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A Matter of Trust

Do you avoid looking into trusts because you think they are only for large families or the wealthy? Many people don’t give trusts due consideration because they think they are for certain groups of people. To dismiss them, however, could be a mistake.  You may miss an opportunity to accumulate and protect assets for your own financial wellbeing and for the benefit of your loved ones. We hope this brief article sheds light on whether further inquiry into trusts might be beneficial for you.  

Without planning ahead, especially by utilizing the benefits that come exclusively from creating a trust, your family could face some harsh financial realities after you are gone. They will have to pay federal and state taxes on your assets.  This could dilute your legacy more than you realize or intend. Your assets will also become open to public scrutiny through the probate process. 
Trusts can alleviate both these concerns. 

The Basics

A trust is a legal entity that holds assets to benefit a third party.  The assets held in a trust pass to your beneficiaries free of estate taxes.  A trust could also help you shelter assets from creditors and allows you to continue to maintain influence over the distribution of your assets after death. 

Unlike Wills, trusts do not go through probate, a public legal process that typically takes time and costs money (e.g., legal fees).  With a trust, your private financial matters stay private, and your assets go directly where you provided.

A trust involves a grantor (you), a trustee and beneficiaries.  As grantor, you determine the provisions of the trust.  You also provide the assets and name your beneficiaries.  Beneficiaries don’t have to be family members.  You can name individuals or groups, such as church, charities or colleges, as beneficiaries.

A critical step in the process is determining who will carry out your wishes.  This person serves as trustee and manages the assets in the interests of your beneficiaries.   It can be a relative or friend, but many people have a professional trustee act as either sole or co-Trustee with a family member.

After death, the trust distributes your assets according to your wishes.  For example, the trust could distribute your assets immediately at your death to your beneficiaries.  Alternatively, the trust could continue to invest and monitor your assets until your spouse dies or until your children reach a certain age, or they could remain in the trust for future generations.  Another option involves distribution of just the income generated by trust investments.  

The Specifics

Trusts are intentionally flexible to meet individual objectives.  They typically serve as a key element in a comprehensive estate and wealth transfer plan or otherwise to direct the management and distribution of your legacy.  They can also be created to accomplish specific goals and can be combined to address the needs of multiple families and generations.  For example, if you have a loved one with special needs a Special Needs Trust can ensure they receive proper care after you die.  Likewise, a Charitable Remainder Trust could transfer some or part of assets to the charity of your choice.  

A Trust can also provide asset management, estate planning consultation and tax services, like investment oversight, financial reporting, asset disbursements and bill payment.  If you are your family’s CFO, these services may be of great value to your family when you die. 

Is a Trust Right for You? 

If you want the lion’s share of your legacy to pass to your loved ones and not the government, then you may want to consider establishing a trust.  You should also consider a trust if you know how you want your legacy managed, preserved, and distributed.

United Capital

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Do Women Invest Differently Than Men?

It’s a popular pastime to identify the differences between men and women. There are many generalities – some could even be accurate, and some just misconceptions. So, when it comes to money and investing, are women really that different from men?  Actually, the research shows that women and men do differ in a variety of ways when it comes to financial decision-making and investing.

For example, bankrate.com reports that “Men are more self-directed learners, using the Internet more than women. Women rely more on personal networks with friends, family (and) financial planners, and (they) take a networking approach to gathering information.” And dailyfinance.com reports, “Multiple studies have shown that female investors tend to be more risk-averse than their male counterparts. Because of this, women consistently do more research than men before making an initial buy, trade less frequently, and hold longer.”

We have seen through the years that women may benefit greatly from having a safe place to talk about their Money Mind® and their financial concerns. Many times a woman cares about family or giving back, and an adviser who wants to talk only about “a retirement number” isn’t really listening to her needs.

In other cases, a woman may be asked to set her goals and objectives for the long term, but without a guide to talk about what matters – really matters – this can be hard to do. Many women have not been taught that there are many different emotions and responses around money, and that all of them are legitimate and need to be considered when making financial decisions.

This isn’t because women need to be coddled and made to feel good. It’s because no one can make a solid financial decision for the short-term, or for their future, without knowing how they feel and what matters to them about their money. Money is a means to an end. Defining the “end”– and the beginning, and the middle –is so important.

Because the financial industry can be complex and unpredictable, we believe that helping individuals feel good about taking action is key. Women often want to connect – with others and with information. Understanding the connections, and the implications, of the decisions you make can offer better overall results toward life goals – and the confidence to go with it.

Here’s an interesting twist on the differences between men and women –The Wall Street Journal reported, in 2009, “Finance professors Brad Barber and Terrance Odean have found that women’s risk-adjusted returns beat those of men by an average of about one percentage point annually. In short, women trade less frequently, hold less volatile portfolios and expect lower returns than men do.”

Women might inherently be better investors, even though the perception is that they don’t understand financial complexities as well as men. We like to think that we can put this natural proclivity to making good decisions together with insight and awareness that many investors never have.

Information, insight and awareness – we believe those combine to give women investors the power to own their financial decisions.

United Capital

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Hidden Costs that Could Sabotage Your Long-Term Financial Picture

Many retirees are now looking back at their dwindled nest eggs wondering what happened.  They may have thought that they had enough to live out their retirement the way they imagined, but as life unfolded, they realize that retirement is much more costly than they anticipated. 

Here are some of the hidden costs that could potentially sabotage your long-term financial picture.

Unexpected life events.  Nine out of ten people surveyed reported at least one setback that had a negative impact on their retirement savings.  Setbacks vary from suddenly having to care for an adult child; college expenses that last six years instead of four; loss of a job; assisted living expenses; to disappointing stock performance.  Survey respondent’s indicated that unexpected life events cost their retirement accounts on average $117,000. [1]

Wear and tear.  When projecting future costs, many people overlook the fact that the contents of their home will need repair or replacement at some point.  Appliances, rugs, furnaces and roofs – they all have costs associated with their upkeep. In the same survey mentioned above, home repairs (17%) and out-of-pocket bills (11%) were both cited as reasons their long-term savings were not what they expected.

Health care expenses. Health care costs are rising at an alarming rate.  According to the Employee Benefit Research Institute, retirees will need approximately $635,000 (per couple over age 65) to cover healthcare costs in retirement.  This amount gives retired couples a 90% chance of having enough money to pay health expenses beyond what Medicare covers.

Upgrades. New technology comes out at a dizzying rate, and the cost to our pocketbooks is enormous. Our parents probably bought a new phone twice in twenty years.  Now, it’s not uncommon to upgrade to a new mobile device every year or two just to keep up with the latest innovations.  In addition to a shrinking technology upgrade cycle, products that will be invented in the future designed to solve needs we don’t even know we have, will cost us dearly.

Inflation.  Historically low levels have made inflation somewhat of a silent killer to many retirement accounts.  Even at low rates, inflation can have a devastating impact on wealth over time, particularly when not offset by investment gains.

Taxes. Many people forget to factor in all forms of taxes when projecting future expenses.  They may include federal income taxes, but overlook state income tax, local income tax, property tax, sales tax and Medicare tax. 

Impulse for improvement.  No matter how good we have it, it is natural to want more.  We quickly forget our needs once they are met and move on to the discovery of a need not yet met.  This urge doesn’t retire once we stop working.

Hidden Costs

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