Financial advice for millionaires: 5 strategies for 2022

For decades, my firm has helped retirees preserve and protect their wealth and leave a legacy. In these tumultuous times, here are some potential retirement and estate planning strategies you can learn more about:

Worried about potentially higher taxes in the future?

Our government currently has over $29 trillion in debt, so you might be worried about a potential increase in income taxes in the future.

If you have a substantial IRA (individual retirement account), it could be a “tax time bomb.” Someone is going to pay taxes on that money in the future, whether it’s you or your children after you leave. With the provisions of the Secure Act, most children can no longer do an extended IRA because the funds must be withdrawn before the end of the 10-year period after the death of the IRA owner.

A potential strategy to help deal with this tax problem is to consider a partial Roth IRA conversion. As you probably know, although the money you put into a Roth IRA is taxed up front, all of your earnings and qualified retirement withdrawals are tax-free afterward. If you were a farmer, would you rather pay tax on small seeds or on 8-foot-tall mature wheat? Obviously, you’d rather pay taxes in pennies than dollars, which is why partial Roth IRA conversions might make sense for you. You may be able to pay taxes now rather than pay taxes if your Roth IRA grows in the future.

Of course, everyone’s situation is different and Roth conversions create a taxable event, so you should always work with your accountant.

For more information, please read this article I wrote for Kiplinger: The Elimination of the Stretch IRA: 7 Strategies to Consider.

How a Donor Advised Fund Works to Potentially Save Taxes

The goal of many people is to pay as little tax as possible, and each year everyone must decide whether to take the standard deduction or the itemized deduction. The standard deduction in 2021 for married couples filing jointly is $25,100, or $27,800 if both spouses are over 65.

If a person’s actual deductions, such as mortgage interest on a principal residence, property taxes up to $10,000, medical expenses (if more than 7.5% of your adjusted gross income), and donations of charities combine to be higher than the standard deduction, it might make sense for them to itemize.

However, for many retirees, the standard deduction is higher than the itemized deductions.

What if someone is inclined towards charity? Suppose a person normally donates $10,000 to charity each year. If they took the standard deduction, they would not get a tax benefit by making these charitable contributions.

However, people might consider using a donor-advised fund to potentially reduce income tax by donating multiple years of future charitable contributions in one year. Donor-advised funds can be created at many brokerages and invested as someone wishes.

For example, let’s say someone chooses to donate five years of deductions, or $50,000, now into a donor-advised fund. The good news is that it is possible to get a tax deduction for that $50,000 by itemizing your deductions this year.

And what’s more, it’s possible to donate $50,000 of appreciated stock into a donor-advised fund and then sell that stock inside the donor-advised fund and pay no capital gains on this stock sale!

Then, for the next four years, that person can take the standard deduction and donate $10,000 each year to the charity directly from the donor-advised fund, and then they can repeat the process every six years.

This might be a strategy to explore with your accountant.

Dynasty Revocable Trusts Can Help Keep Assets in the Family Line

The estate planning attorneys we work with set up revocable living trusts with dynasty provisions. This means that after a husband and wife leave, a bulletproof trust can be created for a child that is designed to help protect them from divorce, creditors and lawsuits. . These trusts are intended to help protect assets left to children and grandchildren.

Another potential benefit of these trusts is that they are designed to help keep assets in the family line. After the death of a child, trust funds left to that child do not go to that child’s spouse. Instead, these trust assets revert only to their children in the same ironclad trusts. It also helps protect grandchildren from divorce, creditors and lawsuits.

Also, these trusts don’t usually give grandkids control of the money at 18 or 21, but wait until they’re at least 30, so they don’t make stupid mistakes early in life. life.

You can watch a video of one of the estate planning attorneys we work with and myself discussing Dynasty Advanced Estate Planning on YouTube.

Worried about the next recession?

Do you think the next 10 years of the economy will look like the last 10 years? We don’t.

We’ve seen this movie before – sky-high house prices coupled with sky-high stock prices – and we have our own ideas of how it’s going to end, we just don’t know when. Some retirees may be worried about reliving another 2008-style crash and may be looking for strategies designed to preserve and help protect their wealth.

Here’s the story of the S&P 500 over the past 20 years, and while the past doesn’t predict the future, history does rhyme:

Courtesy of Craig Kirsner

Please note that it is not possible to invest directly in the S&P 500® Index; this metric is provided as an indicator of overall market performance only. Standard & Poor’s: “Standard & Poor’s®”, “S&P®” and “S&P 500®” are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”). The historical performance of the S&P 500 is not intended as an indication of its future performance and is not guaranteed. This table is not intended to provide investment, tax or legal advice. Be sure to consult a qualified professional about your personal situation. This graph does not take investment costs into account, so actual results may differ from those described above. The downside percentages shown above go from the top of the market to the bottom of the market in each downward movement without dividends. The percentage increase is from March 9, 2009 to December 31, 2021, without dividends.

If you want to learn more about the current stock market and real estate market, which I call the “central bankers bubble,” watch my YouTube video.

Make sure you’re not paying too much into your pension plan

Fees can be a drag on your retirement portfolio, so it’s important that you don’t pay too many fees. There are three strategies that could have fees which include financial advisor fees, mutual fund fees and variable annuities.

Your financial advisor usually charges you a fee. These fees are negotiable and you may be able to reduce these fees from what you are currently paying. If your advisor does not charge fees, they will generally use investment strategies that earn them fees because they need to be paid for their time. Make sure you know what your fees are and how your advisor is paid.

Mutual funds can be great because they can give you diversification, but some mutual funds have higher internal fees than others. It is important that you know what your internal charges are.

Variable annuities can include up to 6 different fees! So if you have a variable annuity or are considering buying one, make sure you know all the facts. For the facts about variable annuities, you can watch my YouTube video on variable annuities.

To learn more

If you live near Boca Raton or Fort Lauderdale, Florida, learn more by attending an upcoming free dinner workshop at Ruth’s Chris or Abe & Louie’s Steakhouse. This workshop is best suited for people over the age of 65 with between $500,000 and $10 million or more in investable assets. Or you can contact us to set up a Zoom meeting with Craig Kirsner, MBA, and Sean Burke, MS, VP. Call our office to register now at 800-807-5558.

Stuart Estate Planning Wealth Advisors is an independent financial services company that uses a variety of investment and insurance products. Investment advisory services offered only by persons duly registered through AE Wealth Management, LLC (AEWM). AEWM and Stuart Estate Planning Wealth Advisors are not affiliated companies. Stuart Estate Planning Wealth Advisors has a strategic partnership with tax professionals and lawyers who can provide tax and/or legal advice. All investments are subject to risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in times of falling values. Any reference to guarantees or lifetime income generally refers to fixed insurance products, never to securities or investment products. Guarantees for insurance and annuity products are backed by the financial strength and claims-paying ability of the issuing insurance company. 1166799 – 1/22

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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