Category: Wisdoms

  • Maximize Your Income with a Charitable Gift Annuity

    Charitable Gift Anuity - Generations Magazine - August - September 2011Each year thousands of caring individuals use the Charitable Gift Annuity to secure a lifetime income and provide critical financial support for Salvation Army programs and services in their communities. This time-tested technique has resulted in many gifts that otherwise might not have been made.

    What is a Charitable Gift Annuity?

    The name says it all. It’s both a charitable gift and an annuity — a secure promise of lifetime income. When you establish a Charitable Gift Annuity you do not sacrifice income from your gift asset. In fact, you may very well be able to increase your income. Your payments will be fixed for life and will not be affected by changes in the stock market.

    A Lifetime Income and a Life-Changing Gift

    Popular and flexible, the Charitable Gift Annuity is a simple contract between you and The Salvation Army promising fixed payments for life at an attractive rate based on the ages of up to two annuitants. For example, our annuity rates range from 5.7% if you are 65 to 10.50% if you are 90 or older. Your income can begin immediately or be deferred to a later time, such as retirement. You can also fund the annuity with cash or other property, such as appreciated stock or real estate.

    But the benefits of a Charitable Gift Annuity do not end with attractive rates.

    • Your gift can qualify for major tax benefits.
    • You will receive an immediate income tax deduction in the year of your gift.
    • A portion of your annuity payments will be tax-free.
    • And if you fund your Charitable Gift Annuity with appreciated assets, any reportable capital gain will be significantly reduced and spread out over your lifetime.

    Finally, your gift will serve as a personal statement of your commitment to the men, women and children in your community. We will use the gift portion of your Charitable Gift Annuity to support life-changing programs and services.

    Ana secured a Charitable Gift Annuity because of what she witnessed. She saw her neighbor Renee high on drugs almost on a daily basis. Ana was worried and concerned, but never said a word. Later, she saw Renee again — clean, employed and with a bright future. Ana asked Renee’s mother what happened. “We have our daughter back!” cried Renee’s mom. “The Salvation Army turned her life around and now she has a purpose for living.”

    Ana was so touched; she wanted to help other “Renees” turn their lives around. Upon contacting The Salvation Army, Ana learned she could fulfill her wish to help other young women, and increase her retirement income at the same time.

    It’s nice to know you can make a difference in the lives of others while also making a difference in your own.

    If you’d like to learn more about the Charitable Gift Annuity, please call Ellen Kazama at The Salvation Army at 440-1862 or 1-877-840-1862 (Neighbor Islands toll-free).

    Each year thousands of caring individuals use the Charitable Gift Annuity to secure a lifetime income and provide critical financial support for Salvation Army programs and services in their communities. This time-tested technique has resulted in many gifts that otherwise might not have been made. What is a Charitable Gift Annuity? The name says it…

  • Looking for a Retirement Career? Maybe Being a Landlord is For You.

    Landlording - Generations Magazine - August - September 2011In today’s economy, it seems that everything old is new again … albeit with a bit of a twist. Years ago, it was common for older couples – and frequently widows – to rent out rooms for extra income. Taking in boarders was a viable way to supplement income.

    Well, the idea is back, with a bit of a twist. As Baby Boomers face the cold, hard facts of retirement, they are increasingly changing the definition of the term to include at least some form of work. While you may not be ready to hang out a shingle on the front gate, “Rooms for Rent,” you might consider becoming a landlord. In fact, the Wall Street Journal Online (June 19, 2011) writes that it may be just the ticket, especially given the uncertain prospects for stocks and bonds and the meager interest rates on savings accounts.

    Think about it. It’s a buyer’s market now, so purchasing a multi-family home is more financially feasible. And, the trend toward the renter’s lifestyle is picking up steam. All this means you have a low cost of entry into a market that is expected to expand. Starting to make investment sense?

    Sure, it’s a career of sorts, but you also need to think of it as an investment. Weigh everything in the short term, including start-up and maintenance costs, as well as the marketability of the location you’re considering. But then also keep your long-term goals in mind, including appreciation and eventual sale. Buying in a depressed market, after all, is only a steal if that market bounces back. Finally, don’t overlook the possible danger of having all your eggs in one basket since being a live-in landlord will unite your home, equity and employment, into one potentially risky asset.

    Like any retirement move, don’t make this one too quickly. Discuss plans with a professional who can help you sort out the details, including how an investment rental property could affect your Social Security benefits. Remember, too, that this lifestyle may not suit you. In which case, you would be wise to explore other, more enjoyable options.

    If becoming a landlord seems like an attractive alternative, just be aware of the legal details you will need to consider. Will the rental income be subject to state tax? (Hint: If the property is located in Hawai‘i, it will be subject to General Excise Tax, plus any other taxes applicable to Hawai‘i residents.) Might it make sense to hold the property in an entity for liability and creditor protection purposes? Are there ways to hold rental property that will make it easier to pass on to your descendants? Be sure to address these questions with your trusted advisors before you take the plunge.

    In today’s economy, it seems that everything old is new again … albeit with a bit of a twist. Years ago, it was common for older couples – and frequently widows – to rent out rooms for extra income. Taking in boarders was a viable way to supplement income. Well, the idea is back, with…

  • How to Hire a Caregiver

    If you are hiring a caregiver for yourself or another loved one, you may be tempted to try to make the process as simple as possible by treating the caregiver as a “private contractor.” You tell the person, “I will pay you so much an hour, and you deal with the IRS and the State when it comes time to pay taxes.” After all, taking on the responsibilities of withholding taxes (and then paying the taxing authorities), buying Worker’s Compensation insurance, paying Social Security and Medicare tax, and all the rest, may seem daunting if you have never done it before. Be aware, however, that the IRS and the State will probably take the position that the caregiver is an employee, that you are an employer, and that all of the legal obligations that attach to those labels apply to your situation.

    IRS Publication 926 gives very helpful guidance to those hiring household employees, including caregivers. You would do well to go through that publication and consider all of the questions it poses, several of which might never occur to you. For example, can your prospective caregiver legally work in the U.S.? How do you verify that, and what records must you keep to prove that you satisfied your obligation to verify the caregiver’s status? On that subject, you can find all of the information and forms you will need at the U.S. Citizenship and Immigration Services website, www.uscis.gov.

    Depending on your budget and the number of caregivers you need, it may make sense to look into local employment or caregiver agencies. This simplifies your job. You can contract with the agency, and the agency will be the caregiver’s employer and will deal with all of the details of being an employer. You will pay a premium for this kind of service, but the agency’s experience and employment expertise may make the extra cost seem like a bargain.

    Another set of issues arises if you opt to be the employer of a caregiver, and then your employee is injured on the job. If you have made sure to carry the right kinds of insurance, you will be fine. However, the consequences of failing to do so can be financially disastrous. An agency will probably carry Worker’s Compensation insurance, but you should be sure to talk with your personal insurance professional to find out if there is anything else you should do to protect yourself through your homeowner’s and umbrella policies.

    The bottom line is that you should not hire a caregiver without addressing your legal responsibilities and potential liabilities. Ask your trusted advisors — your CPA, your lawyer and your insurance professional — for guidance, and check out the resources cited above. You will be glad you did.

     

    If you are hiring a caregiver for yourself or another loved one, you may be tempted to try to make the process as simple as possible by treating the caregiver as a “private contractor.” You tell the person, “I will pay you so much an hour, and you deal with the IRS and the State…

  • Friends & Family Fighting Fraud

    The best protection against fraud is information and communication.

    Being open and aware of what’s going on in our friends’ and family’s lives; taking the time to talk about day-to-day events and even watching over each other is vital for many reasons.

    As much as we’d like to believe in the spirit of human kindness, we all know that there are people out there who would like to relieve us of our hard-earned money in unethical ways—fraud and scams.

    No one is invulnerable to these scammers. We are not protected by race, religion, age or economic status. The best tools we have available are knowledge and education. Knowing what frauds are out there, and how to deal with the scammers should we encounter them.

    Encourage our friends and family to use open communication and common sense. That, united with good resources and information, will go a long way in the fight against fraud.

    One of the ways in which you can help prevent yourself or a loved one from becoming a victim of fraud or scams is to ensure that someone is watching over them on a regular basis. If you or a loved one feels like you are being pressured into a bad business deal or has encountered something that seems too good to be true; contact Hawai‘i’s Better Business Bureau (BBB).

    For more information about topics affecting marketplace trust, visit www.bbb.org.

     

    The best protection against fraud is information and communication. Being open and aware of what’s going on in our friends’ and family’s lives; taking the time to talk about day-to-day events and even watching over each other is vital for many reasons. As much as we’d like to believe in the spirit of human kindness,…

  • At Home With Parents

    As parents age, it often becomes more difficult for them to live independently and manage their own affairs without outside help. The thought of mom or dad leaving the comfort of the family home can be a painful and challenging proposition for everyone, but when it’s no longer safe or practical for them to live alone, adult children often intervene to find an alternative living arrangement. At that point, the question becomes whether you should invite Mom or Dad to live with you or help facilitate a move to a nursing home or other senior living facility.

    Consider the following when deciding how to address an elderly parent’s living situation.

    The emotional roller coaster

    It helps to realize you’re entering a very emotional territory—for you and your parents—when you broach the subject of a move. Adult children often feel guilt and anxiety. You may also be frustrated by a parent’s lack of cooperation or combativeness. For the parent, there most likely will be sadness and, in some cases, anger. Understandably, parents will mourn their status as independent adults, which may be compounded by grief over a lost spouse, failing health or the prospect of dying. Be patient and respectful of one another. Avoid rushing the decision-making process as best you can.

    Available accommodations

    Before you ask Mom or Dad to move in with you, think about the realities of this scenario. Does your home have the necessary space and amenities? You may need to remodel to accommodate special needs, such as a ramp for wheelchair access, safety bars in the bathrooms and so on.

    Level of care

    Be honest with yourself about how much care you can give. Will you be able to provide supervision, assistance with daily cares, medication, rides to the doctors’ office and more? Are you ready to prepare three meals a day, manage the extra laundry and give up your privacy? You may have the time, energy and willingness to joyfully take on these responsibilities. Or you may not. Don’t take on more than you can handle. Seek the help of professionals if you are able to do so.

    The costs and who will pay them

    Whether you open your home to a parent or help find a suitable alternative, there will be costs involved. A financial advisor can help you sort out the ramifications of having another boarder under your roof or paying for nursing home care. If you are paying for more than half of a parent’s living expenses or paying for medical expenses, you may be eligible for a tax break. Talk to your tax preparer to see if you qualify for deductions.

    Seek help with decision making

    No one can tell you what to do when the time comes to care for an elderly parent. Rally your extended family members and wise family friends to explore your options. Enlist the insights of your financial advisor and tax preparer to determine how expenses can be managed and shared. Keep a positive attitude and take advantage of the opportunity to help make things easier for your parent at this stage of life. By thinking it through, you can find a solution that works for the entire family. For more information, please contact Michael W. Yee at (808) 952-1240.

     

    As parents age, it often becomes more difficult for them to live independently and manage their own affairs without outside help. The thought of mom or dad leaving the comfort of the family home can be a painful and challenging proposition for everyone, but when it’s no longer safe or practical for them to live…