DOCUMENTS TO GATHER WHEN FILING TAX RETURNS
Tax season is right around the corner and we know how tricky it can be to manage such a task on top of your other responsibilities. To help you get organized, this checklist provides categories of documents you may need to gather to file your return. Feel free to use it as needed or provide it to your accountant so we can work together to make sure this tax season goes smoothly for you.
After reviewing the checklist, please let us know any questions you may have or if you would like to meet to discuss this further. Please share this resource with others you feel may benefit from it.
Tech Tip ~ Adobe Scan App
We have a number of clients send us pictures of documents. This can be challenging for both the sender and receiver. The sender must contend with lighting, centering, sizing, shadows, etc. The receiver does not always receive a document that can be easily reviewed or saved.
A free app we have used that works well is Adobe Scan. This app allows users to scan documents of a variety of sizes, convert them to pdf, and forward via text, email, etc. without needing access to a scanner or computer.
To get the app, simply scan the QR code and download. You can find more information at https://www.adobe.com/acrobat/mobile/scanner-app.html
Hope you find this helpful!
DETERMINING THE OWNERSHIP OF PROPERTY
We recently shared articles regarding the importance of choosing the right people to fill essential roles when executing your estate plan. Ownership (or titling) of property is another valuable aspect to consider.
There are various ways property can be owned which also effects how property can be transferred. In general, ownership can be outright, as tenants in common, as joint owners with rights of survivorship, or as community property. The use of trusts and custodial gifts to minors with UGMA or UTMA designation are options as well. Attached is a document describing some of the more common forms of ownership.
We would be happy to discuss this further or answer any questions you may have.
Executing your estate plan: Choosing the right people
While minimizing taxes and planning for the eventual disposition of your assets are important aspects of estate planning, selecting the best people and/or organizations to carry out your wishes when you are no longer able is often one of the most difficult decisions. It is important to consider a number of factors including trust (will they honor your wishes), ability (do they have the knowledge and experience), and the willingness (proximity, time, desire, etc.) of those appointed in each role.
Below are links to five articles relating to key roles that need to be filled.
- Power of Attorney
- Estate Planning Attorney
- Health-Care Agent
Appointing the proper people in these roles (and reviewing this regularly) allows you the opportunity to put several layers of protection in place, especially as estate situations become more complex.
Buy or Lease Your Next Vehicle
When it’s time to get a new vehicle, it is worth considering whether buying or leasing is the best option. This flowchart may help guide you or someone you know through the buying versus leasing decision.
If you would like to discuss whether buying or leasing is more appropriate for your individual situation or have us assist with a break-even analysis, please let us know.
Bonus Pay for MN Frontline Workers
We recently received notice from the Minnesota Department of Labor and Industry (MN DLI) regarding bonus pay for COVID-19 frontline workers. We thought it would be helpful to share and, although it may not apply directly to you, it may for your family members or friends.
The notice states “To thank those Minnesotans who worked on the frontlines during the COVID-19 peacetime emergency, Gov. Tim Walz signed Frontline Worker Payments into law April 29, 2022, enabling those workers to apply for Frontline Worker Pay.”
We received two information sheets provided by the MN DLI. The first contains information to help determine eligibility. The second provides details on the application process after determining eligibility.
The state is anticipating applications will be taken June 8 through July 22. If you are interested in applying or would like more information, please visit frontlinepay.mn.gov.
Considerations when updating your estate plan
Creating an estate plan takes time and energy. It always feels good when the planning is done and the documents have been finalized.
Like almost everything related to financial planning, priorities, assumptions, expectations, and relationships tend to evolve over time making it important to review your estate plan on a regular basis to be sure it continues to reflect your desires.
Hopefully, this checklist will assist you in reviewing your documents and determining whether it is time for an update. We will be happy to discuss your estate planning in more detail with you.
If you have family, friends, or colleagues you believe would find this resource helpful, please feel free to share it.
MILESTONES RELATED TO FINANCIAL PLANNING
Age is more than just a number when it comes to financial planning. Certain ages have implications for retirement plan distributions, while others are related to benefits you may qualify for.
The table below may be of interest illustrating important age-based milestones.
If you would like to discuss how any of these milestones will impact your current and/or future planning, we would be happy to do so.
AM I AT RISK FOR IDENTITY THEFT?
Cyber threats and identity theft are risks almost everyone faces. Most of us use personal data in one form or another to perform a myriad of tasks including accessing financial accounts, email, social media sites, online shopping, and other password-protected websites/portals/software applications. Criminals are well aware of this and are working hard to exploit our use of these platforms.
The checklist below can help you assess your level of risk and provide a few pointers to reduce the likelihood of being a victim of cyber criminals, internet scams, identity theft, etc.
We hope the information is useful. Please feel free to share this resource with others.
RETIREMENT INCOME PLANNING
Retirement income planning is one of the primary reasons people engage in financial planning. In most cases, retirement income planning is a two-step process: a long period of gradual asset accumulation leading up to retirement, followed by a long (hopefully) period of distribution during retirement.
There are numerous strategies that can be implemented and products that can be purchased in order to accumulate retirement assets as effectively as possible. In almost all cases, however, it is impossible to know what long-term rate of return will be realized and, therefore, the amount of savings necessary to accumulate adequate resources to retire comfortably.
Projecting asset growth based on fixed return assumptions is a common approach to determining the amount that should be saved in order to reach a retirement savings goal, and how much can be withdrawn during retirement. However, since long-term rates of return are the result of a series of shorter-term (monthly, quarterly, annual, etc.) variable returns, the sequence of returns realized plays a significant role in determining how much is accumulated at retirement and the sustainability of a given level of distributions.
For example, a period of negative returns just prior to retirement can push one’s planned retirement date well into the future. Likewise, a period of weak returns during the first part of retirement can have a significant impact on the sustainability of the desired distributions. These scenarios are not captured using fixed return assumptions.
In order to account for the impact of variable and unknown returns both pre- and post-retirement, we are now using software that projects the likelihood of a financially successful retirement by modeling a range of potential outcomes. By simulating thousands of return sequences using expected returns, volatilities and asset class correlations, we are able to more accurately calculate the probability of success for various savings and distribution scenarios (chart 1 below). The software also integrates social security benefits, health care costs and inflation expectations into the calculations. This allows us to explore a wide range of possible outcomes with our clients and describes the results in terms of probability of success (chart 2 below).
The results bring a new perspective to retirement income planning and help illustrate the likely impact of changes in savings rates and asset allocation strategies.