Five Reasons to Hire a Financial Adviser

In an age of political unrest, ever changing regulations, and an array of different financial services offerings many Americans could benefit from using a wholistic Financial Adviser. More often than not, we find ourselves sitting down with clients who have gone years without getting the help they need (before meeting us, that is). In this week’s blog, we have decided to put together a list of concerns that trigger people to reach out to an adviser.

  1. You Are Feeling Overwhelmed
    We can help you identify your goals and develop a plan that is going to help you achieve them. You work too hard to spend your time studying the complicated world of finance, so let us do it for you.
  2. You Are Not Sure Who to Trust
    If you think you are being sold a product rather than sound advice, you are probably right. It may be time to talk to your current adviser about how they get paid. Your adviser works for you, and should be compensated fairly for their work, but it is important that you understand what their motivations are behind their advice. That is why we take so much pride in our simple and transparent fee structure. We can easily explain exactly what you are paying for our services, so that you can be sure that our best interests are aligned with yours.
  3. You Want to Leave a Legacy
    Whether you want your property or business to stay in the family for generations to come or you want to leave a make a meaningful contribution to a cause that you are passionate about, you need help designing a plan. Without professional oversight your assets could be diminished by after death taxes or worse, not get to their intended destination at all.
  4. You Have a Business to Run
    Is your business structure right for you? What additional benefits could you be providing your employees? Are your business systems correctly aligned with your personal financial goals? What is the long-term plan to grow and expand? We can address these concerns by creating a cohesive plan- implement the correct tools to maximize overall efficiency, monitor the results and adjust the plan as circumstances change over time.
  5. You Are Not a Robot
    Even the most cool and calculated investors benefit from the opinion of a third party. It is human nature to react emotionally to fluctuations in the market, even though we know historically such volatility is to be expected. Having a professional can help talk you through your fears, and build confidence that your plan is strong enough to withstand market downturns.

These are just a few of the compelling reasons to reach out to a financial adviser. At Granite Financial Partners, our wealth advisers are professional stewards and true advocates for our clients. The cornerstone of our client partnerships is our comprehensive wealth planning process, which transcends simple financial planning to provide high-level wealth preservation strategies and coaching. Where knowledge, experience, and education intersect, there lies True North. If you are at all interested in learning more about our process, please do not hesitate to call us at 603-554-8551.

How To Find Money To Invest In Your Budget

This week we’ll review a great clip from Morningstar’s Christine Benz. She is regular contributor to Morningstar, a very highly respected financial research company. She tells us a few very basic rules of thumb for squeezing those few extra investment dollars out of your budget. Whether you are barely scraping by on your current budget or coasting on a higher income, there is no reason to let money slip through the cracks. Here is my summary of Christine’s three money saving tips and a link to her video below.

First: Start with the Savings In Mind

It is all too easy to find ourselves budgeting backwards. By this I mean we live our lives and decide what to do with what is left of our income afterwards. Christine suggests starting with a savings target first and living within the parameters of your remaining income second. We at Granite Financial Partners would have to agree. It cannot be said enough, “failing to plan is planning to fail”. Too often we see well intentioned people fail in their financial goals because of simple errors in philosophy. Call us to set up a cash flow planning meeting and we can make sure you are on track.

Second: Higher Salary Should Mean Higher Savings

As your income adjusts, so should your savings goals. Higher earners should be setting aside more, not only from a dollar amount standpoint, but from a percentage of income standpoint as well. Christine recommends targeting at least a 20% savings rate and while that is a good suggestion, we recommend a professional consultation to make sure your additional savings are accomplishing what you want them to. Depending on your situation different tools and strategies have varying efficacies at achieving different goals. Let us help you sort through the financial labyrinth to be sure your additional savings are really accomplishing what you want them to.

Third: Automate

The easiest way to stay on track with a savings goal is to automate your contributions. Just like with a bill payment, your 401k and IRA contributions can set to take place automatically at an amount and interval of your choosing. This ties closely with our first segment, “Start With the Savings In Mind”. It is much easier to meet your savings goals with it is set to automatically withdraw periodically. This brings the additional benefit of dollar cost averaging. The concept here is if you invest at a scheduled time repeatedly over the years you will be investing in both positive and negative markets. This allows you to invest at the long-term average cost.

Thank you for reading and I hope you enjoy the video below as much as we did. Please reach out to us at Granite Financial Partners directly with any questions or comments and be sure to tune in next week for more helpful insight.

Retained Life Estate: You Get What You Give

Among the most pressing questions when formulating a cohesive estate plan is what to do with an individual’s residence. For many, residential properties make up the largest or among the largest portion of one’s net worth. Believe it or not this can couple nicely with one of the most commonly use estate tax strategies as well, charitable giving.

We at Granite feel strongly about the altruistic aspect of such donations, but the tax advantages can also be enticing if deployed properly. We’ve done a lot to support clients in creating Qualified Personal Residence Trusts as well as Donor Advised funds in the past. One should strongly consider both the philanthropic and tax advantages to incorporating these strategies in an estate plan. This week we will skim the surface of the Retained Life Estate conceptually and seek to explain where and why it can be a good fit. The core concept is that the donor gifts the property to a nonprofit organization of their choice, retains the right to live there for a term (such as the life of the donor and their spouse), and upon their death the property is given to this organization. In the meantime, the donor reaps the benefits of a charitable tax deduction. This is a complex strategy, but we will attempt to break it down for you in plain English.

Defining the personal residence

The Retained Life Estate is required to be a personal residence. The important distinction to make here is that the property need not be an individual’s full time home. As long as the property is a home, is not being lived in by anyone else, and is not producing revenue it can be defined as a personal residence. For example a lake house, vacation home, or condominium all qualify. You can even donate a farm if you choose. It is also important to point out the items and property within the home must be given separately, and won’t be factored into this calculation.

Tax Considerations

No tax deduction is allowed for donations of partial ownership in a property on federal income taxes except in the cases of a charitable remainder unit trust, pooled income fund, or a qualified charitable remainder annuity trust. These exceptions mean that you cannot claim this deduction based on the partial gift of a property, but you can claim a deduction based on the amount of your ownership in the asset, as long as the other owners contribute their ownership in the property as well.
Like all charitable donations, a retained life estate has a tax deduction limitation of up to 30 percent of the donor’s adjusted gross income. Additionally, any leftover portion of the remainder interest value can be carried over for up to 5 years.

Donors can receive a charitable deduction on federal taxes equal to the amount of the net present value of charitable remainder interest. If this calculation sounds complicated, that’s because it is. Factors include market values of the property, depreciable improvements, depleted resources, salvage value of these improvements at the end of their use and the Applicable Federal Midterm Rate among other things. This is why it is imperative that you call a professional like Granite Financial Partners to assist you in utilizing this strategy.

The final benefit of such a transaction is that the real estate is no longer included in your taxable estate upon death. If you don’t want to burden your family members with selling the property, this can be effective in avoiding that as well. In summary, the end the Retained Life Estate donation allows you to capture a sizeable income tax deduction while you are still alive, live in the property until you pass, then exclude the property’s value in your estate tax calculation, in exchange for forfeiting your family’s ownership of the property upon your death.

Flexible Timeline

As the donor of a Retained Life Estate, you oversee how you reap the tax advantages as well. You can design the gift to be measured by a lifetime (how long you will live, passing the real estate to charity in full upon your death), by a term of years, or a combination of the two. If you decide upon a term of years there are no maximums or minimums required for tax purposes. Meaning that this term could be one year or 30. Combining the two would mean the donor can transfer a portion of the property over a specified period, then retain ownership of the rest until death.

You Design the Agreement

When you donate a property, you are doing a good thing for an organization that matters to you. As the donor and original owner of the property you are granted the opportunity to set the terms of engagement up front. It is prudent to employ legal help to craft a professional gift agreement that establishes the details on responsibilities like remodeling, repairs, utilities, insurance, and the many other considerations with property ownership. Additionally, it is wise to establish a clear dispute resolution process in case unforeseen issues arise.

Don’t Go Alone

A retained life estate is a complex blend of financial and legal strategy that is best left to the professionals. If you think this or a similar tactic could work for you start by setting some time aside to meet with us at Granite Financial Partners. Based on our conversation we can help you decide whether this is really the best fit for you, or if another option may be more advantageous. Implementing this strategy is a big undertaking but the altruistic and financial value is substantial, reach out to us to hear more.