In May of 2024, financial advisors Josh Trubow, Gyb Spilsbury, and Marie St. Clare traveled to Fort Worth, Texas to attend the NAPFA (National Association of Personal Financial Advisors) Spring National Conference. They watched sessions on tax savings, IRAs, long-term care planning, and estate taxes. Along with the warm Texas weather, the advisors enjoyed interacting with other advisors and learning from the expert presenters.
Josh discovered more about IRAs, rollovers, and consolidations
Josh Trubow, Senior Financial Advisor, started off the NAPFA conference by attending two sessions about “IRA Tips” and “Rollovers and Transfer Rules for Beneficiaries”. With the passage of Secure Act 1.0 (in 2019) and Secure act 2.0 (in 2022), the rules surrounding retirement plans and rollovers have only become more complicated.
The sessions focused on what to watch out for when consolidating retirement accounts and how to ensure that retirement account beneficiaries understand their options.
There were plenty of real-life examples of rollovers or consolidations “gone wrong”. The tax bills and penalties for getting it wrong can be significant. So, what does that mean for you if you are planning to consolidate your retirement plan, or you’ve inherited a retirement account?
You usually have one opportunity to get the transaction right.
- Some types of transactions are limited to once-per-year. In these cases, a second transaction could result in taxes and penalties. It’s important to know what other transactions you have done during the year and how they were done, to determine if you are permitted to do another.
- If you are planning to move a retirement account or you’ve recently inherited one, consult your financial advisor promptly to make sure you understand the rules for moving the account.
- Allow Sensible Financial to help obtain or generate the appropriate paperwork.
- With the help of new software, Sensible Financial is improving our processes for calculating and monitoring Required Minimum Distributions.
Gyb dove into the federal estate tax sunset
Gyb Spilsbury, Financial Advisor, watched a presentation on the federal estate tax sunset.
Presently, few Americans are subject to federal estate tax due to the high exemption, currently $13.61M per individual. Unless Congress acts to maintain this high exemption, the amount will revert to approximately $7M ($5M adjusted for inflation) on January 1st, 2026, thus affecting more Americans.
For those affected by this decrease, and who have lifetime plan surplus, advanced planning could reduce potential tax liability. Some strategies to reduce the size of your estate include:
- Gifting up to the annual exclusion
- Funding 529s
- Paying education or medical bills directly to an institution
- Accelerating charitable giving
- Spousal Lifetime Access Trust (SLAT)
- A SLAT is established for the benefit of one’s spouse and children and the grantor may receive ancillary benefits while removing the assets from the estate
- Irrevocable Life Insurance Trust (ILIT)
- A trust owns a life insurance policy and removes it from the grantor’s estate
This can be especially useful when wealth is concentrated in real estate or a business.
Marie learned more about long-term care planning
Marie St. Clare, Financial Advisor, attended a session on long-term care planning and management. Dr. Carolyn McClanahan drew on her background as a financial planner and physician to highlight planning opportunities around long-term care.
Here are some of the things she mentioned:
- Plan ahead!
- If you wait until you need care, it can be more expensive and may not be what you want
- How will you pay for care?
- If you plan to self-insure, make sure the family is ready to write the checks.
- If you plan to use long-term care insurance, investigate how filing a claim would work.
- If you are a veteran, check to see if you are eligible for long-term care benefits through the Veterans Administration (VA).
- If you plan to use Medicaid to pay for care, be aware that some facilities do not accept Medicaid.
- Where and when will you receive care?
- Is your home set up so you could comfortably receive care? Are there services available in your area? At what point would you be willing to move to an assisted living or nursing home?
- If you need assisted or nursing care, to what facility would you go? Due diligence and careful research are paramount.
- Document your care plan in detail and share it with anyone involved in your care plan (family, friends etc.) so everyone is aware of and agrees to follow your wishes.
- Care management tips for your advocates
- Crisis/emergency
- Make plans for care needs after release from a hospital as soon as possible (when you are admitted)!
- Agree on who is responsible for advocating, coordinating medical care, financial management etc.
- Long-term care (at home, at assisted living/nursing home)
- Visit often to ensure quality of care.
- Take complaints to the nursing home and then to state regulators if issues are not resolved.
- Review contracts and request to remove provisions about forcing patients to leave for any reason (if possible).
- Crisis/emergency
NAPFA holds conferences where financial advisors can gain deeper knowledge about new legislation, regulations, and practices in their field. They also network with other financial advisors and earn credits toward further certifications.