By  | 
By Jacqueline Miller

No matter the level of your wealth, sound planning strategies and carefully researched investment advice for a fruitful, worry-free retirement is rarely achieved without the advice of professionals.

Here are answers to some important questions we hope you’ll find helpful. After all, we are living longer and healthier lives. Isn’t it time to get serious about your retirement security?

Do you still need to worry about estate tax if you are Florida resident and have a net worth of less than the $5.49 million federal estate tax exemption?

You might. Many Florida residents think that by virtue of their Florida residency and their net worth they are immune from estate tax. That may not be the case if they own real estate, such as a vacation home, in a state with a state estate tax. Such states usually impose their estate tax on non-residents who die owning real estate in the state, and many have much lower exemptions than the federal estate tax exemption. For example, in 2017, the Massachusetts estate tax exemption is $1 million, the Connecticut estate tax exemption is $2 million, the Illinois estate tax exemption is $4 million, and Pennsylvania has no estate tax exemption. (Pennsylvania’s estate tax rates vary based on the decedent’s relationship to the beneficiary, from 0% if the beneficiary is a surviving spouse to 15% if the beneficiary is an individual unrelated to the decedent.) All of the decedent’s assets, not just those located in the state imposing the tax, are considered when determining whether the value of the decedent’s estate exceeds the state exemption.

Fortunately, paying state estate tax can be avoided on the death of the first spouse if the marital deduction (or in Pennsylvania, the 0% tax rate) applies, and there are techniques available to avoid state estate tax altogether, such as contributing the out-of-state residence to an irrevocable trust or a limited liability company and leasing it back.

Attorney J. Allison Archbold

Shareholder with Fergeson Skipper, P.A.

1515 Ringling Blvd., 10th Floor, Sarasota, FL 34236

941.957.1900, fergesonskipper.com

What is the least mentioned but most common financial mistake?

The most common mistake I see is that individuals and families do not have complete and accurate financial statements that account for all of their assets, liabilities, income and expenses. Countless surveys arrived at the same conclusion – that the most important financial question for individuals and families is “do I have enough to maintain or enhance my lifestyle?” This includes the $25 million and up Ultra Affluent segment. It’s impossible to answer this question without financial projections. If this is your number one question, how are you answering it?

A Net Worth statement represents your financial strength today. Knowing your net worth is a fun fact, but it can easily be impacted by market fluctuations, inflation, income taxes, and also by creditors, estate taxes, and property and casualty perils. A properly constructed net worth statement will have not only values, but will also spell out ownership and asset location. All clients have the ability to protect their families from multiple perils, but first you must identify those to which you are exposed. Once you have a Net Worth statement, this is a valuable tool to share with your trusted advisors including your attorney and CPA.

A Capital Sufficiency Analysis is designed to project your future and forecast how your net worth might evolve. No, there is no crystal ball. But if you and your advisor use accurate data, along with reasonable but conservative assumptions, and monitor it annually, you may be surprised at how accurate it can be. We will experience significant financial events, like 2008, again in the future. My experience with financial plans created prior to that event confirmed that reasonable assumptions would play out over time. It took a couple years, but those that stuck with their plans experienced positive results.

Whether you have “enough” or not, I encourage you to approach your finances in a positive and fully engaged manner. Planning your future without strong financial statements is like building your dream home without blueprints, only much more important.

Mitchell Helton, CPA, CFP

Senior Wealth Strategist, PNC Wealth Management

1549 Ringling Blvd., Sarasota, FL 34236


What recurring mistakes are most frequently observed in your clients’ retirement plan beneficiary designation forms?

In my practice, many new clients desire to obtain sophisticated wills and trusts. However, many of these same clients are unaware of the critical role that their retirement plan beneficiary designation forms play in their overall estate plan. When I ask clients what their beneficiary designation form states, I frequently get a look of surprise or concern when they learn that their will or trust generally does not control the beneficiary of their retirement plan.

Some of the more frequently observed mistakes include outdated forms that were signed when family situations were different, failing to name contingent beneficiaries, designating minors as beneficiaries, missing or lost forms, and naming beneficiaries who fail to or are unable to take full advantage of stretching the income tax deferral benefits of the plan. Each of the specific mistakes above will tend to create their own set of unique problems if not timely addressed and could result in unintended beneficiaries of the plan, loss of creditor protection, unnecessary income taxes paid and lost income tax savings opportunities.

Attorney Todd D. Kaplan

Icard Merrill

8470 Enterprise Circle, Bradenton, FL  34201

941.907.0006, icardmerrill.com

Should I delay my social security benefits? 

Deciding whether to delay your Social Security benefits is a critical choice — and one that can have potentially significant financial payoffs. Take your benefits at your full retirement age and you’ll get 100 percent; wait a year and you’ll get 108 percent; delay even further until you’re 70 and receive 132 percent. However, choosing to postpone is a very personal decision and there are many factors to consider.

If you’re still working when you reach your retirement age and start collecting Social Security, your benefit payments could be subject to taxes. Although you won’t be taxed on more than 85 percent of your benefits, if your Adjusted Gross Income is above a certain point, the federal government will take a portion of your benefits. Claim your benefits even earlier and the Social Security Administration will withhold a certain amount on every dollar you make above a defined threshold. You will also need to evaluate your lifestyle and needs in the coming years. Can you live comfortably through other sources of income, like a pension or a retirement account? Finally, consider your life expectancy and your break-even age (where the cost of waiting is counterbalanced by the increased benefit). These will help you determine whether it’s worth it to take your earnings now, or delay for several years.

Before you make this important decision, we encourage you to speak with an investment advisor who can provide a full spectrum of wealth management guidance and retirement advice. With a trusted financial partner, you can maximize your benefits for a happy, worry-free retirement.

Jerry Bainbridge, President

J.L. Bainbridge & Company

1582 Main Street, Sarasota, FL 34236

941.365.3435, jlbainbridge.com

How often do I need to update my estate planning documents?

A few days ago, I was fast asleep and it was 2:00 a.m. when a heard a “chirp” that startled me from my sleep. I knew instantly what it was. The smoke detector battery in my bedroom needed to be changed. Of course it was the middle of the night, and of course the ladder was in the garage behind an obstacle course of junk. I reminded myself that this wouldn’t be happening if I had followed the rule of thumb and changed the battery when the time changed.

If you are one of the 36% of Americans that has an estate plan, you should give yourself a pat on the back. However, like a smoke detector with a dead battery, your estate plan may not be of any use to you if it is out of date. The rule of thumb is to review your estate plan every three to five years to ensure that it is up to date. Death, divorce, marriage and births are just a few reasons to take an earlier look at your estate plan. Changes to state and federal laws may also necessitate a review and change. Within the past five years, we have had significant changes to the estate tax laws that may allow you to greatly simplify your estate plan. If you have sold an asset that is specifically referenced in your Will or Trust, you should update your estate plan in order to avoid confusion. Beneficiary designations on IRAs, annuities and life insurance should be re-checked regularly. Finally, personal property lists should be updated. Feuds among siblings often begin over the division of personal property after a parent’s death.

If you happen to be one of the 64% of Americans without an estate plan, then you have a little more work to do. I will promise to change all of the smoke detector batteries in my house and clean my garage if you promise to get an estate plan.

John M. Compton

Shareholder with Norton, Hammersley, Lopez & Skokos, P.A.

Estate Planning & Asset Preservation, Business & Corporate Law

1819 Main Street, Suite 610, Sarasota, FL 34236

941.954.4691, nhlslaw.com

Are your financial advisors for your retirement accounts fiduciaries?

Most investors understand the retirement assets (IRA’s, Roth IRA’s, retirement plans like 401k’s, etc.) are different from other investable assets. The first and most important distinction is related to the purpose of trying to secure a standard of living for the individual well after one’s ability to earn money has ended. As such, there should be care to make sure retirement funds get the best advice that does not have conflicts of interest associated with it. The federal government (the Department of Labor) and now even some state governments (Nevada is the first) are starting to mandate that financial advisors be fiduciaries rather than selling financial products on commission. This means that they—like a doctor giving medical advice—should not receive more fees by recommending to you one style of investment versus another. In short, they should be focused on you first and foremost. Their compensation should not vary based on their recommendations. Ask your financial advisor if they are a fiduciary. If the answer is no, buyer beware.

Michael D. McNiven, PhD

Managing Director & Portfolio Manager

Cumberland Advisors

2 N. Tamiami Trail, Ste. 303, Sarasota, FL 34236

941.554.4352, Cumber.com


With interest rates as low as they are, how does one solve for a more productive cash flow in retirement?

Bonds have essentially been in a bull market for over 35 years. Put another way, interest rates have been declining since 1981, which has been a positive tailwind for those holding bonds and or bond funds thus far. Global central banks have cut rates nearly 700 times and bought more than 12 trillion in assets since the financial crisis. Back in July 2016 with most of Europe at negative bond yields, the Swiss government could have borrowed money for 50 years out to 2066 and gotten paid to do so. All of this is unprecedented and it sets up for a potentially treacherous path for investors who believe their bond fund holdings are safe investments. The commonly owned TLT or the iShares 20+ Year Treasury ETF is currently yielding around 2.5%. This ETF hit a high in July of 2016 and post the US election dropped over 17% in less than five months through December 2016. Investments considered “safe” need to be better understood by the investing public. People are living longer. The “solve” for this dilemma of longevity and record low rates should start by working with a sophisticated team who acts as a true fiduciary legally bound to their clients. Secondly, access to alternative fixed income solutions that own income producing real assets is one of many examples. Cash flow, liquidity, and risk analysis done by a CFP and or Fiduciary (or credentialed individual) is critical before implementation of any such investment strategy.

Matt Otto, CFP®, AIF®

Managing Director, Partner

The Otto Group

1605 Main St., Ste 900, Sarasota, FL 34236

941.203.7200, hightoweradvisors.com/otto

Can I work while receiving social security benefits?

The answer is certainly yes, however if you continue working there are some important tax implications to consider if you choose to work while receiving Social Security Benefits.

You may begin collecting Social Security retirement benefits as early as age 62, however full retirement age is between 65 and 67, depending on your year of birth. People age 65 and younger who continue to work while receiving Social Security will have their benefits reduced by $1 for every $2 they earn over $16,920 in 2017.

If you reach full retirement age in 2017, your Social Security benefits will be reduced $1 for every $3 you earn over $44,880 in the months before you reach full retirement age. Earnings include gross wages from a job or net self-employment income, however it does not included pensions, annuities, investment income, or other retirement income. However, beginning the month you reach full retirement age, your benefits will not be reduced no matter how much you earn.

Your Social Security benefits received may be taxed depending on your earnings. If your adjusted gross income, tax-exempt interest and 50% of your Social Security benefits exceeds $25,000 as an individual, or $32,000 for a married couple filing jointly, you may be subject to income tax on as much as 85% of your benefits.

Melodie Rich, CPA

Mauldin & Jenkins

1401 Manatee Avenue West, Ste. 200, Bradenton, FL 34205

941.747.4483, mjcpa.com

As small business owners with a 401(k) profit sharing plan who are looking to maximize tax savings, how much more tax-deferred money can we put away, since laws are limited to $54,000 ($60,000 if over age 50)?

How much more money a small company employer can contribute will depend on their age, how many employees, their ages, as well as the dollar amount the employer is able to invest depending on various variables in relation to life goals and levels of risk. A census is required to do an actual calculation but on average, the employer may be able to contribute anywhere from $50,000 to $200,000.

How can I make sure that I am meeting my fiduciary responsibilities? 

As participants are added to plan, the responsibility of the trustee increases significantly. The Trustee is responsible for the overall management of the investments in the plan. The trustee is responsible for monitoring the investments and making sure they are suitable for the plan. They are also responsible for making particular investment changes as needed. Lastly, the Trustee is responsible for making sure the fees associated with the plan are reasonable for the services being provided. Many employers don’t know or understand the responsibility of being the Trustee and the penalties that go along for failing to keep the plan in compliance. The Employee Retirement Income Security Act (ERISA) of 1974 clearly specifies these responsibilities and the penalties associated with failing to comply.

Tony Blasini

Vice President of Employee Benefits

Caldwell Trust Company

1561 Main Street, Sarasota, FL 34236

941.926.9336, ctrust.com

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