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Smart Money Monthly
September 2024
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Life With Duke, Duchess, and Lincoln
PET STORIES THAT ALWAYS MAKE ME SMILE
Something is very special about the pets you grew up with. When I discovered the holiday in September called “National Pet Memorial Day,” a flood of memories about the dogs I grew up with came back to me. These dogs are in the background of many moments in my childhood, and remembering them gave me a few laughs and some appreciation. I grew up with two fat basset hounds appropriately named Duke and Duchess. This duo was so lazy and fat that they could hardly venture anywhere — unless they could find someone to give them a scratch or two. And they always “ran away” to the same place, too! When I was about 8 years old, my family moved into town. It was still rural Kentucky, but more buildings and public spaces surrounded us, including some ball fields just diagonally behind our house. More than once, Duke and Duchess would waddle over to the ball fields simply because people there were more than willing to pet them. My mom says she got more than a few calls from people asking her to come pick up Duke and Duchess, who refused to move when “chased” because they were so lazy!
Duke and Duchess were as good of dogs as any boy could hope for, even if they did laze around all day. Nothing beats coming home to welcoming faces and tails wagging every day, knowing a living creature out there loves you unconditionally. These days, I still feel that same emotional support from my dog, Lincoln, an Aussiedoodle. (This means Lincoln is a mix between an Australian shepherd and a poodle — two of the more intelligent dog breeds.) The story of how we adopted Lincoln is unique because he flunked out of school! Lincoln was in training to become a support dog for someone with disabilities, but the trainers found his temperament was better suited for a life on the couch with a family. We feel fortunate Lincoln couldn’t hack it as a support dog. Today, the most “support” Lincoln offers us is letting us know when a UPS or FedEx delivery person or another dog is near the house! He’s all bark and no bite. Lincoln just needs a moment to go nuts, and then he’s everyone’s friend. Suffice it to say life would be pretty dull without Lincoln. Nothing can replace the love and loyalty of a pet, especially a dog’s. I’m forever grateful to have grown up with Duke and Duchess, even if they weren’t the playful, active creatures you imagine when you think of a dog. The stories of their escapades into town always make me smile, and I’ll always fondly remember seeing them lazily nap, content at home with their pack. Today, Lincoln offers that same level of comfort — albeit with a bit more energy.
I hope these stories conjured up memories of your own pets. No matter how big or small, nothing can compare to the love they bring to our lives.
—Kevin Roberts
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NEW YEAR, NEW EXEMPTION Why 2024 Is the Year to Update Your Estate Plan
While keeping up to date with your estate planning should always be a priority, 2024 is the ideal year to review and make changes to your estate plan. This is because the federal estate, gift, and generation-skipping transfer, or GST, tax exemptions have seen a marked increase this year. In 2023, the GST was $12.92 million per individual, but it has increased by $690,000 to $13.61 million per individual in 2024. This means you can transfer property with a value up to the exemption amount, either at death or throughout your lifetime, without paying a transfer tax. If you are in a position to do so, consider taking full advantage of this estate planning environment. Estate, Gift, and GST Taxes Every year, the IRS allows individuals to gift up to $18,000 to individuals without incurring federal gift or estate taxes. If you are married, your spouse may also gift up to the same amount, effectively increasing the amount to $36,000 per year, tax-free. Some gifts do not count toward
the exemption — meaning these are not taxed — such as payments made directly to medical providers or between spouses. According to the American Bar Association, the GST tax is imposed on transfers to “remote descendants,” including grandchildren, known as “skip” persons, that exceed the exemption limits. The GST tax is applied to direct transfers to any skip person, either during someone’s lifetime or at the time of death. However, transfers made to trusts can use the GST exemption — making the trust partially or wholly exempt from the tax. As of 2024, the federal gift, estate, and GST tax rate is a flat 40% — representing a significant expense. That is why the gift, estate, and GST tax exemptions are so important; they allow you to circumvent this tax rate in your estate plan. The GST Tax Exemption While the federal estate, gift, and GST tax exemptions were just $5 million in 2011, they have increased by over 170%. Before 2012,
inflation was not considered when determining the exemption. This increase should not come as a surprise to anyone. After all, inflation has significantly strained the economy in recent years. If you wish to take advantage of the GST tax exemption through the use of a trust, you need to consider a few factors. Any non-exempt trust will still be taxed at a 40% rate. For a trust to be GST tax-exempt, it must either be a Gallo trust, meaning it is for the benefit of a single grandchild or skip person, be a grandfathered trust, or qualify for the GST tax annual exclusion. Otherwise, if you want to cement your legacy and do what is best for your family at the time of death, you need to act quickly while this exemption still applies. You need to create your estate plan this year; the current federal estate, gift, and GST tax exemption rate is temporary and set to decrease soon.
GIFTING WITH PURPOSE
MAXIMIZE YOUR LEGACY, MINIMIZE TAXES
As we navigate the complexities of personal finance, one often overlooked aspect is the gift tax. This federal levy can catch many individuals off guard, but with the right knowledge and planning, you can maximize your wealth transfer while minimizing the tax burden. Understanding the Scope of the Gift Tax The gift tax applies to various asset transfers, from cash and property to stocks and even lenient loans. However, not all gifts are subject to this tax. Educational expenses, medical bills, gifts to spouses,
Maximizing Long-Term Savings While gift taxes seem like a burden, they can be valuable in estate planning. Individuals with sizable estates often utilize annual gifts to gradually reduce the overall value of their estate, ultimately lowering the estate tax owed upon their passing. This strategic approach can result in substantial long-term savings for your family. Seeking Professional Guidance The intricacies of gift taxes can be daunting, but with the right expertise, you can confidently navigate this landscape. Financial advisors and tax professionals can help you identify opportunities to minimize your gift tax liability while aligning your wealth transfer with your broader financial goals. By
and donations to charities or political organizations are exempt. It's crucial to consult with a financial advisor or tax professional to ensure your gift falls within the appropriate guidelines. Leveraging the Annual Exclusion The key to strategic gift-giving lies in the annual exclusion. As of 2024, individuals can gift up to $18,000 per person per year without incurring any gift tax. Married couples can effectively double this amount, transferring $36,000 per recipient annually. Taking advantage of this exclusion can significantly reduce your taxable estate while providing for your loved ones.
leveraging their knowledge and experience, you can ensure your gifts maximize their positive impact on your loved ones. In the ever-evolving world of personal finance, the gift tax is a crucial consideration. By understanding its nuances and employing strategic planning, you can unlock new pathways to safeguard your assets and create a lasting legacy for your family.
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Delicious Chickpea Curry
• 2 tbsp olive oil • 1 onion, diced • 2 garlic cloves, minced • 2 tbsp curry powder • 1 tsp ground cumin • 1 tsp ground turmeric INGREDIENTS
The Power of Ethical Portfolios In an age of heightened social and environmental consciousness, ethical investing has emerged as a powerful means of aligning financial decisions with one's moral compass. Gone are the days when investments were solely driven by the bottom line; today, investors are increasingly seeking opportunities that not only generate returns but also contribute to positive change. Ethical Investing Explained Ethical investing, often used interchangeably with "socially responsible investing" (SRI), is a holistic approach that goes beyond the traditional focus on financial metrics. It's about supporting businesses prioritizing sustainability, human rights, and social impact while steering clear of industries or practices that conflict with one's values. This can include considerations such as a company's environmental footprint, labor policies, While ethical investing and ESG (environmental, social, and governance) investing share similarities, there's a subtle yet significant distinction. ESG investing primarily examines a company's performance across those three key pillars, providing a framework for assessing its overall sustainability. Ethical investing, however, takes a more comprehensive view, delving deeper into the moral and ethical implications of a company's operations and decision-making. The Power of Aligned Investments and commitment to corporate governance. Ethical Investing vs. ESG: A Deeper Dive Contrary to popular belief, ethical investments don't necessarily mean sacrificing financial returns. A 2019 study by the Morgan Stanley Institute for Sustainable Investing found that the performance of investments focused on ethical considerations was on par with traditional investments. By directing your capital toward companies that align with your values, you grow your wealth and contribute to positive change on a global scale. The Ripple Effect of Ethical Investing The collective shift in investment priorities pressures businesses to reevaluate their practices, encouraging them to adopt sustainable, socially responsible, and ethically sound policies. The more capital that flows into ethical investments, the stronger the incentive for companies to prioritize their environmental, social, and governance practices.
• 1 15-oz can chickpeas, drained and rinsed • 1 14-oz can diced tomatoes • 1 cup low-sodium vegetable broth • Salt and pepper, to taste
DIRECTIONS
1. In a large pot over medium heat, add the olive oil. 2. Add the onion and garlic and cook until softened, about 5 minutes. 3. Add the curry powder, cumin, and turmeric and stir to combine. 4. Add the chickpeas, tomatoes, and vegetable broth and bring to a simmer. 5. Reduce the heat to low and simmer for 20 minutes, stirring occasionally. 6. Season with salt and pepper to taste.
SUDOKU
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INSIDE THIS ISSUE 1 A Few Pet Stories You’ll Love 2 2024 Sees Rise in Transfer Tax Exemptions
Strategies for Savvy Wealth Transfer 3 Aligning Your Wealth With Your Values Delicious Chickpea Curry 4 Avoid Impulse Buys With This Smart Budgeting Mindset
SKIP THE SPLURGE, SECURE THE FUTURE How to Prioritize Long-Term Financial Goals
Embrace your unique financial journey. It's time to embrace your financial path. No two financial journeys are alike, so why waste time comparing your fiscal plot twists with someone else’s blockbuster budget? Instead, focus on your own financial goals — like building a robust retirement nest egg or investing in assets that grow over time — so you can create a personalized plan that brings you long-term happiness and security. Budget with your ‘future you’ in mind. Instead of viewing budgeting as a bummer, think of it as planning a bright future for yourself. You’re the boss; every dollar you save is a building block for your future empire, so spend wisely! A good rule of thumb is to take your monthly income and only spend 50% on essentials and 30% on lifestyle, then put 20% toward your savings or paying off debt . This isn’t about cutting out fun; it’s about increasing your future fun fund!
Set goals that make your ‘future you’ proud. When setting goals, think about what will make your future self thank you. Instead of splurging on the latest designer bag or a fast car, consider how satisfying it will be to reach financial freedom. Whether it’s being mortgage-free by 50 or having a healthy investment portfolio, these goals can motivate you to stick to your While saving for the future, remember to enjoy today responsibly . Embrace the joy in low-cost pleasures like reading a great book, exploring nature, or spending time with loved ones. These activities enrich your life without deflating your wallet. Living within your means doesn't mean denying yourself all of life's pleasures — it means making wise choices now to enjoy even greater pleasures later. Let’s all start nurturing our future financial well-being! budget with purpose. Savor the simple joys.
Living within your means can be a delightful challenge where you learn how to make the most of what you have (not on your credit card). The secret power move? Shifting your mindset from immediate gratification to long- term fulfillment. Here’s how you can enjoy dancing to the beat of your own financial drum without being swayed by the flash and dazzle of everyone else’s spending habits.
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