Cash is an Opportunity

As we start another year, we want to work with you, our clients, to keep an eye out for new opportunities.  Many of our clients have significant cash reserves which they accumulate as part of their safety net and a rainy-day fund.  In the past leaving the funds in the bank or looking for investment opportunities did not make much difference as cash was essentially yielding nothing and a dormant asset class.  Things have changed, it’s time to upgrade your fixed income.

As the Federal Reserve has begun to raise interest rates cash is no longer an asset class to be ignored.  Boost your income and diversify your investments with short-term fixed income. There are many vehicles which now can be considered as an alternative to low yielding idle cash or bank money market accounts.  Consider the benefits of high-quality short-term U.S.Treasury bills and notes, intermediate-term tax-exempt municipal bonds, or investment grade Collateralized Loan Obligations. Depending on the time horizon, liquidity needs and risk tolerance, we can find a productive home for those idle funds that will generate income and add balance to your investments.

Short-Term Fixed Income

Short-term fixed income will generate more interest income than a typical savings account and the investments have been found to preserve capital. Generally, there is very little market volatility and the funds are usually available within two days of the request. We have found this to be ideal for people who are saving for a specific goal or to keep a reserve.

Please contact us if you would like to discuss the cash opportunities discussed above. We look forward to hearing from you.

Get a FREE ICE Key and Be Ready for a Medical Emergency


As we age, having our affairs in order is more important than ever. And I’m not just talking about our own personal affairs, but those of our parents and children, too. Many boomers are now caring for aging parents, which requires knowledge of all their medical conditions, prescriptions, allergies and more. If we’re lucky, this information is recorded somewhere, but too often it’s not.

Plus, as our kids leave for college, we must be able to manage their healthcare from afar. Even though we try to equip them to be self-sufficient and use good judgment, they’re still college students who may not be as organized as they should be, especially if a medical emergency arises. Plus, the ability to share a student’s healthcare information — even with parents — is often limited due to of HIPAA regulations.

The Difference between Life and Death

In the case of a medical emergency, having important details readily available to medical professionals can be the difference between life and death. An innocent drug prescription can be lethal when taken in conjunction with other medications. It has been reported that Adverse Drug Reactions (ADRs) seriously injure up to 2 million hospitalized patients and cause over 106,000 deaths annually. In most cases, doctors simply lack the medical information they need to treat their patients.

The Solution: The ICE Key

This portable, easy-to-use USB flash drive goes right on a keychain. In a medical emergency, first responders are trained to look for the acronym ICE (In Case of Emergency), ensuring that medical professionals will have the information they need to make life-saving decisions.

Simply input important medical information on the PDF forms pre-loaded on the ICE key. This is not only critical to nurses and doctors but can also allow them to communicate directly with you as the person to contact in case of an emergency involving a parent or child.

Get a FREE ICE Key

Contact us today to schedule a review and we’ll give you a free ICE Key and help you complete the pre-loaded PDF forms.

Back to School Checklist

As school starts up again, we at Snow Creek want you and your child to be as prepared as possible. Here are a few things you might consider as we begin a new school year.  Read more…

Philanthropy: What do you want your legacy to say about you?

I’ve been thinking a lot lately about philanthropy and its role in our financial planning practice. As more of our clients begin to contemplate retirement and estate tax planning, the questions that always arise are, do we have enough money to retire? How do we pass what’s left to our heirs? And sometimes, what are our philanthropic goals?

Often what is missed are the numerous planning opportunities available to benefit charity, create a current income flow, and reduce potential inheritance tax while we are alive.

Generational Wealth Transfer

Some of the more common generational wealth transfer techniques are to create a trust during your lifetime. These trusts are usually funded with appreciated assets being transferred to the trust. The trust sells the property and, in these instances, avoids any income tax.  The grantor receives a current charitable income tax deduction and an income stream for life or for joint lives. Upon death, the remaining assets go to the charities you have designated. There are numerous types of trusts to facilitate this kind of planning.

Charitable Giving Reflects Your Values

For clients with heirs, the dilemma is to determine what is fair so the children and grandchildren are adequately taken care of and what should be left to charity. While some people prefer to leave their entire estate to their heirs, others believe leaving enormous sums of money to children and grandchildren can be a disservice.

Communicating Your Values

One item we would stress is to have as many of the family involved in the discussions as possible. It is critical for future generations to understand your philanthropic views so they can continue to respect your wishes. Formal family meetings, for example, may be scheduled so all the generations can have an understanding of what’s at stake, as well as getting to know the key family advisors: attorney, accountant and wealth manager. This gives the opportunity for parents to encourage giving without imposing their ideas on their children.

Immediate Tax Planning

For more immediate income tax planning, consider bunching deductions in one year and taking the standard deduction in the alternate year. This is especially beneficial in light of the significant increase to the standard deduction passed into law in the new tax bill effective 2018. This can partially be achieved by making donations to donor-advised funds. A donor-advised fund can be established by most custodians as well as community foundations. The amount contributed to the fund is allowed as a charitable deduction in the year contributed. The funds can be distributed in the current or future years to the respective charities at your direction, thus satisfying your tax planning and philanthropic goals.

Please call us to schedule an appointment to discuss any of your charitable questions.

Retiring Abroad, Not as Simple as Waving Goodbye

As a frequent watcher of House Hunters International, I ponder what retirement would be like in a foreign exotic/low-cost destination. As is usually the case there are many items to consider before taking such a bold step. Here are some items to consider. 

Satisfying Uncle Sam 

As a U.S. citizen or permanent resident, you are required to continue to file a U.S. tax return. Certain income may be excluded if you are a “Bona Fide Resident” or meet the “physical presence test” of a foreign country. BUT you are still required to file a tax return and report foreign bank accounts.

Managing Medicare

Medicare typically does not cover medical care you receive outside of the U.S. You will need to determine what is available in your new country of residence. In addition, a Medevac policy may be advisable. Not only is this an additional cost to consider, but don’t give up on paying for monthly Medicare Part B, because paying the premium to keep Part B when abroad will ensure that Medicare will cover your care whenever you travel to the U.S. Additionally you will not face premium penalties or gaps in coverage. If you fail to pay for Part B while abroad, when you move back to the U.S. you may go months without health coverage. This is because you may have to wait until the General Enrollment Period (GEP), which runs January 1st through March 31st each year, with coverage starting July 1st.

Securing Social Security Benefits

Benefits can be transferred to retiree’s bank account thanks to advances in technology. This is available in most countries, but there are some exceptions. Make sure your new country of residence is not a restricted jurisdiction.

Housing Hurdles

Before buying real estate make sure you work with honest, knowledgeable professional as there are sometimes restrictions on what foreigners can buy and what if any financing is available.

Keep Your Investments Here

The U.S. financial and banking system is regarded as the safest and most reliable in the world. We would strongly advise keeping your assets invested in the U.S.A., avoiding major currency fluctuations and arranging for funds to be electronically transferred to your new domicile. This will ensure your funds are not subject to exchange rate fluctuations and political upheaval.

Bon Voyage!

Nothing Goes Up Forever

As you have probably noticed, the stock market has been on a wild ride since Friday, with the Dow dropping 1,175 points on Monday. While this can certainly be anxiety-inducing, you should always remember investments are for the long term.

Up until Friday, we had been enjoying record highs in the stock market, so it was only a matter of time before we saw a correction. Nothing goes up forever. We all love to see the market when it’s booming, but we don’t experience the same feelings when it’s down.

Stay the Course

Corrections can’t be avoided and it is likely the lows in the market will be tested again. However, we certainly recommend you stay the course and do not make rash decisions. While we can’t avoid the losses incurred, by working with us as advisors and having a personalized financial plan, portfolios can be structured to minimize the volatility.

Our responsibility as wealth managers is to react accordingly should an event take place to help protect our clients’ investments. As always, we are monitoring the market closely and have tools at hand should we need to take action quickly. If you have any questions in the meantime, please do not hesitate to give us a call.

Saving for College – New Tax Law Benefits to 529 Plans

Prior to the newly enacted tax bill 529, savings plans offered tax-free earnings growth and tax-free withdrawals when the funds were used to pay for college. Under the new law families will be able to withdraw up to $10,000 per year tax-free for “public, private or religious elementary or secondary school” expenses.

The biggest advantage to saving money in a 529 plan is that you won’t have to pay tax on the investment gains if the funds are used for appropriate educational expenses. To get the maximum tax-free benefit the question becomes How to fund the 529 Plan? Gifts to a 529 plan are restricted to $14,000 per year per donor. So, for example, two grandparents could each contribute $14,000 to the plan for a total of $28,000.

It Gets Even Better

In any year during which your 529 contributions for a particular beneficiary exceed $14,000, you may make an election on Form 709 to prorate the contributions over five years (20% per year) for gift-tax purposes. This permits frontloading of up to $70,000 per beneficiary (or $140,000 for a married couple) into a 529 plan without generating a taxable gift, assuming no other gifts to that beneficiary are made during the five calendar-year period. Frontloading gives the 529 plan the opportunity to get the maximum tax-free growth for educational needs.

There is a maximum that can be contributed into a 529 account for each child. The amount differs from state to state, ranging from approximately $300,000 to $500,000. In order to find the maximum allowed amount in any state, get a current copy of that state’s disclosure booklet. Remember, you do NOT have to fund the plan for the state you live in. You can fund in any state, but this may have implications for those who have state income tax.

If you are interested in forming a 529 savings plan, please call us to schedule an appointment.

A New Year, A New Tax Bill

The overall theme of the tax bill is to lower taxes for all, but as always, the devil is in the details. There are numerous provisions to the proposed sweeping changes, so I will highlight a few from the House version that I believe will be most pertinent to our clients.

The Good

  • Simplifies the number of tax brackets from seven into four.
  • Doubles the standard deduction. This will have a benefit to a significant number of taxpayers as approximately 75% of taxpayers claim the standard deduction.
  • Increases the child tax credit.
  • Estate Tax: Increases the exemption before tax is due to $10 million per person, with repeal after six years.
  • Retains the 1031 exchanges for real estate. This could be extremely beneficial if the estate tax is eliminated.
  • Eliminates the Alternative Minimum Tax.
  • Favorable treatment for income from pass-through entities, S corps and partnerships.

The Bad

  • Limits the mortgage interest deduction. This would reduce the tax benefit on mortgages over $500,000 and indirectly make the benefits of home ownership less attractive.
  • Restricts the amount of state and property tax. Amount to be determined.

The Ugly

  • Repeals the deduction for medical expenses.
  • Treats graduate student tuition waivers as taxable income
  • Eliminates the tax deduction that divorcees receive on their payments to ex-spouses. This would be effective for divorces after December 31, 2017. This provision would dramatically affect alimony computations.

What to Do?

These are some of the more pertinent proposals. So what steps should you take?

  • Delay recognition of income and capital gains until next year and accelerate payment of expenses that qualify as itemized deductions. Realize capital losses to set off any capital gains.
  • Consider setting up a donor-advised charitable fund to get the tax benefits now and flexibility to distribute to the charities at a future date. (Call us to assist you with this.)
  • Make sure you take required minimum distributions from retirement accounts if you are over 70.5.
  • As always take cyber security seriously and change your passwords.
  • Consider adding to or funding a 529 Plan for your children or grandchildren.

To learn more about how these changes may affect you please give our office a call to schedule an appointment.  And as always, consult your CPA to determine how these changes may impact your decisions.


A Note About Planning

The definition of investing is to commit money to a financial scheme with the expectation of achieving a profit. Financial expectations are beliefs that something will happen or be achieved in the future.

The core question in a financial plan is something like “Do you, or will you, have enough money?” When we meet and talk about your situation we spend most of the time validating allocations, investments, and returns, and we create a never-ending mix of assumptions. Our financial principles rest on the wisdom of financial behaviors and principles that need to be applied to better a client’s situation.

We want to keep risk in perspective as your wealth situation changes, and you may discover that your personal risk profile has changed because of investment growth. There is a “payoff” between risk and return, and it is important to understand where you are. This gives us an opportunity to meet with you to have a conversation about protecting as well as building your net worth.