1. NOT TAKE ADVANTAGE OF TAX EXEMPTIONS: Taxes are by far the biggest expense we have, and it’s likely to make the problem worse. Tax laws are complex things that change every year. While most people who are employed and have some bank statements and/or brokerage accounts can get away with preparing their own taxes with one of the many tax software packages on the market, those with Complex companies that have to complete “Schedules Letter” (Schedules A, B, C, D, E, etc.) in depth, or depreciation/amortization items should almost always use a tax professional.

SOLUTION: Have a tax professional do your return once every few years, even if you don’t have to. If there’s something you’ve been missing out on, it might well be worth the one-time expense when you compound the savings over a period of years. For those who receive property tax assessments on a regular basis, do you do appeals when appropriate? Here in Allegheny County, where Pittsburgh is located, their appraisal method includes taking a picture of the front of the property and going through the area of ​​land already surveyed. Recently, a new client’s mom was tested for a creek that ran through her property. When her son (my client) brought this to the attention of the appeal board, the tax was reduced without question.


John and Mary divorced three years ago. John and Mary can’t stand each other, just the mother’s mention of each other’s names sends bile flowing down the other party’s esophagus. Last year John remarried Linda. John and Linda are very much in love. Today, John perished in a traffic accident on the freeway. Today, Mary is now a multi-millionaire thanks to John, and Linda is stuck paying huge final expenses from the joint bank and investment accounts. Why did this happened? John never bothered to tell his own insurance agent and his human resources person at work about the major change in his life, and fill out the paperwork to change the beneficiary from Mary to Linda.

I know firsthand that this happens, not only because I am an insurance professional, but also because I served as vice president of my volunteer fire company for a period of 3 years, and the veep’s job included keeping track of the insurance beneficiaries. During my tenure as vice president, a member passed away due to a firefighting related death, one of the many things the state of Pennsylvania did when it came to guide us through the death in the line of duty process was to mandate that the member file drawer to be sealed until further notice. No new information could be added or removed from ANYONE’s file in that drawer until told otherwise. After access was allowed again, several members suddenly remembered the changes that needed to be made. Thank God nothing else happened in the meantime

SOLUTION: Check the beneficiary information on your life insurance policies regularly, but no less than every two years or when there is a major life change, including marriage, divorce, birth of children, etc. Special Note: If you leave money to minors, there will need to be a guardian for the money, as the court system does not typically release hundreds or thousands of dollars for children to use at their own discretion. If you do not appoint someone of your own choosing, the court will appoint a guardian for money who may or may not be the person you would choose. He may or may not be the person you dedicate yourself to for the day-to-day care of your offspring.


Insurance policies and IRA accounts have a very important point in common, they are affected by laws outside the inheritance law and succession processes in most cases. I say most because if you have cash value life insurance (permanent insurance instead of term), its value could make you eligible to pay federal estate tax if your estate is large enough. This is NOT a good thing that happened to you. IRA money may be subject to estate law if you name your estate as beneficiary rather than an individual. Although if you die it won’t cost you anything for not naming a beneficiary, it could cost your loved ones millions. The reason is that IRAs inherited by an individual can benefit from what is called an “IRA expansion.”

Here’s a Cliff’s Notes version of the Stretch. Let’s say that, at death, he is of the age at which he should receive required minimum distributions (RMDs), which means that he is over 70 1/2 years old. Let’s also say that he leaves his IRA to his 35 year old son or daughter. By inheriting the IRA to his son or daughter, because they are wise, he turns to Halas Consulting to learn the best way to manage his new wealth. The good folks at Halas Consulting would advise your son or daughter to set up a Beneficiary IRA. Basically what happens is that when ownership is successfully transferred, your son or daughter still has to continue taking RMDs, but they do so based on their younger age and not their older age. This means less is distributed to be taxed if the IRA is a traditional IRA and not a Roth IRA which can never be taxed. If Halas Consulting is also asked to manage the money and is set up on a proper asset allocation model, that money can potentially grow very large (we’re talking millions here) tax-advantaged with only smaller amounts of money. annually, until your child reaches around the half-century mark, to satisfy the RMD. This is a good thing.

HOWEVER (you just KNEW it was coming), if the IRA is set up or transferred incorrectly, the tranche is lost FOREVER. What if the reason this is happening is because of bad advice? In most cases the IRS says “hard beans”, there are many private letter failures (PLR) from people who have claimed this same thing and lost on the PLR. You could sue the one who gave you the bad advice, but you could still lose and then lose legal fees on top of losing your case. For more detailed information on this, I recommend reading books by IRA expert Ed Slott. These can be found in bookstores or possibly your local library (yes, that place with all the books most haven’t visited since they had to write their college thesis or worse, their senior year of high school).

THE SOLUTION: Always have a named beneficiary on your IRAs and 401ks. Again, if you want to get the most out of Stretch and name a minor. Also name an adult you trust with the money to act as guardian of the money until the minor reaches an age where you think they would be responsible.


While on the surface this may seem like a good idea, it really isn’t. The reason is a little-known rule called “Net Unrealized Appreciation” or NUA. Here is a brief synopsis of the way NUA works. Let’s say he had 500 shares of the company that he accumulated during his years of work. For the sake of simplicity, let’s say you had the option to buy this stock at $3 per share when the stock was priced at 10 in the heyday of the late 1990s. Now, upon retirement, these shares are worth $20. If you transfer these shares to a self-directed IRA at retirement, you will owe income taxes on these shares each time they are distributed from your IRA. Your income taxes could be quite high if you have a lot of retirement income.

THE SOLUTION: If you take advantage of the NUA properly, you will sell the shares and move the money to a non-qualified brokerage account (not IRA). By doing this, you will pay income taxes of $7 per share, which is the amount of the difference between what you paid for the share ($3) and the value of the share at the time you exercised your call option ($10). . The difference between the share price at the time of purchase ($10) and its current value ($20), or $10 per share, will be taxed at the capital gains rate, which is currently a maximum of 15% (the maximum income tax could be more than double). After the shares are sold and removed from the IRA, transfer the rest to an IRA for maximum flexibility and options. The cash proceeds from the stock you just sold are no longer taxable, only interest and capital gains will be taxed on this cost basis if you invest the money you have in the non-qualified brokerage account. To manage your taxes efficiently and not be burdened with high expenses, a well-researched growth stock ETF would be a good fit here. Just make sure it fits with your asset allocation model.


With the recent financial collapse still fresh in people’s minds, credit and debt have become four letter words. But while credit CAN be bad if not used properly, it can also be a lifesaver and allow you to buy many necessary things that can’t be paid for in cash up front because of their cost. Those who are aware of their credit score and research what makes one’s score look better and what the various credit bureaus are looking for pay less money in interest on cars, houses, home repairs and credit cards. I don’t mean to be a braggart, but several months ago, when it seemed like the doom and gloom was going to last forever, I was sitting in my kitchen opening the mail and some of the applications were ready to lend me over $50k in unsecured money. because of my good credit, and here were the people on TV getting foreclosed on houses where they owed less than that.

Another area where good credit will help you with lower payments is insurance. ALL insurance companies use something called an “insurance score” when calculating your insurance score. For example, when shopping for car insurance, it makes sense for insurance companies to look at your driving and moving record violations, but what the heck does my credit score have to do with what kind of driver I am? I may not be reckless with money but a model citizen on the road? Well, according to research done by insurance companies, no you can’t. Your insurance score is basically a composite of how you live your life, and those who live responsible lives can save some money. One of those components is money and how responsible you are with it. Likewise, if you have a DUI on your driving record, it could also affect your premiums on your home, health, and life insurance, as well as your car insurance.

THE SOLUTION: Get a free credit report every year from annualcreditreport.com, take advantage of it. I would recommend that every year or two you spend about $40 and get a consolidated credit report, or a “triple merger” of all three companies. This consolidated report will give you a lot more detail than the giveaway, and it’s what banks and mortgage brokers use to decide who gets a loan (at least they did until the government stepped in and told them they had to lend to bums and then the whole economy crashed. But I digress). Go through this report with a fine tooth comb. A year later, I found a credit card account that I closed years ago and the bank did not report to the credit bureaus as closed. This is your “face” and your reputation at stake, DO NOT have a clue what you are saying.

Well, here are five things you can work on to get started, if I think of more ways, I’ll write a continuation of this article. Meanwhile, he takes care of your money and he will take care of you.

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