If juggling priorities were an Olympic sport, young parents would win the gold medal. Raising kids, advancing careers, paying off student loans, and saving for a home is a lot. All this makes estate planning feel like a tomorrow problem.
But estate planning puts you in charge of your family’s financial future if the unexpected happens.
Here are three ways you can protect your family’s future by starting your estate planning today.
Protect your current income
Your current income is the fuel that keeps your household going. Here are several ideas to protect your earnings:
Minimize tax liabilities using tools such as trusts or family limited partnerships can shield assets from estate or capital gains taxes.
Protect against lawsuits and creditors by structuring ownership through legal entities or trusts. These separate legal entities can make it harder for lawsuits or creditors to reach your personal income or business revenue.
Ensure income continuity if incapacitated. With powers of attorney and living trusts in place, you can tap someone you trust to manage your income and financial affairs if you’re unable to do so.
Protect your future income
Estate planning isn’t just about distributing assets—it’s a proactive way to secure financial stability down the road. Here are several ideas to protect your future income.
Preserve wealth using tax planning strategies. Trusts, retirement accounts, and gift giving can minimize your future estate and income taxes, helping you retain more of your earnings over time.
Safeguard business and investment income. Planning for succession or setting up buy-sell agreements ensures that income from businesses or investments can continue in the future, even after death or incapacity.
Provide long-term control over assets. Set specific terms in wills or trusts to dictate how and when income-generating assets are used. This can protect them from mismanagement or being wasted in short order.
Protect your children
Estate planning isn’t just about money – it’s also about protecting your kids if something happens to you. Here are several ways to protect your children.
Ensure guardianship. If you pass away or become incapacitated, a will lets you name who should raise your children. Without this, the decision goes to the courts, and a judge will choose a guardian. Naming someone in your estate plan ensures your children are raised by someone you trust, in a stable and familiar environment.
Control their inheritance. A well-structured estate plan allows you to manage how and when your children receive their inheritance. For example, you can create a trust and decide when to distribute money and for what purposes, such as education, health care, or buying a home.
Minimize conflict. When your wishes are clearly written in legal documents, it leaves less room for disagreements among family members. This can help prevent costly legal battles or emotional fights over who should care for the kids or how money should be used.
Many people believe estate planning is only for the very wealthy. But as you can see, managing an estate is important for everyone, regardless of income level. Consider reviewing your situation with a qualified expert and help create peace of mind for yourself and your loved ones.
Lowering your tax bill next year works best as a planned event. So if you are interested in breathing a sigh of relief come next April, consider a review of these four areas as you create and implement your tax plan for 2025.
#1 – Your Home
Your home can create unexpected tax liabilities. Property value appreciation, home improvements, and refinancing your mortgage influence how much tax you pay.
When your home’s value increases substantially, you might pay higher property taxes. Selling a home can also lead to capital gains taxes if you’ve lived in the property for less than two years or exceed the home sale exclusion amounts.
Tax Planning Tips for Your Home:
Get a professional property assessment to ensure you’re not overpaying property taxes. If so, know your location’s time frame and process to amend your property’s value in their formula.
Consider timing home improvements to manage potential tax consequences by being smart about when assessments are applied in your location’s property value.
If selling, understand capital gains exclusion rules ($250,000 for single taxpayers, $500,000 for married couples)
#2 – Your Investments
Review your refinance closing disclosure to identify deductible mortgage points or fees
Investment income can impact your tax bill. Capital gains, dividend distributions, and frequent trading can all cause tax consequences.
Different investments also face different tax rates: Short-term capital gains get taxed at higher ordinary income rates and long-term gains typically receive more favorable treatment.
Tax Planning Tips for Your Investments:
Implement tax-loss harvesting to offset capital gains
Hold investments for more than a year to qualify for long-term capital gains rates
Consider tax-efficient investments like index funds or ETFs
Maximize contributions to tax-advantaged accounts like 401(k)s and IRAs
#3 – Your Retirement
Retirement accounts offer financial opportunities. But they can also cause tax pitfalls. Required minimum distributions (RMDs), early withdrawal penalties, and the tax treatment of different retirement account types influence your tax bill.
Tax Planning Tips for Your Retirement Accounts:
Understand RMD rules and plan withdrawals strategically. Sometimes the most cost-effective plan withdrawals occur long before the RMD rules come into play!
Consider tax-efficient Roth conversions to manage future tax liability
Maximize health savings account (HSA) contributions as an additional retirement account
Explore catch-up contributions if you’re age 50 or older
#4 – Your Life Events
Major life changes can dramatically change your tax situation. Marriage, divorce, having children, changing jobs, or experiencing significant income shifts can all reshape your tax liability.
Tax Planning Tips for Life Changes:
Reassess your filing status as life changes may affect your tax bracket and deductions
Track new deductions and credits as life events like adoption or education expenses may qualify for specific tax breaks
Understand the age triggers built into the tax code and plan accordingly. This is especially important to understand as your children get older.
Sometimes your tax plan will show you an unavoidable, upcoming tax event, but you can plan for it to avoid a surprise. But other times your plan can help lower your tax liability, so it is best to begin as soon as possible.
Here are several ideas to help your business grow and thrive this year.
Understand your cash flow. One of the biggest causes of business failure is lack of understanding cash flow. At the end of the day, you need enough cash to pay your vendors and your employees. If you run a seasonal business you understand this challenge. The high season sales harvest needs to be ample enough to support you during the slow, non-seasonal periods.
Recommendation: Create a 12-month rolling forecast of revenue and expenses to help understand your cash needs.
Know your pressure points. When looking at your business, there are a few big items that drive your business success. Do you know the top four drivers of your financial success or failure? By staying focused on the key drivers of your business, success will be easier to manage.
Recommendation: Look at your most recent tax return and identify the key financial drivers of your business. Do the same thing with your day-to-day operations and staffing.
Inventory matters. If your business sells physical products, you need a good inventory management system. This system doesn’t have to be complex, it just needs to help you keep control of your inventory. Cash turned into inventory that becomes stuck as inventory can create a major cash flow problem.
Recommendation: Develop an inventory system with periodic counts to ensure you do not have shrink or theft issues. These periodic counts can help identify when you need to take action to liquidate old inventory.
Know your customers. Who are your current customers? Are there enough of them? Where can you get more of them? How loyal are they? Are they happy? Several large customers can drive your company’s growth or create tremendous risk should they take their business to a competitor.
Recommendation: Know who your target audience is and then cater your business toward them and what they are looking for in your offerings.
Know your point of difference. Once you know who your target customer is, understand why they buy your product or service. What makes you different from other businesses selling a similar item?
Recommendation: If you don’t know what makes your business better than others, ask your key customers. They will tell you. Then take advantage of this information to find new customers.
Develop a great support team. Successful small business owners know they cannot do it all themselves. Do you have a good group of support professionals helping you? You need accounting, tax, legal, insurance, and employment help, along with your traditional suppliers.
Recommendation: Conduct an annual review of your resources. Be prepared to review your suppliers and make improvements where necessary.
Sometimes focusing on a few basic ideas can help improve your business’s outlook. Please call if you wish to discuss your situation.
Financial goals make it possible for you and your partner to work toward achieving your dreams. Here are several action items to create – and achieve – financial goals as a couple:
Start talking sooner rather than later. Finances can be hard to talk about. People sometimes feel guilty about debt or ashamed that they don’t make more money. More than that, many people consider money to be a private thing that shouldn’t be discussed with others.
However, the first step to setting financial goals as a couple is to start talking. And the sooner you start talking with your partner, the better prepared you’ll be to make positive financial decisions. Saving for a big purchase, for example, takes time and planning. Having a discussion early on gives you more time to start saving.
Agree on your goals. Once you’re talking about your finances, you’ll want to agree on your goals. Would you like to pay off your credit card debt? Save for a big family vacation? Have more of a financial safety net?
After you’ve agreed on what you’d like to achieve, start talking about how you’ll work together to achieve it. The best financial plans require both partners to contribute to the financial goal – whether that means each agreeing to contribute monthly to a savings account or cutting back on personal spending.
Keep the conversation going. Plans need maintenance to succeed. That means continuing to talk about them, and checking progress on a regular basis. It’s important for both partners to know all the numbers, even if one partner is the primary manager of the finances.
Scheduling a regular financial conversation is one way to keep you and your partner on track to achieving your goals. This financial date night is a good way to ensure that things are proceeding as planned. It’s an opportunity to check in and adjust the numbers accordingly.
With open communication and commitment from both partners, you’ll be well on your way to reaching your financial goals.
With the cost of college rising rapidly, it can be overwhelming to think about how to pay your way through school for either yourself or your kids. Fortunately, saving hundreds, or even thousands, is possible. Teenagers can help keep down the cost of their future college tuition by taking the following classes and exams while in high school:
Advanced Placement (AP) classes and exams provide the opportunity for high school students to take college-level classes at their high school and an exam at the end of the
school year. Many colleges will accept AP credits as placement and/or college credit. Most will accept a passing grade of 3, but some universities may require a score of 4 or 5 to earn college credit. (AP exam scores range from 1 to 5.)
College Level Examination Program (CLEP) tests also offer the opportunity to earn college credit by passing an exam. However, instead of taking a class, you must study on your own and schedule an exam at a testing center when you’re ready. CLEP exams receive a score between 20 and 80. A score of 50 is typically the passing score to obtain college credit, but each university sets its own requirement. It is important to note that while many colleges accept CLEP credits, some top schools do not.
Dual enrollment classes allow high school students to take college courses at a local college or university and earn both high school and college credit. You must be a high school junior or senior to qualify for the program. Dual enrollment credits are widely transferable.
Cost of Exams and Potential Savings
AP exams cost around $100, while CLEP tests cost $93 plus an additional administrative fee while dual enrollment programs pay for tuition, fees and books. According to the College Board, the average cost of a 3-credit class at a four-year college ranges from $1,200 to $4,500, meaning for each 3-credit class you test out of, you save hundreds—potentially thousands–of dollars!
Additionally, earning college credit in high school can enable you to finish college in less than four years. Just make sure that when you’re choosing a college, you pay attention to whether or not the schools accept AP and/or CLEP exam scores as credit.
One of the most common reasons businesses fail is due to lack of proper cash flow. The same is often true in many households. Here’s how this concept of cash flow applies to you along with some ideas to improve it.
Cash flow defined
Cash flow equals cash coming in (wages, interest, Social Security benefits, etc.) and cash going out in the bills you pay and money you spend. If more is coming in than going out, you have positive cash flow. If the opposite is true, you have negative cash flow. Unfortunately, calculating and forecasting cash flow can get complicated. Some bills are due weekly, others monthly. A few larger bills may need to be paid quarterly or annually.
Create your cash flow snapshot
Before improving your cash flow, you need to be able to visualize it. While there are software tools to generate a statement of cash flow, you can also take a snapshot of your cash flow by creating a simple monthly spreadsheet:
Type each month across the top of the spreadsheet with an annual total.
Note all your revenue (cash inflows), then create a list of expenses (cash outflows) in the left-hand column.
Enter your income and bills by month. Create a monthly subtotal of all your inflows. Do the same for your cash outflows. Then subtract the expenses from income. Positive numbers? You have positive cash flow. Negative numbers? You have negative cash flow.
Create a cumulative total for the year under each month to see which months will need additional funds and which months will have excess funds.
Ideas to improve your cash flow
Identify your challenges. See if you have months where more cash is going out than is coming in to your bank account. This often happens when large bills are due. If possible, try to balance these known high-expense months throughout the course of the year. Common causes are:
Holidays
Property tax payments
Car and homeowners insurance
Income tax payments
Vacations
Build a reserve. If you know there are challenging months, project how much additional cash you will need and begin to save for this during positive cash months.
Cut back on annuities. See what monthly expense drivers are in your life. Can any of them be reduced? Can you live with fewer cell phone add-ons? How about cutting costs in your cable or streaming bill? Is it time for an insurance review?
Shop your current services. Some of your larger bills may create an opportunity for savings. This is especially true with home, rental and car insurance.
Create savings habits to add to cash flow. Consider paying a bill to yourself in your cash outflows. This saved money is a simple technique to create positive cash flow each month to build an emergency reserve.
