Six Key Year-End Tax Moves That The Woodlands Folks Should Consider

Do you see that train barrelling towards the station? The one with “2018” all over it? This calendar year is about to change in under three weeks, and most people I know couldn’t be happier about the fact.

But what that means for our The Woodlands clients and friends here at Aurelia E Weems, CPA … well, ye olde clock is ticking LOUD.

And so this week, I thought I’d dive right in to our particular area of expertise and offer you some generalized considerations for the kinds of things that you can do NOW (i.e. in the next three weeks, before 12/31/18) that can ONLY be done now, and which will reduce your state and federal income tax bill.

Which is always a good thing.

So, without further ado, let’s dive in, shall we?

Six Key Year-End Tax Moves That The Woodlands, Conroe And Magnolia Folks Should Consider

“The work of the individual still remains the spark that moves mankind ahead even more than teamwork.”  – Igor Sikorsky

Firstly, I should say that the following moves that I suggest are intended as generalized advice — which is to say that your particular situation might call for different moves. As such, I am a bit restricted in how strongly I can make certain suggestions.

So shoot me an email through the button at the top of the page if you want to discuss a private tax planning appointment for these year-end tax moves, and we’ll see what is available. Or you can also call us: (936) 273-1188

All that aside, here are some possible tax moves to consider before 12/31/18…

1) Double-check withholding and estimated taxes. Because the individual federal tax changes can either be reducing or increasing your particular situation, it’s hard to know how the various changes will interact with the rate reductions. But, if you are at risk of incurring penalties for underpayments, consider increasing your withholding rate in your December paychecks or bumping up an estimated tax payment. The IRS offers a withholding calculator that can help you evaluate your situation: https://www.irs.gov/individuals/irs-withholding-calculator. Regardless, if you are behind, a big jump in your final withholding can reduce penalties (which are NEVER advisable).

2) Evaluate where you are with charity giving. If you are itemizing, and you plan to give year-end gifts, there are a whole host of strategies that can deepen your charitable impact AND more pronouncedly help your tax bill at the same time. Gifts of appreciated securities can be great because the recent tax bill (the TCJA) retained the “fair market value” deduction for charitable contributions of appreciated property (like stock and real estate), and you can still avoid capital gain tax on the appreciation when you contribute appreciated property to charity outright. That way, you can avoid part of the gain tax and defer the rest if you use the property to create a life income gift.

And if you have a big chunk to give, you can “bunch” your contributions and indicate that you want the contributions to count for more than one tax year — which helps the charity, and might help your FUTURE tax bills at the same time.

3) Be careful about mortgage moves. In the past, making an additional mortgage payment was an easy way to reduce your tax, but the new tax laws lowered the amount of debt taxpayers can use to claim a mortgage interest deduction — from $1.1 million to $750,000. But there are grandfathering rules for some pre-existing mortgages in that range, and we can help you if it applies to you.

4) Catch up on retirement savings. Contributions can still be made pre-tax, which reduces taxable income dollar-for-dollar. The 2018 contribution limits are $18,500 for qualified plans and $5,500 for IRAs, with additional catch-up contribution amounts permitted for taxpayers age 50 or over at the end of the calendar year. However, what did change was that we cannot “recharacterize” a Roth conversion after 12/31 … so let’s make sure you are clear on if you want the Roth benefits or not for your IRA.

5) Consider making large purchases before online sales tax fully kicks in. If you have some large items to purchase online, here’s a good place for you to look to determine when your state will begin to require sales tax for online purchases: https://taxfoundation.org/post-wayfair-options-for-states/. Many states kick in on January 1, but others already have.

6) Don’t forget to give tax-free gifts and use your FSA funds. Both of those options reset on 1/1/19, so remember that you can give up to $15K tax-free to individuals before 12/31. And if you have FSA funds to use, make sure you take full advantage before the year ends.

That’s all I have for now from a generalized point of view. Though, of course, I reserve the right to offer you MORE advice in the next couple weeks. 🙂

And if you want to get more granular about your particular situation, well, we’re only an email or phone call away.

Until next week,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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Aurelia Weems’ Nine Can’t Miss Questions For Year-End Tax Planning

With the Thanksgiving leftovers mostly consumed by this point, we are turning our eyes to year-end matters.

And this year, there are LOTS of things to consider as we approach 12-31-18.

Because yes — the standard deduction this year has been significantly increased, and it might make sense for you to take that.

Or, it might not.

There are so many factors to consider in this “new” tax code, that it can be a little overwhelming. In fact, I know that there are plenty of tax pros and taxpayers in The Woodlands who will opt for the “simplest” solution and just take that standard deduction. In some cases, that’s smart, and offers true savings.

But it’s not always wisest to go the simplest route.

Which is why it might make sense for us to have a chat. In fact, there may be a few moves we can make that can make a big difference — even in this next month — before we’re forced into “reaction mode”, which is the only mode in which after-the-fact tax work can be done.

So, if at all possible, I’d like to figure out if there are things we can do NOW to prepare 
by having you answer a few short questions for me…

This isn’t our “official” tax preparation questionnaire, it’s simply designed to help us figure out if we can do something before year-end to make a real difference … before we can’t anymore. To send me your answers please click the email button at the top of the page.

*****

1) Have you had a significant change in your wage income this year?

<Put YOUR answer here in your email reply>

2) Have you taken capital gains or losses this year? Are you planning to?

<Put YOUR answer here in your email reply>

3) Did you start or sell a business this year?

BONUS QUESTION: Do you know anyone who did, that would like input on their tax situation?

<Put YOUR answer here in your email reply>

4) Did you purchase real estate?

<Put YOUR answer here in your email reply>

5) Did you make your full contributions to retirement accounts?

<Put YOUR answer here in your email reply>

6) Have you considered a Roth IRA?

<Put YOUR answer here in your email reply>

7) Did you withdraw from retirement accounts, and for what purpose?

<Put YOUR answer here in your email reply>

**8) Have you sent your family and friends our way — and, if not, is there a way we can help to make this easier?

<Put YOUR answer here in your email reply>

9) Are there any other tax or financial (or other) issues you think we should know about?

<Put YOUR answer here in your email reply>

*****

Now — your answers to these questions form the “tip of the iceberg”, and they will help us to know which direction to take as we work with you over the next two months to prepare for year-end tax planning. With your permission, we’ll contact you back, once you email us your answers, as appropriate, and set up a time to discuss them further with you, whether by phone or other method.

Hope to see you in here soon…

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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One Significant Habit Of The Wealthy In The Woodlands — Generous Charitable Contributions

Now that we have a divided Congress again, we can all sit back and enjoy the gridlock that is headed our way.

Or something.

I don’t blame you if you tune out from politics — and I also don’t blame you if you find yourself jumping more intentionally into the fray. There’s lots to be frustrated by, and plenty to fight for.

But, as I always like to say, the MOST important thing you can be doing is tending to the state of your own mind, so that you are able to be focused on those things that most concern your family and financial world.

And yes, I know that’s “easy to say” as somebody who has built a business in The Woodlands, Conroe, and Magnolia and is making certain progress … but it’s also because I have chosen to focus on these things that we are even having this conversation right now.

So, if you want to add focus to those more private matters and you need somebody to pay attention to how upcoming Congressional actions will be affecting your finances … well, that’s exactly what we’re here for. We pay attention to these things so you don’t have to. It’s just what we do.

With all of that said (and speaking of habits that will help you), I’m returning to one of my favorite topics today. Would love your thoughts…

One Significant Habit Of The Wealthy In The Woodlands, Magnolia, and Conroe — Generous Charitable Contributions

“My best friend is the one who brings out the best in me.” – Henry Ford

We’re into the final quarter of 2018, and since this is the biggest quarter of the year for giving, I’d like to take the opportunity as one of your financial advisers to make a few points about giving to charity.

Because with more taxpayers taking the standard deduction than has been done in years past (at least in terms of what people are projecting for this upcoming year), there are some who might be wondering if they should be as aggressive about charity as they have been in the past.

In which case, allow me to posit a question:

Why do you give to charity? Is it for the tax deductions … or for a different reason?

Now, as someone who prepares tax returns (and who figures out all the many new ways we can keep more of your money in your pocket), much of what we do revolves around tax avoidance strategies. I have ZERO problem whatsoever in helping my The Woodlands, Conroe, and Magnolia clients use all available strategies to their utmost, ethical advantage. But I love it when I see my clients and friends make giving decisions which seem to run counter to immediate, short-term self-interest.

And, I believe it’s actually enlightened self-interest in the long run. And not just in our sense of feeling good.

I also see the balance sheets of people from every walk of life and every kind of income class, and over the years I’ve noticed an interesting phenomenon: individuals and families who make giving a priority, even when they aren’t “wealthy” by others’ standards, seem to eventually do better in the long run. And I do mean financially — not just in their state of mind.

(Though, there are great “state of mind” reasons for giving. Have you seen, as I have, that those who freely give seem to be much more pleasant company?)

In my line of work, I have made it a point to observe how money works. And, for some reason, money gets attracted to those who aren’t in hot, desperate pursuit of it. It’s almost like in romance — potential lovers are usually turned off by the overly-aggressive seeker.

So, because of (and not despite) the shifting nature of how charitable contributions might be counted on your taxes, may I suggest that you consider increasing your giving? You might be surprised by what happens in your heart. And, dare I say, in your balance sheets.

Lastly, let me also say that just because you give — you don’t have to be a dunce! We can help you determine the most tax-advantaged way under the “new” tax code for you to do your giving, if you want that advice.

We’re only an email or phone call away.

Until next week,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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What To Do When You Experience A Sudden Income Increase In The Woodlands

I don’t know about you, but I am *celebrating* the end of all of the automated phone calls and ads, now that this election is behind us. And no matter how you feel about the results, I hope we can all agree that it’s good to put all the shouting behind us.

Er, well … maybe the shouting never ends. But at least we can change the topic now.

And if there’s one topic that is nice to dream about, it’s the sudden windfall. Like for the South Carolina individual who purchased the winning Mega Millions ticket last month (still wisely anonymous), or more realistically, if we get a sudden raise or an inheritance … or, really, any kind of windfall.

It’s nice to consider — though I don’t recommend “considering” it for too long, lest you become overly dissatisfied with your current circumstances.

I spend a lot of time writing about what you should do if things suddenly turn south … and we are right here for you should that occur. We specialize in helping people in The Woodlands dig out of holes.

That said, we’ve had a number of clients who have come to us because their incomes have suddenly taken a different, much higher turn. And aside from the new tax considerations, there are a number of things you should consider when your income takes leaps that you’re not accustomed to.

What To Do When You Experience A Sudden Income Increase In The Woodlands, Magnolia or Conroe

“It is wrong to assume that men of immense wealth are always happy.” – John D. Rockefeller

Inheritance and sudden income increase are not nearly as uncommon as you might imagine. There was recent data from the Fed I saw in which more than nine million households in the U.S. reported getting an inheritance of at least $100,000. And there is other data which suggests that baby boomers stand to receive over $8 trillion in inheritance over the next few decades.

But sometimes such “blessings” end up as curses to those who aren’t prepared.

Consider former baseball star Lenny Dykstra, who filed for bankruptcy years ago, and was eventually imprisoned for financial crimes — after once having a net worth estimated at $58 million. And, of course, the stories of lottery winners have become so pervasive that Hollywood has even begun using them as a regular plot device.

I would highly recommend that you not follow those examples. When your income suddenly rises, whether through windfall or the sale of a business or home or some such, well, here’s what I suggest…

Don’t move too fast.

Take some time to let it sink in and get through the emotion. Most poor decisions made with sudden wealth usually occur within the first couple of months.

So lock it up in a low-yield savings account for three months, proceed as normal, and use that time productively.

While you have your new buffer locked away…

Take the time to create specific life goals, and evaluate how the money will help you achieve them.

You’ve suddenly been given some cushion, but that doesn’t have to mean your life needs to radically change. It might get easier … but if you leave behind the goals you created BEFORE this change, it’s more likely that it will get harder.

And to properly do this, you need…

A “disinterested” advisor.

It’s often best to work with someone who already has experienced handling the finances for people with means. That way they, too, won’t get caught up in the emotion of it. Be very careful to whom you give fiduciary responsibility, and perhaps split what you are able to under the auspices of more than one financial advisor, so you can get a feel for what works best for you.

And then you can allow one of these advisors to be your gatekeeper from that suddenly-interested cousin or high school friend from The Woodlands, Conroe, or Magnolia with those “can’t miss” investment ideas.

An important step: Immediately, give a portion of it away.

I’ve written about this dynamic before, but there’s something special which happens inside your mind when you give away your money: it loses its grip on you, ever so slowly. And, far from turning you into a profligate (and unwise) giver, what can happen is that you aren’t as affected in your character by the sudden influx of funds. Which means that you don’t become more flashy, nor do you become a tightwad.

And of course, assess your tax strategy.

Coming from me, this should be a no-brainer, but every gift has a variety of ways by which it can affect your taxes. This is something that we are especially prepared to help you with, and you should ALWAYS plan the tax implications of how you receive large sums of money.

There is obviously more that can be covered in one note here, but again, whether your circumstances have improved OR taken a turn for the worse, we really are in your corner.

Until next week,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

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One Trump Tax Plan Mistake That Aurelia Weems Wants You To Avoid

The internet can be a confusing, anxiety-inducing space.

The national news is downright scary (and tragic), and places that used to be the province of baby pictures and goofy status updates are becoming increasingly divided over cultural questions and differences.

But on top of it all, finding good information about how to rightly handle your finances in light of the new tax plan is another shaky proposition. There are so many contradictory articles, confusing jargon and “explainer articles” that only leave you scratching your head.

Oh, and then there’s the fact that the IRS STILL hasn’t released full guidance for every component of the plan. Oh yeah, and Congress might change a bunch of it before the end of the year (you might have heard — there are elections coming up).

Which is why we make it our mission to be your port in the storm in The Woodlands. To provide you personalized recommendations and guidance through the chaos of all of it.

Because the fact is that there are some strategies that, on the face of things, might *seem* like they would be super-smart.

That is, of course, until you dig into the details.

Which is what we do for you.

We’re only a phone call ((936) 273-1188) or an email away. Don’t make this kind of scary mistake…

One Potential Tax Plan Mistake That Aurelia Weems Wants You To Avoid

“All adventures, especially into new territory, are scary.” – Sally Ride

One of the big changes to come down the pike this year is the limit placed upon how much you can deduct for state and local taxes (the SALT deduction).

As it was before,  you could deduct all of your property taxes, and all of your state and local taxes. In most situations, you could deduct almost all of your mortgage interest paid.

This policy was put in place to spark a greater percentage of us to opt for home ownership, because as the value of your house (presumably) went up, you could get the deductions on your interest and property taxes.

But now things have changed.

And this has especially struck those who live in high tax states. California is tops on most lists (depending on how you calculate it, with or without sales tax — this list includes sales tax and has New York as the highest, with CT, NJ and CA not far behind).

But really, if you have a higher income, or a larger mortgage, this is something we should consider for you, because as of 2018 (that would be this year), you can only deduct mortgage interest and $10,000 total of state and local taxes.

Some of these states sprung into action by enacting provisions that would allow taxpayers to contribute to charity at a higher level instead of property tax, but the IRS nixed that.

So some “smart” tax professionals that I’ve seen started pushing a different strategy: set up an LLC, put your home under that entity, and then “rent” it from that LLC.

On the face of it, this seemed super smart. You now have a “business”. You can deduct your mortgage interest and property taxes as a business expense. You MIGHT even be able to take the QBI deduction!

But there is a significant catch to this strategy that I’m not sure everyone has thought through.

And this is why it pays to have somebody in your corner who is paying attention to this stuff (so you don’t have to): it keeps you from making a possibly-frightful mistake.

Because in this scenario, if you EVER sell your home, and it has increased in value, you are no longer eligible for the gain exclusion of $500K (if you’re married filing jointly) or $250K (if you’re single).

Now, if you know FOR CERTAIN that your property won’t sell at a gain, or only a negligible one, this might make sense for you. We can help you run those numbers.

But consider…

Let’s say you’re at the 24% tax bracket (which is for incomes between $82,501 to $157,500 as a single, or $165,001 to $315,000 when filing jointly) and your property tax is $10,000/year. And we’re assuming you sell at a gain, let’s say of $250K. It will take almost 20 YEARS of this strategy for you to have made up the difference that you would lose from the gain exclusion.

If your property taxes are lower, it would take even longer.

The point is this: there is a downside to every tax strategy. And you need to have somebody in your corner in The Woodlands who is looking at things from every angle to make sure you are making the smartest decision for YOU.

There are ways around many problems. But sometimes following the advice from the “guru of the day” can bite you in the rear. And you could make a frightening mistake.

But remember … we’re in your corner.

Is there anything more that we could do for you, to help?

Until next week,

 

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

 

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Implement Aurelia Weems’ Tax Planning Strategy To Pay Less On Taxes This Year

It’s true — there are certain people for whom this note doesn’t apply. There are those who are perfectly fine paying the amount of tax they pay every year, thank you very much.

However, since YOU have chosen to invest yourself in our services (or at one point considered it), you are probably in the second group: those who would love to pay less in taxes, THIS year.

If that’s the case, well, there are two main things you need to understand:

Weems’ Irrefutable Fact #1: Our tax system is not fair.

It is too true — the Elon Musks, Warren Buffetts, Mark Zuckerbergs, etc. operate under a vastly different system than most “regular” taxpayers. This is NOT because they are politically-connected (though they are), but because of the people they have who do wonders on their behalf.

And the sooner you quit complaining about those who *seem* to be connected … and make the decision to JOIN their ranks, the sooner you will pay less in taxes.

Because all of those people, and other people like them, understand the second fact…

Weems’ Irrefutable Fact #2: A tax return is a report, NOT a strategy.

Yes, we’re pretty good at coming behind with our magic brushes and cleaning up the mess made by many of our The Woodlands clients in their finances and taxes. But there is a much better way to fly.

It’s called tax planning strategy, and it’s essentially comprised of three parts:

1) Strategic review:

Assess the current situation, and identify short-, mid-, and long-term strategies to lessen your taxes, and grow your income.

2) Implementation:

This can be a little tricky (especially if you do it yourself), because there are bound to be accounting and local regulatory questions which arise. We recommend that you stay with your same team who developed the tax strategy so they make sure you’re doing what you need to do.

3) Proper compliance:

There are plenty of people out there who will give you “the secrets to paying less taxes!!!” — but are they willing to put their name on a dotted line and defend it? If not, RUN from these people. They are hype artists. Or worse, they know that their advice will lead to a fraudulent return.

The main thing to understand is that in order to REALLY get your tax situation improved, you MUST plan ahead.

Otherwise, you’re just cleaning up a mess that was already made (and can’t be fixed) when filing your tax return.

This is all especially true with the brand new 
tax code in place for this year.

The good news is that there is still plenty of time to do some great work on your 2018 taxes, even now that we are headed into the final quarter. We have a pretty full couple of months ahead of us with extension returns, but we can still schedule a time to talk about ways to better your tax strategy now, so that we aren’t just cleaning up after a mess.

Call my office this week: (936) 273-1188 (or reply to this note through the email us button at the top of the page) and request one of our limited Tax Planning Saver Sessions. During this session, we will analyze your current situation and identify clear action steps for the last quarter of 2018 — designed to save your bottom line hundreds (or even thousands).

You CAN control your tax strategy … and we can help.

Until then…

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

 

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Tax Reform Has Opened Up Many Tax Strategy Opportunities We Can Implement For The Woodlands Families And Individuals

I can’t believe it, but here we are, almost done with the month of August (!), school is already starting in many areas where we serve clients, and football is again being discussed as something to pay attention to. This summer has absolutely FLOWN by — and those of us who pay attention to politics are already tired of all of the midterm electioneering.

Frankly, it’s my opinion that “those of us who pay attention to politics” is a smaller number than it used to be, but that’s a story for another day.

But speaking of politics, you are probably aware that with the brand new tax code in front of us, that there are some brand new ways that YOU might be able to save on your taxes this year.

However, most of these opportunities are only available to those who take action BEFORE the year closes out.

Sure, we have some time — more than an entire quarter — but you and I both know that the pace doesn’t slow down, come fall.

And our national conversations aren’t doing any of us any favors. All we seem to hear about is division, seeming chaos, poor leadership all across the political spectrum, and international turmoil.

Which is why it’s so important for you to maintain your peace in the midst of it all.

Look — it’s no mystery, probably, why I choose to write so often about maintaining the proper perspective. We see clients from The Woodlands, Conroe and Magnolia in here regularly, and you probably wouldn’t believe how often we have the same kinds of conversations. Finances touch a deep place of security (and fear) for so many, NO MATTER how much is in the bank accounts.

From the very well-off, to those deep in debt … everyone can pick and choose their poison these days, when it comes to fear.

I often play the role of counselor, in addition to helping my clients navigate their way through tax and financial decisions. Because The Woodlands, Conroe and Magnolia families and individuals can make rash decisions in times of perceived crisis — and they often have unforeseen wealth complications that stem from those decisions down the road.

Which is why it’s critical that we take a look at how things are set up (tax-wise) for you and your family for the rest of 2018.

There are too many opportunities now for us to sit idly by.

And with school coming back, it is the perfect time to take a clear-eyed look at things, and plan for the best way to save as much as absolutely possible.

Aurelia Weems

(936) 273-1188

Aurelia E Weems, CPA

 

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The Woodlands Families Should Not Neglect Estate Planning

estate planningHow is your summer rolling along for you? I’d love it if you sent us an update on what you have been doing … even if it’s just a personal update. (You can send us an email through the link at the top of the page.) We take great joy in knowing that our work is being done on behalf of some pretty incredible individuals and families, and getting a closer look into the personal lives of our clients and friends gives us fuel!

This is especially helpful if you have had any changes on the financial front! We’d love to get ahead of what’s happening in your financial life, so that we’re not scrambling at the end of the year to take full tax advantage on your behalf (or, even worse, after the year is done, during tax prep time). But again, even just a personal update would be welcomed!

As you may gather, we are compulsive planners — which means that even if YOU don’t happen to be one, you get to leverage our idiosyncrasies on your behalf. Everybody wins.

And we like to help you think through every aspect of your personal, financial world. And an often-neglected part of many people’s financial world is an effective estate plan. 

It’s a sad reality that over 50% of adults do NOT have a will or other estate planning instruments in place to protect themselves and their family. And, perhaps even worse, over 69% of parents have not yet named legal guardians who can raise their children if something happens to them. (And by “in place”, I mean something that would be legally recognized — not an “idea” that hasn’t been properly notated).

Those are scary numbers. Estate plans obviously provide great peace-of-mind for The Woodlands families (and even for single individuals) … and, of course, they can create a bunch of headaches if not handled correctly.

Believe me, we’ve seen some problems in our day.

Which is why it always helps to have someone in your corner. Whether or not we speak into your situation directly, we can also bring in specialized counsel. We aim to be your advisors in all things financial, whether we have “skin in the game” (i.e. we get paid for it) or not. Our The Woodlands clients are our family, and we want to see you treated well by those who serve you.

So, please consider this…

The Woodlands, Conroe and Magnolia Families Should Not Neglect Estate Planning
“I’m not afraid of storms, for I am learning how to sail my ship.” – Louisa May Alcott

You may have established an estate plan in the past, or you may not have gotten around to it, but it is critical that you ALWAYS have an up-to-date plan. 

Most people are smart enough to keep their car in good working order — it requires oil changes, an annual physical check-up, etc. But I’m always surprised by the common misconception about how often they should have their estate plan reviewed.

You see, most people see estate planning as something you “do once” and never have to think about again. That’s just flat incorrect.

Just like your health can take a dramatic turn (for the better or worse) in a year, your estate planning decisions can change dramatically in a short period. Sometimes, something simple happens, such as an out-of-state move by the people you’ve identified to serve as the guardians for your minor children. That’s just one of many good reasons to revisit your estate planning decisions.

Plus, though there’s been a lot of talk in recent years about the higher estate tax threshold, there are many ways in which out-of-date plans can be “burned”, by not complying with new laws.

Your estate plan is a “living and breathing” plan (at least when done right) and therefore has to be maintained to reflect your life as it is today.

Second, PLEASE ensure you have chosen the proper executor. 

Whether you’re dealing with significant sums, or with a more modest estate, choosing the person to handle these transactions is a critical decision for EVERY The Woodlands family.

It’s always a great idea to get professional advice in making these selections. But, if you choose to “go it alone” for some reason, here’s what you need to keep in mind as you consider who will be your executor:

An executor must:

 * Obtain certified copies of your death certificate
* Locate Will beneficiaries
* Examine and inventory your safe deposit boxes
* Collect your mail
* Cancel credit cards and subscriptions
* Notify the SSA and other benefit plan administrators of your death
* Learn about your property, which may involve examining bank statements, deeds, insurance policies, tax returns and other records
* Get bank accounts covered by the Will released
* Place notices in newspapers so creditors can make claims
* Hire a probate attorney

Either the executor or the probate attorney must:

 * File court papers to start the probate process and obtain legal authority to act as your executor
* Manage your assets during the probate process, which usually takes six months to a year
* Handle court-supervised probate matters, including transfer of property to your beneficiaries and making sure your final debts and taxes are paid
* Have final income tax forms prepared, and, if necessary, have estate tax returns for your estate prepared and filed

Of course, the open probate process is something you will absolutely want to minimize and even avoid. A sound plan does this.

But this right here (the choice of executor), is where it starts. In the future, I’ll have more to say on the subject of an executor and why that choice is so important.

More to come. And again, we’re in your corner.

Warmly,

Aurelia Weems
(936) 273-1188
Aurelia E Weems, CPA

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Achieve Financial Independence in The Woodlands by Outsourcing

financial independenceIf you pay close attention to the news media (which I don’t advise, but in our digital world, it can be unavoidable), you might be feeling a weight, almost as if there is a sense of impending doom. I saw a recent survey that indicated that almost one third of respondents felt that we could be headed towards a second civil war.

That is not a happy thought.

And it might also cause us to feel that the events we celebrate on July 4th are in the very (very) distant past.

But I still believe that, seen in light of the circumstances of the age, the Declaration of Independence was an act of incredible bravery by many people who had plenty to lose by adding their names to it. It’s one of many inspiring acts by our founders, and rightly worth tossing rockets into the air to celebrate and honor (if not more than that!).

As John Adams wrote in a letter to his wife on July 3rd, 1776:

“I am apt to believe that it will be celebrated, by succeeding Generations, as the great anniversary Festival. It ought to be commemorated, as the Day of Deliverance by solemn Acts of Devotion to God Almighty. It ought to be solemnized with Pomp and Parade, with Shews, Games, Sports, Guns, Bells, Bonfires and Illuminations from one End of this Continent to the other from this Time forward forever more.

You will think me transported with Enthusiasm but I am not. — I am well aware of the Toil and Blood and Treasure, that it will cost Us to maintain this Declaration, and support and defend these States. — Yet through all the Gloom I can see the Rays of ravishing Light and Glory. I can see that the End is more than worth all the Means. And that Posterity will tryumph in that Days Transaction, even altho We should rue it, which I trust in God We shall not.”

It is America’s 242nd birthday today. Let us pray that we have reason to continue celebrating for many decades to come.

Now, speaking further of financial independence, I believe that many of my The Woodlands, Conroe and Magnolia clients (probably you among them) already “get” much of what I write about as it relates to debt, avoiding taxes, and other basic financial strategies. Financial freedom, if you will.

But sometimes there are “non-financial” decisions we’ve made or attitudes we’ve fostered that creep into how we approach our careers, our finances, or even our families — and they actually rob us of independence.

Here’s what I mean…

Achieve Financial Independence in The Woodlands, Conroe or Magnolia by Outsourcing
“You will never win if you never begin.” – Robert Schuller

There are many people who are handier, when it comes to fixing things around the home.

But rather than beat myself up over this lack, I’ve begun to embrace my limited ways, and have learned to see why this “deficiency” enables me to think bigger, and grow wealth.

It’s probably healthy to admit that most things you simply cannot do (with apologies to the very “handy” among us): You probably aren’t going to redo the roof on your house. You likely don’t have a clue how to knock down a wall to open up the downstairs. If the toilet stops working and the plunger and Drano don’t work, you’re calling the plumber. Likewise, you might pay someone to work on your car because you either don’t know how to or you’d rather have a professional do it.

But one of the common messages which even the wealthiest among us find ourselves adhering to is: “Do it all yourself and you will save money.” Don’t hire a house cleaner, don’t go out to eat, don’t pay someone to do your yardwork. Do it yourself and save money.

Is that actually wise?

What if we, instead took this as our ethos: “Outsource everything you can and focus on building your wealth.”

Some people have the time or the motivation to do things other people would outsource. I know plenty of people in The Woodlands, Conroe and Magnolia who simply *like* to change their car’s oil. But I also know people too busy (and too productive) to mow their own grass. So you have to decide what aspects of your life are worth outsourcing.

For fathers and mothers, there’s plenty that you perhaps *shouldn’t* outsource: raising your children, engaging with charities, loving your spouse (!).

But conversely, there are likely to be plenty of tasks that sap your energy, drain your productivity (in the home AND in your work pursuits), and which can be successfully handled by an hourly earner.

Personally, I hope to make it possible that I’m so productive I have to outsource just about everything that I’d rather not do. Said differently, I want to move towards the place where all I do is work on great projects, help my amazing clients, love my family well — and pay people to do just about everything else for me.

In my opinion, this is true financial independence.

And sometimes, it’s important to make certain shifts in this direction before we’re as “ready” as we’d like. It may, in fact, initiate a virtuous cycle of productivity that brings us to where we want to be.

Because we then free up the space to do MORE of what we alone can best do. In this way, even before we “feel rich”, we can achieve greater financial independence in our actual, day-to-day lives.

What do you think you can move off of your plate today?

Warmly,

Aurelia Weems
(936) 273-1188
Aurelia E Weems, CPA

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Aurelia Weems’ Four Tips On How To Think About Money

how to think about moneyIt’s been a great pleasure to reconnect with some The Woodlands, Conroe and Magnolia clients this past week, as we have had the opportunity to conspire together about building their financial fortress, with the “new” tax law in mind.

There are still plenty of provisions within these new tax regulations for which the IRS has not yet issued clear guidance, but that doesn’t mean that we can’t make some very solid plans for people like you to implement — all so that we do NOT have to play catch-up next year during tax preparation time.

Meeting with these clients has reminded me about how so many of our financial decisions are driven by *how* we think about money. And, obviously, this subject could be the basis for an entire education, but I thought I might offer you some basic tricks I’ve used to fool my brain into thinking properly about money.

Because the fact is that our instincts are NOT always correct when it comes to how we think about and spend our money.

That’s why these principles on how to think about money might be useful to you.

Aurelia Weems’ Four Tips On How To Think About Money
“I am not a product of my circumstances. I am a product of my decisions.” – Stephen Covey

It’s still a bit of a mystery why we make some of the decisions that we make.

And that’s especially true when it comes to finances.

If you have ever read Thinking, Fast and Slow by Daniel Kahneman (who, along with Amos Tversky, has been credited with being the father of modern behavioral economics), then you know how easily we can be fooled by our assumptions, fears and false intuitions.

Which is why it’s useful to put some basic principles into practice when we make decisions about money. This is besides, of course, the regular practices of following a budget, saving, investing and avoiding most kinds of debt.

These are some of the principles that you should be thinking about when you are creating that budget or making the decisions about those investments and savings plans.

Here are four principles I’ve used, and which I commend to you…

1) Opportunity costs
What do you need to give up in order to get something you want? It’s almost always a question of money, but also one that involves time and value.

Pursuing an advanced degree may take years — are you willing to put in that amount of time? Will a sports car give you enough enjoyment to offset going into debt for it?

Whatever decision you end up making about how you are investing your money, should also be applied to how you think about your time. Sometimes it really does pay to invest in a lawn care service so that you can free yourself up to do more “valuable” work on behalf of your family.

2) Sunk costs
This is money you can’t get back — a non-refundable airline ticket, for example. The idea here is that you need to keep sunk costs in the proper perspective. It’s easy to start thinking, “Well, I’ve already spent $100, so what’s another $25?” You’ve got to be willing to walk away sometimes.

Once something is paid for, and cannot be refunded, it shouldn’t impact your future financial decisions. It is a “sunk” cost, i.e., water under the bridge, and whatever you do in the future won’t ever get it back.

3) Quick Interest Calculations: The Rule of 72
Want to double your holdings? The Rule of 72 can tell you how long it will take, based on the specific interest rate. Just divide 72 by the interest rate.

For example, if you’re looking at an investment with an interest rate of 6 percent, then 72 divided by 6 gets you an answer of 12 years.

This is a rough estimate, of course, but it’s pretty effective.

In fact, you can also turn the equation around to determine the interest rate you’re looking at if someone promises to double your returns in a set amount of time. Twice as much money in 12 years? Divide 72 by 12 and you get an interest rate of 6 percent. This rule lets you evaluate investment opportunities quickly and decide where to put your money.

4) The time value of money
According to this principle, a dollar you receive today is worth more than a dollar you’ll get tomorrow. You’ll have opportunity to invest that dollar immediately and begin earning more revenue from it (and also avoid losing value because of inflation).

Again, this helps you make certain calls about your purchases — and your income. It’s the old “a bird in the hand” theory in action for your wallet.

These four principles have served me well over the years.

Are there any that you think I have missed? Do you have questions? I’d love to hear from you, so shoot me an email through the email button at the top of the page with your thoughts.

Until next time.

Warmly,

Aurelia Weems
(936) 273-1188
Aurelia E Weems, CPA

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