1. NOT TAKE ADVANTAGE OF TAX BREAKS: Taxes are by far the biggest expense we have, and the problem is likely to get worse. Tax laws are complex things that change every year. While most people who are employed and have a few bank statements and/or brokerage accounts can get away with preparing their own taxes with one of the many tax software packages on the market, those who have statements Complex companies that have to fill out the “Schedule Letter” (Schedules A, B, C, D, E, etc.) in depth, or depreciation/amortization items should almost always be used by a tax professional.

SOLUTION: Have a tax professional do your return once every few years, even if you don’t have to. If there’s something you’ve been missing, it might well be worth the one-time expense when you compound savings over a period of years. For those who receive property tax assessments on a regular basis, do you make appeals when appropriate? Here in Allegheny County, where Pittsburgh is located, their appraisal method includes taking a picture of the front of the property and going through the already registered area of ‚Äč‚Äčland. Recently, the mom of a new client was tested for a creek running through her property. When her son (my client) brought this to the attention of the appeal board, the tax was reduced without question.


John and Mary divorced three years ago. John and Mary can’t stand each other, just the mother’s mention of the other’s name causes bile to flow down the other party’s esophagus. Last year John remarried Linda. John and Linda are very much in love. Today, John was killed in a traffic accident on the freeway. Today, Mary is now a billionaire thanks to John, and Linda is stuck paying huge final expenses from joint bank and investment accounts. Why did this happened? John never bothered to inform his own insurance agent and his human resources person at work about the major change in his life, and fill out the appropriate paperwork to change the beneficiary from Mary to Linda.

I know firsthand this happens, not only as an insurance professional, but also because I served as vice president of my volunteer fire company for a period of 3 years, and the veep’s job included keeping the information of the insurance beneficiaries. During my tenure as vice president, a member passed away due to a firefighting related death, one of the many things the state of Pennsylvania did when it came to guide us through the line of duty death process was to order that the Drawer with members’ files to be sealed until further notice. No new information could be added to or removed from ANYONE’s file in that drawer until told otherwise. After access was allowed again, several members were suddenly reminded of the changes that needed to be made. Thank God nothing else happened in the meantime

SOLUTION: Check the beneficiary information on your life insurance policies regularly, but not less than every two years or when there is a major life change, including marriage, divorce, the birth of children, etc. Special Note: If you leave money to minors, there will need to be a guardian for the money, as the court system does not typically release hundreds or thousands of dollars for children to use at their own discretion. If you do not appoint someone of your own choosing, the court will appoint a guardian for money who may or may not be the person you would choose. He may or may not be the person you dedicate yourself to for the day-to-day care of your offspring.


Insurance policies and IRAs have a very important point in common, they are affected by illegal probate laws and probate processes in most cases. I say most cases because if you have cash value life insurance (permanent rather than term insurance), its value could make you eligible to pay federal estate tax if your estate is large enough. This is NOT a good thing that happened to you. IRA money may be subject to estate law if you name your estate as the beneficiary instead of an individual. While it won’t cost you anything if you die for not naming a beneficiary, it could cost your loved ones millions. The reason is that IRAs inherited by an individual can benefit from what is called “IRA rollover.”

Here is a Cliff’s Notes version of the Stretch. Let’s say that, at death, he is the age at which he should receive required minimum distributions (RMDs), which means that he is over 70 1/2 years of age. Let’s also say that he leaves his IRA to his 35 year old son or daughter. When inheriting the IRA to his son or daughter, because they are wise, he turns to Halas Consulting to learn the best way to manage his new estate. The good folks at Halas Consulting would advise your son or daughter to establish a Beneficiary IRA. Basically, what happens is that when ownership is transferred successfully, your son or daughter still has to keep taking RMD, but they do so based on your younger age and not her older age. This means that less is distributed to tax if the IRA is a Traditional IRA and not a Roth IRA that can never be taxed. If they also ask Halas Consulting to manage the money and it’s set up in a proper asset allocation model, that money can potentially grow a lot (we’re talking millions here) with tax breaks with just smaller amounts of money. annually, until your child reaches around the half-century mark, to satisfy the RMD. This is a good thing.

HOWEVER (I just KNEW it was coming), if the IRA is set up or transferred the wrong way, the tranche is lost FOREVER. What if the reason this is happening is because of bad advice? In most cases the IRS says “hard beans”, there are many PLR judgments from people who have claimed this very thing and lost on the PLR. You could sue the one who gave you the bad advice, but you could still lose and then you will lose legal fees in addition to losing your case. For more detailed information on this, I recommend reading books written by IRA expert Ed Slott. These can be found in bookstores or possibly your local library (yes, that place with all the books most haven’t visited since they had to write their college thesis or, worse, their senior year of high school).

THE SOLUTION: Always have a named beneficiary on your IRAs and 401ks. Again, if you want to take full advantage of the Stretch and name a minor. Also name an adult you trust with the money to act as guardian of the money until the minor reaches an age when you believe they would be responsible.


While on the surface this may seem like a good idea, it really isn’t. The reason is a little-known rule called “Net Unrealized Appreciation” or NUA. Here is a brief synopsis of the way NUA works. Let’s say he had 500 shares of the company that he accumulated during his years of work. For the sake of simplicity, let’s say you had an option to buy this stock at $3 per share when the stock was priced at 10 in its heyday in the late 1990s. Now, upon retirement, these shares are worth $20. If you roll over these shares to a self-directed IRA at retirement, you will have to pay income taxes on these shares each time they are distributed from your IRA. Your income taxes could be quite high if you have a lot of retirement income.

THE SOLUTION: If you take proper advantage of the NUA, you will sell the shares and move the money to a non-qualified brokerage account (not IRA). By doing this, you will pay income taxes of $7 per share, which is the amount of the difference between what you paid for the share ($3) and the value of the share at the time you exercised your call option ($10). . The difference between the share price at the time of purchase ($10) and its current value ($20), or $10 per share, will be taxed at the capital gains rate which is currently 15% maximum (the level maximum income tax could be more than double). After the shares are sold and removed from the IRA, roll the rest into an IRA for maximum flexibility and options. The cash proceeds from the stock you just sold are no longer taxable, only interest and capital gains will be taxed on this cost basis if you invest the money you have in the non-qualified brokerage account. To manage your taxes efficiently and not be overwhelmed with big expenses, a well-researched growth stock ETF would be a good choice here. Just make sure it fits your asset allocation model.


With the recent financial collapse still fresh in people’s minds, credit and debt have become four letter words. But while credit CAN be bad if not used correctly, it can also be a lifesaver and allow you to buy many necessary things that cannot be paid for in cash up front due to their cost. Those who are aware of their credit score and research what makes one’s score look better and what the various credit bureaus look for pay less money in interest on cars, houses, home appliances and credit cards. I don’t want to be a braggart, but several months ago, when it seemed like the doom and gloom would last forever, I was sitting in my kitchen opening the mail and some of the requests were ready to loan me over $50k in unsecured money. because of my good credit, and here were the people on tv getting foreclosed on houses where they owed less than that.

Another area where good credit will help you with lower payments is insurance. ALL insurance companies use something called an “insurance score” when calculating your insurance score. For example, when shopping for auto insurance, it makes sense for insurance companies to look at your moving and driving record violations, but what the heck does my credit score have to do with what kind of driver I am? I can’t be reckless with money but a model citizen on the go? Well, according to the research done by the insurance companies, no, you can’t. Your insurance score is basically a composite of how you live your life, and those who live a responsible life can save some money. One of those components is money and how responsible you are with it. Similarly, if you have a DUI on your driving record, it could also affect your premiums on your home, health and life insurance, as well as your auto insurance.

THE SOLUTION: You get a free credit report every year from annualcreditreport.com, take advantage of it. I would recommend that every year or two you spend about $40 and get a consolidated credit report, or a “triple merger” of all three companies. This consolidated report will give you much more detail than the free gift, and it’s what banks and mortgage brokers use to decide who gets a loan (at least they did until the government stepped in and told them they had to lend to slackers and then the whole economy collapsed. But I digress). Go through this report with a fine-toothed comb. A year later, I found a credit card account that I closed years ago and the bank did not report to the credit bureaus as closed. This is your “face” and your reputation on the line, have NO idea what you are saying.

Well here are five things you can work on to get started, if I think of more ways I will write a follow up to this article. In the meantime, he takes care of your money and he will take care of you.

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