Evans Wealth Management Blog

Articles written by Evans Wealth Management are designed to educate clients & potential clients on concepts important to their financial future.

What kind of tax policy changes should you expect in 2017?

It was a contention election this year and one of the driving points was the economy. There has been a lot of speculation regarding tax policy changes under the Trump administration. The tax theme for his campaign was tax relief for middle class Americans. Based on what we have seen so far, here are a few points that you might expect to happen in the next four years. Because of their close similarities to the House Republican’s plan, many of these are likely to gain traction.


Let’s start with some changes that could impact individuals. The below are limited to taxes at the individual level. They are designed to simplify the tax code and lower your tax bill slightly.


- Simplify the tax code from 7 brackets to 3. They are likely to land around 12%, 25% and 33%.


- Increase the standard deduction


- Eliminate the marriage penalty


- Eliminate the NIIT (Net Investment Income Tax – also known as the Medicare Surcharge) and AMT (Alternative Minimum Tax)


- Exclude child care expenses from taxation


- Eliminate the “death tax” in favor or recognizing capital gains at death for estates worth over $10.0 M


Since President Trump is a business-minded individual, we should expect more policy changes related to businesses. These changes are designed to encourage more economic growth. Some of the potential changes include the following:


- Allowing businesses to expense immediately the costs related to new business investment


- Reducing the business tax rate to 15% or 20%


- Providing for a one-time repatriation of offshore earnings taxed at a 10% rate


- Repealing and replacing the Affordable Care Act which, would is designed to reduce business and family health care costs


With a Republican-led House and Senate eager to pass new tax policies designed to grow the economy, it is likely a new tax bill will be signed by the middle of next year. Something similar to the above outline is a strong possibility. Let’s hope it has the intended effect on the economy and on our wallets!

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Umbrella Insurance: Why it is a good idea

Most of us wouldn’t think about not having homeowner’s, health and auto insurance. They are everyday staples in today’s society. However, many overlook the advantages of what is known as a Personal Umbrella Policy (PUP). It is probably the most misunderstood and under-appreciated form of insurance available.

In short, a personal umbrella policy is extra liability insurance. It is designed to provide protection beyond the limits of your auto, home or boat policies. It also provides coverage for claims excluded by other policies such as libel, slander and lawsuits related to rental property that you own, none of which are generally covered by other types of insurance policies.

An umbrella policy, however, doesn’t cover everything.

While the name of the policy suggests it covers a broad range of events—seemingly everything—there are limits. It does not cover damages to personal property, contract disputes, business-related settlements or intentional or criminal acts.


So that leaves the question: Who is covered?


An umbrella policy is generally designed to protect you, your spouse, dependents and any relatives living with you. The caveat is that it isn’t likely to cover any who have auto or other policies in their name. For example, your mom living with you might not be covered under your PUP if she has an auto policy in her name. So it is a good idea to check into these things before you get an umbrella policy.


If you do get one, coverage typically extends beyond incidents at your home. For example, if you were traveling outside the country and damaged another vehicle, your PUP would likely cover the damages beyond your auto policy’s limits. And, since coverage tends to come in increments of $1 million, it is surprisingly reasonable in cost.


Unfortunately, we live in an increasingly litigious society. If you have an asset base worth protecting, you should seriously consider the merits of owning this type of protection. Feel free to consult your financial or insurance advisor for its applicability to your specific situation.

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6 Meaningful Tax-wise Financial Practices

When it comes to your finances, being intentional in your actions will save you money. Thinking through decisions and having a strategy in place ensures that you are prepared for the future. One of the most effective ways to save is to adopt tax-wise financial practices. Every year, as the year end approaches, take the time to review your situation and take action to minimize your tax bill.

Here are 6 examples of how you can do that:

1 - Defer your income. Some self-employed individuals delay billings until late December to ensure that they won’t be paid until January. For employees, some firms will allow you to defer a year-end bonus until next year.

2 - Maximize your retirement plan contributions. Employer-based plans (ex. 401K, 403B, etc.) require contributions to be made by year end. However, IRA-based plans give you to April 15 to make contributions for 2016.

3 - Make charitable donations. Charitable donations must be submitted by year end to a qualified 501(c)3 tax exempt organization in order to count against your taxes.

4 - Realize losses to offset capital gains. If you have realized capital gains during the year, review your portfolio for losses that could be realized to offset those gains.

5 - Take the Required Minimum Distribution from your IRA. For those at least 70.5, the IRS requires you to take distributions from your traditional IRA and they tell you how much to take. You must do it by year end. It saves you in penalties because failure to do so can cost you as much as 50% of the amount under-withdrawn. This principle also applies to those of any age who have inherited IRAs.

6 - Review your flexible spending accounts. These accounts have a “use it or lose it” provision. If you have money in the account, either book a doctor’s appointment by year end, or at least by your plan’s grace period date. Many allow you until March 15 to spend the funds.

Tax collection happens every year so it is one of the things you can work into a regular schedule in order to maximize your savings and financial security. To learn more about these kinds of tactics talk to your financial advisor.

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4 things to think about involving Spouses and IRAs

When a spouse passes and you are named the beneficiary of an IRA, you have a number of options. However there are some specifics to consider related to choosing a spousal rollover.


  • If the deceased was 70 years & 6 months or older, they were required to take a Required Minimum Distribution (RMD). Assuming you are younger, selecting the spousal rollover option could delay or stop RMDs on the account. What this does for you is allow your account to continue to grow tax deferred until you reach the target age. Increasing its worth.

  • If you are younger than 59 years & 6 months, taking distributions from a spousal rollover would subject you to taxes and a 10% early distribution penalty. Needless to say, if you are young and need the money, establishing an inherited IRA payable to you rather than your spouse is likely a better option.

  • When you inherit a Roth IRA, choosing a spousal rollover will not trigger RMDs. However, an inherited Roth IRA that is already payable to the spouse will require RMDs.

  • If you were to determine you don’t need some or all of the money in the first to die spouse’s IRA, you could disclaim a portion or all of it. When a spouse disclaims the IRA, the funds are directed to the deceased spouse’s contingent beneficiaries (usually children or grandchildren). What this decision does is it stretches the IRA by resetting the distributions based on the beneficiaries’ life expectancy which should be much longer than yours. More tax-deferred growth means larger IRA balances. This can be an especially wise decision if there are concerns your estate will be subject to estate taxes. This decision requires thought because once done it cannot be undone. The decision must be made within 9 months of your spouse’s death and before you take possession of the assets.

These are just three general rules to consider related to inherited IRAs. The issues surrounding inherited IRAs are complex and should be made after careful deliberation and ideally with the help of your tax or financial advisor.

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Balancing Children's College Tuition & Retiremen

Balancing Children's College Tuition & Retirement

Many parents struggle when it comes to deciding how to lay aside funds for both college and retirement.

Retirement or College fund, where should money go?


Some questions to consider:

  • How long until you retire?
  • How financially prepared are you for retirement?
  • How long until your children attend college?
  • What is the projected total cost for college?


    Points to consider:
  • Parents should review their current budget. Are there adjustments that need to be made to free up funds for college savings?
  • Few pay the full college list price. Most receive some form of scholarship. A 2015 study suggests 90% receive some form of financial aid reducing the cost on average 54%*
  • The costs of a 4 year degree vary widely depending on the school your children plan to attend. Take a look at in-state, out-of-state, public and private options. Then set expectations with your student, based on your budget, well in advance of the time when he or she begins applying for acceptance.
  • Parents don’t have to fund the full cost. Establish a percentage of the cost that you are comfortable with and stick to it.
  • The conversation about funding college is a great way to teach your children lessons about wise financial decision-making. When both parties are allowed to share their expectations, a path can usually be found that satisfies all parties.


One last thing to remember: there is no financial aid for retirement ,so it takes precedence over funding college. Short-changing your retirement could lead to many regrets down the road.

* referred source http://www.thefiscaltimes.com/2015/10/27/Never-Pay-Full-Tuition-3-Ways-Reduce-Cost-College

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