Articles for July 2017

When Baby Boomers Become Elders, Will Their Kids Provide Care?

Right now, millions of baby boomers provide informal, unpaid eldercare to parents in their eighties and nineties. This obligation has led some boomers to retire earlier. The Center for Retirement Research at Boston College says that men who play these caregiving roles are 2.4% less likely to stay in the workforce than their peers. Women are more likely to leave the office under such stress, and the CRR estimates that those who do balance a career and eldercare work 3-10 hours less a week and earn an average of 3% less than other working women.

Fewer middle-aged adults may be available to care for baby boomers who become elders. Divorce and geographic separation of families may worsen this dilemma. Additionally, nearly all baby boomers will be age 70 or older by 2033 – the date when the Social Security Trust Fund is projected to run dry, and a 20% reduction in Social Security benefits has been mentioned as a possible consequence. Rising nursing home costs and the financial strain of caregiving may eventually lead federal agencies and the private sector to a collaborative response to meet a pressing need for economical eldercare.1

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – cbsnews.com/news/boomers-elder-care-financial-burden-on-children/ [6/6/17]

Understanding the Gift Tax

Most of us will never face taxes related to money or assets we give away. 

“How can I avoid the federal gift tax?” If this question is on your mind, you aren’t alone. The good news is that few taxpayers or estates will ever have to pay it.

Misconceptions surround this tax. The I.R.S. sets both a yearly gift tax exclusion amount and a lifetime gift tax exemption amount, and this is where the confusion develops.

Here’s what you need to remember: practically speaking, the federal gift tax is a tax on estates. If it wasn’t in place, the rich could simply give away the bulk of their money or property, while living, to spare their heirs from inheritance taxes.

Now that you know the reason the federal government established the gift tax, you can see that the lifetime gift tax exclusion matters more than the annual one.

“What percentage of my gifts will be taxed this year?” Many people wrongly assume that if they give a gift exceeding the annual gift tax exclusion, their tax bill will go up next year. Unless the gift is huge, that won’t likely occur.

The I.R.S. has set the annual gift tax exclusion at $14,000 this year. What this means is that you can gift up to $14,000 each to as many individuals as you like in 2017 without having to pay any gift taxes. A married couple may gift up to $28,000 each to an unlimited number of individuals tax free this year – this is known as a “split gift.” Gifts may be made in cash, stock, collectibles, real estate – just about any form of property with value so long as you cede ownership and control of it.1

So, how are amounts over the $14,000 annual exclusion handled? The excess amounts count against the $5.49 million lifetime gift tax exemption (which is periodically adjusted upward in response to inflation). While you will need to file a gift tax return if you make a gift larger than $14,000 in 2017, you owe no gift tax until your total gifts exceed the lifetime exemption.1

“What happens if I go over the lifetime exemption?” If that occurs, then you will pay a 40% gift tax on gifts above the $5.49 million lifetime exemption amount. One exception, though: all gifts that you make to your spouse are tax free, provided he or she is a U.S. citizen. This is known as the marital deduction.2,3

“But aren’t the gift tax and estate tax exemptions linked?” They are. The lifetime gift tax exemption, estate tax exemption, and generation-skipping tax (GST) exemption are conjoined. Sometimes they are simply called the unified credit. If you have already made taxable lifetime gifts that have used up $4 million of the current $5.49 million unified credit, then only $1.49 million of your estate will be exempt from inheritance taxes if you die in 2017.2

That unified credit is portable, however. That means that if you don’t use all of it up during your lifetime, the unused portion of the credit can pass to your spouse at your death. (One footnote: the lifetime GST exemption regarding asset transfer to recipients two or more generations younger than the donor is not portable.)1,2

In sum, most estates can make larger gifts during the individual’s life without any estate, gift, or income tax consequences. If you have estate planning questions in mind, turn to a legal or financial professional, well versed in these matters, for answers.

Mike Moffitt may be reached at Ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor.  Cornerstone Financial Group and AIM are separate entities from LPL Financial.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – natlawreview.com/article/2017-estate-gift-and-gst-tax-update-what-means-your-current-will-revocable-trust-and [12/6/16]

2 – taxpolicycenter.org/briefing-book/how-do-estate-gift-and-generation-skipping-transfer-taxes-work [6/26/17]

3 – investopedia.com/terms/u/unlimited-marital-deduction.asp [6/25/17]

What if Your Debit Card Gets Cloned?

Responses to a worst-case scenario.

You find out a crook is using your debit card for ATM withdrawals. Or, someone has used your personal information to open a new credit card. What do you do?

There is much you should do as soon as possible. As a first step, call one of the three credit bureaus (Equifax, Experian, TransUnion) and request a free, 90-day fraud alert; call one bureau, and it will alert the others. Request fraud alerts and extra security or passwords for your bank, investment, and credit card accounts. Change your PINs and online passwords. Soon after these moves, turn to the Federal Trade Commission (identitytheft.com) and fill out their identity theft affidavit, which can generate written form letters for you to mail to banks and credit bureaus. These letters can either request credit freezes or extended fraud alerts. You should mail these letters with a copy of the FTC affidavit and subsequently file a police report (this will aid the banks and credit bureaus). Keep checking your credit card, investment and/or bank statements as time goes by.2

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.    

Citations.

2 – cleveland.com/business/index.ssf/2017/05/when_someone_is_opening_accoun.html [5/14/17]

 

 

Old Phone, New Uses

Ways to repurpose, rather than recycle that constant companion.

When you get a new phone, you need not toss the old one. Yes, you could recycle it – but you could also keep it around and get further use from it.

That old phone could become a lightweight alarm clock thanks to its clock app. It could serve as a camera; you could transmit the images taken via Wi-Fi. Amazon Fire TV, Apple TV, and Roku will allow you to use a smartphone as a Wi-Fi TV remote. A wired adapter and a phone mount could give an old car or truck a touchscreen user interface for music and podcasts. In a similar vein, you could use it as a dedicated music player in your bedroom or kitchen, with a Bluetooth speaker to improve sound quality. You could even set it up as an emergency 911 phone (ready and positioned to dial). Skype or FaceTime users with good Wi-Fi connections could potentially take a generation-old phone and make it an always-on FaceTime or Skype interface. So, before you recycle that old phone, think about all the ways it might still be handy.1

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – pcmag.com/feature/351781/11-uses-for-your-old-smartphone [3/11/17]

Ways to repurpose, rather than recycle, that constant companion.