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A Primer for Estate Planning

February 12, 2017
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Estate planning is a task that people tend to put off, as any discussion of “the end” tends to be off-putting. However, those who leave this world without their financial affairs in good order risk leaving their heirs some significant problems along with their legacies. No matter what your age, here are some things you may want to accomplish this year with regard to estate planning.

Create a will if you don’t have one. Many people never get around to creating a will, even to the point of buying a will-in-a-box at a stationery store or setting one up online.  A solid will drafted with the guidance of an estate planning attorney may cost you more than a will-in-a-box, and it may prove to be some of the best money you ever spend. A valid will may save your heirs from some expensive headaches linked to probate and ambiguity.

planningComplement your will with related documents. Depending on your estate planning needs, this could include some kind of trust (or multiple trusts), durable financial and medical powers of attorney, a living will and other items. You should know that a living will is not the same thing as a durable medical power of attorney. A living will makes your wishes known when it comes to life-prolonging medical treatments, and it takes the form of a directive. A durable medical power of attorney authorizes another party to make medical decisions for you (including end-of-life decisions) if you become incapacitated or otherwise unable to make these decisions.

Review your beneficiary designations. Who is the beneficiary of your IRA? How about your 401(k)? How about your annuity or life insurance policy? If your answer is along the lines of “Mm … you know … I’m pretty sure it’s …” or “It’s been a while since …”, then be sure to check the documents and verify who the designated beneficiary is. When it comes to retirement accounts and life insurance, many people don’t know that beneficiary designations take priority over bequests made in wills and living trusts. If you long ago named a child now estranged from you as the beneficiary of your life insurance policy, he or she will receive the death benefit when you die – regardless of what your will states. Time has a way of altering our beneficiary decisions. This is why some estate planners recommend that you review your beneficiaries every two years. In some states, you can authorize transfer-on-death designations. This is a tactic against probate: TOD designations may permit the ownership transfer of securities (and in a few states, forms of real property, vehicles and other assets) immediately at your death to the person designated. TOD designations are sometimes referred to as “will substitutes” but they usually pertain only to securities.

Create asset and debt lists. Does this sound like a lot of work? It may not be. You should provide your heirs with an asset and debt “map” they can follow should you pass away, so that they will be aware of the little details of your wealth.

  • One list should detail your real property and personal property assets. It should list any real estate you own, and its worth; it should also list personal property items in your home, garage, backyard, warehouse, storage unit or small business that have notable monetary worth.
  • Another list should detail your bank and brokerage accounts, your retirement accounts, and any other forms of investment plus any insurance policies.
  • A third list should detail your credit card debts, your mortgage and/or HELOC, and any other outstanding consumer loans.

Think about consolidating your “stray” IRAs and bank accounts. This could make one of your lists a little shorter. Consolidation means fewer account statements, less paperwork for your heirs and fewer administrative fees to bear.

Let your heirs know the causes and charities that mean the most to you. Have you ever seen the phrase, “In lieu of flowers, donations may be made to …” Well, perhaps you would like to suggest donations to this or that charity when you pass. Write down the associations you belong to and the organizations you support. Some non-profits do offer accidental life insurance benefits to heirs of members.

Select a reliable executor. Who have you chosen to administer your estate when the time comes? The choice may seem obvious, but consider a few factors. Is there a stark possibility that your named executor might die before you do? How well does he or she comprehend financial matters or the basic principles of estate law? What if you change your mind about the way you want your assets distributed – can you easily communicate those wishes to that person?  Your executor should have copies of your will, forms of power of attorney, any kind of healthcare proxy or living will, and any trusts you create. In fact, any of your loved ones referenced in these documents should also receive copies of them.  

Talk to professionals. Do-it-yourself estate planning is not recommended, especially if your estate is complex enough to trigger financial, legal and emotional issues among your heirs upon your passing. Many people have the idea that they don’t need an estate plan because their net worth is less than a certain amount. Keep in mind, money isn’t the only reason for an estate plan. You may not be a multimillionaire yet, but if you own a business, have a blended family, have kids with special needs, worry about dementia, or can’t stand the thought of probate delays plus probate fees whittling away at assets you have amassed … well, these are all good reasons to create and maintain an estate planning strategy.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

Will You Avoid These Estate Planning Mistakes?

February 11, 2017
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Too many households commit these common blunders.

Many people plan their estates diligently, with input from legal, tax and financial professionals. Others plan earnestly, but make mistakes that can potentially affect both the transfer and destiny of family wealth. Here are some common and not-so-common errors to avoid.

Doing it all yourself. While you could write your own will or create a will or trust from a template, it can be risky to do so. Sometimes simplicity has a price. Look at the example of Warren Burger. The former Chief Justice of the United States wrote his own will, and it was just 176 words long. It proved flawed – after he died in 1995, his heirs wound up paying over $450,000 in estate taxes and other fees, costs that likely could have been avoided with a lengthier and less informal will containing appropriate language.

Failing to update your will or trust after a life event. Relatively few estate plans are reviewed over time. Any life event should prompt you to review your will, trust, or other estate planning documents. So should a life event affecting one of your beneficiaries.

Appointing a co-trustee. Trust administration is not for everyone. Some people lack the interest, the time, or the understanding it requires, and others balk at the responsibility and potential liability involved. A co-trustee also introduces the potential for conflict.

Being too vague with your heirs about your estate plan. While you may not want to explicitly reveal who will get what prior to your passing, your heirs should have an understanding of the purpose and intentions at the heart of your estate planning. If you want to distribute more of your wealth to one child than another, write a letter to be presented after your death that explains your reasoning. Make a list of which heirs will receive particular collectibles or heirlooms. If your family has some issues, this may go a long way toward reducing squabbles and the possibility of legal costs eating up some of this or that heir’s inheritance.

Failing to consider what will happen if you & your partner are unmarried. The “marriage penalty” affecting joint filers aside, married couples receive distinct federal tax breaks in this country – estate tax breaks among them. This year, the lifetime gift and estate tax exclusion amount is $5.45 million for an individual, but $10.9 million for a married couple. If you live together and you are not married, it is worth considering how your unmarried status might affect your estate planning with regard to federal and state taxes. As Forbes mentioned last year, federal and state taxes claimed more than more than $15 million of the $35 million estate of Oscar-winning actor Phillip Seymour Hoffman. He left 100% of his estate to his longtime partner, and since they had never married, she could not qualify for the marriage exemption on inherited assets. While the individual lifetime gift and estate tax exclusion protected a relatively small portion of Hoffman’s estate from death taxes, the much larger remainder was taxed at rates of up to 40% rather than being passed tax-free. Hoffman also lived in New York, a state which levies a 16% estate tax for non-spouses once estates exceed $1 million.

Leaving a trust unfunded (or underfunded). Through a simple, one-sentence title change, a married couple can fund a revocable trust with their primary residence. As an example, if a couple retitles their home from “Heather and Michael Smith, Joint Tenants with Rights of Survivorship” to “Heather and Michael Smith, Trustees of the Smith Revocable Trust dated (month) (day), (year)”. They are free to retitle myriad other assets in the trust’s name.

Ignoring a caregiver with ulterior motives. Very few people consider this possibility when creating a will or trust, but it does happen. A caregiver harboring a hidden agenda may exploit a loved one to the point where he or she revises estate planning documents for the caregiver’s financial benefit. We believe the best estate plans are clear in their language, clear in their intentions, and updated as life events demand. They are overseen through the years with care and scrutiny, reflecting the magnitude of the transfer of significant wealth.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

Think About Your Lifestyle Before You Retire

January 24, 2017
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Sometimes planning for retirement isn’t entirely about money.

How many words have been written about retirement? It’s a preoccupation for many, and we devote so much time, thought, and energy toward saving for the last day we go to work. Saving and investing in such a way that we no longer have to work may seem ideal at first, but it raises a question: what do you have planned for all of that free time?

What do you do with your first day? Maybe you finally take that big vacation you’ve been talking about. Or, perhaps, it’s time to catch up with your kids, grandkids, and other extended family. But, eventually, you come home from a vacation or a visit. While many of us have that first day mapped out, it’s the days that follow that we haven’t really considered.

Free time can be a luxury or a curse. The idea that many retirees don’t give much thought to what they will be doing with all of their free time. We are meant to enjoy our retirement, of course, so banishing the restlessness and loneliness that can come from leaving your job should be taken into consideration when you are planning.  In his book, You Can Retire Earlier Than You Think, investment strategist and radio host Wes Moss advises seeking out what he calls “core pursuits.” These are rewarding and engaging interests that can bring satisfaction and happiness to your life; charity work, hobbies, community activities, or public service are but a few examples.  Moss estimates that the most satisfied retirees enjoy three or four such pursuits as they go into retirement – though, there’s no reason that someone can’t find more ways to pass the time.

“Retirement” doesn’t mean “not working.” Not everyone is geared toward making their life about core pursuits. You may find that you miss working, or that you simply need or desire a little more income. Maybe you find that a part-time job is ideal for supplementing your retirement income? Or, perhaps, you have an idea for a small business that you’ve always wanted to pursue? Whatever path you take, it’s important to consider the options open to you once your time is finally your own. You’ve worked most of your life for it, so enjoying yourself during retirement should be a priority.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

 

 

Your Financial To Do List for the New Year

January 17, 2017
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We have compiled a list of frequently asked financial priorities to start thinking about as we approach a new year. What are your financial, business or life priorities? Your goals? Specify them, then consider investing, saving or budgeting methods you could use to realize them.

  • Think about deductions. If you have made a great deal of money in a given year and have the option of postponing a portion of the taxable income until the following year this may bring some tax savings.
  • Can you maximize your retirement plan contribution at the start of the year? If you can do it, and you want to do it, do it early, the sooner you make your contribution, the more interest those assets may earn.
  • Required Minimum Distributions? Retirees over age 70½ must take RMDs from traditional retirement plans. Make sure you are aware of the deadlines.
  • Transaction? Did you (or will you) sell any real property this year? Start a business? Receive a bonus? Sell an investment held outside of a tax-deferred account? These moves may have an impact on your taxes.
  • Charitable gifts? Remember, if you make charitable contributions this year, you may claim the deductions on your return.
  • Mortgage payments? Can you make a January mortgage payment in December, or make a lump sum payment on your balance? If you have a fixed-rate mortgage, a lump sum payment may reduce the loan amount and total interest paid.
  • Life changes? Did you marry or divorce? You may want to change beneficiary designations and/or take look at your insurance coverage. If your last name is changing, you will need a new Social Security card. Are you returning from active duty? Check the status of your credit, and the state of any tax and legal proceedings that might have been preempted by your orders. Review the status of your health insurance, and revoke any power of attorney you may have granted to another person.

Plan accordingly. At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110

Are You Prepared for the New Year Ahead?

January 16, 2017
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A New Year can bring a new outlook, new opportunities and new chances to improve your financial standing. As we welcome a new year, it is worth considering how you want to make the most of the next 12 months. A New Year is an opportunity and you may even say New Year’s Day represents page one. All the pages are blank to begin with and you now have the chance to write all the chapters and make this year a classic. You also have a chance to write a new chapter in your financial life by making the most of opportunities that may make the years ahead even better for you.

The New Year is a wonderful time for recommitting ourselves to things that are important to us. What could be more impactful than a fresh start and starting anew? With 2017 here, this can be an optimum time to set your goals and refine your investment philosophy and goals. The New Year tends to signify a fresh start and leaves us open to new possibilities, strategies and aspirations. I have found if you set aside time to plan, it will set the tone for the entire year. This small practice can allow you to make decisions and goals that are in line with your vision, and that ultimately impact your year to allow some meaningful change. You may want to reflect on the following as you begin the year:

What are your goals for the Year? Not only do you want to reflect on financial goals, but any goal you’d like to work toward or achieve in the New Year that may have financial consequences. For example, during the past year did you get married or divorced, have a child, decide to work less, change jobs or change short-term or long-term goals?

What’s truly Important to you and your family? Setting specific goals and scheduling dedicated time to achieve them is a powerful tool for realizing those goals. It not only clarifies what you have to do financially to achieve the goals, it prompts you to achieve them within a specific time. Review the goals you had last year, refresh what you are focusing on, restructure your investments and schedule dedicated time with your advisor to prepare.

Update your financial plan. All financial actions (or inactions) affect other financial actions one way or another. As we meet for our scheduled meetings, we can discuss any changes that may come up.

As the year has come to close, we are thankful playing an important role in your lives and helping to achieve what’s truly important. Happy New Year and the very best wishes for a prosperous 2017. At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

What is Comprehensive Financial Planning?

January 15, 2017
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Just what is “comprehensive financial planning?” As you invest and save for retirement, you will no doubt hear or read about it, but what does that phrase really mean? Just what does comprehensive financial planning entail, and why do knowledgeable investors request this kind of approach? While the phrase may seem ambiguous to some, it can be simply defined as: building wealth through a process, not a product. Your approach to building wealth should be built around your goals & values.

Comprehensive financial planning is holistic. It is about more than “money.” A comprehensive financial plan is not only built around your goals, but also around your core values. What matters most to you in life? How does your wealth relate to that? What should your wealth help you accomplish? What could it accomplish for others?

Comprehensive financial planning considers the entirety of your financial life. Your assets, your liabilities, your taxes, your income, your business – these aspects of your financial life are never isolated from each other. Occasionally or frequently, they interrelate. Comprehensive financial planning recognizes this interrelation and takes a systematic, integrated approach toward improving your financial situation. Comprehensive financial planning is  also long-range. It presents a strategy for the accumulation, maintenance and eventual distribution of your wealth, in a written plan to be implemented and fine-tuned over time.

What makes this kind of planning so necessary? If you aim to build and preserve wealth, you must play “defense” as well as “offense.” We have seen it is best to carefully plan to minimize taxes and debts, and adjust wealth accumulation and wealth preservation tactics in accordance with personal risk tolerance and changing market climates.

Basing decisions on a plan prevents destructive behaviors when markets turn unstable. Impulsive decision-making is what leads many investors to buy high and sell low. On the whole, investors lose ground by buying and selling too actively. A comprehensive financial plan, and its long-range vision, helps to discourage this sort of behavior.

A comprehensive financial plan is a collaboration and results in an ongoing relationship. Since the plan is goal-based and values-rooted, both the investor and the financial professional involved have spent considerable time on its articulation. There are shared responsibilities between them. Trust strengthens as they live up to and follow through on those responsibilities and the continuing engagement promotes commitment and a view of success.

Think of a comprehensive financial plan as your compass. Accordingly, as you craft and refine the plan, it can serve as your navigator on the journey toward your goals. The plan provides not only direction, but also an integrated strategy to try and better your overall financial life over time. As the years go by, this approach may do more than “make money” for you, it may help you to build and retain lifelong wealth.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

End-of-the-Year Money Moves

December 23, 2016
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Here are some things you might want to do before saying goodbye to 2016. 

What has changed for you in 2016? Did you start a new job or leave a job behind? Did you retire? Did you start a family? If notable changes occurred in your personal or professional life, then you will want to review your finances before this year ends and 2017 begins. Even if your 2016 has been relatively uneventful, the end of the year is still a good time to get cracking and see where you can plan to save some taxes and/or build a little more wealth.

Do you itemize deductions? If you do, great. Now would be a good time to get the receipts and assorted paperwork together. Besides a possible mortgage interest deduction, you might be able to take a state sales tax deduction, a student loan interest deduction, a military-related deduction, a deduction for the amount of estate tax paid on inherited IRA assets, an energy-saving deduction … there are so many deductions you can potentially claim, and now is the time to meet with your tax professional to strategize to claim as many as you can.

Could you ramp up 401(k) or 403(b) contributions? Every dollar you contribute to these retirement plans lowers your yearly taxable income. Lower it enough, and you might be able to qualify for other tax credits or breaks available to those under certain income limits. Note that contributions to Roth 401(k)s and Roth 403(b)s are made with after-tax rather than pre-tax dollars, so contributions to those accounts won’t lower your taxable income for the year. They will certainly help to strengthen your retirement savings, however.

Are you thinking of gifting? How about donating to a charity or some other kind of 501(c)(3) non-profit organization before 2016 ends? In most cases, these gifts are partly tax-deductible. You must itemize deductions using Schedule A to claim a deduction for a charitable gift. If you donate appreciated securities you have owned for at least a year, you can take a charitable deduction for their fair market value and forgo the capital gains tax hit that would result from their sale. If you pour some money into a 529 college savings plan on behalf of a child in 2016, you may be able to claim a partial state income tax deduction (depending on the state), but will need to check with your tax professional for specifics.

Of course, you can also reduce the value of your taxable estate with a gift or two. The gift tax exclusion is $14,000 for both 2016 and 2017. So, as an individual, you can gift up to $14,000 to as many people as you wish this year. A married couple can gift up to $28,000 to as many people as desired in 2016 and 2017. (The IRS prohibits a current-year income tax deduction for the value of a non-charitable gift.) While we’re on the topic of estate planning, why not take a moment to review the beneficiary designations for your IRA, your life insurance policy, and your retirement plan at work? If you haven’t reviewed them for a decade or more (which is all too common), double-check to see that these assets will go where you want them to go should you pass away. Lastly, take a look at your will to see that it remains valid and up-to-date.

Should you convert all or part of a traditional IRA into a Roth IRA? You will be withdrawing money from that traditional IRA someday, and those withdrawals will equal taxable income. Withdrawals from a Roth IRA you own are never taxed during your lifetime, assuming you follow the rules. Translation: tax savings tomorrow. Before you go Roth, you do need to make sure you have the money to pay taxes on the conversion amount. If you do this and change your mind, the IRS gives you until October 15 of the year after a conversion to undo it.

What can you do before they ring in the New Year? Little year-end moves might help you improve your short-term and long-term financial situation.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

 

Can Gratitude Make You Healthier and Wealthier?

December 21, 2016
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Learn to be grateful—it’s not just a Sunday-school platitude. Science shows that inviting thankfulness into your life is one of the most effective ways to increase happiness.  Being grateful, science has asserted, can make you happier, healthier and wealthier. Fortunately, there exists the science of happiness, by now comprising hundreds of experiments run at major universities about what makes people happy—and what makes happiness stick. Among the characteristics of happy people is gratitude. In fact, there is no greater factor in making us happy, according to the authors of The Happiness Equation: 100 Factors That Can Add to or Subtract From Your Happiness. Stephen M. Poulan is the author of several bestsellers, including Die Broke and It’s All in Your Head. He tells what finally got him to stop striving for what he didn’t have, and realize that the only thing he was lacking in his life was gratitude.

“In 1978, I was the 48-year-old chairman of an American Stock Exchange-listed venture capital firm. I had a lovely wife, Corky, and four incredible children: Michael, Lori, Tracy, and Dana. We had recently moved from a home on suburban Long Island to a 12-room apartment on New York’s Park Avenue. During the summer, the whole family stayed at a house we’d built on Martha’s Vineyard.” “Was I happy? No, I was living in the future. Not only couldn’t I stop and smell the roses, I couldn’t stop and smell dinner on the table, since I didn’t get home until 10 p.m. I was smoking three packs a day, and the only exercise I was getting was bending my elbow.” You get the idea.

Then one day at his physician’s office, Dr. Dove heard Poulan’s labored breathing and suggested some X-rays. The doctor found a troubling spot on his lung, and consulted with some cancer specialists. The oncologists pushed for immediate surgery, but his doctor asked for a biopsy first. While they waited for the results of the biopsy, Stephen and Corky Poulan made plans for how to take care of their family if he were gone or out of work forever. It would change their plans for where they lived, where the kids went to school, everything. Life seemed very grim as they waited for the doctor’s return. As he relates in, It’s All in Your Head: “Then Dr. Dove came into the hospital room and said, ‘Congratulations, you have tuberculosis!’ At that moment, my life turned around. I was given a reprieve. I felt that every day from that point on was a gift from God, sent via Dr. Dove. All the material things Corky and I figured out we stood to lose meant nothing. When we were going over the list, I had thought to myself, I would give them all up to spend another day with my wife and children.”

And from that point on, Pollan was grateful every day, not for what he hoped to have in the future, but what he had in the very present. But you don’t have to go through a cancer scare to experience gratefulness. As a sage once said, “How happy would you be if you lost everything you had…and then got it all back again?”

Research shows that people who actively practice gratefulness are happier. In fact, practicing gratitude is a very unusual discipline, in that it is impossible to feel gratitude and any negative emotion, such as anger, depression, or despair, at the same time. The journey to become a grateful person is not necessarily a natural occurrence. We can take certain actions that cause us to be more grateful, and to exhibit more gratefulness. Since you can’t be grateful and depressed or anxious at the same time, you’ll reach more of your goals. But didn’t we promise you would get healthier too? Leaving aside any potential benefits from lower blood pressure, less stress, and reduced anxiety, get this: it is said people who practice gratefulness began exercising one and a half hours more per week than the control group.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110.

The Importance of Giving Back

December 20, 2016
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As 2016 comes to a close, I encourage you to consider what was important to you this past year. December is thought of as the season of giving: to our families, of parties, of gifts and of donations to charities. It is reported 40% of all individual charitable donations are made in December. As the year ends, you may be reflecting on charity and sharing what you have been uniquely blessed with. In the hustle and bustle of the season, have you thought about why we give? It is my belief, and the belief I share with my family and friends, clients and employees, that charitable giving has to come from the heart and from your guiding principles first. To be truly meaningful, I suggest your gift should first be in alignment with what connects your values, personal convictions and beliefs to how you live.

In my own business, I have been involved with charitable planning for over 30 years. Charitable gifting is important and can truly have an impact on our families, communities and the world at large. At HFG Wealth Management, we believe it is important to give and give carefully. As the holidays are here, this can be a wonderful time for conversation with family on what matters most and how to plan to give. Giving is measured in the sum of our life experiences, relationships, values, talents and skills and what we do to improve the lives of others. It takes great clarity and confidence in your financial and estate planning to make intentional decisions on how to leverage your assets.

Whatever your preferred method of giving may be, contributions, volunteering and living with purpose can sincerely offer greater happiness and more meaning to life. Ultimately, it serves our communities and families to offer some impact onto the world at large through our contributions of time and money. It matters that we give. What will we do with what we have been given? The impact and lasting legacy generosity can offer is what matters most. At HFG Wealth Management, we believe it is important to use giving to influence and impact, change and shape our communities. It takes clarity and confidence in financial and estate planning to make intentional, holistic decisions about how to purposefully and meaningfully leverage your assets. I encourage you to reflect this season on how you feel led to change, improve and impact our communities through your personal giving.

Charitable Giving Planning

December 19, 2016
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As the year ends, you might be thinking about making a financial gift to your old school, or a church or charity.  We have pulled together a brief list of some of the more common gifts we have seen used.

Partnership gifts. These gifts are made via long-term arrangements between donors and recipient charities or non-profits, usually with annuity-style income coming to the donor and an eventual transfer of the principal to the charity at the donor’s death. A charitable remainder trust also allows you to pay yourself a dependable income (typically for life) and then distribute the remaining trust principal to charity. A charitable lead trust offers you the potential to reduce gift and estate taxes on assets passing to your heirs by making annual charitable gifts; your beneficiaries get the leftover trust assets at the end of your life or the specified trust term. You could even name a charitable life income arrangement as the beneficiary of your IRA.

You might opt to invest some of your assets in a pooled income fund offered by a university or charity. Your gifted assets go into a “pool” of assets invested by a fund manager; you get a pro rata share of the income of the fund for life, and when your last income beneficiary passes away, the principal of your gift goes to the school or charity. If you like the idea of a family foundation, you could consider setting up a donor-advised fund. You make an irrevocable contribution to a third-party fund, realizing an immediate tax deduction; the fund invests the money in an account you create. You advise the fund where the money goes and how it grows, but the fund makes the actual grants to nonprofits.

Lifetime gifts. These are charitable gifts in which the donor retains no powers or other controls over the gift once it is made. A lifetime gift of this sort is not included in what the IRS calls your Gross Estate (but typically taxable gifts are used in calculation of estate tax).  Lifetime gifts also include outright gifts of cash or appreciated assets such as stocks or real estate. A gift of appreciated stock could possibly bring you a charitable deduction to lower your income tax, and help you avoid capital gains tax linked to the sale of the appreciated shares. Through a gift of appreciated property, you can even transfer a real estate deed to a school or charity. You could even consider a retained life estate, in which you deed your home to a charity or non-profit while retaining the right to live in it as your primary residence for the rest of your life.

Estate gifts. These are deferred gifts you make after your lifetime, without impact on your current lifestyle. You can make a bequest to a charity through your will or a living trust without incurring estate taxes on the gift amount. A gift of life insurance to a university or charity can give you an immediate income tax deduction for the cash surrender value of a paid-up policy, and possible future deductions. You can also make an IRA gift or retirement plan gift effective upon your death, with the non-profit organization receiving some or all of the assets as you wish.

The caveats. As your income increases, you may face limits on the amount of charitable gifts you can deduct.  Keep in mind that your unique circumstances need to be weighed before making any decision. As with all tax and estate planning, we recommend discussing all planning with attorney or tax advisor to affirm that you are in a position to fully benefit from charitable deductions.

At HFG Wealth Management, we embrace a holistic method of financial planning known as Financial Life Planning™. We believe this is a financially effective and personally rewarding approach to creating a practical, lasting financial plan. As financial professionals using the life planning approach, our purpose is to assist individuals and families in creating a long-term vision that is consistent with their core values. At HFG we recognize that life events and life transitions can impact your financial responsibilities and your vision of the future. We are here to provide you with tips and strategies to get you started and help you reach your financial and life goals at every stage. For more information, please visit www.hfgwm.com or call 832.585.0110

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Copyright © 2017. HFG Wealth Management, LLC. Investment advisory services offered through HFG Wealth Management, LLC – An independent Registered Investment Advisory firm registered with the SEC. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Therefore, any information presented here should only be relied upon when coordinated with individual professional advice. [ more disclosures ]