December 2022 – Experience a Richer Way to Wealth

Posted on December 27, 2022 by admin

This week, before the year ends, consider these 5 financial, retirement, and tax actions you may need to take before it’s either too late or very costly for your family. If you have living parents in their 70s, make sure you cover these considerations with them this week…

01 – Review Your Investments to Harvest Losses This Year

If you have investments in a taxable account (including cryptocurrency investments), you may want to consider selling off any losers to offset any gains you’ve made. Selling losses can help reduce your tax liability for the year, if you have any capital gains, and then you can carry forward investment losses to offset capital gains in the future.

If you’re sitting with cryptocurrency losses that you haven’t recognized yet because you haven’t sold your cryptocurrency due to wanting to stay in the market for when crypto goes back up, you can have the best of both worlds. Sell your cryptocurrency now before the end of the year, and because the “wash sales” rules don’t apply to crypto tokens, you can buy the exact same tokens right back. In contrast, with non-crypto investments, you’d have to wait 30 days to buy back into the same investment, in order to harvest non-crypto losses.

Once the year 2022 ends, you can no longer harvest losses to offset against 2022 capital gains.

02 – Contribute to a Retirement Account

If you haven’t yet reached your retirement account contribution limits for the year, you may want to consider contributing to a retirement account such as a 401(k) or traditional IRA.

Here are the contribution limits for 2022:

401(k), 403(b), and most other defined contribution plans: $19,500
Traditional and Roth IRAs: $6,000 (plus an additional $1,000 catch-up contribution for those age 50 or older)
SIMPLE IRA: $13,500 (plus an additional $3,000 catch-up contribution for those age 50 or older)
SEP IRA: 25% of salary, up to a maximum of $58,000

03 – Required minimum distributions (RMD) and qualified charitable distributions (QCD)

If you have a traditional IRA and you (or your parents) are age 73 or older, you (or they) need to take an RMD for 2022 by the end of the year.

If you’re 72 in 2022, you have until April 1, 2023 to take your first RMD. Failing to take an RMD can result in a penalty of 50%. If you don’t need the income, consider converting your RMD into a qualified charitable distribution (QCD), which is a tax-free transfer directly from your IRA to a charity of your choice, up to $100,000 per year.

You must take RMDs or make a qualified charitable distribution by December 31, 2022, or you’ll pay the 50% penalty. Don’t miss this one.

04 – Inherited IRA Required Minimum Distributions

If you inherited an IRA prior to the SECURE Act or if you’re an eligible designated beneficiary who inherited in 2020 or 2021, you’ll need to take an RMD for this year. In addition, if you inherited an IRA this year, and the family member who left you that IRA didn’t take a required minimum distribution, you’ll need to take a year of death RMD this year, before the end of the year.

Note: The IRS has waived the 50% penalty for 2022 RMDs that aren’t taken when a beneficiary is subject to the 10-year payout rule under the SECURE Act due to confusion surrounding this new rule.

If you’ve an inherited IRA and you don’t have a financial advisor, contact us to ask for our best recommendation for support.

05 – ROTH IRA Conversion

If you’re considering converting to a Roth IRA, now may be a good time to do so, as tax rates are currently low and markets have come down from their previous highs. You’ll need to act quickly, as the deadline for converting for 2022 is December 31.

This article is a service of Brittany Cohen, Personal Family Lawyer. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, during which you’ll get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge

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Posted on December 19, 2022 by admin

The environmental costs of death are significant and constantly rising. With 8 billion people on the planet right now—all of whom have bodies that die and must be disposed of—we need to start seriously considering alternatives to traditional options for burial and cremation. Fortunately, more and more “green” options are being developed to reduce these costs, and this article looks at some of the latest innovations.

In most conventional burials, the body is pumped with toxic embalming fluid, placed in a steel casket, and buried within a cement-lined vault six-feet underground. According to the Green Burial Council, burials in the U.S. go through roughly 77,000 trees, 100,000 tons of steel, 1.5 million tons of concrete, and 4.3 million gallons of embalming fluid each year.

Although cremation is touted as more eco-friendly than burial, it still comes with serious environmental risks. In fact, cremating a single body uses about the same amount of gas as a 500-mile road trip, according to the Natural Death Center. Cremation also releases some 250 lbs. of carbon dioxide into the atmosphere, roughly the same amount an average American home produces in a week.

A return to nature

With the death rate expected to spike as Baby Boomers age, the funeral industry is poised to cause even more damage. While green funerals are a recent trend, natural burials were the norm until the Civil War, which coincided with the rise of the industrial age, embalming, and the modern funeral director business.

Today, natural burials are making a comeback. Green funerals are designed to not only be more environmentally friendly, but also less expensive overall than conventional burial or cremation. If you want to make your last act on this planet less harmful to the ecosystem, here are 6 green funeral options, along with the best way to include your final wishes in your estate plan.

01 – Green burial

Founded in 2005, the nonprofit Green Burial Council (GBC) establishes environmental standards for green cemeteries, funeral professionals, and funeral-product manufacturers. According to the GBC, a green burial must meet three general criteria:

The body cannot be embalmed.
The body must be buried without a cement or metal vault or grave liner.
Only biodegradable burial containers and shrouds may be used.

In green cemeteries, graves are typically marked by GPS or with a simple stone or tree, instead of headstones, metal plaques, and other ornate markers. The grounds are often planted with native species, forgoing pesticides and mechanical landscaping. The graves are shallower than conventional plots, exposing the body to more natural organisms to speed decomposition.

Green caskets are constructed from biodegradable materials, such as untreated wood, bamboo, wicker, or cardboard. Burial shrouds should be non-bleached, undyed, and made of natural fabrics like cotton, linen, silk, wool, or hemp. To find funeral providers in your area that offer green burial, use the GBC’s list of approved companies.

02 – Aquamation

Without the need for embalming, caskets, or burial vaults, cremation is considered less harmful to the environment than burial. However, a new water-based method—aquamation—promises an even greener alternative. Also called “resomation” or “flameless cremation,” the method involves a chemical process in which lye, superheated water, and pressure dissolve the body, rather than burning fossil fuels. The ashes produced by aquamation can be scattered or placed in a biodegradable urn for burial.

03 – Mushroom burial suits

One of the latest innovations in green funerals are special burial shrouds containing mushroom spores sewn into the fabric. The suit fits like long-john pajamas, and the mushrooms facilitate decomposition. In addition to absorbing and purifying toxins released by the body, the fungi delivers nutrients to the soil to encourage plant growth. When he died of a stroke at the age of 52, TV and film star Luke Perry was reportedly buried in a mushroom burial suit.

04 – Eternal reefs

Eternal Reefs combine ashes from cremated remains with environmentally friendly concrete to create an artificial reef. Submerged on the ocean floor, these hollow “reef balls” create new habitats for coral, fish, and other marine life. Marked by GPS, your loved ones are encouraged to visit these living memorials by boat, snorkeling, or scuba diving. The company currently has locations in the waters off the following states: Florida, New York, North Carolina, Texas, South Carolina, Maryland, and New Jersey.

05 – Become a tree

If you aren’t near the water, but still want to leave a living memorial of yourself, a tree burial might be an attractive alternative. The startup Transcend plans to open forest-based cemeteries across the U.S., where rows of trees, rather than headstones, mark the graves. Here’s how it works: the body is wrapped in a biodegradable, linen shroud and placed in a shallow grave that’s lined with wood chips or hay. Then, a mixture of soil, wood chips, and fungi is used to fill the grave, and a young tree is planted on top. As the body decomposes, it provides nourishment to feed the tree.

Additionally, Transcend has partnered with the nonprofit One Tree Planted, which specializes in planting trees around the world. For every tree burial reserved, Transcend promises to plant an additional 1,000 trees right away. The company expects to launch their first tree burials in 2023. Visit their website to learn more, including how the company plans to ensure your tree will be well-maintained for years to come.

06 – Human composting

Another way your death can create new life is by having your remains composted. Known as “human composting” or “recomposting,” the process is similar to composting used to fertilize gardens and farms. The body is first placed in a steel cylinder filled with wood chips, straw, and alfalfa, along with bacteria designed to break down organic matter.

After roughly a month, your body is transformed into what basically amounts to soil. The end product can either be returned to your family or used to revitalize local conservation areas. Developed in 2020 by the Seattle-based company Recompose, human composting is currently legal in five states: California, Washington, Oregon, Colorado, and Vermont, with legislation pending in Hawaii and Delaware.

Put Your Final Wishes In Your Estate Plan

Regardless of the method you select, it’s critical to include your desires, plans, and the money to pay for disposal of your body in your estate plan. While green funerals are typically less expensive than traditional burial and cremation, they can still cost thousands of dollars. To avoid burdening your loved ones, at the very least, your plan should include enough money to pay for your funeral and legally name the person you want to carry out your desired wishes.

Moreover, it’s typically not a good idea to leave money for your funeral in your will. Any money left in your will won’t be accessible to your family until your estate goes through the court process of probate, which can last months or even years. Since many funeral providers require full payment upfront, if you leave funds in your will, your loved ones will likely be stuck with the bill.

To avoid the necessity for probate, we often advise our clients to leave money and directions for their immediate post-death wishes in a revocable living trust. A living trust doesn’t require probate, so the money for your funeral would be available to your loved ones right away. In the terms of your living trust, you can specify how you want your funeral carried out, and the person you designate as trustee is legally bound to use the funds in the exact manner the terms stipulate. This can be especially important for green funerals, which might not be something your loved ones would choose if left to plan things on their own.

Finally, you can change the terms of your living trust at any point during your lifetime, and with new alternatives being developed all the time, this flexibility would allow you to use the very latest innovations in green funerals. If you’re interested in creating a trust to cover your funeral expenses, meet with us to discuss the options.

Help Your Loved Ones And The Planet

With proper planning, you can ensure that your death is not only significantly easier and less expensive for your family, but that it also has the most beneficial impact on the environment. We’ll work with you to prepare an estate plan that includes enough funding to have your funeral handled in the exact manner you desire—without forcing your family to pay for it. Contact us today to learn more

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Posted on December 12, 2022 by admin

Whether it’s called “The Great Wealth Transfer,” “The Silver Tsunami,” or some other catchy sounding name, it’s a fact that a tremendous amount of wealth will pass from Baby Boomers to younger generations in the next few decades. In fact, it’s said to be the largest transfer of intergenerational wealth in history.

Because no one knows exactly how long aging Boomers will live or how much money they’ll spend before they pass on, it’s impossible to accurately predict just how much wealth will be transferred. However, studies suggest it’s somewhere between $30 and $90 trillion. Yes, that’s “trillion” with a “t.”

A blessing or a curse?

While most are talking about the many benefits the wealth transfer might have for younger generations and the economy, fewer are talking about the potential negative ramifications. Yet there’s plenty of evidence suggesting that many people, especially younger generations, are woefully unprepared to handle such an inheritance.

In fact, an Ohio State University study found that one third of people who received an inheritance had a negative savings within two years of getting the money. Another study by The Williams Group found that intergenerational wealth transfers often become a source of tension and conflict among family members, and 70% of such transfers fail by the time they reach the second generation.

Regardless of whether you’ll be the one passing on wealth or inheriting it, you must have a well-prepared estate plan in place to prevent the potentially disastrous losses and other negative outcomes such transfers can lead to. Without proper planning, the money and other assets that get passed on can easily become more of a curse than a blessing for you and your loved ones.

Proactive planning is the key

There are a number of proactive measures you can take to help reduce the risks posed by the coming wealth transfer. Beyond putting in place a comprehensive estate plan that’s regularly updated, openly discussing your values and legacy with your loved ones can be a key way to ensure your estate planning strategies work exactly as you intend. Here’s what we suggest:

01 – Create your own estate plan

If you haven’t created your own estate plan yet—and far too many of you haven’t—it’s essential that you put a plan in place as soon as possible. It doesn’t matter how young you are, how much wealth you have, or if you have any children yet—all adults over age 18 should have some basic estate planning vehicles in place. If you have yet to get your estate plan started, meet with us to get this crucial first step handled.

From there, be sure to regularly update your plan on an annual basis and immediately after major life events like marriage, births, deaths, inheritances, and divorce. Unlike traditional estate planning professionals, when you work with us, we maintain a relationship with you long after your initial estate planning documents are signed.

Our Life & Legacy Planning Process features proprietary systems designed to ensure your estate plan is regularly reviewed and updated over your lifetime, so you don’t need to worry about overlooking anything, as your family, the law, and your assets change over time. Be sure to ask about these systems during your visit.

02 – Talk about wealth with your family early and often

Don’t put off talking about wealth with your family until you’re in retirement or nearing death. As soon as possible, clearly communicate with your children, grandchildren, and other heirs what wealth means to you and how you’d like them to use the assets they inherit. Make such discussions a regular event, so you can address different aspects of wealth with your family as the younger generations grow and mature.

With everyone gathered under one roof for the holiday season, right now is the ideal time to have this discussion. If you feel anxious or uncomfortable talking about wealth with your family, reach out to us and ask for our help. As we covered in our previous article on how a recession can affect your family, we have processes and systems specifically designed to support you in having these delicate conversations, with far more ease than you trying to do everything on your own. We can even facilitate these discussions with your loved ones, if that’s something you are interested in.

When you do have the conversation with your loved ones, focus the discussion on the values you want to instill, rather than what and how much they can expect to inherit. Let them know what values are most important to you, and try to mirror those values in your family life as much as possible. Whether it’s saving money, charitable giving, or community service, having your loved ones see you live your most important values is often the best way to ensure they carry those values on once you’re no longer around.

03 – Discuss your wealth’s purpose

Outside of clearly communicating your values, you should also discuss the specific purpose you want your wealth to serve in your loved ones’ lives. You worked hard to build your family wealth, so you’ve more than earned the right to stipulate how it gets used and managed when you’re gone. While you can add specific terms and conditions for your wealth’s future use in estate planning vehicles like trusts, don’t make your loved ones wait until you’re dead to learn how you want their inheritance used.

If you want your wealth to be used to fund your children’s college education, provide the down payment on their first home, or invest for their retirement, tell them so. By discussing how you would like to see their inheritance used while you’re still around, you can make certain your loved ones know why you made the estate planning decisions you did. Having these conversations now can greatly reduce future conflict and confusion among your family about what your true wishes really are when you’re no longer able to explain your wishes.

A Trusted, Lifelong Guide For You And Your Family

No matter how much, or how little, wealth you plan to pass on—or stand to inherit—it’s critical you take action now to make sure that wealth is secure and offers the maximum benefit to your family. Our Life & Legacy Planning Process is designed to ensure the wealth that’s transferred is not only protected, but that it’s used by your loved ones in the very best way possible.

Moreover, every estate plan we create features a built-in legacy planning process, which ensures you can communicate your most treasured values, lessons, and life stories to those you leave behind. That’s why we call our services Life & Legacy Planning, not just estate planning. These intangible assets form the foundation of your family legacy, and they’re often what we value most of all when it comes to our inheritance. Unfortunately, most estate planning lawyers focus little, if any, attention on such assets.

But we aren’t like most estate planning lawyers.

We’ll serve as your trusted, lifelong guide to ensure you make a lifetime of wise, forward-thinking choices for yourself and those you love most. We’ll offer your loved ones the support they need to make the most important legal and financial decisions when you’re no longer there to guide them. With our expert, caring counsel, you can rest easy knowing the coming wealth transfer will offer you and your loved ones the most benefit possible, with the least amount of risk. Schedule your visit with us to get your Life & Legacy Plan started today.

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Posted on December 5, 2022December 5, 2022 by admin

Although the end of the year can be a hectic time, it’s also the deadline for your family to implement a number of key tax-savings strategies. By taking action now, you can significantly reduce your tax bill due in April, but with just a few weeks left in 2022, you better act fast.

While there are dozens of potential tax breaks you may qualify for, here are 4 of the leading moves you can make to save big on your 2022 tax return. However, there may be other opportunities for saving, so meet with us to make certain you haven’t missed a single one.

01 – Maximize retirement account contributions

By maximizing your contributions to tax-deferred retirement accounts, such as IRAs and 401(k)s, you can not only save for retirement, but also reduce your taxable income for 2022.

In 2022, you can contribute up to $6,000 to an IRA and up to $20,500 to a 401(k) if you’re under 50, and up to $7,000 to an IRA and $27,000 to a 401(k) for those 50 and older. If you don’t have the cash available to fund the maximum amount, try to contribute at least any amount that will be matched by your employer, since that’s basically free money, and you lose it if you don’t use it.

The ability to deduct your traditional IRA contributions from your taxes comes with certain limitations. These limitations are based on factors, such as whether or not you or your spouse is covered by a retirement plan at work and your adjusted gross income (AGI), so make sure you know how your family is affected by these limits when taking deductions. On the other hand, Roth IRA contributions are not tax deductible, since they’re made after taxes are taken out, but withdrawals from a Roth in retirement are tax-free.

Additionally, consider maxing out contributions to your Health Savings Account (HSA). Contributions to HSAs for 2022 are capped at $3,650 for individuals and $7,300 for families, with an additional catch-up contribution of $1,000 allowed for those age 55 and older.

You have until December 31, 2022 to contribute to a 401(k) plan and until April 18, 2023 to contribute to an IRA or HSA for the 2022 tax year.

02 – Defer income if you’ll make less next year

If you’re expecting to make significantly more income this year than in 2023, try to defer as much income into next year as possible. However, this strategy only makes sense if you’ll be in the same or a lower tax bracket next year.

This might mean asking your boss to delay paying a year-end bonus until after Jan. 1, 2023, or if you’re self-employed, waiting to invoice certain clients until the new year. On the other hand, if you think you’ll be in a higher tax bracket in 2023, you may want to do the opposite and accelerate income into 2022 to take advantage of a lower tax bracket.

Meet with us to find out what’s best for your situation.

03 – Use “loss harvesting” to offset capital gains

With the stock and crypto markets down this year, it can be the ideal time to use a strategy called “loss harvesting,” which means selling taxable investment assets, such as stocks, mutual funds, and bonds, at a loss to offset any capital gains you may have realized earlier in the year. Capital losses offset capital gains dollar for dollar.

If your losses exceed your gains, you can write off up to $3,000 of collective losses against other income. Any losses in excess of $3,000 can be carried over into the next year. In fact, you can carry over such losses year after year over your lifetime.

Note that the loss harvesting strategy does not apply to tax-advantaged accounts, such as 401(k)s, IRAs, and 529 plans. Additionally, the IRS “wash-sale” rule prohibits using this tax write-off for buying a “substantially identical” asset within a 30-day window before or after the sale that generated the loss.

Given the restrictions, you should always consult your CPA or financial advisor before employing loss harvesting to ensure it doesn’t backfire on you.

04 – Watch your required minimum distributions (RMDs)—or ensure your parents are watching theirs—if you or they are over age 72

If you have an employer-sponsored retirement plan, including a 401(k), 403(b), traditional IRA, SEP IRA, or SIMPLE IRA, you must start taking required minimum distributions (RMDs) by April 1st of the year that follows the year you turn 72. After that, annual withdrawals must be made by December 31st each year to avoid a serious penalty.

If you fail to take the proper RMD, you may face a 50% excise tax on the amount you should have withdrawn based on your age, life expectancy, and your account balance at the beginning of the year. If you do make a mistake, you may be able to avoid the penalty by requesting a waiver from the IRS. You can request a waiver if your failure to take the RMD is due to a reasonable error, and you take steps to make the required distribution. To request a waiver, submit Form 5329 to the IRS, with a statement explaining the error and the steps you’re taking to correct it.

Note that in 2022 the IRS updated its uniform lifetime table to calculate RMDs to account for longer life expectancies. As a result, your RMDs for this year may be slightly lower compared to previous years. To determine your RMD, refer to the IRS RMD worksheet, or use an RMD calculator.

Maximize Your 2022 Tax Savings

Implementing these—and other—year-end tax-saving strategies could save your family thousands of dollars on your 2022 tax bill. But if you don’t act soon, some of these opportunities may vanish for good, so meet with us today to schedule your appointment and lock in your savings

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