Thanks to review specialist Expertise for ranking Castle Rock as one of 2019’s Best Financial Advisors in St. Paul! Expertise reviewed dozens of financial advisors serving the St. Paul area. Castle Rock is thrilled to have made the shortlist of the Top 15 Financial Advisors in St. Paul! Thanks to the team at Expertise for their research, focus on quality, and commitment to ensuring all consumers can make confident decisions in the experts they select.
I have seen it over and over: a beloved parent dies and the adult children do not know where to start. The first question is always, “What do you think they would have wanted?”
Once the question is out, then the arguments begin. All relatives have opinions informed by their own experiences, and they rarely agree. “She told me this.” “She supported this.” “She would never have done that.” It causes strife during a time when people could be focused on grieving and carrying out their loved one’s wishes.
The sad part is it does not end there. Beyond the practices for mourning and celebrating their loved one’s life, adult children are responsible for details and logistics too. “Do you know what her passwords were?” “No. What about their financial accounts, do you know who we should call?” “What about insurance, did she have insurance?” Finding passwords, locating and inventorying accounts, managing insurance policies, and determining who needs to be contacted—the list goes on.
Unfortunately, too many times this crucial information—where everything is, what their wishes are and who to contact—dies with the person. The greatest gift you can leave your children is clear, organized information. It is so important to provide this information so when the time does come when they have to say goodbye, they have time to grieve and celebrate your life, rather than being put under the pressure of wondering what your wishes were or where to find everything.
Some of the items that are often forgotten and forever lost include:
- End of life wishes;
- Retirement or Pension Plans at old employers;
- Stock purchased through the company;
- Burial plots or policies purchased;
- Intellectual property;
- Electronic property;
- Relatives unknown to children; and
- Valuables that the children were not aware were valuable.
There are a number of ways you can share this information. One option, which many people find overwhelming, is to sit down and have an end of life discussion with your loved ones. This also has the potential drawback of people misremembering or forgetting details when the time arrives. Another option is to fill out an end of life checklist and to alert your family members to its existence. Filling out an end of life checklist may be difficult, but no one wants to leave surviving loved ones with arguments, fights, or lawsuits that last lifetimes.
Because I’ve seen how critical this is for the well-being of families, I’ve created a free end of life checklist that you can download by signing up for our e-mail list. You can also contact your own financial advisor for a list. Most people would gladly give up their inheritance to know what their parent would have wanted. Take the time to do it now—start today, this week. It’s hard emotional work, but it is a gift that can only come from you.
April is Financial Literacy month! What a great opportunity to talk to our children and young adults to find out what they know and how to improve on it.
High school students do most of their learning about money and finances from parents. But many parents do not feel equipped to teach their children about financial issues. In 2018, the research group Brookings Institute published a large-scale review of youth financial literacy, which showed a continued failure of U.S. high school students to pass simple financial literacy tests. In fact, in a 2008 literacy test by Jump$tart, high school seniors averaged 48.3%—more than 10 points lower than a passing grade. We need to do better for the sake of our children. And we can start both at home, but also in supporting our schools.
Talk to your children’s teachers and school administrators and discover what they provide in financial literacy. In 2011, Minnesota passed the Minnesota K-12 Social Studies Standards that went into effect in the 2013-2014 school year. The goal of these Standards was to provide Minnesota students with some training in economics. Of the 34 economic education benchmarks for students 1-12 grade, 5 are related to personal finance.
While most schools do not have the funding to add programs, there is support available for schools. BestPrep is a Minnesota based non-profit organization that provides educational programs to students in grades 4-12. They have developed many programs which are available at no cost to schools. One such program is Money Matters. They provide volunteers from the financial industry who go into schools and teach classes about personal finance. They have financial experts volunteering to develop presentations that not only address the Social Studies Standards, but go beyond. They work with students on understanding money basics like budgeting, credit vs. debit, and credit scores. Additionally, BestPrep provides volunteers e-mentors for classrooms as they discuss financial topics. The students can e-mail questions to their e-mentors who respond not only with answers, but with new ways to look at their personal finances.
Another way you could be involved is to volunteer with a group of students and participate in the Stock Market Game. You do not need to be a financial expert to run this game. BestPrep provides training and on-going support. The curriculum not only provides students with an education in business, economics, and financial literacy, but also gives students a richer understanding of the U.S. economic system, current events, and teamwork. To see all that BestPrep has to offer go to www.BestPrep.org.
There are many organizations that not only work with students, but provide individual guidance for any adult interested in helping youth achieve financial literacy. Check out some of the great resources listed below to learn more about what you can do!
Share Save Spend – www.sharesavespend.com
The Financial Educators Council – www.financialeducatorscouncil.org
The Mint.org – www.TheMint.org
One of the unexpected gifts from the Tax Cuts and Jobs Act of 2017 was the virtual elimination of the so-called “marriage penalty.” But at the same time, the new tax regime imposes a new “stealth” marriage penalty which will show up for taxpayers in higher-tax states.
The marriage penalty is roughly defined as assessing higher federal taxes on married couples with two incomes than would be assessed on the same couple if they had filed individually. For example, under the old regime, two single filers making $50,000 would each pay at a 25% tax rate. But a couple who each earned $50,000 ($100,000 total household income) would have been assessed at a 28% marginal rate.
Obviously there was no penalty if the family had only one income; in fact, for those increasingly rare households, there would be a marriage bonus. If the sole breadwinner, under the old tax regime, were single, and that person was making $50,000, he or she would still have been subject to a 25% tax. But if the breadwinner happened to be married, and moved into the “married filing jointly” category, his or her income would then have been taxed at a 15% rate.
|2018 Personal Income Tax Rates|
|Rate||Married Filing Jointly||Single|
|10%||$0 – $19,050||$0 – $9,525|
|12%||$19,050- $77,400||$9,525 – $38,700|
|22%||$77,400 – $165,000||$38,700 – $82,500|
|24%||$165,000 – $315,000||$82,500 – $157,500|
|32%||$315,000 – $400,000||$157,500 – $200,000|
|35%||$400,000 – $600,000||$200,000 – $500,000|
|37%||over $600,000||over $500,000|
So how has this changed? As you can see from the chart, the tax brackets for “married filing jointly” are exactly twice as high as the “single” brackets—up to the very highest brackets, when a marriage penalty finally kicks in. A couple earning $50,000 each, under our current tax regime, would pay income taxes at a 22% rate, whether they were married or filing individually.
It gets a bit interesting at the highest two brackets, however. As you can see from the chart, if two individuals were to make, say, $350,000 in any tax year, they would each fall comfortably into the 35% bracket. However, if they get married, suddenly they must pay tax at a 2% higher rate (37%) for the first combined $100,000 they make over the $600,000 threshold. It’s not a lot of difference, but there is clearly a penalty involved.
What about the stealth marriage penalty? The new tax law sets a hard $10,000 limit on the amount that you can deduct for state and local taxes—including state income or sales taxes and property taxes. That applies to individuals, and the same limit applies to households. Single persons would get to deduct up to $10,000 for these various taxes, each, but when they get married, their deduction gets cut in half: only $10,000 for the household as a whole.
Of course, this only applies to people who would have significant state and local tax obligations—some states impose zero state taxes—so for some, there is no stealth marriage penalty at all. To get up to where they have to worry about the marriage penalty, they would also have to join the 1%.
Thanks to Bob Veres for this guest content.
When things get tight, many people get insular. That is, they cut ties and obligations with anything that doesn’t protect themselves, and their own. However, this is when charitable giving is needed the most. Don’t look at budgeting for philanthropy as an either-or situation. It’s not either I help myself and my family or I have money for charitable giving. It’s about getting smart in how to do both.
Make it a family value.
Charitable giving isn’t all about having a big budget. It’s about making an impact. You can incorporate volunteer work into your family’s set of values. Budgeting time is just as important; create a regular schedule of events that the whole family can participate in.
Be a transparent advocate.
Talk to people about their philanthropic giving. Ask about how they make charitable giving choices, when they give, how much they give (if you have that level of trust). These conversations connect you with causes you might not have heard about any other way. If you’re a transparent advocate for giving, even if you’re not able to give as much as others, you’ll be doing good for the world. Your word of mouth support of your causes (and even just giving as a way of life) may help someone you know prioritize it in their budget.
Work with percentages.
As you earn more income, ensure your charitable giving grows too. Think critically about how you can be generous; if your income decreases, can you donate time? Statistically, wealthier people actually tend to give a smaller percentage of their income to charity. This trend leaves the people who most benefit from the services that charities provide shouldering more of the burden. Those who have been or are currently in need know first-hand the benefits charities can provide. If you’re not currently or haven’t ever been on the receiving end, be extra generous.
Do the math.
The biggest change with the current tax laws is that the benefit for giving has been greatly reduced, except for those who donate a large amount. There are a few simple ways to work this system, if you can’t donate enough to qualify for the tax break every year. Save what you would be donating one year, and add it to the next year’s donations, bringing your total up to the threshold, just every other year. Or, better yet, set up a donor-advised fund which you can contribute to every year, or every other year, while still supporting you and your family’s causes annually.
Your giving is creating the world you want to see, the one you hope your children will grow up in! It teaches many beautiful things about the value of humanity. It’s definitely worth including in your budget.
Are you ready to prioritize charitable giving? We can help you stay philanthropic and reduce your tax liability through donor-advised funds. Contact us today to start the conversation.