning, with the support of experts who care, can ensure that you and your loved ones are prepared for any phase in your life.

The National Association of Senior & Specialty Move Managers® (NASMM) can help simplify any home transition by managing the complete process and guiding you or a loved one through the important considerations surrounding where to live. From small assistance like organizing what to keep versus donate, to modifying an existing home for future possibilities, managing your estate sale, and more, the association boasts positive differentiators that can make an immediate impact on your peace of mind.

We encourage you to plan proactively for where you’d like to live in the next chapters of life and lean on me to help you navigate potential changes. We can help you evaluate the impact of different moves on your financial plan and connect you with resources for support and guidance through life’s many stages.

Related resources:

Why Hire a Senior Move Manager®?

Top 7 Reasons to Hire a Senior Move Manager

Key requirements for aging in place

Material created by Raymond James for use by its advisors.

Preparing for Caregiving | Longevity Ever After

Volume 6 – June 2023

If you are having trouble reading this email, read the online version.

Preparing for caregiving

 

To my caring client, you are not alone. According to AARP, approximately 48 million individuals in the US provide unpaid care to a loved one. Sixty-one percent of family caregivers are also working, so if you are struggling to balance your care responsibilities, work, family, and self-care, you are not alone. According to AARP’s recent research, the financial impact of caregiving can be immense, with 78 percent of caregivers reporting out-of-pocket caregiving expenses and the average annual amount caregivers spend totaling $7,242. We are finally beginning to understand what caregiving looks like for ourselves and our community. Providing care can be a wonderful way to connect deeper with those we love most, if given the right support throughout.

I recognize that planning for care is essential, so I invite you to lean on me. We are equipped with resources to support your caregiving journey, and we can proactively plan for your own care with the right long-term care insurance. Please reach out for support, you are not expected to take on the responsibilities of caregiving alone.

 

Related resources:

Help for Caregivers

Helping people share their wishes for care through the end of life

Material created by Raymond James for use by its advisors.

Share Your Personal Legacy | Longevity Ever After

If you are having trouble reading this email, read the online version.

VOLUME 6 – FEBRUARY 2023

Share your personal legacy

 

Life is a continuous and evolving journey. We navigate life learning, growing and developing our core values. These values become our compass. Your views on life are important, especially to your loved ones. Did you know you can document and share your values and life lessons with loved ones by writing an ethical will? Not to be confused with a legal will, an ethical will captures your motives, life lessons and experiences. It can contain stories, family photos, secret recipes and so much more. Everplans, a life and legacy tool, created a worksheet to help you start your own ethical will.

 

Additionally, online tools such as StoryworthStoryFile or A Life Untold can be used to create keepsake books or videos sharing your story. These offer an opportunity to pass on your values, preserve meaningful memories, and share your legacy with those who matter most to you. Your friends and family use your compass to help find their way, so I encourage you to share with them the experiences that built your path through life.

Your copy should address 3 key questions: Who am I writing for? (Audience) Why should they care? (Benefit) What do I want them to do here? (Call-to-Action)

Create a great offer by adding words like “free” “personalized” “complimentary” or “customized.” A sense of urgency often helps readers take an action, so think about inserting phrases like “for a limited time only” or “only 7 remaining”!

Real Estate Capital Gians – Defer or Pay the Tax? | Advice4Life

Provided by Brian Rogers, Certified Financial Planner at AEGIS Financial

A delightful couple owned a piece of rental real estate for over 30 years. The desire to be free of being a landlord and to have a significant portion of their wealth in one piece of real estate led the clients to sell the property. Over the years, the clients had used debt on the property to fund various projects and expenditures. The property, therefore, was fully depreciated but remained tied to a significant mortgage. Being fully depreciated, in addition to seeing a nice price appreciation, meant that there would be a large tax bill upon the sale of the property. The clients sought advice on what their best option would be.

We identified several options:

1. Pay the tax.

2. Complete a 1031 Exchange into another local piece of real estate.

3. Complete a 1031 exchange or to multiple Deferred Sales Trusts (DST), in which each held one leveraged property.

4. Complete a 1031 exchange program resulting in owning a Real Estate Investment Trust (REIT) after two years.

Each option had various advantages and disadvantages, which we discussed with the client.

Pay The Piper

The outright sale and payment of the taxes would have given the clients maximum flexibility in their future investments. However, due to the property’s debt, the clients would have had approximately 65% of the sale proceeds go to the Federal and State governments to pay the Capital Gain and Depreciation Recapture taxes. Being left with about one-third of the sale proceeds would have prevented the clients from enjoying the lifestyle they have been accustomed to enjoying.

1031 Exchange

A 1031 exchange is a transaction in which the IRS allows real estate investors to liquidate one investment and reinvest the proceeds into another investment. By completing the 1031 exchange, the investor can continue to defer the taxes due. Then at death, these investments could qualify for a step-up basis, resulting in the surviving spouse or the heirs having little to no tax owing—any sale proceeds not reinvested through the 1031 exchange become taxable. Therefore, in our client’s case, the debt on the property also had to be considered.

Due to the property’s value, the local real estate market offered limited options. Additionally, the required deadlines set by the IRS made this option difficult, as local properties were not targeted before the sale. Finally, a local property would not fulfill the goal of exiting the role of landlord.

The option of investing in individual DSTs accomplished the deferral of taxes in addition to generating income from dividends. However, the selection of properties was once again challenged by the debt held on the property because specific DSTs had to be selected to cover all the equity and debt of the property. In addition, the individual DSTs are illiquid investments that the investment manager will eventually sell, forcing another 1031 exchange or the tax to become due at some future date. Finally, the individual DSTs also carried the risk of having a significant portion of the client’s net worth tied to one piece of property.

The final and preferred option was a multi-step process that resulted in the clients owning shares in a multi-billion-dollar REIT that held properties across the US and spread over various sectors and industries. This option resulted in lower dividend yields and a lack of liquidity for the first two years. However, beginning in year three, liquidity and dividend yields improved more income from the dividends, and they could partially liquidate REIT shares. The sale of the shares of the REIT would result in a portion of the deferred capital gain being realized, but the tax would be significantly lower because not all gains were realized in one year.

At AEGIS Financial, we are not swayed by product commissions or incentives. Instead, our interest is in finding the right solution to your problems. By laying out various options and educating them on the advantages and disadvantages of each option, we were able to help our clients defer a significant tax bill while providing the income to fund their retirement.

2023 Year End Considerations | Advice4Life

Provided by Michael Donnan, CLTC, FIC Wealth Manager at AEGIS Financial

As we head into 2024, it’s essential to be mindful of key figures and areas that warrant careful consideration. Navigating these financial landscapes can be intricate, but rest assured, the AEGIS team is here to provide guidance and discuss any questions you may have.

 

Things to Know:

  • Tax Day Alert: Mark your calendars for Monday, April 15th, 2024. This is the deadline for contributing to your IRA and Roth IRA for the tax year 2023.
  • Roth Contribution Limits: In 2024, the Roth contribution limits stand at $7,000 for those under 50 and $8,000 for those 50 and older.
  • Enhanced Employer-Sponsored Plans: If you have a 401(k), 403(b), or 457 plan through your employer, note that the new maximum contribution limit for 2024 is $23,000. Individuals aged 50 and above receive a higher limit of $30,500.

 

Things to Review:

  • Estate Planning Checkup: Review your estate planning documents. If they are older than 8 years, it’s advisable to consult your attorney and assess whether updates are necessary.
  • Property Ownership Consideration: If you own property in your name, consult with your attorney about the potential benefits of adding a Transfer On Death (TOD) Deed. This can streamline the property transfer to your named beneficiaries, bypassing probate.
  • Tax Efficiency Strategies: With anticipated tax rate increases in 2026, consider the advantages of Roth Conversions as a strategic financial move that can benefit both you and your heirs.
  • Charitable Giving Tactics: For individuals aged 70 ½ who donate to charities or churches, explore the benefits of utilizing a Qualified Charitable Distributions (QCDs) strategy. This approach allows you to contribute directly from your IRA, bypassing taxes. If you’re in Required Minimum Distribution (RMD) status, this tactic aids in meeting your distribution requirements without incurring taxable consequences.

As you plan for the upcoming year, these insights and reviews can contribute to a more informed and financially resilient future. The AEGIS team is ready to assist you in navigating these intricate financial considerations and give you peace of mind in your financial journey.

Understanding your Medicare plan options | Longevity Ever After

Understanding your Medicare plan options

Medicare is complex and ever-changing. Having the right Medicare plan for your individual needs is an important piece of your retirement and longevity plan. We can help.

Medicare basics

Medicare includes Part A hospital insurance and Part B medical insurance. There are two paths for filling the gaps Part A and Part B don’t cover and getting the Medicare coverage you need.

  • Part A + Part B + Part D + Medigap
  • Part A + Part B + Medicare Advantage (many Medicare Advantage plans include Part D coverage)

You have the option to add Part D prescription drug coverage and Medigap or Medicare Advantage. You are eligible for your initial enrollment in Medicare when you turn 65 and can make changes to your plan every year in the fall during open enrollment.

What isn’t covered by Medicare?

Medicare Parts A and B do not cover hearing, vision, dental, mental health, coverage abroad or long-term care needs. Hearing aids can range from $900 to $6,000, and it is estimated that a couple will spend more than $18,000 in dental services without the proper coverage. The costs add up. Traditional Medicare will not cover you if you are traveling outside the United States, and caregiving services like bathing and dressing are not covered.

The path to additional coverage and ensuring you are not financially liable for extra healthcare costs in retirement is a highly personal decision. Once enrolled, you should review your plan yearly to make sure there haven’t been any changes to your coverage. Working with a Medicare agent can help you determine the best route for your individualized needs.

A trusted resource

HealthPlanOne is a vetted resource to help you learn more about, get enrolled in or make changes to your Medicare plan. HealthPlanOne agents will walk you through your medical situation and preferred doctors and hospitals and help determine your supplemental plan options. They can also write the policy for you if you choose to move forward. Please reach out to our team, and we will set up a call with one of HealthPlanOne’s top agents.

 

Navigating Medicare Infographic, Raymond James Financial, 2019.
Raymond James is not affiliated with HealthPlanOne. Raymond James & Associates, Inc., receives a one-time referral fee from HealthPlanOne for each Medicare Advantage and Medicare Supplement application submitted.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members

Unintended Consequences of Transferring Your Home to Your Kids | Advice4Life

Are you concerned about losing your home due to a long-term care need?

One of the most significant risks as we age is long-term care. Throughout the years, we have had clients who wanted to protect their homes in the event of an extended long-term care need.

One solution often considered is transferring your home to your children. Before this is done, one needs to consider the unintended consequences and additional risks that may occur.

In the example below, we walk you through a family considering this option. The family has a home, cottage, other equipment, and investment accounts, including IRA accounts of $1,000,000.  The question of transferring the title of their home to their adult children arose.

The following are some of the unintended consequences.

  • Transferring the house does not protect their other assets. The protection of the house will only come into play after they have spent down their liquid assets, including the IRAs. Then the non-liquid assets, such as the home, cottage, equipment, vehicles, etc., will come into play.
  • In a worst-case scenario (if both parents are in a nursing home), they would be spending about $200,000 per year for their care from their investments.  They would have about five years of spending down their IRAs alone before the house would even be considered.  Since the average stay in a nursing home is three years, the transfer potentially would do nothing to protect the home.
  • The house would be subject to the liabilities of their children (bankruptcy, lawsuit, etc.).
  • If the children ran into financial difficulty or were at fault in an accident, the home could be lost even while they are living in it.
  • The house would be an asset to their children and would be included in any divorce agreement.
  • Transfer of title to the house moves the house from a tax-free asset, due to step-up in basis upon either of the parents passing, to taxable as capital gain with no step-up at deaths.
  • Scenario A – Transfer house to children.
    • House value = $500,000 (original cost, plus improvements of $250,000)
    • Husband passes – No step-up.
    • Five years later, wife passes – No step-up.
    • Children sell the house for $750,000
      1. $750,000 sale price – $250,000 basis = $500,000 realized capital gain, split between the children.
      2. Depending on their tax situation, this realized gain could be taxed between 20% and 28% between federal and state taxes.

$500,000 realized capital gain x 28% = $140,000 tax due.

  • Scenario B – No transfer of house
    • House value = $500,000 (original cost, plus improvements of $250,000)
    • Husband passes – Basis steps up to $500,000 current value.
    • Five years later, wife passes – basis steps up to FMV = $750,000.
    • Children inherit the house and sell it for $750,000
      1. $750,000 sale price – $750,000 new basis = $0 realized capital gain = $0 tax due.

Other solutions to consider: These options will effectively transfer their house while maintaining the tax benefits without incurring additional risks but will not protect the home from long-term care costs.

  • Establish a living (revokable) trust and transfer the house and other non-IRA assets into it.
  • Complete a Transfer on Death Deed naming the adult children as direct beneficiaries of the house.

If the situation warrants the transfer of one’s home, most of the above risks could be mitigated through a properly written irrevocable trust.  This option does lose the step-up in basis on the house, and therefore, it needs to be thoroughly analyzed before being implemented.

Most often, one of the best ways to protect your assets from potential long-term care costs is using an insurance option.

If you are concerned about protecting your home and other assets you have spent a lifetime obtaining, schedule a time to have one of our wealth managers provide options to avoid unintended consequences.

New Year Financial Check-Up | Advice4Life

Many of us make New Year’s resolutions to lose weight, eat healthier, exercise more, read more… This year why not make a resolution to review some overlooked areas of your financial life?

Review Retirement Savings

Contribution limits have increased for 2023 – do you need to update your deposit or payroll instructions to take advantage of the new savings limits? Will you turn 50 in 2023 and  are now eligible to make catch-up contributions?

2023 Contribution limits

  • 401(k)/403(b)/457 = $22,500 + $7,500 catch-up
  • SIMPLE IRA = $15,500 + $3,500 catch-up
  • IRA/Roth IRA = $6,500 + $1,000 catch-up
  • HSA = $3,850 Individual or $7,750 Family

Review Insurance Policies

When was the last time you reviewed your Home/Renter/Auto/Umbrella policies to ensure coverage limits are adequate? Can you afford to raise your deductibles to save on premiums? Do you qualify for any discounts (veteran, bundling policies, senior rates, good student, etc.)? Contact your agent and schedule an insurance review.

Review Budget

Inflation was the talk of 2022, and it is not going away so it may be time to review and update your household budget or consider starting one by tracking spending for 3 months using an App (Mint, Rocket Money, NerdWallet), spreadsheet, or pen & paper.  Can you save money on subscriptions you no longer need (Streaming services, online services, etc.) or making coffee at home more?

Review Savings

Is your emergency fund adequate? We recommend 3-6 months of expense in a savings or money market account.  Additional cash reserves should be working for you – consider putting excess cash in CDs, I-bonds, or other safe options to take advantage of higher interest rates.

Review Debt

Interest rates have increased over the past year, are you paying more on your debt? Could you save by consolidating debt or taking advantage of a lower balance transfer promotional rate?  Can you increase your payments and accelerate debt payoff?

Review Charitable Giving

Do you regularly or periodically give to church or charities?  Review who, what and how you give.  Is it the most tax-advantageous option available to you? Are there organizations you no longer want to give to or new causes you want to support? Review charities you support on Charity Navigator, CharityWatch or GuideStar to evaluate the organization on a number of metrics. Do you want and can you afford to give more?  Have you incorporated your charitable giving into your estate planning?

If you would like any help with these areas of your financial life or have any questions or concerns, please reach out to us here at AEGIS Financial.  We are always happy to help.

End-of-the Year Money Moves | Advice4Life

What has changed for you in 2022? This year has been as complicated as learning a new dance for some. Did you start a new job or leave a job behind? That’s one step. Did you marry? There’s another step. Did you retire? That’s practically a pirouette.

If notable changes occurred in your personal or professional life, you might want to review your finances before this year ends and 2023 begins. Proving that you have all the right moves in 2022 might put you in a better position to tango with 2023.

Even if your 2022 has been relatively uneventful, the end of the year is still an excellent time to get cracking and see where you can manage your overall personal finances.

Do you engage in tax-loss harvesting? That’s the practice of taking capital losses (selling securities worth less than what you first paid for them) to manage capital gains. If you are thinking about this move, and haven’t done so already, consider seeking some guidance from one of our wealth managers.

You could even take it a step further. Consider that you can deduct up to $3,000 of capital losses over capital gains from ordinary income. Additional capital losses above that amount can be carried forward to offset capital gains in upcoming years. 1

Do you have the opportunity to convert IRA funds to a Roth IRA?  You may benefit from converting a portion of your IRA to a ROTH if your income is down or if you have room to add income to your tax return without going into a higher tax bracket.

Are you thinking of gifting? How about donating to a qualified charity or non-profit organization before 2022 ends? Your gift may qualify as a tax deduction. You can also donate appreciated assets and receive a tax deduction without paying capital gains tax on the appreciation. If you are over 70 1/2 you can also make a Qualified Charitable Deduction (QCD) if you donate to a qualified charity directly from your IRA.

Do you want to itemize deductions? You may want to take the standard deduction for the 2022 tax year, which has risen to $12,950 for single filers and $25,900 for joint filers. If you think it might be better for you to itemize, now would be an excellent time to get the receipts and assorted paperwork together.2

While we’re on the topic of year-end moves, why not take a moment to review a portion of your estate strategy? Specifically, take a look at your beneficiary designations. If you haven’t checked them for some time, double-check that these assets are structured to go where you want them to go, should you pass away. Lastly, look at your will to ensure it remains valid and up to date.

Check on the amount you have withheld. If you discover that you have withheld too little on your W-4 form, you may need to adjust your withholding before the year ends.

What can you do before ringing in the New Year? New Year’s Eve may put you in a dancing move, eager to say goodbye to the old year and welcome 2023. Before you put on your dancing shoes, consider speaking with a financial or tax professional. Do it now rather than in February or March. Little year-end moves might help you improve your short-term and long-term financial situation.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.