Category: Newsletters

Jake owns a small company that is increasing business by bolstering its online presence. However, he wonders how to protect his company when cyber-thieves hack even large companies and government agencies. How can he best protect his company?

The Federal Communications Commission offers cyber-security tips for small business, including ways Jake can establish and train employees in the latest cyber-security practices, as well as maintain the latest security software, web browser and operating system. He should also make sure to have a current firewall to protect data in both the office and home.

Because businesses are increasingly mobile, best practices require employees to password protect their devices, encrypt their data and install security apps to prevent criminals from stealing information while on public networks. If he conducts financial business online, he should work with banks or processors to ensure they use up-to-date tools and anti-fraud services to protect his customers. Changing passwords regularly is also a given.

Check out fcc.gov/general/cybersecurity-small-business to learn more, and don’t forget to explore how to insure against potential cyber liabilities.

Client Profile is based on a hypothetical situation. The solutions discussed here may or may not be appropriate for you.

Employee benefits are often beneficial for both the companies that provide them and employees who receive them. When one of those benefits is paid medical or family leave, the loved ones of employees benefit, too – often at a crucial time in their lives. If you’re an employer who wants to offer benefits that really matter, consider the following.

Employer Benefits

Companies qualify for a tax credit when they meet certain conditions providing paid family and medical leave. According to the IRS, employers may claim the credit when they have a written policy that offers at least two weeks of paid family and medical leave annually to all qualifying employees who work full time. This can be prorated for employees who work part time.

Paid leave must provide at least 50% of the wages normally paid to the employee. In return, employers who offer the paid leave receive a credit based on a percentage of the amount of wages paid to a qualifying employee on leave for up to 12 weeks annually.

Qualifiers

Employers should be aware of two caveats when offering the paid leave for tax credit. One is that the qualifying employer must reduce its deduction for wages or salaries paid by the amount of credit. The second catch is that the tax credit expires on wages paid starting in 2020.

Qualified events include:

• The birth and care of a newborn.
• Adoption or foster care.
• Caring for a spouse, child or parent with a serious health condition.
• Certain events involving family members on active duty in the Armed Forces.

As open enrollment nears and companies review their employee benefit offerings, employers may want to consider the pros and cons of providing employees with access to long term care insurance. And, if you are an employee, you might consider reexamining this benefit if your company offers it.

Apples To Apples

Because the terms of long term care insurance can differ dramatically among policies, you will want to first decide which features are important. Start by choosing a daily benefit — a little is better than nothing. Also decide on the elimination period — the time between when care is needed and when benefits begin. The longer this period, the less expensive the policy typically is. Learn if the policy will pay for home, intermediate and nursing home care.

When you nail down the specifics you want in a policy, work with a financial professional to make the right comparisons.

As America ages, more people are confronting the challenges of finding and paying for adequate long term care. Baby Boomers, in particular, face this challenge on two fronts as they care for aging parents while considering their own potential future care. This potential challenge needn’t become a crisis if you prepare accordingly.

What Is Care?

While some people think of the extreme type of care typically provided in nursing homes, most long term care looks quite different. Care can be as unobtrusive as family, friends or a professional caregiver helping with household chores, cooking or yard work. Or, you might make bathrooms and other areas of your house more accessible as you age without needing the help of others.

The next step up in care may include a visiting nurse. Or consider a community service provider, which could provide meals and activities for you and your peers. Either approach allows you to continue living in your home. And when more care is needed, assisted living communities are another step up in care. Nursing home care is needed only for the most acute care conditions.

Preparing For Care

Creating a strategy that deals with several care scenarios may ensure you and your loved ones aren’t surprised if and when care is needed. Include family in any discussions about care, detailing who will provide help at which point and how to pay for it.

From a legal standpoint, you will want to consult an attorney to ensure you have a will, powers of attorney for healthcare and financial situations, and an advanced directive. Financially, you may periodically put money away to pay for potential care, consider long term care insurance to help defray some costs or adopt a combination of approaches.

Talk to an insurance professional to learn more about how to prepare for potential long term care expenses.

When You Need Care – Plan to avoid a potential crisis.

Workplace Benefits – Consider the pros and cons of providing employees access to long term care insurance.

Dual Benefits – When the employee and their loved ones benefit.

Profile – How to protect your company from cyber-thieves.

Raise Capital For Business – If your company is in the market for extra cash, consider these sources.

Living Together After 50 – Consider the financial implications if you are in this group.

Questions And Answers

Short Bits

Consumer expenditures rose 2.4% in 2016, according to the Department of Labor’s Bureau of Labor Statistics.

Families saw average annual expenditures increase from $55,978 in 2015 to $57,311 in 2016. Spending increased in seven of nine categories: food, housing, healthcare, entertainment, education, cash contributions and personal insurance and pensions. Spending on transportation, as well as apparel and services, declined.

LIMRA conducted a survey to learn how much American workers knew about their benefits and found out they can use more education.

A little more than half of employees weren’t aware life insurance benefits could be used for any purpose, and fewer than half were aware that short-term disability income insurance generally pays for leave after childbirth. One-quarter of employees understood that critical illness insurance pays out a lump sum that can be used for anything upon diagnosis, not just medical expenses.

The Federal Reserve Bank of New York’s February 2018 SCE housing survey showed the majority of households continue to view housing as a good financial investment, although some felt this way more than others.

About two-thirds of respondents think that buying property in their zip code is a very good or somewhat good investment, compared to 60% in 2016. In the West, 70% think buying property is a good investment compared to 56% in the Northeast.

The First-Quarter WELLS FARGO/GALLUP investor and retirement optimism index survey finds that only 20% of non-retired investors have calculated their future retirement income or expenses.

Pre-retirees were more likely to have planned their retirement activities and location.

Question:

I heard the new tax changes affect depreciation on business-owned automobiles. What are the specifics?

Answer:

The Tax Cut and Jobs Act increased annual depreciation caps on passenger cars. Depreciation on both new and used vehicles acquired and placed in service during 2018 (with a bonus first year depreciation deduction) is capped at $18,000, $16,000, $9,600 and $5,760 for service years one through four. The latter cap also applies after the fourth year. Depreciation limits for business vehicles without the bonus deduction are $10,000, $16,000, $9,600 and $5,760 for service years one through four.

Question:

My parents want to give a gift to my son to help pay his college tuition. Will this affect our financial aid?

Answer:

Yes, it will likely affect what’s known as your Expected Financial Contribution (EFC), which the federal government, colleges and universities use to determine scholarships. A dependent student is expected to pay a higher percentage of income for college expenses than parents, so giving your son the money directly will likely decrease any financial aid. Your best bet is to have the grandparents make the gift to you or pay some expenses directly for the least effect on financial aid.

If you are a small business owner and have a partner, you may have agreements about what will happen to business ownership should one of you die or voluntarily leave. A buy-sell agreement should address these events and should also include the possibility of an owner’s major disability.

Put It In Writing

In the buy-sell agreement or in a separate agreement, clearly define qualifying disabilities that would trigger a buyout, and the parties who get right of first refusal to buy the disabled owner’s share of ownership. This document should detail what would trigger mandatory and optional buyouts.

Funding Options

Next, explore funding options for buying the disabled owner’s share of the business. You might make regular installment payments taken from profits or investments put aside for this possibility, which could be a problem if either experiences difficulties. Or you could buy cash value life insurance on all the owners, with the business named as beneficiary, directing cash value to the business in the event of a qualifying disability.

Many agreements are funded by including long-term disability income insurance, which the business would buy on all partners. Talk to your tax, insurance and legal professionals to learn more.

People of almost any financial means share some basic estate planning concerns, which should be addressed in written plans. Here are some tips that can help.

1. Update Your Will

You already have a will, right? Update this document throughout your life when events including births, deaths, divorces and other changes occur.

2. Check Your Executor Decision

While we’re talking about wills, make sure the guardian you named to care for your minor children isn’t an immature 40-year-old traveling the world.

3. Create A Living Will

Also known as an advanced directive, this document details what medical steps to take if you can’t communicate them.

4. Update Your Beneficiaries

When life changes, make sure your retirement plan, life insurance and estate beneficiary designations are current.

5. Talk To Your Tax Professional

Taxes can sneak up on you when you build wealth or inherit assets. Talk to your tax pro.

My mother, Caroline, is 67 years old and will soon amicably divorce my stepfather. Currently, she receives spousal Social Security benefits and shares his pension payments. How will this change, if at all, when the divorce becomes final?

If your mother’s marriage lasted 10 years or longer, she can continue to receive benefits on her ex-spouse’s record. As a spouse, she gets a combination of benefits equaling the higher spouse’s benefit. So, if her benefits as a spouse are higher than her own retirement benefits, she gets the spousal benefits, minus any extra credits for her spouse’s delayed retirement.

This benefit as a divorced spouse is equal to one-half of the ex-spouse’s full retirement amount, if payments begin at normal retirement age. In other words, your mother should continue to receive the same Social Security benefits as long as she does not remarry.

Most states consider pensions a joint asset of both spouses and typically divide them with other assets upon finalization of the divorce. However, your state’s court will make the final determination, so make sure your mother hires an experienced divorce attorney.

Client Profile is based on a hypothetical situation. The solutions discussed here may or may not be appropriate for you.