Category: Wisdoms

  • How Much Money Do I Need?

    The “million dollar” question many of those preparing for retirement ask themselves is simply stated but not necessarily easy to answer — “how much money do I need to save to secure a comfortable retirement?” In some circles, this is referred to as “the number” — that magical figure that tells pre-retirees how prepared they may be.

    A recent survey from Ameriprise Financial found that working Americans ages 50–70 with at least $100,000 in investable assets estimated that what’s needed to comfortably retire, on average, was $930,000.

    But what does that number really mean? How important is it? What assumptions must you make to arrive at a number — and how many rapidly changing factors impact your number? Preparing for retirement is about much more than arriving at a number, but some calculation is necessary.

    Calculate Your Retirement Expenses

    When determining how much you’ll need to save, it’s helpful to think in terms of how much income you’ll need to withdraw to cover expenses. But projecting future spending is an inexact science. Some expenses might go away (mortgage, FICA taxes, retirement plan contributions), but you may also have more time and energy to spend money on things you need and want to do. However, medical expenses could greatly increase too.

    Essential Expenses

    These are the required costs associated with daily living — food, shelter, utilities, transportation, insurance (health, life, long-term care) and taxes — that most likely will persist in retirement.

    Lifestyle Expenses

    This is the “fun” part of retirement — interests that you want to pursue such as golfing, travel, owning a vacation property or starting a business. To make these lifestyle choices a reality, enough money needs to be in place to finance them. Though separating out lifestyle expenses from required expenses can help you prioritize, using funds from your nest egg too quickly can jeopardize your long-term financial security. Spending on lifestyle needs can be adjusted as needed throughout retirement, as these are considered discretionary expenses.

    Your remaining available assets can be used to fund lifestyle expenses. You may choose to invest this money more actively with a strategy of drawing down assets over time using a sustainable withdrawal rate.

    A true number may be elusive, but using this process, you may have a better sense of what your ultimate savings goal is. It may be useful to set multiple goals — or “numbers” — to reach enough to cover essential expenses and then lifestyle expenses. Beyond these goals, you might also consider the amount you’ll need to cover unexpected expenses in retirement and to leave a legacy.

    Planning financially for retirement can be complex as you near retirement: taking appropriate steps to calculate income needs in an evolving economic and political environment can become more complicated. Consider working with a financial professional who can help you work toward your short- and long-term goals.

     

    Michael W. K. Yee at (808) 952-1222 ext. 1240

    Michael W K Yee, CFP®, CFS®, CRPC®, is a Financial Advisor and CERTIFIED FINANCIAL PLANNER practitioner™ with Ameriprise Financial Services, Inc. in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 25 years. To contact him, michael.w.yee@ampf.com, 808.952.1222 ext 1240, 1585 Kapiolani Blvd., Suite 1100 Honolulu, Hawai‘i 96814.
    Advisor is licensed/registered to do business with U.S. residents only in the states of Honolulu, Hawai‘i.
    1 The Money Across Generations IISM study was commissioned by Ameriprise Financial, Inc. and conducted by telephone by GfK in December 2011 among 1,006 affluent baby boomers (those with $100,000 or more in investable assets); 300 parents of baby boomers; and 300 children of baby boomers at least 18 years old. The margin of error is +/- three percentage points for the affluent boomers segment and +/- six percentage points for the parents and children of boomers segments.
    2 United States Department of Labor, Wage and Hour Division, Family and Medical Leave Act http://www.dol.gov/whd/fmla/
    Ameriprise Financial and its representatives do not provide tax or legal advice. Consult with your tax advisor or attorney regarding specific tax issues.
    Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC.
    ©2012 Ameriprise Financial, Inc. All rights reserved.

    The “million dollar” question many of those preparing for retirement ask themselves is simply stated but not necessarily easy to answer — “how much money do I need to save to secure a comfortable retirement?” In some circles, this is referred to as “the number” — that magical figure that tells pre-retirees how prepared they may be. A recent…

  • Your Favorite Charity in Your Estate Plan

    Charitable giving can be complicated, especially when it moves beyond cash or writing a check. A recent Forbes article provides some advice you may not have considered. The article is titled “Five Ways To Be Charitable Even If You Aren’t Bill Gates.” Take heart in knowing that even if you’re not Bill Gates, the “five ways” do not require the complexities of his estate plan.

    Here are the Forbes tips (with some commentary by yours truly) for your consideration:

    • Give the gift of education and medical care. Have you thought about giving your children or grandchildren in the form of a 529 college savings plan or a direct gift to the college? Gifts by way of 529 plans use up your annual gift tax exclusion (which is $14,000 per recipient per year as of 2013), but they are a wonderful way to benefit your loved ones. You can also pay tuition directly to a private school or college and not have to treat that payment as a gift for gift tax purposes. A similar exclusion applies to payments made directly to doctors, dentists, orthodontists or other medical care providers. These latter kinds of gifts are called “qualified transfers” and are worth discussing with your financial and estate planning advisors.
    • Give your IRS distribution to charity. Since you have to take your required minimum distribution anyhow, send it directly to a charity instead. This is a no-brainer if you are taking RMDs from your traditional IRA and are also charitably inclined. You won’t get a deduction, but you won’t have to take the charitable gift into income either. The net result is a win for you and your favorite charity. This strategy may have a limited shelf life, as it is set to expire at the end of 2013. Hopefully, Congress will make it permanent at some point.
    • Name your charity as your beneficiary on your retirement account. This option is appropriate if you’ve decided that left over retirement funds should pass to charity instead of loved ones. Be sure to designate your charitable beneficiaries accordingly! Note: The full amount of your retirement account given to charity is income tax free. If left to a non-charity, then the full amount is taxable as ordinary income, AND your retirement account is includible in your estate for estate tax purposes. If you are charitably inclined and have substantial retirement plan assets, this is an opportunity to avoid some double taxation (income tax+estate tax).
    • Donor-advised funds. By giving to a donor advised fund, you can give today, take the charitable deduction in this year’s taxes, but decide which charities to benefit next year or beyond. They are easy to establish too. In Hawai‘i, you can work with the Hawai‘i Christian Foundation or the Hawai‘i Community Foundation.
    • Charitable gift annuity. Are you keen on the idea of receiving a guaranteed lifetime monthly income, especially as an assurance in old age? If you also want to benefit charity, then consider hitting two birds with one stone by opting for a charitable gift annuity. Not every charity will do this for you, but it’s worth asking if your favorite ones will. One Hawai‘i charity that will offer charitable gift annuities is the YMCA of Honolulu.

    This is just an overview of the “five ways” featured by Forbes, so be sure to consult with your financial, tax and legal advisors regarding the appropriateness of each for your circumstances.

    Another important point to remember is that paying estate tax (the tax on owning stuff when you die) is 100% optional. You can give your loved ones a decent inheritance, benefit one or more charities for a term of years, and then have whatever is left of your estate go to your descendants. This is a very powerful technique, called a Charitable Lead Trust. Again, talk with your trusted advisors about whether this might make sense for you and your ohana.

    Scott Makuakane, Attorney at Law

    Specializing in estate planning and trust law.

    www.est8planning.com
    O‘ahu: 808-587-8227, Maui: 808-891-8881
    Email: maku@est8planning.com

    Charitable giving can be complicated, especially when it moves beyond cash or writing a check. A recent Forbes article provides some advice you may not have considered. The article is titled “Five Ways To Be Charitable Even If You Aren’t Bill Gates.” Take heart in knowing that even if you’re not Bill Gates, the “five…

  • BBB: Volunteering: Keep Yourself Active

    For the past 50 years, May has been a month to appreciate and celebrate the vitality and aspirations of older Americans and their contributions to our communities. Many seniors are productive, active, and influential members of society, sharing essential talents, as well as passing on wisdom, and life experience with their families, friends, and neighbors.

    With busy lives, it can be hard to find time to volunteer. However, the benefits are enormous to you, your family, and your community. The right match can help you find friends, reach out to the community and even learn new skills.

    Volunteers are often the glue that holds a community together. It allows you to connect to your community and make it a better place. However, volunteering is a two-way street. Dedicating your time expands your network and can help you maintain a healthy lifestyle.

    Hawai‘i’s BBB recommends taking the four following steps to make sure your time and energy are put to great use as a volunteer:

    1. Identify your skills. Volunteering opportunities are available for any skill level. Consider what you’re good at and what services you’d be particularly well-equipped to provide. From stuffing envelopes to construction, to providing pro bono legal advice, you can find a good fit regardless of your education or talents.
    2. Consider your passions. Maximize your enthusiasm for volunteering by finding an issue that resonates with your own personal passions. If you’re a runner, consider a marathon fundraiser. If you like history, look for opportunities to help out at an archeological dig. By identifying your passions, you’re more likely to stay engaged with the charity and be a more effective volunteer.
    3. Determine your availability. Make a realistic estimate of how much time you’re willing to give. Maybe it’s just a weekend of picking up trash at a park, a week of building schools in a foreign country or maybe you’re willing to make a long-term commitment to tutor someone to read. It’s better to volunteer the amount of time you can reasonably handle, rather than drop out in the middle of a longer commitment.
    4. Research the charity thoroughly. Just as you would before making a cash donation, research the charity fully before you volunteer to make sure the organization has a commitment to standards and accountability. You can contact Hawai‘i’s BBB to hear or get news on local and national BBB charity reviews.

     

    Better Business Bureau, Hawai‘i
    808-536-6956 | 877-222-6551 Neighbor Islands

    www.hawaii.bbb.org

    Better Business Bureau - Generations Magazine - April-May 2013

    For the past 50 years, May has been a month to appreciate and celebrate the vitality and aspirations of older Americans and their contributions to our communities. Many seniors are productive, active, and influential members of society, sharing essential talents, as well as passing on wisdom, and life experience with their families, friends, and neighbors.…

  • Time for a Meeting

    Many people think that when they retire they would be able to travel, or sit and read a book worry-free. Sadly, many also express that their experience during retirement is not at all that way. Some are caring for spouse’s who have dementia or other mental or physical challenges. Some are fearful that they do not have enough money to last their lifetime. Others face their own mental and/or physical challenges as well.

    These challenges can turn into crisis rapidly in all areas of life, including mental, physical, legal, economic, social and spiritual.

    Successfully managing these myriad of issues requires family members and their advisors to unify their efforts together in a holistic approach synergistically to ensure that our elders remain safe, healthy and as independent as possible, preserving their dignity for the duration of their life.

    For this purpose, engage in a family meeting with all family members, fiduciaries and the financial advisor so that everyone gains an understanding of the estate plan and the underlying intent and wish of the maker of the plan. Not only can this provide for a meaningful discussion, a “circle of trust” can be established to provide protection from anyone outside of this circle attempting to take advantage of our elders.

    Stephen B. Yim, Attorney at Law | 2054 S. Beretania St., Hon. | (808) 524-0251 | stephenyimestateplanning.com

    Many people think that when they retire they would be able to travel, or sit and read a book worry-free. Sadly, many also express that their experience during retirement is not at all that way. Some are caring for spouse’s who have dementia or other mental or physical challenges. Some are fearful that they do…

  • Caring for Aging Parents: Don’t Wing It

    As the parents of boomers age, more family members are managing eldercare responsibilities. Healthcare and finances aren’t easy topics for many families to broach. In fact, research from the Money Across Generations IISM study shows that 36 percent of boomers’ parents feel that talking about healthcare with family will likely or very likely create tension or spark an argument.1

    This is where a long-term financial plan comes into play. Your plan should support your financial goals and help to care for your parents needs, especially when there are unexpected expenses and emotions involved.

    To get started:

    • Talk about finances now. While it may be uncomfortable to discuss finances, it’s essential that you’re familiar with your parents finances. This includes medical, disability and long-term care insurance policies. Use this information—along with your own funds—to choose healthcare options.
    • Create a contact list. Ask your parents to compile a list of account numbers, computer login names and passwords, plus the names, addresses and phone numbers of the professionals they work with. Also, ask about the location of important financial and legal documents and lockbox keys.
    • Identify current healthcare costs and needs. Learn about your parents medical and pharmaceutical expenses and identify any cost savings. For example, change from a name brand to a generic prescription or, instead of filling prescriptions at your pharmacy, order a long-term supply from a mail-order provider.
    • Build a support network. Talk with family members, neighbors and industry professionals to see who can help you care for your parents and in what capacity and at what cost.
    • Anticipate future lifestyle changes. Even if they aren’t yet needed, explore the costs of in-home, senior apartment, assisted living and memory care housing and services, as well as the costs of having a parent live with you. Consider the pros and cons of each option.
    • Become familiar with assistance programs. Your parents may qualify for government programs, supplements or services. For information, visit www.Govbenefits.gov. Also, contact your local Area Agency on Aging for information about elder programs and services.
    • Keep your retirement goals in mind. Continue to manage your budget and save for your future. Be mindful that exiting and re-entering the workforce even temporarily may affect your earning power and employer-sponsored retirement plan.
    • Know your rights at work. The Federal Family and Medical Leave Act of 1993 (FMLA) allows covered employees up to 12 weeks of unpaid leave to provide care for a family member with a serious health condition.2 If you’re caring for a parent, inform your Human Resources department about your situation to take advantage of this legal protection, if relevant, and create a workable plan within your company’s policies.

    Thinking about caring for an ill or aging parent isn’t easy to do, but creating a plan now can help immensely down the road. Consider working with a financial advisor who can help you plan for unexpected expenses and prepare for the costs of healthcare during your own retirement.

    Michael W. K. Yee at (808) 952-1222 ext. 1240

    Michael W K Yee, CFP®, CFS®, CRPC®, is a Financial Advisor and CERTIFIED FINANCIAL PLANNER practitioner™ with Ameriprise Financial Services, Inc. in Honolulu, HI. He specializes in fee-based financial planning and asset management strategies and has been in practice for 25 years. To contact him, michael.w.yee@ampf.com, 808.952.1222 ext 1240, 1585 Kapiolani Blvd., Suite 1100 Honolulu, Hawai‘i 96814.
    Advisor is licensed/registered to do business with U.S. residents only in the states of Honolulu, Hawai‘i.
    1 The Money Across Generations IISM study was commissioned by Ameriprise Financial, Inc. and conducted by telephone by GfK in December 2011 among 1,006 affluent baby boomers (those with $100,000 or more in investable assets); 300 parents of baby boomers; and 300 children of baby boomers at least 18 years old. The margin of error is +/- three percentage points for the affluent boomers segment and +/- six percentage points for the parents and children of boomers segments.
    2 United States Department of Labor, Wage and Hour Division, Family and Medical Leave Act http://www.dol.gov/whd/fmla/
    Ameriprise Financial and its representatives do not provide tax or legal advice. Consult with your tax advisor or attorney regarding specific tax issues.
    Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC.
    ©2012 Ameriprise Financial, Inc. All rights reserved.

    As the parents of boomers age, more family members are managing eldercare responsibilities. Healthcare and finances aren’t easy topics for many families to broach. In fact, research from the Money Across Generations IISM study shows that 36 percent of boomers’ parents feel that talking about healthcare with family will likely or very likely create tension…

  • Legal: Fighting Over Assets?

    “My parents made a trust with a lawyer. Why is it not working and the trustee and beneficiaries are fighting over the assets?”

    Sadly, these are words I often hear from families who call me after the second parent dies to settle their parents’ estate. The Trust might have worked from the drafting attorney’s point of view in that the assets did not go through probate and the taxes were minimal. However, the drafting lawyer probably did not investigate and counsel their clients as to the relational aspects of estate planning.

    In my 25 years’ experience as a lawyer, I’ve come to realize that there are five questions that must be answered with a “Yes” to ensure that the estate plan will work:

    • Did the plan properly transfer the assets to the beneficiaries avoiding probate and minimizing tax?
    • Did the beneficiaries receive the assets properly to minimize the risk of mismanagement and misspending of assets?
    • Did the parents clearly convey their message, meaning, and intent to their trustee and beneficiaries?
    • Did the beneficiaries and trustee clearly receive the message, meaning, and intent from the parents?
    • Will the trustee and beneficiaries honor the message, meaning, and intent of the parents?

    In other words, making the estate plan is not enough. Communication, verbally and in writing, with the trustee and beneficiaries over time conveying the message, meaning and intent, and making sure they clearly receive your message, meaning and intent is critical to a successful estate plan.

    Stephen B. Yim, Attorney at Law | 2054 S. Beretania St., Hon. | (808) 524-0251 | stephenyimestateplanning.com

    “My parents made a trust with a lawyer. Why is it not working and the trustee and beneficiaries are fighting over the assets?” Sadly, these are words I often hear from families who call me after the second parent dies to settle their parents’ estate. The Trust might have worked from the drafting attorney’s point…

  • Better Business Bureau: Tax and Scams

    Tax and Scams - Generations Magazine - February-March 2013This time of year, fliers, yard signs, emails and other advertisements offering tax preparation assistance and promising bigger, faster refunds are popping up everywhere. When you alone are ultimately responsible for the information on
    your tax returns, how do you separate the professionals from the scammers? Over the past few years seniors have become prime targets of the tax scammers.

    One popular scheme works by convincing seniors that they qualify for reimbursement through the American Opportunity Tax Credit (AOTC). The AOTC allows people paying for college to reduce their taxable income by as much as $2,500.

    A key requirement of the AOTC is that a person be currently enrolled in an institute of higher education — a condition that most seniors do not meet. But, scammers lie, telling seniors that they can collect benefits even if they went to school many years ago or even if they helped pay for their children’s schooling.

    Here is a list of some of other recent tax related scams:

    • Fictitious claims for refunds or rebates based on excess or withheld Social Security benefits.
    • Claims that Treasury Form 1080 can be used to transfer funds from the Social Security Administration to the IRS enabling an IRS-payout.
    • Unfamiliar for-profit tax services teaming with local churches.
    • Homemade fliers or brochures implying credits or refunds available without proof of eligibility.
    • Offers of free money with no documentation required.
    • Promises of refunds for “Low Income — No Documents Tax Returns.”
    • Claims for the expired Economic Recovery Credit Program or for the Recovery Rebate Credit.
    • Senior stimulus payment. Retirees and other Social Security beneficiaries are eligible for a senior stimulus payment — $250 for individuals and $500 for couples — as part of the new stimulus plan. Some scams claim seniors can get a second, much larger payment by calling a telephone number and surrendering personal information.

    Hawaii’s BBB offers the following tips for avoiding tax preparation scams:

    • Be cautious of tax preparers who claim they can get larger refunds than other preparers, or who base their fee on a percentage of your refund.
      Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months, or even years, after the return has been filed.
    • Check the preparer`s credentials. Only attorneys, certified public accountants (CPAs) and enrolled agents can represent taxpayers before the IRS
      in all matters including audits, collections and appeals.
    • Find out if the preparer is affiliated with a professional organization that provides its members with continuing educational resources and holds them to a code of ethics.
    • Ask friends and family if they know of people who has used the tax preparer before, and whether they were satisfied with their service.
    • Check out the firm with Hawaii’s Better Business Bureau at Hawaii.bbb.org

    Keep your money and your identity safe this tax season. And remember the IRS provides free telephone assistance for people who have questions at 1-800-829-1040.

    Better Business Bureau - Generations Magazine - April-May 2013

    This time of year, fliers, yard signs, emails and other advertisements offering tax preparation assistance and promising bigger, faster refunds are popping up everywhere. When you alone are ultimately responsible for the information on your tax returns, how do you separate the professionals from the scammers? Over the past few years seniors have become prime…

  • Financial: Home Exemptions for Seniors

    Many have told us that their Real Property Taxes seem to be going up. This may be true since our property taxes are a direct relation with the City’s value of the property. The higher the assessed value of your property, the higher your property taxes will be..

    We have clients from all over the world. And believe it or not, our property taxes are not as high as some states. As of the 2008 U.S. Census, the state of New Jersey holds the #1 position for the highest median property tax paid per year at $6,320. The lowest median property tax paid was Louisiana at just $188.

    Home exemptions reduce the net taxable assessed value of the property used in determining your property tax and apply only to your primary residence. You can only have one primary residence which is tracked by your Social Security number. The current basic home exemption is $80,000. This means that $80,000 is deducted from the assessed value of the property and the homeowner is taxed on the balance. If you’re 65 years and older, the home exemption is $120,000. To qualify for the higher exemption you must be 65 years or older on or before June 30 preceding the tax year for which the exemption is claimed. Your exemption amounts will automatically increase depending on the age of the homeowner. The current property tax rate is $3.50 per $1,000 of assessed value. This rate is set in May or June by the City Council and may be adjusted for the July statement of this year.

    If you believe your property taxes are too high, there is a way you can file for an appeal. These are what you need to know:

    You’ll need to complete the Notice of Real Property Assessment Appeal form and submit a $25.00 deposit. This form as well as other valuable information can be found online at www.realpropertyhonolulu.com.

    There are 4 ways to appeal. The most common is based on your belief that the assessment of the property exceeds more than 10% the market value of the property.

    Once the form is completed a hearing is scheduled before the Board of Review. This board is made up of private citizens in an informal setting. You’ll want to bring documentation to validate your statement and then they’ll remedy a decision.

    If you purchase a property, remember to file for the exemption immediately, so you don’t forget later. Ownership must be recorded at the Bureau of Conveyances on or before September 30 preceding the tax year.

    We’ve known seniors who have lived in their home for years and never took advantage of their home exemptions and they’ve paid more property taxes than needed — imagine the extra savings.

    Dan Ihara (RA) & Julie Ihara (RA)
    Dani@iharateam.com, juliei@iharateam.com
    808-256-7873
    www.oahuhomes.biz

    Many have told us that their Real Property Taxes seem to be going up. This may be true since our property taxes are a direct relation with the City’s value of the property. The higher the assessed value of your property, the higher your property taxes will be.. We have clients from all over the…

  • Financial: Selecting Your Financial Advisor

    Speaking from experience, the relationship between financial advisors and their clients is incredibly important. Whether you rely on your advisor to help with retirement planning, saving for college, or meeting other goals, this individual will help determine how you approach some of life’s biggest financial decisions. Here are a few things to keep in mind when choosing an advisor.

    Find someone who shares an interest in your future. Your financial advisor should ask questions about your hopes, dreams and concerns. Your advisor should not be someone who only talks at you, but also listens to you.

    Your advisor should know the marketplace. A good advisor should offer a tailored plan based on your goals — whether it’s building cash reserves, protecting your income against death or disability, or creating a balanced portfolio.

    Financial advisors shouldn’t be know-it-alls. A smart advisor knows when it’s time to gather input from other experts, such as tax and legal professionals. Find an advisor who is willing to use a team approach to help you reach your goals.

    Select an advisor with a solid reputation. When interviewing advisors, ask for references and specific examples of how they helped clients reach their goals. Check the advisor’s educational background and note any professional designations they have earned. You may find this infor-mation and on websites like FINRA.org.

    Once you choose an advisor, you can start customizing a financial plan that fits you. Here’s what to expect during the planning process:

    Set Goals: Your advisor will ask questions to help you identify your financial needs and dreams. These might include:

    • Envisioning your future — what’s next for you?
    • Where do you see yourself living?
    • What lifestyle goals are important to you?
    • Providing for your children’s education?
    • How do you envision your retirement?
    • Do you want help to reduce the effect of taxes on your assets?

    Don’t worry if you can’t provide detailed answers. As you go through the financial planning process, your responses will become clearer to both you and your advisor.

    Determine the Facts. After setting goals, assess your current financial picture. This includes gathering information and materials for your advisor to get a clear picture of your present situation.

    Create the Plan. Your financial advisor will work with you to establish a course of action designed to help you achieve your goals. This strategy may cover things like:

    • Your needs, goals and values.
    • Current assets and liabilities.
    • Investment portfolio recommendations.
    • Retirement plan.
    • Insurance audit and needs analysis.
    • Estate planning analysis.
    • Product recommendations and action items.

    Implement the Plan. After reviewing your strategy and consulting with your financial, tax and legal professionals, you and your advisor will implement the plan.

    Meet and Review. Now that your plan is in motion, you will want to meet once or twice a year to review progress and make updates.

    Selecting an advisor and creating a financial plan does take some time and effort. Once you take action to achieve your goals, you’ll likely discover life’s challenges can be better managed with the security of having a plan in place.

    For info, contact Michael W.K. Yee at (808) 952-1240.

    1 The Money Across Generations IISM study was commissioned by Ameriprise Financial, Inc. and conducted by telephone by GfK in December 2011 among 1,006 affluent baby boomers (those with $100,000 or more in investable assets); 300 parents of baby boomers; and 300 children of baby boomers at least 18 years old. The margin of error is +/- three percentage points for the affluent boomers segment and +/- six percentage points for the parents and children of boomers segments.

    Ameriprise Financial and its representatives do not provide tax or legal advice. Consult with your tax advisor or attorney regarding specific tax issues.

    Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services may not be available in all jurisdictions or to all clients. ©2012 Ameriprise Financial,Inc. All rights reserved. File # 143286

    Speaking from experience, the relationship between financial advisors and their clients is incredibly important. Whether you rely on your advisor to help with retirement planning, saving for college, or meeting other goals, this individual will help determine how you approach some of life’s biggest financial decisions. Here are a few things to keep in mind…

  • Legal: Review Your Estate Plan Often

    As we turn the page from 2012 to 2013, it is not a bad time to focus on your Rule Book (the set of documents in which you lay out your estate plan) and make sure that the rules you have in place are still consistent with your wishes and your needs. How often you review your Rule Book is up to you, but it is important to appreciate that things change. As they do, your Rule Book can gradually become obsolete, and if you fail to update it, it may do more harm than good.

    What kinds of changes impact your estate plan?

    Changes in your health. Like it or not, your health will change over time, and the general trend will not be for the better. Your doctors can do a lot to keep you going, but they have not discovered the Fountain of Youth yet. If you ever lose the capacity to update your estate plan, your family may be stuck with a Rule Book that does not meet your needs, and there may be little that can be done about it, short of taking an expensive foray through the court system.

    Changes in your assets. Values go up, values go down. Those fluctuations can affect how your estate plan works. More importantly, it is important to take periodic stock of your assets and make sure they are all properly titled. If you have a revocable living trust, you probably should have all or most of your assets in the name of your trust. If you sell an asset that belongs to your trust, make sure the proceeds go into an account owned by your trust, and when the proceeds are reinvested, make sure the new assets are properly titled.

    Changes in your family situation. Any time your family experiences a marriage, a divorce, a birth, or a death, you should have a look at your Rule Book. Other changes might impact what you want to say in your Rule Book as well. Those changes might be good, such as a child heading off to college, or not so good, such as the discovery that a family member has a drug problem or a debt problem.

    Changes in the law. There have been some dramatic changes in the Federal and Hawai‘i estate tax laws over the past several years, and you can expect those kinds of changes to continue for the foreseeable future. Though the changes have caused uncertainty, they have also given rise to opportunities. Over the past two years, Hawai‘i laws relating to trusts and tenancy by the entirety have changed in some very positive ways that open the door to enhanced asset protection. Don’t miss out on what those new laws have to offer.

    If you review your Rule Book at least once per year, you will probably be able to stay on top of all of these changes and be able to make appro-priate updates to your estate plan.

    You should also sign a new durable power of attorney and advance health-care directive each year, even if there are no changes. The reason to update your power of attorney is that once it is more than a year old, many financial institutions will not honor it, and once it is five years old, nobody will honor it. The reason to update your advance directive is to force you to focus on it and make sure that it accurately reflects your wishes. It will not be called upon until you are unable to speak for yourself, so you need to get it right while you still have the capacity to do so.

     

    Scott Makuakane, Attorney at Law
    Specializing in estate planning and trust law.
    www.est8planning.com
    O‘ahu: 808-587-8227, Maui: 808-891-8881
    Email: maku@est8planning.com

    As we turn the page from 2012 to 2013, it is not a bad time to focus on your Rule Book (the set of documents in which you lay out your estate plan) and make sure that the rules you have in place are still consistent with your wishes and your needs. How often you…

  • Tax Planning & Preparation

    Our tax system for the most part remains firmly based upon the calendar year. At year-end, it’s time to take a snapshot of your income, deductions and credits. Based on that data, your tax liability for the year can be computed. If year-end strategies are implemented before your tax liability is “set in stone” it can make a significant difference in what you owe for the tax year. Tax planning for year-end 2011 should use traditional year-end strategies as well as those that react to situations unique to this year.

    Income/Deduction Shifting

    The traditional year-end strategy of income shifting applies to 2011, but with an extra twist. Under traditional strategy, you time your income and deductions so that your taxable income is about even for 2011 and 2012 so your tax bracket does not spike in either year. If you anticipate a higher tax bracket for 2012, you may want to accelerate income into 2011 and defer deductions into 2012. If you anticipate a leaner 2012, income might be delayed through deferred compensation arrangements, postponing year-end bonuses, maximizing deductible retirement contributions and delaying year-end billings.

    The twist for year-end 2011 is the uncertain future for the tax rates after 2012. Many political observers forecast that higher-income taxpayers will be asked to pay more, either through higher tax rates or more limited deductions. That may suggest a strategy in which income is not defer-red but is recognized now at lower tax rates still available in 2011 and 2012.

    Roth Conversions

    If you converted an Individual Retirement Account (IRA) to a Roth IRA in 2010, you were given an option - recognize all income in 2010 or defer that income, half into 2011 and half into 2012. If you elected to defer that income into 2011 and 2012, do not forget to figure that income into your year-end planning.

    Life Changes

    Marriage, divorce, the birth of a child, death, a change in job or loss of a job, and retirement are just some of the life events that trigger a special urgency for year-end tax planning. After December 31, 2011, it will be too late to alter most of your bottom-line tax liability for 2011.

    Tax Extenders

    A number of tax extenders are scheduled to expire after December 31, 2011. They include:

    • the state and local sales tax deduction
    • the higher education tuition
    • the teacher’s classroom expense deduction

    Seniors age 70 ½ and older should also consider making a charitable contribution directly from their IRAs up to $100,000 and paying no tax on the distribution. This tax break, especially advantageous to those who do not itemize deductions, is scheduled to end for distributions made in tax years beginning after December 31, 2011.

    For more information, call Tamilyn Masuda at 847-4422 or visit www.masudacpa.com.

    Our tax system for the most part remains firmly based upon the calendar year. At year-end, it’s time to take a snapshot of your income, deductions and credits. Based on that data, your tax liability for the year can be computed. If year-end strategies are implemented before your tax liability is “set in stone” it…

  • Review Your Estate Plan Often

    As we turn the page from 2012 to 2013, it is not a bad time to focus on your Rule Book (the set of documents in which you lay out your estate plan) and make sure that the rules you have in place are still consistent with your wishes and your needs. How often you review your Rule Book is up to you, but it is important to appreciate that things change. As they do, your Rule Book can gradually become obsolete, and if you fail to update it, it may do more harm than good.

    WHAT KINDS OF CHANGES IMPACT YOUR ESTATE PLAN?

    Changes in your health. Like it or not, your health will change over time, and the general trend will not be for the better. Your doctors can do a lot to keep you going, but they have not discovered the Fountain of Youth yet. If you ever lose the capacity to update your estate plan, your family may be stuck with a Rule Book that does not meet your needs, and there may be little that can be done about it, short of taking an expensive foray through the court system.

    Changes in your assets. Values go up, values go down. Those fluctuations can affect how your estate plan works. More importantly, it is important to take periodic stock of your assets and make sure they are all properly titled. If you have a revocable living trust, you probably should have all or most of your assets in the name of your trust. If you sell an asset that belongs to your trust, make sure the proceeds go into an account owned by your trust, and when the proceeds are reinvested, make sure the new assets are properly titled.

    Changes in your family situation. Any time your family experiences a marriage, a divorce, a birth, or a death, you should have a look at your Rule Book. Other changes might impact what you want to say in your Rule Book as well. Those changes might be good, such as a child heading off to college, or not so good, such as the discovery that a family member has a drug problem or a debt problem.

    Changes in the law. There have been some dramatic changes in the Federal and Hawai‘i estate tax laws over the past several years, and you can expect those kinds of changes to continue for the foreseeable future. Though the changes have caused uncertainty, they have also given rise to opportunities. Over the past two years, Hawai‘i laws relating to trusts and tenancy by the entirety have changed in some very positive ways that open the door to enhanced asset protection. Don’t miss out on what those new laws have to offer.

    If you review your Rule Book at least once per year, you will probably be able to stay on top of all of these changes and be able to make appropriate updates to your estate plan. You should also sign a new durable power of attorney and advance health-care directive each year, even if there are no changes. The reason to update your power of attorney is that once it is more than a year old, many financial institutions will not honor it, and once it is five years old, nobody will honor it. The reason to update your advance directive is to force you to focus on it and make sure that it accurately reflects your wishes. It will not be called upon until you are unable to speak for yourself, so you need to get it right while you still have the capacity to do so.

    Scott Makuakane, Attorney at Law
    Specializing in estate planning and trust law.

    www.est8planning.com
    O‘ahu: 808-587-8227, Maui: 808-891-8881
    Email: maku@est8planning.com

    As we turn the page from 2012 to 2013, it is not a bad time to focus on your Rule Book (the set of documents in which you lay out your estate plan) and make sure that the rules you have in place are still consistent with your wishes and your needs. How often you…