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Catherine Bennett

Is Hiring a Wealth Manager Worth the Investment?

By Uncategorized

We collect a lot of stuff in life. Maybe it’s cash, debts, properties, investments, or solid oak furniture from the Turn of the Century. Whatever it is, as you age, it’s likely you have a long list of items to your name.

And the longer you live, the more complex that list becomes. It’s natural to wonder if you’re doing everything you can to be a wise steward of all your stuff.

What you need is guidance to help you manage your assets well, but you’re not sure if hiring help is the right move.

Should You Hire a Wealth Manager?

Wealth managers are there to help you make informed decisions about your finances. It’s in their best interest to help you grow your wealth, become debt-free, and move toward financial peace.

They do that through educating their clients about financial tools and investment strategies that match their risk tolerance.

Consider the following questions:

  • Do you know your net worth? In the maze of chutes and ladders—assets and liabilities— are you in the positive?
  • Should you hang on to an investment you made 30 years ago that hasn’t paid dividends in a while?
  • What’s the plan for all of your stuff after you’re gone?

If any of these felt relevant to you (or you answered “unsure” to any of them), a wealth manager’s expertise could be just what you need!

Here’s how hiring a wealth manager can help you stay on top of your finances and prevent valuable assets from falling through the cracks.

Wealth Managers Help Build Your Financial Roadmap

So what is a wealth manager, and what does one do?

You’ve probably heard wealth managers referred to by a lot of different names: CFP (Certified Financial Planners), CFA (Chartered Financial Analyst), investment advisors, portfolio managers, etc. But what these professionals all have in common is that they see the big picture of your finances.

Wealth managers use their expertise in investments, tax law, and financial tools to help you grow and optimize your assets. So you can feel peace of mind about your finances.

In a way, wealth managers are like trail guides—there to help you reach your goals and avoid financial pitfalls. Wealth managers can understand your short-term and long-term ambitions in the context of where you are currently, and make a plan to help you achieve those goals.

Wealth Managers Help You Manage Financial Risk

Intimidated by the stock market? Wealth managers can help you navigate investing according to your risk tolerance. In other words, you can explore buying and trading stocks with someone who will alert you of high-risk maneuvers and recommend strategies aligned with your desired level of financial safety.

Is all of your money kept in one place? Is it leaving you vulnerable? Wealth managers can help you create a diversified portfolio, which acts as a counterbalance to an ever-changing marketplace. Wealth managers can suggest investments that make sense for your situation and are aligned with your long- and short-term goals. So you can feel more secure knowing your eggs aren’t all in one basket and your funds will be available when you need them to be.

In effect, a wealth manager’s personalized service can give you a level of stability that goes far beyond individual investments and keeps your assets safe from inflation.

Wealth Managers Help You Optimize Your Tax Strategy

Now, let’s talk about taxes.

Wealth managers are adept at navigating tax law to make sure you’re taking advantage of every possible deduction. Wealth managers understand that money the government takes unnecessarily (the dollars that come back to you in your tax return) can be put to better use in retirement accounts or other investments than as a free loan to Uncle Sam.

By helping you keep more of your money, wealth managers help you save substantially over time. They can also help you turn around and invest what you save, so that your money is working for you by generating interest.

Truly, the benefits of your wealth manager’s tax knowledge alone often offsets the cost of their services.

Wealth Managers Help You Save Time and Stress

Life is busy, and managing your wealth can be time-consuming. On our fast-paced planet, every second of your time has a price on it. (Why do you think companies pay so much for well-placed online ads?) Your time is valuable.

By entrusting a professional financial advisor, you free up your time while reducing the stress associated with financial decision-making. It’s an investment in your financial confidence and overall well-being.

It helps to look at the cost of wealth management as an investment rather than an expense. The long-term value and potential returns will likely outweigh the initial financial outlay.

The Final Cost-Benefit Analysis

Hiring a wealth manager is not just about protecting what you’ve earned; it’s about growing your wealth and improving your quality of life today.

The cost associated with wealth management isn’t merely an expense; it’s a strategic investment in a plan that aligns with your goals, whether that be getting out of debt or preparing for retirement.

It’s not an off-the-shelf solution, but a bespoke framework designed with your financial future in mind.

Talk with a Wealth Manager in Reno, Nevada Today

American Wealth Management is a financial management firm in Reno, Nevada, that serves many local clients as well as individuals across the country.

If you have questions about your finances, take advantage of American Wealth Management’s 1-hour no-cost financial consultations and talk one-to-one with one of our financial advisors, we’ll seek to understand your financial goals and explain exactly what we can do to help you along the way.

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Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. M.S Howells does not provide tax or legal advice. Please consult your legal or tax advisor regarding your individual situation.

important birthdays for using your retirement funds.

Important Birthdays Over 50 For Retirement

By Uncategorized

Most children stop being “and-a-half” somewhere around age 12. Kids add “and-a-half” to make sure everyone knows they’re closer to the next age than the last.

When you are older, “and-a-half” birthdays start making a comeback. Starting at age 50, several birthdays and “half-birthdays” are critical to understanding because they have implications regarding your retirement income.

Age 50: Qualified Retirement Plans

At age 50,  workers in certain qualified retirement plans can begin making annual catch-up contributions in addition to their normal contributions. Those who participate in 401(k), 403(b), and 457 plans can contribute an additional $8,000 per year in 2024. Those who participate in Simple Individual Retirement Account (IRA) or Simple 401(k) plans can make a catch-up contribution of up to $3,500 in 2024. And those who participate in traditional or Roth IRAs can set aside an additional $1,000 a year.1,2

Age 591⁄2: Retirement Plan Withdrawals

At age 591⁄2, workers can start making withdrawals from qualified retirement plans without incurring a 10% federal income tax penalty. This applies to workers who have contributed to IRAs and employer-sponsored plans, such as 401(k) and 403(b) plans (457 plans are never subject to the 10% penalty). Keep in mind that distributions from traditional IRAs, 401(k) plans, and other employer-sponsored retirement plans are taxed as ordinary income.

Age 62: Social Security

At age 62 workers are first able to draw Social Security retirement benefits. However, if a person continues to work, those benefits will be reduced. The Social Security Administration will deduct $1 in benefits for each $2 an individual earns above an annual limit. In 2024, the income limit is $22,320.3

Age 65: Qualify for Medicare

At age 65,  individuals can qualify for Medicare. The Social Security Administration recommends applying three months before reaching age 65. It’s important to note that if you are already receiving Social Security benefits, you will automatically be enrolled in Medicare Part A (hospitalization) and Part B (medical insurance) without an additional application.4

Age 65 to 67: 100% of  Social Security

Between ages 65 and 67, individuals become eligible to receive 100% of their Social Security benefits. The age varies, depending on the birth year. Individuals born in 1955, for example, become 100% of their benefits when they reach age 66 years and 2 months. Those born in 1960 or later need to reach age 67 before they’ll become eligible to receive full benefits.5

Age 73: Individual Retirement Account

In most circumstances,  once you reach age 73, you must begin taking required minimum distributions from a traditional Individual Retirement Account and other defined contribution plans. You may continue to contribute to a traditional IRA past age 701⁄2 as long as you meet the earned income requirement.

Understanding key birthdays may help you better prepare for certain retirement income and benefits. But perhaps more importantly, knowing key birthdays can help you avoid penalties that may be imposed if you miss the date.
If you have you have questions about your finances, take advantage of American Wealth Management’s 1-hour no-cost financial consultations. Submit this form to us and we will contact you to schedule a video call with one of our advisors.

American Wealth Management Reno, Nevada

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1. If you reach the age of 50 before the end of the calendar year.
2. IRS.gov, 2023
3. SSA.gov, 2023
4. SSA.gov, 2023. Individuals can decline Part B coverage because it requires an additional premium payment.
5. SSA.gov, 2023

The content is
The content is

The content is de from sources believed to be providing accurate information. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used to avoid any federal tax penalties. Please consult legal or tax professionals for specific information regarding your situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Investment advice offered
Investment advice offered

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. M.S Howells does not provide tax or legal advice. Please consult your legal or tax advisor regarding your individual situation.

New Retirement Contribution Limits for 2024

New Retirement Contribution Limits for 2024

By Uncategorized

The Internal Revenue Service (IRS) has released new limits for certain retirement accounts for the coming year.

Keep in mind that this update is for informational purposes only, so please consult with an accounting or tax professional before making any changes to your 2024 tax strategy. You can also contact your financial professional, who may be able to provide you with information about the pending changes.

Individual Retirement Accounts (IRAs)

Traditional IRA contribution limits are up to $500 in 2024 to $7,000. Catch-up contributions for those over age 50 remain at $1,000, bringing the total limit to $8,000.

Remember, once you reach age 73, you must begin taking the required minimum distributions from a Traditional IRA in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 591⁄2, may be subject to a 10% federal income tax penalty.

Roth IRAs

The income phase-out range for Roth IRA contributions increases to $146,000-$161,000 for single filers and heads of household, an $8,000 increase. For married couples filing jointly, the phase-out will be $230,000-$240,000, a $12,000 increase. Married individuals filing separately see their phase-out range remain at $0-10,000.

To qualify for the tax-free and penalty-free withdrawal of earnings, Roth 401(k) distributions must meet a five-year holding requirement and occur after age 591⁄2. Tax-free and penalty-free withdrawals can also be taken under certain other circumstances, such as the owner’s death.

Workplace Retirement Accounts

Those with 401(k), 403(b), 457 plans, and similar accounts will see a $500 increase for 2024, the limit rising to $23,000. Those aged 50 and older will continue to have the ability to contribute an extra $7,500, bringing their total limit to $30,500.

Once you reach age 73 you must begin taking required minimum distributions from your 401(k) or other defined-contribution plans in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 591⁄2, may be subject to a 10% federal income tax penalty.

SIMPLE Accounts

A $500 increase in limits for 2024 gives individuals contributing to this incentive match plan a $16,000 stoplight.

Much like a traditional IRA, once you reach age 73, you must begin taking the required minimum distributions from a SIMPLE account in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 591⁄2, may be subject to a 10% federal income tax penalty.

As a reminder, this article is for informational purposes only. Consult with an accounting or tax professional before making any changes to your 2024 tax strategy.

If you have questions about your finances, take advantage of American Wealth Management’s 1- hour no-cost financial consultations. Submit this form to us and we will contact you to schedule a video call with one of our advisors.

American Wealth Management Reno, Nevada

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The content is developed from sources believed to be providing accurate information. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used to avoid any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Investment advice is offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. M.S Howells does not provide tax or legal advice. Please consult your legal or tax advisor regarding your individual situation.

What you pay for wealth management depends on your personal goals and financial situation. Wealth management based in Reno, Nevada.

How Much Does a Wealth Manager Cost?

By Uncategorized

Google isn’t likely to serve you up a tidy cost menu for wealth management services. That’s because wealth management isn’t one-size-fits-all. What you pay depends on your personal goals and financial situation.

But, you can still choose the right wealth manager for you and figure out what it will cost. You just need to understand how different wealth managers are paid and how your situation affects what you pay.

3 Factors to Consider When Budgeting for a Wealth Manager

1. There are 3 Main Models a Financial Advisor Can Use for Compensation

In the wealth management world, you’ll encounter a few different compensation models—or payment structures. Every compensation model has strengths and weaknesses depending on your needs and how the pay structure incentivizes your manager to handle your account.

Here are the 3 basic pay structures:

Flat-Rate Model

Want to keep things simple? You can find a wealth manager who charges a flat rate for their services. Common flat rates for 2023 ranged from $2,000 to $7,500 a year. You can also find wealth managers who charge by the month or by the hour for their financial expertise.

However, what all flat rate structures have in common is that they eliminate the manager’s incentive to grow the client’s assets. In other words, the wealth manager gets paid whether you get a return on investment or not.

Commission Model

Like a credit card company that takes a small cut every time you swipe, some wealth managers earn a commission every time you buy or trade investments based on their recommendation. Those investments can include mutual funds, stocks, annuities, life insurance, and so on.

This pay structure may incentivize managers to engage in more frequent trading of your assets and to recommend specific investment products.

That might be exactly what you’re looking for. However, use caution when engaging a commission-based wealth manager, as they work around incentives that don’t always align with their client’s best interests.

Fee-Based Model

This compensation model involves paying your wealth manager a percentage of your total assets under management (AUM). That means your wealth manager takes a fixed percentage of what you’ve invested year to year. The typical range for fee-based wealth managers is 1– 1.5% AUM.

This compensation model is called a fee-based or fee-only model. (There are small differences between the two, but the overall payment structure is the same.)

This model motivates your wealth manager to grow your assets, since their compensation increases as your investments do.

Assuming you choose a fee-based wealth manager, let’s look at what the pay structure could look like.

2. Your Total Assets Affect the Cost of Wealth Management Services

If you want to know how much a fee-based wealth manager will cost you, a good place to start is knowing how much you plan to invest. With a percentage-based pay structure, you can plan to pay your wealth manager a percentage of invested assets and come up with an approximate figure.

So, for example, here’s how you would calculate the fee for a $150,000 AUM at a rate of 1.25%:

$150,000 * 0.0125 = $1,875 per year

Keep in mind that, in some cases, there may be additional costs associated with some services or transactions. These could include financial planning fees, account maintenance fees, or trading costs.

In the end, more assets will mean a larger payout for the financial manager. However, being “wealthy” is never a prerequisite for seeking out and obtaining financial guidance.

3. Wealth Management Services Cost More or Less Depending on Financial Complexity

The range of services you require, and the intricacy of your financial situation will have some bearing on how much you pay your wealth manager.

If your finances are relatively straightforward (your assets are consolidated in one or two investment categories) you might find yourself at the lower end of the fee range. On the flip side, if your financial situation is more intricate, involving complex investment strategies, tax planning,

or estate planning, you might be closer to the higher end of the fee spectrum, reaching 1.5% or more.

Have an open conversation with your wealth manager about your financial goals, the services you expect, and how the manager’s fees align with your needs.

Understanding the factors that contribute to the cost of wealth management can help you make informed decisions about the value you receive for the fees you pay.

What to Discuss When You Consult with a Wealth Manager

The best way to get an accurate reading on what financial services will cost is to sit down with a wealth manager and discuss your goals. Prepare to discuss this list of topics:

  • An overview of your financial situation, including income, expenses, assets, and liabilities
  • Short-term and long-term financial goals, such as education savings, retirement planning, or homeownership
  • Your risk tolerance and any specific concerns or preferences you have about your investments
  • The wealth manager’s approach to financial planning, investment strategies, and the range of services they offer
  • The wealth manager’s fee structure, including potential additional costs associated with their services

Get Wealth Management Services in the Reno, Nevada Area

American Wealth Management is a fee-based wealth management firm based in Reno, Nevada.

To schedule a free consultation with American Wealth Management and explore how their services align with your financial goals, click here and fill out the consultation request form.

This free consultation is the perfect chance to assess whether one of our wealth managers is the right fit for your financial needs and to establish a foundation for a successful long-term partnership.

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Investment advice is offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. M.S Howells does not provide tax or legal advice. Please consult your legal or tax advisor regarding your individual situation.

transfer of wealth

How Boomers and Millennials Differ

By Uncategorized

We are in the midst of an unprecedented transfer of wealth, with trillions of dollars being moved from one generation to the next. This transfer challenges many commonly held notions as new values and interests become more prominent. In short, the economy is changing, and while some of these new practices might raise an eyebrow or two, not all of these ideas are without merit.

Boomer Generation

For someone from the boomer generation, it might be easy to become upset with or confused by millennials’ differing points of view. However, taking note of the differences between the two generations can foster better communication and understanding.

Younger Generations

The younger generations, including millennials, Gen Z, zoomers, and whatever else you call them, have a different perspective on wealth than their forebears. As these generations reach middle age, an interesting trend has emerged in emphasizing YOLO (You Only Live Once). Now that these generations have the steering wheel, they seem to be stepping on the gas and running full force into exciting, once-in-a-lifetime experiences.

At this point, it bears looking at the “why” of the YOLO economy. In other words, why do these forty-somethings spend as if there is no tomorrow?

Less money: Your average 40-year-old earns about $49,000 a year. While this is more than the 40-year-olds of the previous generation, the rising cost of living has taken a significant bite out of that difference.1

Less control: This generation also holds a smaller piece of the pie. While the post-WWII cohort controlled 22 percent of wealth in the United States once it reached middle age, millennials only controlled seven percent.2

Perhaps the biggest factor is less marriage: Middle-aged millennials are less likely to be married or start families than prior generations. Only 44 percent of millennials have walked down the aisle by age 40, compared to 61 percent for Generation X and 53 percent for baby boomers. Only 30 percent of millennials live with a spouse and at least one child, far lower than prior generations. This means that the expenses that come with a family are also off the table. If you aren’t married, the costs of a possible divorce are simply gone. Without children, you don’t have to pay for school clothes each fall, braces, and everything else that comes with helping a child grow up.3

The result is a very different economic picture for today’s middle-aged individuals. Consequently, all of these differences have informed a different set of values. Among millennials, 78 percent prefer spending money on experiences rather than material things. While prior generations may have placed more importance on things like home ownership, car purchases, and investments, millennials are looking at a different future with disparate priorities. For these reasons, spending on travel, exclusive events, and entertainment has become a priority.4

Of course, many boomers today find themselves in similar situations as middle-aged millennials. Most of the boomer generation is in their retirement, with their children growing and perhaps finding themselves needing further stimulation in their golden years. While many keep working part-time, start businesses, or help their families with childcare, there may be a pang of that YOLO spirit in them as well, and a similar yearning for adventure.

And for good reason. While their middle-age experiences may have been very different, there is no better time than now to take that big trip you’ve always thought about. Maybe it’s time to splurge on those expensive concert tickets or challenge yourself through a special adventure that always seemed impractical, like learning to SCUBA dive or skydive.

This might be too far for some, but it’s important to remember that wealth can serve us in two ways: providing security and allowing us to enjoy life. If you’ve been working hard with your financial professionals to pursue that security, maybe it’s time to talk to them about your need for enjoyment.

It’s also possible that the younger people in your family have done too much YOLO and not enough saving and investing. A conversation with a trusted financial professional may help them understand how to balance living for today and preparing for tomorrow.

If you have questions about your finances, take advantage of American Wealth Management’s 1- hour no-cost financial consultations. Submit this form to us and we will contact you to schedule a video call with one of our advisors.

American Wealth Management Reno, Nevada

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1. Businessinsider.com, February 22, 2023
2. Fortune.com, March 22, 2023
3. Pewresearch.org, October 19, 2023
4. Harris Interactive, October 19, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. M.S Howells does not provide tax or legal advice. Please consult your legal or tax advisor regarding your individual situation.

Five Most Overlooked Tax Deductions

Five Most Overlooked Tax Deductions

By Uncategorized

Who among us wants to pay the IRS more taxes than we have to?

While few may raise their hands, Americans regularly overpay because they fail to take tax deductions for which they are eligible. Let’s take a quick look at the five most overlooked opportunities to manage your tax bill.

  1. Reinvested Dividends:

    When your mutual fund pays you a dividend or capital gains distribution, that income is a taxable event (unless the fund is held in a tax-deferred account, like an IRA). If you’re like most fund owners, you reinvest these payments in additional shares of the fund. The tax trap lurks when you sell your mutual fund. If you fail to add the reinvested amounts back into the investment’s cost basis, it can result in double taxation of those dividends.1
    Mutual funds are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money.

  2. Out-of-Pocket Charity:

    It’s not just cash donations that are deductible. If you donate goods or use your personal car for charitable work, these are potential tax deductions. Just be sure to get a receipt for any amount over $250.2

  3. State Taxes:

    Did you owe state taxes when you filed your previous year’s tax returns? If you did, don’t forget to include this payment as a tax deduction on your current year’s tax return. There is currently a $10,000 cap on the state and local tax deduction.3

  4. Medicare Premiums:

    If you are self-employed (and not covered by an employer plan or your spouse’s plan), you may be eligible to deduct premiums paid for Medicare Parts B and D, Medigap insurance, and Medicare Advantage Plan. This deduction is available regardless of whether you itemize deductions or not.4

  5. Income in Respect of a Decedent:

    If you’ve inherited an IRA or pension, you may be able to deduct any estate tax paid by the IRA owner from the taxes due on the withdrawals you take from the inherited account.5

If you have questions about your finances, take advantage of American Wealth Management’s 1- hour no-cost financial consultations. Submit this form to us and we will contact you to schedule a video call with one of our advisors.

American Wealth Management Reno, Nevada

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1. TheBalance.com, 2021 2. IRS.gov, 2022
3. IRS. gov, 2022
4. IRS. gov, 2022
5. IRS.gov, 2022. In most circumstances, once you reach age 73, you must begin taking the required minimum distributions from a Traditional Individual Retirement Account (IRA). Withdrawals from Traditional IRAs are taxed as ordinary income and, if taken before age 591⁄2, may be subject to a 10% federal income tax penalty. You may continue to contribute to a Traditional IRA past age 701⁄2 as long as you meet the earned-income requirement.

The content is developed from sources believed to be providing accurate information. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used to avoid any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. M.S Howells does not provide tax or legal advice. Please consult your legal or tax advisor regarding your individual situation.

White Elephant Inheritance

White Elephant Inheritance

By Uncategorized

Have you ever had to deal with a “white elephant”? Not the actual pachyderm, but what Merriam-Webster calls “a property requiring much care and expense yielding little profit” or, more simply, “something of little or no value.” Of course, we’re not talking about the sort of “white elephants” you might get in a humorous gift exchange over the holidays, like a tacky t- shirt that isn’t even your size or an inexplicable kitchen gadget.

Not everyone has a rich uncle who will present them with a simple cash gift in his will. A “white elephant” is a gift that may cause more issues than it resolves, much as an elephant might eat an unwitting recipient out of house and home. It’s an asset that comes to you via gift or inheritance and needs to be quickly sold, liquidated, or transferred to avoid further expenses of time or money. In such cases, it is crucial to understand how to disclaim an inheritance properly and avoid holding the burden. The average American household stands to inherit $46,200. Not all those bequeathments are straight cash, and some might prove inconvenient or troublesome.1

There are several reasons why someone might not want to accept an inheritance:

  • Income:

If the inheritance generates income, such as a business or rental property, it may push you into a higher income tax bracket. This might be good in many cases, but there are situations where this might prove inconvenient, such as—

  • Litigation or Bankruptcy:

If you face a lawsuit or anticipate bankruptcy, disclaiming the inheritance may be wise. However, it’s important to note that if you are currently undergoing bankruptcy proceedings, you may be unable to deny the inheritance.2

  • Inability to Maintain:

If the inheritance includes property or assets that require ongoing maintenance and you cannot fulfill those obligations, disclaiming may be the best choice. This could be real estate, a business, or perhaps even a literal white elephant.

  • Honoring the Decedent’s Wishes:

Circumstances may have changed since drafting the will, and accepting the inheritance may no longer align with the decedent’s original intentions.

Remember, this article is for informational purposes only and does not replace real-life advice, so consult a legal professional before deciding on an inheritance. The article provides high-level considerations, but a legal professional who is familiar with your situation may be able to provide more insights and guidance.

To officially disclaim an inheritance, you must meet the following requirements set forth by the Internal Revenue Service:

  • Provide written notice to the executor or administrator of the estate, clearly stating that you are disclaiming the assets and that the decision is irrevocable.
  • Submit the statement within nine months of the decedent’s death (minors have until they reach the age of majority).
  • Ensure that you do not benefit from the disclaimed property, either directly or indirectly. Example: What if you were to live with the new recipient in a house you declaimed? The IRS might perceive this as you benefiting indirectly.

Notably, once you disclaim an inheritance, you have no say in who receives it. The estate will be treated as if you died before accepting it and will go to the contingent beneficiary named in the will. If there is no will, the distribution will resume according to the next person, in line with state law.3

However, disclaiming an inheritance may not be the best choice for individuals receiving Medicaid benefits. If you reject an inheritance while on Medicaid, it could be considered a transfer of assets, potentially making you ineligible for Medicaid for a certain period. It is crucial to seek guidance from a professional with information specific to your situation if you receive Medicaid benefits.

Again, you may not have the choice or inclination to refuse this inheritance. Let’s look at a few options open to you.

Donating Assets:

Several tax strategies exist for charitable contributions. One method is to donate assets to charity. By doing this, you may be able to manage capital gains taxes and receive an income tax deduction for the full fair market value of the assets.

This is an overview and is not intended as tax or legal advice. Please consult legal or tax professionals for specific information if you want to donate the assets you received as part of an inheritance.

Real Estate:

Unwanted land can become a financial burden. Selling land can be difficult if it has been on the market for months or years without any offers. The most common reason for this is that the price is too high. Determining the value of land can be challenging, so setting a realistic price is essential. Another reason for a property’s failure to sell is poor marketing. Undesirable features or location can also contribute to a property’s inability to sell, as can title issues such as liens or property boundary problems.

If you need help selling your inherited land, there are several strategies you can try. Listing the land for sale online on various platforms can provide maximum exposure. Contacting neighboring property owners may also be effective. Other options include donating the property to a charity. Several charities accept land donations, but they typically have a screening process and often sell land to raise funds for their organizations.

Collectibles:

Perhaps the most common of these white elephant inheritances include collectibles, esoteric items that future heirs have no wish to inherit, such as stamps, baseball cards, comic books, figurines, or dishware. The inheritance may also require more thought or consideration, such as an art collection that includes several large canvases or a cache of ephemera, such as old letters that may have historical value and require special preservation.

Most metropolitan areas have resources for liquidating collectibles or helping you get in touch with collectors who might purchase these items wholesale. Holding an estate sale is another common step for quick movement. If you believe you can earn more, you might list these items for sale online. However, in most cases, you may have to decide whether this is worth the effort or whether donating the items to a charity might be simpler.

In short, don’t let the elephant gobble up your time and money! Another step, when possible, is to speak to your relative in advance if you anticipate inheriting something you can’t handle or don’t want. Conversations with your relatives might go a long way toward averting more work later and give them the satisfaction of knowing they are caring for you in the present.

If you have questions about your finances, take advantage of American Wealth Management’s 1- hour no-cost financial consultations. Submit this form to us and we will contact you to schedule a video call with one of our advisors.

American Wealth Management Reno, Nevada

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1. Finance.yahoo.com, September 15, 2023
2. NasonLawFirm.com, September 27, 2023
3. GreatAOakAdvisors.com, September 27, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. M.S Howells does not provide tax or legal advice. Please consult your legal or tax advisor regarding your individual situation.

HOW TO KNOW WHEN IT’S TIME TO HIRE A FINANCIAL ADVISOR

How to Know When It’s Time to Hire a Financial Advisor

By Uncategorized

Are your finances complex enough to seek help? Find out when your financial situation calls for a financial advisor.

Stuck on the fence about whether to hire a financial advisor? Apparently, you’re not alone.

According to an international survey conducted for CNBC and Acorns, 99% of people in the United States don’t use a financial advisor.

Why Don’t More People Use a Financial Advisor?

There are a few possible reasons people are hesitant to connect with a financial advisor:

(1) Many people have the perception that financial advisors are only for the wealthy.
(2) The perception that investing is too risky, and people are better off saving their money in traditional savings accounts.
(3) With so much financial information at our fingertips, many believe they know enough to manage their own finances well.

And yet, according to a different survey by cloud-based technology platform Intelliflo, “59% of Americans [say they] want financial advice, but do not know how to get it.”

Could financial advisors be underrated and underutilized in the United States?

Here are some questions to consider as you determine whether or not you could benefit from the help of one of these professionals.

It’s Never a Bad Time to Invest in Financial Literacy

You’re probably familiar with the adage, “It’s not how much you make. It’s how you manage it.”

The idea is that even if you earn a high income, poor money management can lead to financial troubles. On the other hand, people with modest incomes can still achieve financial security through effective budgeting, saving, and investment strategies.

Even though we’re looking at some financial complexities that do warrant professional advice, a financial advisor can help just about anyone (even those without complex finances) improve their money management skills and plan for the future.

How to Assess Whether You Need a Financial Advisor

There are plenty of factors at play when it comes to seeking help with your money. The time you spend on money management, whether you feel confident or knowledgeable enough, and how stressed your money makes you all add to the decision.

But first, let’s just look at your finances.

1. Take Stock of Your Finances

Answering some simple money questions will help you get a bead on whether a financial advisor is a good idea for you.

How Many Income Streams Do You Have?

Having multiple income sources complicates your financial picture in a couple of ways:

For one thing, not all incomes are alike. Different income streams come with their own tax implications and reporting requirements.

Beyond your primary job or business, do you have money coming in from rental properties, investments, freelance work, side hustles, or other sources?

The more diversified your income, the more financial complexity you might encounter. If you’re juggling multiple income streams and feel lost about how to report come tax season, some professional guidance may be beneficial.

What’s Your Debt Load?

Debt isn’t anything to be ashamed of. However, it can make managing your finances more complicated.

The main reason is that different types of debt come with different terms, interest rates, and repayment schedules. Paying off one debt might take a completely different strategy from paying off another.

Mortgages, for instance, are often long-term commitments. Credit card debt, on the other hand, can carry high interest rates and require more immediate attention. Student loans may come with unique repayment options and potential forgiveness programs.

If your debt load is becoming a financial burden or if you’re struggling to make progress in reducing it, a financial advisor can help you craft a comprehensive debt repayment strategy and potentially save you money in the long run.

Is Your Tax Situation Becoming More Complex?

This is an area where even the most financially savvy individuals need a guide.

If you own a business, whether it’s a side venture or a full-scale company, you’ll likely encounter intricate tax implications, such as self-employment tax and deductions specific to your industry.

If you invest your money, various types of income—from capital gains to dividends—may introduce another layer of tax considerations. And, if it wasn’t complicated enough, changing tax laws can make it even worse. Tax codes can be absolutely byzantine in their complexity and are frequently subject to revision, making it hard to keep up on what you’ll owe the government.

If you own a business, have a diverse investment portfolio, or find it challenging to keep up with changing tax laws, it might be an ideal time to get some professional advice.

Do You Have a Diverse Investment Portfolio?

A diverse investment portfolio can be a powerful tool for wealth building, but it also introduces a new layer of financial complexity.

Diverse investments can include stocks, bonds, mutual funds, real estate, and other assets. Each of these comes with its own risk factors, market behaviors, and tax considerations. For instance, stocks can be volatile, bonds are influenced by interest rates, and real estate may require property management.

As you evaluate your investment mix, consider whether you are comfortable with the level of risk in your investments and if you have a strategy in place to achieve your financial goals.

If you find that your investment portfolio is starting to feel complicated or if you’re struggling to maintain a diversified, balanced, and tax-efficient approach, a financial advisor could be a wise call.

Are You Prepared for Retirement?

Do you have a clear retirement plan in place, with savings goals and strategies to meet them?

Are you well-versed in the various retirement account options, such as 401(k)s, IRAs, and pensions, and their associated tax benefits?

A financial advisor can help you define your retirement goals, determine how much you need to save, and develop a customized plan to reach those goals. They can also provide valuable insights into retirement account options and the best strategies for optimizing them.

Whether you’re just starting your retirement planning journey or reassessing an existing plan, a financial advisor can be a valuable resource to help you secure a comfortable retirement.

Estate Planning—Have You Thought About It?

Estate planning might not be on everyone’s radar, but for some individuals, it’s a critical consideration.

It involves crafting a plan for your assets, including wills, trusts, and inheritance strategies, to ensure they’re distributed according to your wishes when you’re no longer here. If you haven’t thought about these aspects, it’s a good time to reflect on your estate planning needs.

If you’re uncertain about where to begin, a financial advisor can help you create an estate plan that safeguards your assets and minimizes potential tax burdens for your beneficiaries.

2. Life Events and Financial Stress: Are They Taking a Toll?

After getting the lay of your finances, it’s time to look at your life and how money affects it. Does money cause you stress? Have you undergone a life event that will change how you manage money?

Here are some questions to consider, the answers to which might shed light on whether a financial advisor can help you.

Life Changes: Any Major Life Events Recently?

Major life events can quickly complicate your finances. Have you experienced any lately? Marriage, divorce, the birth of a child, buying a house, and starting a business are all significant life changes.

If you said yes, how has that change impacted your financial situation? Life changes can affect not only how much or how little money you have, they can also affect how you pay taxes.

A financial advisor can help you navigate these changes and make a plan to help you protect your livelihood.

Is Money Stress Keeping You Up at Night?

Is financial anxiety becoming a regular part of your life? Constant financial stress can be a red flag and a sign that some outside help is called for.

A financial advisor can help you see the whole picture as you seek peace of mind about your financial decisions.

3. Time, Expertise, and Goal-Setting

Time, know-how, and vision are three rare commodities, without which it can be very difficult to manage a complex financial situation.

Do You Have the Time and Expertise?

In the world of personal finance, time and expertise are invaluable commodities. Do you have the time and financial knowledge required to manage your affairs effectively?

Can you confidently navigate the complex landscape of investments, taxes, debt management, and retirement planning on your own?

Have You Set Financial Goals?

Setting and achieving financial goals is another aspect of your financial life to ponder. Are you actively defining and working toward your financial objectives, or does it feel like you’re wandering aimlessly, without a clear path to your desired financial destination? Your financial goals should be more than just wishes; they should be well-defined and attainable.

If you find that time constraints, lack of expertise, or unclear financial goals are hindering your financial progress, this might be the moment to consider engaging a financial advisor.

Takeaways

As you’ve explored the complexities of your financial situation, you might have realized that managing multiple income streams, debt, taxes, investments, retirement planning, and estate matters can be overwhelming.

But remember, seeking help from a financial advisor isn’t a sign of weakness; it’s a resource for those who value expert insights and customized strategies. Whether you’re a Millennial, a Gen Xer, or a Baby Boomer, the path to financial well-being will be as unique as you are.

By enlisting the support of a financial advisor, you can simplify, set goals, and secure a more stable and prosperous future.

Don’t hesitate to reach out for professional assistance when you need it.

Find a Financial Advisor

American Wealth Management is a financial management company based in Reno, Nevada, that caters to both local residents and individuals nationwide.

Feel free to get in touch with our team for tailored assistance in handling your finances and strategizing for your retirement.

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Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. M.S Howells does not provide tax or legal advice. Please consult your legal or tax advisor regarding your individual situation.

Do you know the difference? Read on to discover exactly how these two service providers differ.

What’s the Difference Between a Financial Advisor and a Wealth Manager?

By Uncategorized

Do you know the difference? Read on to discover exactly how these two service providers differ.

Maybe you’ve heard the terms wealth manager and financial advisor around the workplace, on TV commercials, or on LinkedIn.

You might wonder: Are they interchangeable? Or are we talking about two completely different services? And how do I know if I need one or the other?

You’re not alone in these questions—after all, they sound very similar.

So What’s the Difference Between Financial Advisors and Wealth Managers?

The short answer is wealth managers are a subgroup of financial advisors.

Wealth managers typically help individuals who have substantial assets and don’t know how best to manage them. Most individuals don’t need to consider a wealth manager until they have at least a few hundred thousand dollars in assets.

How Do Wealth Managers Help?

A wealth manager is a financial advisor who offers a more specialized level of service, typically to individuals with considerable assets. They help their clients grow, protect, and manage their wealth.

Even though wealth managers are a subset of financial advisors, wealth managers handle quite a few different facets of your overall financial health.

Financial Planning: Cover the Basics

One of the primary tasks of a wealth manager is to create a comprehensive financial plan tailored to the client’s goals, risk tolerance, and financial situation. This plan encompasses various aspects of a person’s financial life, including retirement planning, tax strategies, estate planning, and investment management. Essentially, they aim to provide a roadmap for your financial success.

Investment Management: Turn Wealth into More Wealth

Like most financial advisors, wealth managers also design investment portfolios that align with your financial objectives and risk tolerance. Unlike standard financial advisors, however, wealth managers are known to employ a broader range of investment strategies, including alternative investments like private equity or hedge funds.

Tax Optimization: Be a Smart Tax Payer

Wealth managers are skilled in tax planning, aiming to minimize the tax impact on your wealth. This can involve strategies like tax-efficient investments, capital gains planning, and charitable giving. They’ll work closely with tax professionals to ensure your tax liabilities are optimized.

Estate Planning: Protect Family and Loved Ones

For individuals with substantial wealth, estate planning is critical. Estate planning involves the intended distribution of your wealth after you die. Wealth managers can assist in structuring your estate to pass assets to heirs efficiently while minimizing estate taxes. This can involve setting up trusts, wills, and other legal mechanisms.

Wealth Managers Offer Specialized Services

Compared to financial advisors at large, wealth managers tend to be more involved in the nuts and bolts of their clients’ financial situation. Wealth managers continuously monitor your investments and overall financial plan.

This level of personalization often involves regular check-ins and quick adjustments to your financial plan as circumstances change. This is partially why wealth managers are normally a more costly option and tend to cater to those with substantial assets.

Benefits of a General Financial Advisor

A financial advisor offers many of the same services, but they are less client-specific. They’re trained to serve a wide range of clients to help them manage their finances.

Financial Advisors Have a Broader Client Base

Financial advisors often work with a more diverse client base, which often includes people with varying income levels and assets. They cater to a wider audience, from individuals just starting to save to those with moderate wealth.

Financial advisors are generally more accessible and cost-effective for individuals who may not have the substantial assets required to engage a wealth manager. They can be a great choice for people seeking basic financial guidance and investment support.

Financial Advisors Are Adept at Most Financial Situations

Financial advisors are well suited to assist individuals with relatively straightforward financial situations. They help clients set up and manage basic investment accounts, create budgets, and offer guidance on retirement planning.

While they provide valuable advice, they typically do not handle the complexities associated with substantial wealth.

Financial Advisors Offer Basic Investment Recommendations

Financial advisors primarily focus on offering investment advice and managing investment portfolios. They may recommend stocks, bonds, mutual funds, and other traditional investments, whereas wealth managers often have access to a wider range of investment options, including alternative investments and private equity.

Regulations and Qualifications of a Financial Advisor

Financial advisors may have different licensing and qualification requirements than wealth managers. They are often registered representatives of broker-dealer firms and can offer a broader range of financial products.

Which Should You Hire, a Wealth Manager or a Financial Advisor?

Financial advisors are ideal for those with simpler financial situations, offering basic financial guidance and investment advice.

In contrast, wealth managers are tailored to individuals with sizable assets and complex financial goals, providing specialized, personalized services.

While wealth management may come at a higher cost, it’s worthwhile for those with significant wealth or intricate financial needs. Your choice should align with your unique financial objectives and complexity.

Key Takeaways

“Wealth manager” and “financial advisor” are often used interchangeably but the professions serve different needs.

Wealth managers work with those who have substantial assets, offering specialized services like financial planning, investment management, tax reduction, and estate planning.

Financial advisors have a broader clientele, catering to various financial situations with basic advice and investment support.

Your choice depends on your specific financial goals and complexity; if your finances are simple, a financial advisor is suitable, while substantial wealth or intricate needs might call for a wealth manager.

Find a Financial Advisor

American Wealth Management is a financial management company based in Reno, Nevada, that caters to both local residents and individuals nationwide.

Feel free to get in touch with our team for tailored assistance in handling your finances and strategizing for your retirement.

American Wealth Management Reno, Nevada

Investment advice offered through American Wealth Management (“AWM”), a SEC- registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. M.S Howells does not provide tax or legal advice. Please consult your legal or tax advisor regarding your individual situation.

Where Will Your Retirement Money Come From?

Where Will Your Retirement Money Come From?

By Uncategorized

What workers anticipate in terms of retirement income sources may differ considerably from what retirees actually experience. For many people, retirement income may come from a variety of sources.

Here’s a quick review of the six main sources:

Social Security

Social Security is the government-administered retirement income program. Workers become eligible after paying Social Security taxes for 10 years. Benefits are based on each worker’s 35 highest earning years. If there are fewer than 35 years of earnings, non-earning years are averaged in as zero. In 2023, the average monthly benefit is estimated at $1,827.1,2

Personal Savings and Investments

Personal savings and investments outside of retirement plans can provide income during retirement. Retirees often prefer to go for investments that offer monthly guaranteed income over potential returns.

Individual Retirement Account

Traditional IRAs have been around since 1974. Contributions you make to a traditional IRA may be fully or partially deductible, depending on your individual circumstances. In most circumstances, once you reach age 73, you must begin taking required minimum distributions from a Traditional Individual Retirement Account (IRA). Withdrawals from Traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. You may continue to contribute to a Traditional IRA past age 70½ as long as you meet the earned-income requirement.

Roth IRAs were created in 1997. Roth IRA contributions cannot be made by taxpayers with high incomes. To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals also can be taken under certain other circumstances, including as a result of the owner’s death. The original Roth IRA owner is not required to take minimum annual withdrawals.

Defined Contribution Plans

Many workers are eligible to participate in a defined-contribution plan such as a 401(k), 403(b), or 457 plan. Eligible workers can set aside a portion of their pre-tax income into an account, which then accumulates, tax-deferred.

In most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 73. Withdrawals from your 401(k) or other defined contribution plans are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty.

Defined Benefit Plans

Defined benefit plans are “traditional” pensions—employer–sponsored plans under which benefits, rather than contributions, are defined. Benefits are normally based on factors such as salary history and duration of employment. The number of traditional pension plans has dropped dramatically during the past 30 years.3

Continued Employment

In a recent survey, 73% of workers stated that they planned to keep working in retirement. In contrast, only 23% of retirees reported that continued employment was a major or minor source of retirement income.4

Expected Vs. Actual Sources of Income in Retirement

What workers anticipate in terms of retirement income sources may differ considerably from what retirees actually experience.

If you have questions about your finances, take advantage of American Wealth Management’s 1- hour no-cost financial consultations. Submit this form to us and we will contact you to schedule a video call with one of our advisors.

 

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1. SSA.gov, 2023
2. SSA.gov, 2023
3. Investopedia.com, December 30, 2022
4. EBRI.org, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Investment advice offered through American Wealth Management (“AWM”), a SEC-registered investment adviser. Certain personnel of AWM may also be registered representatives of M.S. Howells & Co. (“MSH”), Member FINRA/SIPC, a registered broker-dealer, and therefore, may offer securities through MSH. AWM and MSH are not affiliated entities. M.S Howells does not provide tax or legal advice. Please consult your legal or tax advisor regarding your individual situation.