January 2021
Chart of the Month
Wealth & Tax Management Upgrades to Consider in 2021
Wealth & Tax Management Upgrades to Consider in 2021
- We regularly upgrade all six components of our Complete Wealth Solution. Helping you realize the full potential of your wealth so you can flourish and achieve rewarding financial and life goals is what our services are all about. Transformed 1) wealth management, 2) investment management, 3) tax management, 4) professional support, 5) semi-annual pulsing and 6) life enhancement – all in a fraction of the time otherwise required – is the “impact goal” of our unique client experience and patented system. We encourage all clients to fully engage the everexpanding features of this robust system in 2021.
- Mortgage rates remain at historic low levels. We continue to assist and encourage our clients to refinance real estate debt, effectively locking in better terms and a lower interest rate (in many cases a reduction of 1% or more) compared to previous low loan rates. This is allowing us to help clients save thousands of dollars in interest costs over the life of the loan, while improving non-discretionary expense ratios and debt to equity ratios to well within our standards. Now is a great time to review your existing debts to see if a better option exists before interest rates head higher.
- Advanced Tax Planning and Tax Alpha Portfolio Management continues to be an expanding value-added part of our Complete Wealth Solution. We have invested significant sums in the latest technologies and techniques for reducing taxation. Savings of tens and even hundreds of thousands of dollars a year are possible. Be sure to discuss these services and techniques with us in your next Semi-annual Clarity session.
- Required Minimum Distributions (RMDs) have been reinstated for 2021. We have received several inquiries about whether the Federal Government will extend this CARES Act law into 2021, allowing individuals to forego taking RMDs for a second consecutive year if they do not need the distribution. As of now, there are no concrete indications of this happening again, but we will be monitoring closely and will act quickly should this become an opportunity to take advantage of for our clients. In 2020, we helped many clients reduce their tax liability by utilizing this special tax code.
- Consider creative estate and wealth transfer strategies in 2021. There are concerns regarding future legislative changes having a negative impact on one’s wealth, which could include lowering the gift and estate tax exemption limits (currently set at $11.7 million per taxpayer in 2021). A thoughtful strategy being implemented considering this concern is known as a Swap Power for Basis Management. This technique relates to a donor who has gifted or transferred assets such as property or investment accounts into an irrevocable trust (which does not receive a step-up in income tax basis at the donor’s death). Exercising the swap power allows the donor to exchange low-basis assets in an existing irrevocable trust for high-basis assets held in the donor’s estate for estate tax purposes. At the donor’s death, the low basis assets are positioned outside of the irrevocable trust and receive a “step-up” in basis to ultimately reduce or eliminate capital gains taxes that would have been triggered. Just one of many creative techniques at your and our disposal. Our team will continue to work proactively and collaboratively with you and your other trusted advisors to identify and implement the best possible strategies.
Janiczek Wealth Management – At a Glance
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