With retirement on the horizon, it’s imperative to consider several key financial factors before entering what may be the most enjoyable and relaxing time of your life. If you bypass these considerations, there is a significant chance you’ll end up with less money saved.

Therefore, to boost your retirement savings, ask yourself these seven key questions:

#1 – Does my ability to afford retirement depend on Social Security benefits?

According to Kevin Woods, CFP® and Director of Financial Planning at Gratus Capital, the answer to this question will ultimately determine when to begin collecting Social Security. It’s important to know that if you postpone collecting Social Security benefits by four years, from age 66 to age 70, you’ll receive additional Social Security income. However, many investors neglect to run a breakeven analysis regarding this income postponement.

Keep in mind that it takes about 11 years to reach the breakeven associated with delaying your benefits until age 70. Specifically, it isn’t until every year past age 81 that you’ll begin to receive more overall from Social Security than if you started collecting at age 66.

Beyond pressing financial needs, another key determination of when to begin collecting Social Security benefits is your health. Waiting 11 years may be a long time for some individuals, but not others. Ask yourself how healthy you are and if your parents lived well into their nineties? If so, then it may make sense for you to postpone taking Social Security.

Overall, without running a breakeven analysis, you won’t have a complete financial picture.

Helpful Resource: The Social Security Administration offers a simplified document explaining when to start receiving retirement benefits.[i]

#2 – When should I enroll in Medicare medical insurance?

“Every 65-year-old should enroll in Medicare Part B, whether retired or not,” said Woods. “If you don’t enroll during the enrollment period for Medicare Part B or prescription drug coverage, you run the risk of being charged higher premiums for the rest of your life. There is a seven-month window for enrolling in Medicare Part B, beginning three months before you turn age 65. Also, you’ll want to research supplemental insurance coverage, which could ultimately save you thousands of dollars in retirement.”

Helpful Resource: Detailed instructions for applying for Medicare.[ii]

#3 – What is the tax impact on my retirement savings?

Your Individual Retirement Account (IRA) savings are not all yours,” said Woods. “Expect to pay roughly 25 to 30 percent of your Traditional IRA or 401(k) savings toward taxes. For example, if you believe you have $80,000 to live off each year, yet haven’t accounted for taxes, then in reality your income is closer to $55,000 after taxes.

Also, keep in mind that you may need to pay taxes on your Social Security benefits.[iii]

#4 – Should I hold onto my life insurance policy?

There are a couple key reasons to maintain life insurance policies throughout retirement.

First, it’s important to conduct a liability risk review. Specifically, if you’re sued during retirement, ask yourself how much of your nest egg is exposed? Keep in mind that an IRA is only protected up to the first one million dollars. This becomes particularly important if you’ve rolled other financial funds into this one vehicle, surpassing the protection threshold.

In many instances, and depending on the structure of your policy, life insurance assets are protected from creditors and other judgments. However, without a comprehensive risk analysis, it’s difficult to determine whether continuing to pay life insurance premiums makes sense or not.

Second, some investors have single-life pension benefits that end upon the insured person’s death. This loss of income could negatively impact your spouse or another loved one.

#5 – Can I afford to continue my charitable giving in retirement?

Having a fixed income in retirement doesn’t mean that there isn’t room for charitable giving in your financial plan. Consider giving a percentage of either your total net worth or of your annual net income.

Let’s say you’ve been earning $300,000 annually for the past many years and donating five percent of your annual income meaning $15,000 each year. Then, consider the same approach in retirement.

For example, if your retirement income is now $150,000 per year, you could continue to contribute five percent ($7,500) in annual giving. “This way you can continue to make a positive impact within your community, yet realign your approach with your revised retirement income,” said Woods.

Helpful Resource: Comprehensive Charitable Giving: 7 Steps to Create Positive Impact & Change

#6 – What am I retiring to?

Have you considered what your retirement days will look like 365 days a year, year after year? Many pre-retirees neglect this important process. Will you volunteer, golf, travel, watch your grandchildren or something different altogether? If so, how often, and what will you do with your remaining time beyond these activities?

According to Woods, picturing the life you’ll pursue while retired is a critical planning step towards experience a fulfilling retirement.

#7 – Should I pay off my mortgage?

“If at all possible, retire debt free,” said Woods. “At the very least, own what you can afford since you’ll be using your retirement savings to pay off your mortgage. The years just before retiring are an excellent time to reset your mindset regarding spending. For example, if the new Lexus you want today at $50,000 equals five percent of your future retirement savings, are you still okay with this purchase? Only you can decide. However, the closer you are to retiring, the more aware you should become about large purchases as well as other long-term financial commitments and their respective impact on your retirement savings.”

In Closing

The questions to ask yourself in preparation for retirement can sometimes seem daunting. The sooner you start tackling these questions, the better. We can help.  If you have questions pertaining to any element of your financial life, including retirement, estate, insurance, tax and philanthropic planning or asset management, please contact us.

Authored By:

The above article is intended to provide generalized financial information; it does not give personalized tax, investment, legal, or other professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other matters that affect you or your business.





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Is your estate plan set up to manage some of the most common problems that happen in life? Does it reflect your latest wishes as well as the current estate tax environment? For example, have you moved, had another child or reached a financial threshold that necessitates planning for additional tax-saving maneuvers to help your heirs?

Today, we’ll discuss the five most common estate planning mistakes so that you may account for them, ultimately helping you to create a stronger estate plan.

Mistake #1 – Neglecting to Maintain Current Estate Documents

“Individuals and families should review their estate planning documents every few years and sometimes more frequently in the event of significant tax reform like we’ve just seen or if there are changes within a family such as death of a spouse, birth of a child or material net worth changes,” said Jennifer Jones, CPA, CFP®, CTFA and Estate Planning Consultant with Gratus Capital. “There are two key areas to consider when updating your estate documents: specifically, tax and non-tax considerations, the former of which affects fewer people due to recent tax law changes. It’s important to ensure that your estate plan aligns with your current balance sheet and overall situation.”

Jones highlights two key situations that typically necessitate updating estate plans:

  • Change in Circumstances: It’s important to ask yourself what has changed in your life in the last few years.

For Example:

Is your executor still alive, mentally sharp and in good standing in order to still manage your estate when you’re gone? Or, are your children now adults who no longer need the protective measures your estate plans dictate? If one of your children works in a highly litigious field, have you accounted for this within your estate plans? Or, if a loved one is fighting substance abuse issues, should you update your estate plans to include a contingency on passing a drug test before any distributions?

  • Change in State Residency: Some states have their own transfer tax laws. Therefore, it’s important to understand if the state you’re considering moving to or purchasing a second home in could have an impact on your estate planning.

By planning ahead, you may create the opportunity to minimize or defer these taxes. Most licensed attorneys are familiar with planning strategies specific to their states such as using a Credit Shelter Trust[i] for applicable state exemptions.

Mistake #2 – Possessing Non-Flexible Documents

“Well-written estate documents have built-in flexibility,” said Jones. “Equipping executors with flexibility at the time of an individual’s death is extremely important, particularly with the ongoing uncertainty surrounding the future of estate tax laws. Flexible documents enable the executor of your estate to make decisions based on circumstances at the time of death, rather than what was drafted years earlier. Flexibility can help your executor avoid making unnecessary tax payments.  For example, a disclaimer may allow the surviving spouse to decide whether to receive funds outright or via a Credit Shelter Trust, depending on circumstances at the time their spouse dies rather than having the trust automatically fund.  A potential benefit of not automatically funding a Credit Shelter Trust is that the assets would receive a second basis step up on the subsequent death of the surviving spouse. With estate exemptions continuing to rise, this type of income tax planning may trump more traditional estate tax planning such as the automatic Credit Shelter Trust funding. Your advisor team can evaluate sensible options based on the specifics of your situation.

Naming a trust protector is another approach to incorporate flexiblity. A trust protector is someone who is appointed to watch over a trust to ensure it is not adversely affected by changes in the law or circumstances through powers granted to modify the trust as applicable in the future.

Mistake #3 – Failing to Plan Holistically

It’s important to view your estate plans holistically. Titling and beneficiary designations are often overlooked areas of estate planning. Jointly titled property and beneficiary designated assets such as retirement accounts and life insurance typically will not flow through your will, so care should be taken to ensure planning for these assets is consistent with the rest of the estate plan. A comprehensive plan accounts for all of your assets.

Some clients opt to use Revocable Trusts. In addition to providing for management of affairs in event of client incapacity, Revocable Trust assets do not pass through probate which protects clients’ privacy and can also expedite distribution of assets to beneficiaries. In certain situations, clients might instead use transfer on death (TOD) accounts to avoid probate.

Overall, using a holistic estate planning approach helps to:

  • Ensure distribution of assets consistent with testator intent
  • Distribute assets in an estate and income tax-efficient manner
  • Maintain client privacy
  • Reduce probate fees
  • Provide loved ones quicker access to your assets

#4 – Lacking Access to Estate Plans

In the event of your death, it’s important for your loved ones and your executor know where your estate documents are stored. In order for your executor to probate your will, he or she will need access to your original will. This then raises the question of where to store your original documents.

“Many attorneys will retain original documents in their firm’s safe.  This is a good option to ensure originals can be obtained when needed.  Sometimes clients prefer to store their documents in their home safe,” said Jones. “Regardless of where you choose to store them, make sure your advisors and/or executor know where to find the original documents.”

In today’s digital age, it is likely passwords to your asset-related accounts will be helpful to your executor.  Your family may also find comfort in having access to other accounts, such as online photos and social media. Digital password managers can be helpful for maintaining passwords. Generally, with a digital password manager, you’ll only need to remember one master password. This one password can be kept with your estate planning documents.

#5 – Ignoring Tax Implications

If you have considerable assets, proper planning can prevent your heirs from incurring avoidable inheritance taxes.

Irrevocable Life Insurance Trust (ILIT)

One strategy to help minimize estate taxes and provide financial resources to help your heirs pay estate taxes is to use an Irrevocable Life Insurance Trust. A life insurance trust is an irrevocable trust that both owns and is the beneficiary of one or more life insurance policies. Upon the death of the insured, the trustee invests the insurance proceeds and administers the trust for one or more beneficiaries.

If properly set up and administered, assets owned by the ILIT will not be considered part of your estate for estate tax purposes—meaning your heirs won’t have to pay transfer taxes on the life insurance death benefits received after your death. With higher exemptions (approximately $22 million per couple under the Tax Cuts & Jobs Act), the tax planning aspect of ILITs are not relevant to as many clients, but for those that still have taxable estates, they can be an excellent strategy.

“ILITs should not be taken lightly,” said Jones. “It is important that administrative procedures are followed in order for the benefits of ILITs to be fully realized.”  For example, the ILIT should have its own bank account from which life insurance premiums are paid. Additionally, “Crummey notices,” which let beneficiaries know of contributions to the trust and their rights to those contributions, are often required to qualify contributions to the trust for the annual gift tax exclusion. While cumbersome to some, in many cases, the tax-savings of ILITs can be well worth the extra effort.

In Closing

Estate planning can be quite complex, particularly in an ever-changing tax policy environment. If you have estate planning questions or other concerns regarding any element of your financial life, please contact us. We welcome the opportunity to be your financial advocates and provide you well-informed and clear answers.

Authored By:

The above article is intended to provide generalized financial information; it does not give personalized tax, investment, legal, or other professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other matters that affect you or your business.



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It’s expected that in 2017 more than 62 million Americans will receive roughly $955 billion in Social Security benefits.[i] The vast majority of these individuals need this income in order to afford retirement.

In this post, we’re seeking to help individual investors who don’t need Social Security income. Specifically, we want you to better understand how to value Social Security within your overall financial plan.

Medium to High-Net-Worth Individuals

You’ve been contributing to Social Security for many years, and even though you may not need the added income, it’s your right to collect it. Therefore, we’d like to outline some concepts for you to consider when contemplating the overall value and benefits of Social Security and how they factor into your life.

Even though you don’t need the money, there are some legitimate reasons to collect your Social Security benefits early, just as there are key reasons to hold off collecting until you’re age 70. Furthermore, some creative strategies for this excess income could make a tremendous positive impact on another life.

Here are 4 Concepts to Consider:

#1 – Supplement Income During Retirement

“When working with many of our clients, we tend to view Social Security as supplemental income to be used during retirement years,” said Kevin Woods, CFP® and Director of Financial Planning at Gratus Capital. “Even though you may not need Social Security given your sizable retirement savings, it’s important to value the benefits derived from Social Security income.”

For example, Social Security can be used to supplement health care and Medicare costs, provide investment income, pay for unexpected lifestyle needs, and to help with future expenses overall. “Social Security adds value to almost any financial plan, and it’s important to identify how this income will be allocated during your retirement years,” said Woods.

#2 – Redistribute Social Security Income

Let’s say you’ve grown your financial assets to the point that you have no real need to spend your Social Security income, yet you’re still receiving $2,000 a month in benefits. There are many beneficial ways to redistribute this income while helping others and enriching lives at the same time, according to Woods.

He cites the following examples:

  • Grandchild’s college education
  • Adult child’s first home or business
  • Alma mater
  • Irrevocable trust for special needs dependent
  • Loved one’s long-term care
  • Humanitarian and other Charitable Giving Efforts
  • Travel expenses for outreach volunteers

#3 – Reasons to Collect Social Security Early

“While your robust investment portfolio will likely cover your retirement expenses, there are generally three reasons to consider taking Social Security early,” said Woods.

These Include:

  1. Health
  2. Change in investment income
  3. Higher expenses early in retirement

However, there may also be a fourth reason to consider collecting Social Security early.

In a recent Kiplinger article[ii], Financial Advisor and CERTIFIED FINANCIAL PLANNER™ Professional Scott Hanson discusses the concept of “means testing” and suggests that high-income retirees may ultimately receive reduced Social Security benefits.  He writes, “One thing we know is that Social Security, in its current form, cannot continue forever. There simply aren’t going to be enough workers to pay for the benefits of all the projected retirees. Payroll taxes will either have to increase, or benefits will have to be reduced…or a combination of both.”

Hanson reminds us that for roughly its first 45 years, Social Security income was tax-free. However, as the years passed, laws were passed and wealthier individuals’ benefits were taxed.  The tax situation has also been compounded, given federal income tax increases.

Along the same lines, many of Woods’ clients believe that the Social Security system won’t sustain itself and, therefore, choose to collect their benefits as early as possible. Woods agrees that decreasing Social Security benefits for wealthier individuals is a valid concern and that collecting benefits early is a reasonable response relative to your individual goals.

For more information regarding Social Security means testing, read the AARP Public Policy Institute’s Reforming Social Security[iii] special report.

#4 – Reasons to Delay Taking Social Security

According to AARP[iv], the longer you wait to start collecting your Social Security benefits, the higher the amount you’ll receive.  The popular social welfare organization cites the following examples:

If you postpone collecting Social Security until your full retirement age of 66*, your benefit will be 25 percent higher than if you started as early as possible.  However, if you delay collecting beyond your full retirement age, then your benefit will go up eight percent a year until age 70, essentially equating to a 32 percent bonus.

In general, Woods recommends delaying your Social Security benefits until you reach age 70. A key reason is due to a frequent income earning disparity among couples, whereby one spouse has earned significantly more income over the years as compared to the other spouse.  By waiting, you’ll likely leave your surviving spouse in a stronger financial position.

For example, one spouse may be eligible to receive $2,500 per month in Social Security benefits at age 70, while the other spouse may only receive $1,500 per month.  If the greater-earning spouse passes away, the surviving spouse would receive the greater of the two Social Security benefits payouts, i.e., $2,500 rather than $1,500 a month.

Special attention should be given to the status of your health and that of your spouse when determining the best time to start collecting your Social Security benefits, said Woods.

*Your full retirement year is based on the year you were born.  To determine your full retirement year, consult Social Security’s Retirement Planner: Benefits by year of birth[v].

In Closing

Gratus Capital’s financial planning approach addresses complex wealth management issues faced by our clients.  And while many of our clients do not rely on their Social Security benefits to experience a financially fulfilling retirement, we believe that the value of this income should be included within every financial plan.  If you have questions regarding your Social Security benefits or any other financial, estate or trust planning concerns, please do not hesitate to contact us[vi].

Helpful Resources

Obtaining Your Social Security Online Statement[vii]

Social Security Estimator[viii]

Authored By:

The above article is intended to provide generalized financial information; it does not give personalized tax, investment, legal, or other professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other matters that affect you or your business.










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Over the years, we’ve received many questions regarding Individual Retirement Accounts (IRAs). Typically, most investors want to know if they should choose a Traditional IRA or a Roth IRA.  However in reality, while there are differences as well as pros and cons for each, the key focus should be on avoiding the most common mistakes pertaining to IRAs in general.

Today, we’ll discuss five of the most common mistakes that we’ve seen.

#1 – Neglecting to Update Beneficiaries

Believe it or not, this is one of the most common mistakes individual investors make when it comes to managing their IRA, said Al Meadows, MBA, CFP® and Wealth Advisor with Gratus Capital.

“If you haven’t assigned a beneficiary for your IRA and do not have a will or trust established when you die, then the distribution of your IRA proceeds will be determined by the probate court,” said Meadows. “Also, many people are surprised to find out that beneficiary designations will override provisions in a will or trust agreement.  Unfortunately, I’ve heard of situations where someone’s hard-earned money went to someone they didn’t want it to go to, such as an ex-spouse still listed as the beneficiary.”

Meadows recommends revisiting your beneficiary designations for all of your investment accounts no less than once a year.  He adds that it’s particularly important to update your beneficiaries when there is a significant change in your life, e.g., divorce, death of a loved one, purchase or sale of a business, etc.

#2 – Roll-Over Mishaps

One of the key reasons an investor transfers their IRA savings is due to a change in employers.  In general, as long as you’re transferring your IRA retirement savings as a “directed distribution,” meaning from one trustee to another, you don’t need to worry about unplanned taxes or early withdrawal penalties.

However, if you request a withdrawal in the form of a check or direct deposit, you have only 60 days to roll this money into an IRA in order to avoid an early withdrawal penalty and additional ordinary income taxes.

Furthermore, if you receive a direct withdrawal of your IRA funds, keep in mind that the trustee is required to withhold 20 percent of your total IRA balance.  Why?  Because the IRS assumes that you’re keeping the other 80 percent (not rolling it over into another IRA account) and, therefore, requires the trustee to facilitate the withholding of your savings in order to pay the income taxes on the 80 percent that you retained.

If you do decide to roll over your direct withdrawal of 80 percent into an IRA, you must then come up with the other 20 percent in order to avoid the above penalties.  The trustee can’t distribute this money to you.  Rather, it will be reflected as a credit on your next income tax return, said Meadows.

#3 – Forgetting about Required Minimum Distributions (RMDs)

According to the IRS[i], you can’t keep retirement funds in your account indefinitely. Generally, you have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA or retirement plan account when you reach age 70-1/2.  Roth IRAs do not require withdrawals until after the death of the owner.

To determine your required minimum distribution, the IRS provides several different worksheets[ii].  The IRS adds that you can withdraw more than the minimum required amount.  Your withdrawals will be included in your taxable income, except for any part that was taxed previously or that can be received tax-free, such as qualified distributions from Roth accounts[iii].

“Sometimes investors forget that they have a small IRA tucked away somewhere,” said Meadows. “One time, when a new client came to me with 4+ million in assets, we discovered that he had a $100,000 IRA sitting in a self-directed account that he hadn’t touched in more than 20 years.  Since he was retired, we quickly accounted for his minimum distribution so that he could avoid any further unnecessary penalties.”

#4 – Over-Contributing to an IRA

According to Meadows, there are limitations as to how much you can contribute to a Traditional or Roth IRA each tax year.  Investors under age 50 may contribute up to $5,500 per year. Investors age 50 and older may contribute up to $6,500 each year.  However, how much you can actually contribute is determined by your income.  Also, tax deductions related to these contributions depend on whether or not you or your spouse are covered by an employer-sponsored retirement plan.

If you or your spouse are not covered by an employer-sponsored retirement plan, then refer to this chart to determine your tax deductions and income requirements.  However, if you or your spouse do have an employer-sponsored retirement plan, then refer to this chart instead.[iv]

#5 – Mindset & Emotional Mistakes

There are a handful of other IRA mistakes that Meadows has seen over the years, including mindset or emotional mistakes.

For Example:

  • Not starting soon enough – It’s never too soon to start saving for retirement. The key is to open an account now and set up an automatic deposit.
  • Not taking advantage of the “catch up” contribution – The IRS enables investors to contribute more to their IRAs when they reach age 50, up to $6,500. The extra $1,000 a year can truly make a difference for those reaching retirement said, Meadows.
  • Stopping contributions – Some investors think they have enough money already, so they stop contributing to their IRA. With increasing longevity and inflation, there really isn’t much downside to continuing your contributions, said Meadows.

In Closing

At Gratus Capital, we consider IRAs, 401(k)s and many other retirement savings vehicles to be key tools in building, diversifying and sustaining long-term wealth.  We encourage all individual investors to contribute no less than the amount your employer matches, and ideally more.  If you have questions about your retirement vehicles or other financial questions pertaining to financial, estate, insurance, tax and philanthropic planning or asset management, please contact us.

Authored By:

The above article is intended to provide generalized financial information; it does not give personalized tax, investment, legal, or other professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other matters that affect you or your business.






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Do you dream of owning a ski, beach or lake house? Well, you’re not alone. In fact, according to leading statistics company Statista, roughly 2.1 million people last year said they plan to buy a second home within the next 12 months1.

If a special hideaway is on your wish list, then planning ahead is highly recommended in order to remain financially sound. To help you make an informed purchasing decision, we asked Gratus Capital Director of Financial Planning Kevin Woods, CFP® for some advice. [This is really strong, considering our disclosures.  How about – To help you get started, we asked Gratus Capital Director of Financial Planning Kevin Woods, CFP® for his thoughts on making a detailed plan, first.]

What follows are six key considerations Woods encourages you to ponder before signing on the dotted line for a second home.

#1 – Estimate Real & Unexpected Costs

The very first consideration for buying a second home is to ask yourself if you can actually afford it, says Woods.

There are many people that think they’ll buy their second home, rent it and make money, or make enough from rental income to substantially subsidize their bills,” says Woods. “Unfortunately, a great deal of the time this doesn’t turn out to be true. Generally, it’s because many home buyers underestimate the actual carrying costs of owning a second home, above and beyond a second mortgage, property taxes and insurance.”

These Additional Second Home Expenses May Include:

  • Utilities
  • General maintenance & repairs
  • Security system
  • Mowing & lawn services
  • House cleaning services
  • Internet & cable
  • Water & sewer
  • Trash & recycling removal
  • Seasonal maintenance for heating, cooling, hot tub/spa, fireplace, gutters, septic pumping, pesticide spraying, etc.
  • Opening and closing of pool, spa and irrigation system
  • Long-term maintenance for exterior painting, driveway sealing, roof and appliance replacements
  • Travel expenses to reach second home
  • Insurance riders, e.g., snowmobiles, pool, speedboat, etc.
  • Flood insurance
  • Property manager

Hidden Expenses

Remember to account for association fees, such as condo fees, says Woods. Additionally, watch out for an association’s periodic assessments.

Examples Could Include: A one-time $1,500 fee assigned to each condo owner for a new roof, a $5,000 fee for a town-mandated water system upgrade, or a $7,500 assessment post-hurricane damage, and so forth.

Woods also reminds us to look out for individual state property taxes, since some can be significantly higher than what you’re currently used to with your primary home.

Woods recommends that once you’ve isolated all of your variable expenses, double them for the first 10 years of ownership. If you can afford your second home after doubling all monthly variable expenses, then more than likely you can actually afford it. “Keep in mind that at any moment you could lose your job,” says Woods. “If this were to happen to you, do you have enough buffer to continue affording your second home?”

Bankrate® provides a simple home loan calculator that you can use to generate a quick snapshot in qualifying for your second home.

#2 – Identify Usage:  Renting, Personal Use or Both

It’s important to decide if you’ll use your second home for personal leisure, as a rental or both. The key reason to make this determination before purchasing a second home is due to tax ramifications.

For Example:

According to Investopedia, as long as you use the property as a second home and not a rental, you can deduct mortgage interest and property taxes the same way you would for your primary home. You can rent your property for 14 days or less each year without needing to report this as income to the IRS.

However, the financial education portal adds that when you rent out your second home for 15 days or more and either use it for less than 14 days or 10 percent of the number of days the home was rented, it’s now considered a rental property, and you must report all rental income to the IRS. Of course, you’ll be able to deduct a portion or all of your rental expenses, including mortgage interest, property taxes, insurance premiums, fees paid to property managers, etc.

TurboTax provides some detailed scenarios of renting versus personal use and the respective tax ramifications here.

Also, keep in mind that the market fluctuates. A property that is easily rented today may take weeks or maybe even months to rent a few years from now. “We simply don’t know what the real estate market will demand from year to year,” says Woods.

#3 – Titling Your Second Home

If you’re renting your second home, Woods suggests forming a Limited Liability Company (LLC) for the property, helping to protect your personal assets if your rental business is sued. For investors owning a property outside of their resident state, Woods suggests that you title your second home within a revocable trust, helping your loved ones avoid probate should anything happen to you.

#4 – Manage Borrowing Requests & Minimize Resentment

According to Woods, often when you purchase a second home, you’ll start hearing from long-lost relatives and friends asking to stay over or even borrow your second home outright.

Therefore, it’s important to plan ahead and set limits. The first question to ask yourself is, will I allow others to use my property? If so, who and for how long and how often? If you do allow others to use your second home, it’s important to establish rules, such as no smoking or pets, or no one under the age of 21 without an older adult.

“The most important thing to keep in mind is that your vacation home is yours,” says Woods. “You’ve worked hard and have been financially responsible, enabling you to purchase a second home in the first place. And while it’s nice to have guests or to do a favor for someone who needs an affordable vacation alternative, you do not owe anyone a place to stay. Nor do you need to provide an excuse as to why they’re not allowed to use your second home. You’ll enjoy your hideaway more when you manage your expectations, not others’.”

Real Simple provides some great examples of guilt-free strategies for saying no to various types of requests from friends and family members. All of us at Gratus Capital especially enjoyed the first strategy, “Saying no for the sake of your wallet.”

#5 – Estimate Time & Pressures

The concept of buying a second home is exciting, says Woods. Yet many buyers forget to take a step back and realistically consider exactly how much time they actually have to use their second home.

“I’ve seen second homes work out well for families that have very young children,” says Woods. “However, when kids enter middle school their activities become more of a commitment, to the point that they may be penalized if they miss a game or practice. Your 9-year-old may love skiing or camping now, but as he ages, he may lose interest and resist the idea of driving to the mountains. Ask yourself if you’re prepared to manage such situations.”

Also, it’s important to ask yourself if you’ll feel pressured to use your second home every time you vacation versus taking a different vacation, given that you’re paying a substantial amount of money to maintain your second home. Woods says that vacation home owners often feel a pressure to vacation at their second home. This travel limitation can ultimately lead to resentment.

#6 – Maintain Formal Co-Ownership Agreements with Friends & Family

If you’re considering co-owning a second home with a close friend or family member, Woods suggests that you have a clear agreement before signing on the dotted line. “Keep in mind that people’s lives change, and not everyone is successful at projecting their future goals,” says Woods.

“For example, someone may decide they want out of the house because they need the money to help pay for their child’s college education.

It’s important to discuss the nitty-gritty when creating your co-ownership agreement. In fact, if any member of the two parties starts to get agitated with developing an agreement, this could be a sign that you may not want to get into business with this individual. If you’re unable to have ongoing, open and difficult conversations with your co-owners, then the partnership will likely fail.”

At a minimum, Woods suggests that you include the following in your agreement:

  • A list of shared expenses and distribution of expenses.
  • Facilitation of repairs.
  • Usage scheduling, who can use the house and when, including key vacation periods?
  • Guests, who, how many and how frequently?
  • House restrictions, e.g., no smoking, no pets, no adult children without parent present, etc.
  • Buy-sell agreement. The latter would allow you to take out life insurance on the co-owner, enabling you to buy his or her share of the property in the event of their death. Otherwise, you could end up sharing your second home with your best friend’s adult children who may not like your established rules.

In Closing

“I’m all for individuals and families purchasing a second home,” says Woods. “I, too, value quality time and relaxation with my family. Still, it’s imperative that you consider both the financial and emotional factors associated with owning a second home. If you can afford it, that’s terrific. However, do you have the patience to manage it, including enforcing boundaries regarding friends wanting to use your special hideaway? Owning a second home, even if you have the money, isn’t for everyone.”

At Gratus Capital, we take our clients’ lifetime goals very seriously. This includes their desire to secure a second home, whether it be for a personal escape or as another form of income. However, the purchase of a second home has both short and long-term ramifications on your financial well-being. It’s important to weigh the purchase of a second home within your overall financial plan, particularly tax and estate implications.

If you have questions regarding the purchasing of a second home or any other question pertaining to your overall financial health, including taxes and estate planning, as well as investment and wealth management, please contact us. In delivering financial advisory services, we aim to be your collaborative partner and dedicated advocate.

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The above article is intended to provide generalized financial information; it does not give personalized tax, investment, legal, or other professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other matters that affect you or your business.

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No one likes to think about the idea that there may be no tomorrow, whether it be for themselves or a family member. But life happens, and it’s for this very reason that life insurance plays such an important role in protecting your family and financial interests.

The key question is, how much life insurance does one person or family need?

While the answer varies greatly depending on your personal situation, there are important considerations to evaluate in order to obtain a well-rounded answer. To help you start preparing a life insurance strategy, we asked Gratus Capital Wealth Advisor Al Meadows, MBA, CFP® for some first steps.

Initial Life Insurance Planning Steps

“When determining whether or not you even need life insurance, the first step is to ask yourself if anyone is financially dependent upon you,” says Meadows. “If so, then you need life insurance. The next step is to identify your current financial needs as well as your future goals.

Start by asking yourself what current and ongoing financial obligations need to be paid. Then consider your long-term goals. Do you want to pay for your children’s or grandchildren’s college education or a wedding or perhaps provide enough income so your spouse will no longer need to work? No matter what your long-term goals are, you want to purchase enough life insurance to supplement existing assets to cover what you need for today and also for your future goals.”

Common Oversight

Many people wait until they have children to purchase life insurance. Meadows says this is often a mistake.

“Keep in mind that you may have a mortgage and credit card debt, as well as vehicle and college loans,” says Meadows. “Many people can’t afford to pay these debts off without their significant other’s income. If this resonates with you, then you more than likely need life insurance right now whether you have children or not.”

Estimating Life Insurance Costs

Research firm ValuePenguin recently took an in-depth look at the average cost of life insurance across a number of different policy durations. The firm determined that the largest influencing factor on life insurance prices is the health of the individual being insured. In fact, individuals that smoke can expect to pay up to 200 percent more for their life insurance policies than nonsmokers.

As an example, for a 20-year term policy worth $250,000, a nonsmoking 30-year-old can
expect to pay $334.54 annually. However, for smokers, the same policy is $721.99. Insurance premiums increase as you age. For the same plan, a 40-year-old can expect to pay $432.36 and $1,175.35 respectively.

To find your age group, ValuePenguin has put together a detailed Average Cost of Term Life Insurance by Age[1] chart. As an added life insurance price benchmarking resource, the nonprofit organization Life Happens® offers a detailed life insurance calculator[2]. 

Term Life versus Permanent Life Insurance

There are two different types of life insurance:  term life and permanent life. The latter is also known as whole life. Term life insurance is good for a specific time period. It could be two, 10 or 30 years, or any amount in between. Permanent life insurance is a policy that you own your entire life.

According to Meadows, 90+ percent of individuals only need term life insurance. The idea is to determine the period of time that you or your life partner would need additional income if something were to happen to either of you.

Rarely does someone need to purchase permanent life insurance. However, Meadows identifies two legitimate reasons for needing a permanent life insurance policy:

#1 – If you have a special needs dependent since he or she will need to be taken care of indefinitely.

#2 – If you have a large estate, necessitating the need for added income to cover the cost of your estate taxes.

Employer-Provided Life Insurance

According to Meadows, large employers will frequently pay the premium for the first $50,000 of the employee’s group-term life insurance coverage as part of a full-time employee benefits package.

Downside Potential

While there generally is no downside to receiving the first $50,000 of term life insurance paid by your employer, there are downsides in taking out more coverage through your employer, says Meadows. Specifically, if you terminate your employment, you’re now without life insurance and are that much older, unnecessarily increasing the cost of acquiring another life insurance policy.

Meadows adds that there is often a misconception when it comes to employer-sponsored term life insurance. “Most people think it’s cheaper to go through your employer,” says Meadows. “But this isn’t always the case. In fact, if you’re a nonsmoking healthy individual, you’re potentially paying higher premiums due to the unhealthiness of some of your coworkers.” Meadows encourages everyone to explore the idea of an independent policy, above and beyond an employer-sponsored plan.

Key Man & Buy-Sell Life Insurance for Business Owners

Business owners face two unique challenges when it comes to life insurance, says Meadows.

#1 – If you’re a business owner and would suffer financially due to a “key” employee dying, then this insurable interest[4] enables you to take a life insurance policy out on the employee, referred to as Key Man Insurance. You can retain the policy, even if this vital employee quits.
#2 – Suppose you have business partners and one passes away suddenly. If you do not have enough money set aside, you could end up being business partners with your deceased partner’s spouse or adult children.

To avoid this, business owners will establish a buy-sell agreement whereby all business partners agree to a purchase price for their business. They then take out life insurance policies on each other in the amount needed to buy out the deceased partner’s share of the business.

More Life Insurance Planning Considerations

  • Be Mindful of Hidden Expenses: When estimating current and future expenses, be aware of the money that is not spent. A common example is a spouse who remains home to care for your children. If he or she dies, you would need to ensure that you have enough life insurance to pay for childcare and home upkeep.
  • Update Beneficiaries: An important step within your overall life insurance strategy is to ensure that you regularly update your policy beneficiaries, says Meadows. He suggests that you revisit all financial and estate planning accounts with assigned beneficiaries, no less than once a year, and most certainly when you have significant life changes, e.g., divorce.

In Summary

At Gratus Capital, we help our clients build comprehensive financial plans. Our plans encompass every financial facet of life, including life insurance, estate, retirement and tax planning. Furthermore, we’re actively involved in the structure of our clients’ life insurance policies, including helping them to determine how much they really need in relation to their current financial situation and future goals.

To minimize conflicts of interests, we do not sell life insurance nor do we receive a commission when we refer our clients to an experienced life insurance specialist.  If you have questions regarding life insurance or any other financial matter, please contact us. We welcome the opportunity to get to know you better.

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The above article is intended to provide generalized financial information; it does not give personalized tax, investment, legal, or other professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other matters that affect you or your business.





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You worry about them and work hard every day to provide for them, hoping they’ll grow up to be happy, healthy and independent adults. Yet as parents, we often scratch our heads trying to figure out how to teach our kids about money. In fact, some of us don’t talk with our children about money at all.

According to a recent T. Rowe Price® survey, 13 percent of parents surveyed said they never have financial conversations with their kids, while 59 percent said they only talk to their kids about money when their kids ask them about it.

Intuitively, we know it’s important to educate our children about the financial side of life, but what’s the best way to go about it? To answer this question, we looked to Gratus Capital’s Director of Financial Planning Kevin Woods, CFP® for some answers. To qualify his answers even further, we focused on children aged 11 to 25.

Before delving into the different age groups and their respective strategies, Woods believes it’s important that parents come to terms with the following two concepts. Once you do, you’ll have greater success helping your children become money-wise adults.

#1 – Understand Your Own Thoughts about Money

To help your children understand money, Woods says that you must first understand your own thoughts about money. “Every day as adults we make decisions that determine what we need and want,” said Woods. “This drives our lifestyle choices, including the cars we drive, the jewelry and clothes we wear, the house we own and all the extras that make us feel good

“However, living within your means and knowing what you can afford often starts with how we grew up and how our own parents helped us learn about discipline, sensibility, sacrifice, reward and goals when it comes to money. To educate your children, you have to come to terms with your own thoughts and expectations regarding money. Only then can you teach your children how to lead financially fulfilling and responsible lives.”

#2 – Understand the Impact of a Digitally-Charged Generation

According to Woods, today’s children are part of a generation that rarely struggles to get what it wants. In fact, most have never had to make a major sacrifice. Instead, many of today’s children primarily understand what makes them happy and how to get immediate gratification.

But why?

Because now more than ever, today’s generation of children are being highly influenced by products and services that promise to make them happy. Search engines are tracking your children’s behaviors and creating advertisements that match their individual search history. This bombardment of highly-targeted and customized advertising enables today’s children to see the very things they want to buy repeatedly. Whether it’s Facebook, Instagram, Snapchat or another digital channel, most kids can’t escape digital advertising.

Digital influence aside, what can you as a parent do to help your children establish good habits about spending, giving and saving for the future?

Since your children’s needs, wants, and goals will change depending on their age, Woods suggests these money-wise parenting strategies for the following ages:

The Formative Years: Children Aged 11 to 18

Most children receive money for allowances, birthdays, holidays and odd jobs such as babysitting and mowing lawns. At this time of your child’s life, you should explain three financial concepts to them:

  1. How much to save.
  2. How much to give back.
  3. How much they’re allowed to spend.

Woods suggests that children save no less than 20 percent for future needs, such as college, buying a car or attending a concert. He’s also a strong charitable giving advocate and recommends teaching children now about setting aside money for the sole purpose of giving back. He recommends five to ten percent be set aside for giving. The rest of the money should go toward what your child wants today – Starbucks, trips to the mall, etc.

Talk More to Bring Goals to Life

It’s very important to talk with your children throughout the year about their saving, spending, overall needs and wants, as well as their long-term goals. Woods suggests that parents have no fewer than four comprehensive financial conversations per year with their kids, and ideally 12. The more conversations you have, the more you help by reminding your children about their goals and checking in to see if they’re on target to accomplish them.

Spend More Time Together by Opening a Joint Account

Starting at age 11 and up is a perfect time to start buying some shares of stock or open a mutual fund. The key is for you and your child to establish what your child’s ongoing contribution goal will be. Over time, as your child sees his or her savings grow, this will instill the encouragement to save even more. This account also becomes one of the key financial conversations you’ll have throughout the year.

The Budgeting Years: Children Aged 19-25

Financial conversations between you and your children will vary greatly at age 19, perhaps even starting a bit younger. The focus now turns to budgeting, says Woods. For children who go off to college, Woods recommends that you and your child establish a budget for both their everyday and monthly needs. They’ll have fixed expenses, such as food and housing; however, they’ll also have variable expenses including entertainment, weekend traveling with friends, etc.

A monthly amount of money allotted to your child strengthens their decision-making ability surrounding how to make money last.

Many savings apps can be quite useful in helping your son or daughter to budget more responsibly. PCWorld has provided a nice roundup of budgeting apps for tracking savings and spending.

What’s more, Woods recommends that your child have a summer job and be solely responsible for saving no less than the money needed for the extra spending they may want throughout the school year and summer.

By allotting a monthly college budget and instilling upon your student that he or she is responsible for the extra spending they desire, when your child graduates college, they will have built a foundation for knowing how to live within an established budget.

Watch Out for Credit Card Magnetism

According to a recent Experian College Graduate Survey Report, one in five of the college students surveyed gives their college an F grade on preparing them to understand how credit works. What’s more, of those surveyed, 58 percent have a credit card and had the following personal experiences: 33 percent made a late payment, 31 percent maxed out a card, 23 percent had a card declined, and 15 percent missed a payment.

Given these statistics, it’s imperative that parents and their college-age children maintain open and ongoing communication about their child’s credit card usage. Like most financial vehicles, credit cards have their pros and cons. However, as with any effective financial tool, it needs to be managed, says Woods.

Beware the Taxman

When your adult child starts their first professional job, it’s very important that they understand taxes and how to manage what is left over. Too often, young adults forget to take taxes into consideration within their saving and budgeting planning.

Woods recommends that parents encourage their adult children to pursue four positive financial habits:

  1. Contribute 10 to 15 percent of their newly-found income to their company’s 401(k) or a similar retirement plan. If their company doesn’t have a retirement plan, which can be true for many small businesses, then contribute to an Individual Retirement Account (IRA).
  2. Make a list of monthly expenses to determine how much is available to afford rent, such as mobile phone, gas, car payments, food, etc. Additionally, there are new expenses, such as auto and renter’s insurance, that need to be accounted for.
  3. Establish a second savings or investment account, in addition to a 401(k) or IRA, and contribute to it each month.
  4. Set all savings and investment contributions so that the funds are deposited automatically, alleviating monthly decision-making around surplus income and increasing the likelihood the money is saved.

In Closing

It’s been our experience at Gratus Capital that parents who start educating their children about money during their formative years, such as talking about the costs of operating their home, including the mortgage, property taxes, electricity, heating and so on, help their children go on to be far more money-wise and successful simply due to the open dialogue between parent and child about life’s financial responsibilities and expectations.

At Gratus, we’re financial life counselors who advocate not just for your strong financial future, but that of your child’s. If you have any questions about your financial future, or that of your child’s, please contact us. Finance, budgeting, and investment management are just the beginning of our expertise.

Authored By:

The above article is intended to provide generalized financial information; it does not give personalized tax, investment, legal, or other professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other matters that affect you or your business.

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Save More Money for Retirement in 3 Easy Steps

According to a recent survey, one in three people has no retirement savings.1 Clearly, if you’re not feeling confident about your retirement savings, you’re not alone. As financial advisors, we believe that it’s never too late to begin saving for retirement. The key is to get started. Once you get past this initial hurdle, you’ll see your savings accumulate. To begin, first create a realistic household budget and savings plan.

To help you save more money for retirement, follow these three steps:

Step #1 – Determine what amount of money you can live within per month.

Notice that we said, live within. In order to effectively save more for retirement, you first need to define a budget. One that includes forgoing miscellaneous purchases and freeing up additional funds for your retirement savings.

Keep in mind that most people spend and then save what’s left over. The problem with this approach is that there’s typically very little left over, if anything at all. Therefore, a key budgeting step is to first determine how much you need to save each month.

By using a retirement calculator, you can get a better understanding of how much money you need to save in order to afford retirement based upon your projected time frame goals.2

Step #2 – Ask yourself: Where is my money going?

If your savings aren’t adding up fast enough to meet your projected retirement timeline, then the next step is to ask yourself: Where is my money going?

To answer this question, try using an automated tool that helps track spending. For example, Mint is a program that pulls all your financial information into one place so you can see your entire financial picture. Once you have a better understanding of where and what you’re spending money on, you can make proactive savings adjustments.3

Step #3 – Make spending cuts and redirect the funds back into savings.

Before you start cutting, be sure that you’ve outlined your savings goals and projected retirement timeline. By having goals underscored by reasons, it’ll be easier for you to cut expenses.

Good savers are typically individuals motivated by personal goals.

Contemplating where to cut spending? Try looking here:

  • Travel & Vacations – Do you really need to take your family to Disney World this year? Instead, how about a weekend in the city. Taking advantage of local tourist destinations is a nice alternative to expensive vacations – and Atlanta certainly has a lot to offer!
  • Home Repairs – Spend when it’s really Small DIY jobs can often spiral into costly home renovations. Plan ahead for major home repairs by saving in advance. In the meantime, focus only on the projects necessary to the function of your home. Décor preferences change with the season, and it’s worth waiting it out until you’ve properly budgeted for major updates.
  • Dining Out – It’s true, packing a lunch slows you down getting out the door in the morning. What’s more, it’s tiring coming home after a long day at work and then needing to cook dinner. Yet, there are tremendous savings to be had if you were to simply cut back on your dining out. CNN Money found that you could save as much as $207,598 by skipping two restaurant meals a week over a period of 40 years.4 How about limiting a night out to once or twice a week?
  • Coffees-To-Go – Those lattes sure are delicious, and at $5+ each, they ought to be. In fact, if you enjoy one each day on your way to work 49 weeks out of the year, that’s approximately $1,225 a year in lattes. How about limiting yourself to one or two lattes per week?

Many people believe they need a large income in order to save effectively for retirement. This isn’t true. The key to saving is to monitor your spending habits and automate your savings.

If you’re serious about wanting to save more money for retirement, then download our latest complimentary guide: Practical Steps to Fix 3 Fatal Flaws in Your Financial Plan. Learn long-term savings strategies to help you achieve your retirement goals.


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The above article is intended to provide generalized financial information; it does not give personalized tax, investment, legal, or other professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other matters that affect you or your business.

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5 Reasons You Need a Charitable Giving Plan

The new year is the perfect time to make a positive difference in another’s life. Be sure you’re making the most of your donations with the tips below.

Who is donating?
According to a recent Gallup poll, among U.S. adults who said they donated money in the last 12 months, 77% say they’ll give the same amount to charities in the next 12 months, while 18% plan to give more and 5% intend to give less.1

But how many are giving with purpose and clarity?
We tend to think of gifting strategies in terms of tax planning, but there are many other reasons to develop a charitable giving plan, including identifying your priority causes, responding to requests for support, and making your contributions go further.

I have put together a list of five reasons why you should have a simple, yet flexible, documented charitable giving plan. Use these tips to help ensure that your giving goals remain on track year after year.

Reason #1 – To Make an Ongoing Positive Impact in the World
Beyond tax deduction benefits, a charitable giving plan encompasses your philanthropic goals and the positive impact you seek to make in this world. It identifies whom you want to help and why. By defining the latter, you’ll be better able to select from a myriad of charities. Make the most impact with your funds by following the steps below:

  • Determine Whom to Help
    When deciding whom to help, consider what you’re most passionate about and what organizations have played a key role in your life. Perhaps you’re passionate about animals or the environment, or maybe your church or college has made a profound impact on your life. Drawing from your personal interests and experiences will help you in prioritizing your giving goals.
  • Automate Your Giving
    These days, regular giving is extremely easy to do through automatic checking withdrawals on many nonprofit websites. By automating your donations, whether monthly or quarterly, you’ll be less likely to feel the financial impact because you’re donating over a period of time, rather than in a lump sum at the end of the year.

Answer A Key Question
To prioritize your donations, ask yourself: How can I best make a long term positive impact in this world? By answering this one question, you’ll be more likely to achieve your giving goals. Also, consider the scale of impact you’re seeking to make. Are you looking to support your local community, or a worldwide cause?

Case-in-point: According to the Atlanta Community Food Bank, for each $1 donated, they’re able to provide more than $9 in groceries for someone in need.2  Clearly, every dollar donated makes an immediate impact on the community the food bank serves.

Reason #2 – To Feel Satisfied & See an Impact
Simply by defining your goals and financial contributions, you’ll be better able to see the impact that you’re having on an organization. You’ll also be more able to say “no” to other charities, knowing that your concentrated efforts are still helping others in the long term. By determining which organizations you’ll help year after year, you’ll come to know them better and enjoy your involvement that much more.

Reason #3 – To Take Advantage of Employer Matches
Many employers match their employees’ charitable donations. However, employer policies and other charitable giving restrictions can change. Therefore, make sure to review your employer’s charitable matching program annually in order to maximize the positive impact of your donation.

Many employers enable employees to donate their time, and while your time doesn’t qualify for a tax deduction, it does enhance the positive changes you’re seeking to make.

Reason #4 – To Monitor Charity Standards
While you may have narrowed down your charitable giving to two or three organizations (which we recommend), it’s important to revisit a charity’s operational standards each year as part of your plan.

Two key considerations:

  • Board Structure – Is your charity’s board of directors still well diversified? It’s important that your charity has several independent board members to ensure that its original mission is upheld.
  • Donation Distribution – Take the time to review how a charity distributes its donations. Look to review annually what percentage is spent on salaries and operations versus the amount spent directly on its programs and those meant to benefit.

To help you make ongoing informed giving decisions, refer to Charity Navigator, a nonprofit watchdog that rates charitable organizations in regards to their financial, accountability and transparency practices.

Reason #5 – To Ensure Tax Deduction Legitimacy
Keep in mind that not all charitable donations qualify for a tax deduction. In some cases, organizations may lose their nonprofit 501(c)(3) standing. To confirm that your charity is, in fact, still in good standing and qualifies for a tax deduction, begin by utilizing the Internal Revenue Service’s Select Check tool.

Finally, be sure to consult with your financial advisor when preparing to make a charitable donation. Your advisor can help you understand the tax impact on your overall financial plan and help you navigate the various tax deduction thresholds and other restrictions. At Gratus Capital, we welcome your charitable giving questions. As philanthropic advocates ourselves, we support helping others to fund their philanthropic endeavors through effective and ethical investment management.

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The above article is intended to provide generalized financial information; it does not give personalized tax, investment, legal, or other professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other matters that affect you or your business.

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5 Essentials for Estate Planning

Estate planning isn’t just for the wealthy. Money aside, in order to protect yourself and your family, you need a will and a few other legal documents. Without them, you may leave your assets, your medical well-being, and the fate of your children in the hands of a judge who knows very little about you or those you care about.

In this post, we’ll discuss a misconception most Americans have in regards to estate planning that may, mistakenly, deter you from creating a will. We’ll also address how some parents automatically lose the rights to their children’s medical care, as well as key reasons to put estate planning documents in place.

The Facts

According to a Harris Poll survey, 64% of Americans don’t have a will. Of those without a plan, about 27% said there isn’t an urgent need for them to make one, and 15% said they don’t need one at all.1

Estate Planning is Critical

At Gratus Capital, we believe an estate plan is a critical component for helping you achieve your financial and lifetime goals. Ultimately, an estate plan is your voice for a time when you’re no longer living or able to speak for yourself.

To help you plan how to use your voice, we sat down with prominent Atlanta Estate Planning Attorney Tony Turner. What follows are some of his estate planning insights and recommendations. 

Key Estate Planning Considerations

To begin, let’s discuss the basic components that make up a typical estate plan.

#1 – Legal Documents

An estate plan is comprised of several legal documents. The most common include a will, living will, and power of attorney.

A will indicates how you want your property distributed upon your death and names a guardian for your children and a trustee to manage your estate’s finances. A living will names individuals responsible for carrying out your health care wishes in the event that you become severely ill or injured. A power of attorney names the individual you want to oversee your financial affairs in case you become incapacitated.

Turner recommends that these documents be updated every three to five years, since relationships and tax laws change over the years.

If you fail to make time to put these documents in place, then your “voice” may be left up to a court-appointed person who knows little about you, including your goals and values.

#2 – Most Important Decision

The single most important decision you can make for yourself and your family is to decide who shall make decisions on your behalf when you’re no longer living or able. What’s more, this role isn’t limited to just one person.

An estate plan typically includes the following assigned roles:

  • Executor – The person responsible for settling your estate. This role can be short term. Once an estate is settled, the job is done.
  • Financial Power of Attorney – The person who makes financial decisions on your behalf if you become incapacitated.
  • Heath Care Power of Attorney/Health Care Proxy – The person who understands your health care wishes and upholds them on your behalf should you suddenly become ill or seriously injured.
  • Trustee – A key role, this individual manages the distribution of your money, whether through continued investment management or inheritance distributions.
  • Guardian(s) – The person(s) responsible for raising your minor children.According to Turner, the roles of trustee and guardian are often filled by two different people. Why? Because everyone has their strengths. For example,  one of your relatives may be a wonderful parent, but not so reliable when it comes to managing finances.

Simplifying Roles Is Highly Recommended

When choosing whom to appoint to each role, consider what will happen upon your death. A classic example is when a parent makes both their adult children co-executors, or an adult child and a second spouse co-executors. According to Turner, people act differently when you’re no longer around. Assigning a “co” role can often cause complications for those you leave behind.

To simplify decision-making, try assigning primary and secondary executors or agents. Allow one person to make key decisions instead of requiring a consensus. Therefore, a key question is: Who will best carry out your wishes?

#3 – A Key Estate Planning Misunderstanding

Many individuals believe that estate planning is primarily used to avoid paying estate taxes. This couldn’t be further from the truth, according to Turner. In fact, 99% of Americans will not pay federal estate taxes when receiving an inheritance. Why? Because the federal government exempts from taxation the first approximately 5.5 million of inheritance for individuals and 11 million of inheritance for married couples.

#4 – Must-Know for When Children Become Legal Adults

Many families are unprepared for the time when their children become adults. Because of new health care privacy laws2, when your child turns 18 years old, medical professionals can no longer speak with you regarding your child’s well-being.

Imagine that your child is away at college and is involved in a serious car accident. The medical staff cannot legally answer your questions without your child having completed a health care power of attorney. To do so would be a violation of your child’s privacy. Therefore, be sure to have your young adult children complete HIPAA health forms with their primary care physician and with college student health services, ideally naming you as a health care agent.

#5 – Consequences of Not Having a Will

Most people don’t realize that in many states your estate proceeds don’t all go to your surviving spouse by default. In fact, for married couples with two children living in Georgia, if your spouse dies, without a will, then two-thirds of the deceased’s estate proceeds are automatically distributed to the children, and only one-third to the surviving spouse.

Many complications can arise from this, including the surviving spouse not having reliable access to the children’s estate proceeds in order to help pay for their living expenses. What’s more, a child’s inheritance is paid out at age 18, a time when many young people are still learning financial responsibility.

Having a will helps to avoid these unforeseen challenges, as well as many others.

Will you be one of the following?

The American Bar Association claims that 55% of Americans die without a will or estate plan.3

Will you be one of these people? Are you intending to let a court dictate the future of your hard- earned assets or who shall raise your children? In order to reduce havoc in the lives of your loved ones, all of us at Gratus Capital encourage you to coordinate an estate plan. In fact, our expertise includes blending estate planning desires with comprehensive financial plans, to help you ensure that your lifetime goals are fulfilled.

To start the conversation, please contact us with any and all of your estate planning questions.




Guest Blog Authored By:

Tony Turner

Atlanta Estate Planning Attorney Tony Turner is a partner with the law firm Cohen Pollock Merlin & Small. He practices family wealth planning, estate and charitable planning, probate and estate administration and business succession. He is a Fellow of the American College of Trust and Estate Counsel, and was named a Top 100 Attorney in the United States by Worth Magazine. He can be reached at (770)-857-4828 or

The above article is intended to provide generalized financial information; it does not give personalized tax, investment, legal, or other professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other matters that affect you or your business.

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Gratus Capital, LLC
3350 Riverwood Pkwy, Suite 1550
Atlanta, GA 30339
Phone: (404) 961-6000
Toll Free: 1 (888) 707-0773
Fax: (404) 961-6020