Four Ways to Jumpstart Your Financial Plan for Success

✔  Consolidate investment accounts with a single trusted Financial Planner.
Some investors believe in the merit of diversifying investments by way of multiple advisors and institutions. While on the surface this may make sense (what if one advisor retires, or abruptly quits without a thoughtful succession plan in place?) in reality, it can lead to some serious issues in your overall plan. For one, it is far more difficult to track your total portfolio allocation when accounts are spread across various places, leaving you at risk of a very lopsided exposure to equities or bonds. Moreover, the risk in having several advisors is the left hand surely isn’t speaking to the right—which can lead to big tax implications from portfolio rebalancing, overexposure in certain asset classes, and a mismatched philosophy on investment approach. All these components can erode the effectiveness of your investment plan.

✔  Diagram your estate plan.
Creating a diagram of how your estate will flow (either through your will or Trust) is an easy way to visualize all the moving parts. This exercise may show you weaknesses in your plan (i.e. I didn’t realize my daughter would inherit my assets out of trust!) and allow you to make the necessary amendments before it is too late. Visually illustrating your estate documents also makes it easier to communicate to your executor and successor trustees the roles they will be playing.

✔  Check in on how (and where) beneficiaries are titled.
While it is important to check your beneficiaries to ensure the people you really want to receive your money will, it is also essential to review whether they are structured most optimally; for example, philanthropic individuals who are leaving a sum of their estate to charity should consider naming said beneficiary to the least tax efficient assets considering charities to do pay taxes on assets they receive. For many, this means naming a charity beneficiary of their IRA over a different asset type. Separately, under the SECURE Act, many beneficiaries of inherited IRAs are now limited to a 10-year stretch…but not all! There is a list of eligible designated beneficiaries (EDBs) who still benefit from the old rules regarding lifetime stretches on inherited IRA distributions. It is important to understand whether any of your beneficiaries are EDBs and to confer with a planner and estate attorney to ensure they are titled most appropriately to ensure all your loved ones receive assets most optimally.

✔  Re-think your tax gameplan.
Lastly, if you own an IRA, are taking required minimum distributions (RMD), and also pay quarterly estimated taxes, you may want to consider withholding taxes from your RMD at year-end in lieu of estimated tax payments; in the eyes of the IRS, withholdings taxes from your RMD is just as good as making estimated tax payments. And, by delaying tax payments until year-end, you benefit from keeping more of your cash invested longer throughout the year. To effectively employ this strategy, it is helpful to rely on a trusted planner or tax preparer to run an estimated tax projection to ensure your RMD withholding is appropriate.

While these ideas may be simple in theory, they are by no means always easy to navigate. Each individual’s situation calls for its own assessment on how to thoughtfully incorporate these 4 ideas, so don’t forget to seek the guidance of a trusted financial planner before making any major moves in your financial plan! 

Apella Capital, LLC (“Apella”), DBA Apella Wealth is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Apella Wealth provides this communication as a matter of general information. Any data or statistics quoted are from sources believed to be reliable but cannot be guaranteed or warranted. Apella Wealth does not provide tax or legal advice and nothing either stated or implied here should be inferred as providing such advice.  

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