Finance

• toomeyinvest
• Finance
• October 21, 2024

Ensuring Your Legacy: How to Plan Your Estate for a Secure Future

While few people may find saving for retirement and retirement planning “fun,” what it represents is generally positive: a time when you can cease the daily grind of work, set your own life pace, and enjoy hobbies, friends, and families.

Estate planning, however, is most certainly not an enjoyable activity, as it generally involves addressing a time after one’s death. There are good reasons, however, why estate planning should be an important complement to retirement planning. There is enough cross-over in the two activities that it makes sense to engage in them at the same time.

Having a comprehensive estate plan ensures that your assets are distributed according to your wishes, minimizes taxes to maximize what you pass on to your heirs, and prevents court intervention, providing peace of mind for you and your loved ones. It’s also a critical step in achieving your personal financial goals and securing your legacy.

Because retirement planning and estate planning are intertwined, it’s a good idea to work with a financial planner who specializes in both: this individual can help you arrange your estate in a way that will maximize what you leave to your heirs and minimize the work they will have to do in the event of your death. They can also assist with asset management and guide your investment strategy to ensure your long-term objectives are met.

Some elements to consider when planning your estate include:

Whether you will create trusts. There may be a variety of reasons to create trusts. In the case of dependents, you may wish to set up trusts that will ensure they have enough money to finish school, train for a career, or reach a certain age before they can access an inheritance. For family members who require special help or care, a trust can ensure that the care is funded for the rest of their lives.

Minimizing tax burdens. Improper estate planning – similar to improper retirement planning – can expose you to the risk of paying more taxes than necessary or leaving less to your heirs. A professional advisor can address strategies for both retirement and estate planning to ensure that you are minimizing your overall tax burden and maximizing the value of your wealth management plan.

Protecting personal assets from business losses. As a business owner, you’ll know that retirement or death does not end the possibility of lawsuits against your nest egg or your estate, particularly if you operated a business in a high-risk category such as healthcare or construction. A careful estate plan will protect your assets from lawsuits that might be filed after you’ve retired or after you have passed away, protecting both your retirement funds and your heirs through smart independent portfolio management.

Integrating Retirement Planning and Estate Planning

In your financial planning, you may tap the resources of a financial advisor, a tax professional, and a lawyer. Are these professionals working together to ensure that your retirement planning and your estate planning are complementary? Ideally, retirement professionals, estate planners, accountants, and attorneys should all work together to produce an all-encompassing personal financial strategy.

At Toomey Investment Management, we understand the importance of a cohesive approach to your financial future. By integrating retirement planning and estate planning, we help ensure that all aspects of your financial life are aligned and working together. Let our experienced team guide you through a seamless strategy that meets your unique needs—from saving for retirement to effective asset management. Contact us today!

• toomeyinvest
• Finance
• May 30, 2023

Managing Your Finances: Tips for Handling Inheritance and Settlement Events

A large inheritance or a financial settlement can be both a bonus and a burden. It’s a bonus because the money could come in handy for boosting retirement or education savings, upgrading a home, or quality-of-life events such as travel. The burden is because a large amount of money imposes certain responsibilities on the recipient such as taxes, investments, and the many choices involved in managing the money. Experts offer a number of tips for recipients of large funds. These include:

Taking your time. If you inherit a large amount of money or receive it in a settlement, take your time in deciding what to do with it. Inheritances often involve grief in mourning a loved one who has passed, and settlements often happen after a life-changing event such as an accident. Don’t make any fast decisions and be certain to consult with a professional financial advisor. Initially, it’s wise to park the money in a federally insured bank or credit union, which will allow you to store up to $250,000 per depositor. You can arrange for more coverage by setting up several different types of accounts.

Choose a financial advisor carefully. Different types of estate planners will have different responsibilities when it comes to preserving your money. Some advisors may try and steer you toward certain types of investment in order to maximize their own commissions. Consider using an independent RIA, who is not limited in what they can offer in constructing a bespoke plan that is truly tailored to your needs. This way, there should be no conflicts of interest arising on the planner’s part.

Seek help for non-cash assets. If you inherit non-cash assets such as securities, you may find they’re not a good match for your investment style or your goals. Seek assistance in determining whether it’s a good idea to keep them or sell them and turn them into something else.

Debts or investments? Many people use inheritance or settlement money to pay off debts. And while this makes sense for high-cost debts such as credit cards or student loans, it may not make financial sense to pay off a low-rate home mortgage, for example. With an experienced financial advisor, you can make some cost-benefit comparisons to determine whether the money will serve you better be used to pay off loans, or investing in high-yield products.

Tax implications. There are a variety of tax implications depending on the source of the inheritance or settlement, and the amount of money involved. For instance, some lawsuit awards or settlements are not taxable, and some are. If you’ve inherited a non-qualified annuity, your tax liability will be vastly different than an inherited IRA, or real estate. A financial advisor can help you understand how to configure your inheritance or settlement best to reduce your tax liabilities.

At Toomey Investment Management, Inc. (TIMI), our business model is designed to treat all of our clients equally and fairly. We realized long ago that the financial industry dedicated many resources to capture money from prospective clients but much less on service and accountability for existing clients. At Wallingford, Connecticut-based TIMI, we listen carefully, keep in touch, and return your calls and communications quickly, so you can count on us. We will work effectively to optimize your financial situation and solve your problems. Call us at 203-949-1710 or visit our website for more information.

• toomeyinvest
• Finance
• May 30, 2023

Looking to Your Financial Health During a Divorce

Weddings are happy times, and few people want to think about the possibility of divorce in the early years of their marriage. But as many as half of marriages end in divorce, and these painful events are full of difficult decisions at a time when emotions are running high. Basic issues such as the financials in the heart of divorce can become clouded with other distractions. Unfortunately, the time to protect your financial health is often overrun with a thousand other considerations, but it shouldn’t be.

Recently, a panel of Forbes Finance Council members gathered to brainstorm about financial considerations that are often overlooked when dealing with a divorce. Some of their most important points included:

Looking at your joint accounts. Many people spend injudiciously when a divorce is happening, and one partner may be harmed by the financial decisions of the other spouse when it comes to joint accounts, credit cards, and loans. It’s important to seek financial advice at this time so you can protect yourself from suffering the repercussions of bad financial decisions on the part of your soon-to-be-ex-spouse.

Ensuring the bills are paid. It may be a hum-drum thing, but the bills are due regardless of what’s going on in your personal life. During a divorce, some couples tend to ignore run-of-the-mill financial housekeeping duties like ensuring the mortgage is paid. It’s important to make a timely decision about who will be responsible for payments on bills and get that in writing. You may wish to quickly refinance the mortgage to whoever will remain living in the house, so the other spouse isn’t on the hook for the credit hit that will occur if payments are late or non-existent. Experts recommend that divorcing spouses keep a close eye on their personal credit scores so they can receive early warning of any anomalies.

Life insurance policies. Often, it’s the main breadwinner who secures life insurance to cover future alimony and/or child support in the event the breadwinner has a premature death. Many people tend to choose these amounts at random. It’s important to seek professional help to calculate the present value of future payments in order to make sure the future payments are covered.

Tax considerations. Couples often split their assets without considering the tax ramifications of their choices. A couple might, for example, determine that one partner will get the retirement accounts and the other will keep the house if the values are similar on paper. There are strong tax considerations that may make these decisions not as equitable as they appear.

Consult with a Professional Financial Services Partner

One of the first things individuals undergoing a separation or divorce should do is ensure they are getting good advice from a financial services expert. In Connecticut, we are an equitable distribution state, which makes all marital assets fair game for equal, or in some cases, unequal division. It is imperative that both parties understand the long term pros and cons of each decision made that may potentially impact the rest of their respective financial lives.

At Toomey Investment Management, Inc. (TIMI), our business model is designed to treat all of our clients equally and fairly. We realized long ago that the financial industry dedicated many resources to capturing money from prospective clients but much less to service and accountability for existing clients. At Wallingford, Connecticut-based TIMI, we listen carefully, keep in touch, and return your calls and communications quickly, so you can count on us. We will work effectively to optimize your financial situation and solve your problems. Call us at 203-949-1710 or visit our website for more information.

• toomeyinvest
• Finance
• January 9, 2023

Why You Should Not Panic Sell During A Down Market

Many Americans are logging into their investment accounts with a sense of dread these days. How much more, you may be thinking, have I lost since the last time I logged in? 

2022 has proven to be the worst year for the stock market since the financial crisis of 2008. The poor performance can be chalked up to a variety of factors, including rising interest rates, economic worries, the war in Ukraine, global inflation, the ongoing COVID-19 pandemic, and more. As of December 20, 2022, the S&P 500 was down by more than 19 percent for the year. It can be hard to look at as it relates to your investment or retirement accounts. 

But experts have a piece of advice for you: don’t panic sell. 

Watching your investment portfolio or your 401(k) plan that you have been building for years take a sudden dive is difficult to watch. You may have an overwhelming urge to sell up and salvage what you can. But in the long run, this can be one of the most damaging actions you can take.

Reasons Not to Panic-Sell

The market will likely come back. History shows us that downturns in the market are ultimately only temporary. In the end, large rebounds return most portfolios to the black in just a few years.

“Sharp, sudden market declines are disconcerting, prompting many investors to reduce their stock holdings, or pull out of the market,” according to analysts with MFS Investment Management. “As history has shown, financial markets have rebounded from market shocks, posting strong long-term gains. All too often, investors that have sold out during a crisis have locked in losses and possibly missed the rebound. Riding out market declines and benefiting from potential rebounds may be a better plan.”

It’s an opportunity to buy. As the saying goes, “When the going gets tough, the tough go shopping.” If you have some cash to spare, now can be a great opportunity to take advantage of undervalued stocks and purchase some, so your portfolio can bounce back better than ever when the market sees the upswing. 

Consider a downturn “economic exercise.” Just as a body that never faces physical challenges will never get strong, economies that experience no turbulence should be viewed suspiciously. In order for continued growth to occur, regular downturns are necessary to find and eliminate market bubbles and adjust to intrinsic market prices.

Warren Buffet once famously said, “Our favorite holding period is forever.” While you may not be prepared to hold your investments forever, be certain that you’re selling for the right reasons and under the right circumstances. In a panic, a mistaken effort to stem more losses is not the right circumstance. 

Seek Professional Advice

To gain the peace of mind that your financial plan can weather future market downturns, it may be beneficial for you to seek the advice of a professional who will be able to create a comprehensive financial plan that’s suited to your tolerance for risk.  

At Toomey Investment Management, Inc. (TIMI), our business model is designed to treat all of our clients equally and fairly. We realized long ago that the financial industry dedicated many resources to capturing money from prospective clients, but much less on service and accountability for existing clients. At Wallingford, Connecticut-based TIMI, we listen carefully, keep in touch, and return your calls and communications quickly, so you can count on us. We will work effectively to optimize your financial situation and solve your problems. Call us at 203-949-1710 or contact us for more information.

• toomeyinvest
• Finance
• August 25, 2022

Do I Need a Financial Fiduciary?

If you’re taking the initiative in your financial planning, you may have heard that you need a financial fiduciary. A fiduciary is a professional or a company that is required by law to act in your best financial interests. The fiduciary might be a financial advisor, a lawyer, or even a real estate agent. This person can manage your assets, such as investment portfolios or other accounts, as well as real estate. Because this person is required by law to manage your assets in your own best interests, they have a duty of care to your finances and must disclose if the management of your assets benefits them.

Isn’t My Financial Advisor a Fiduciary?

Many people assume that just because they have a financial advisor, this person is automatically a fiduciary. This isn’t necessarily true. Not all financial advisors are completely independent like Registered Investment Advisors (RIAs) and even though they may have advanced planning credentials, they may be limited by the firm at which they are employed.

The Right Advisor At The Right Firm

Guaranteeing the trustworthiness of a financial advisor is often the responsibility of the investor. When choosing an advisor, it’s important to look for advisors with advanced credentials such as Certified Financial Planners, Chartered Financial Consultants etc., but we would argue that it’s even more important to inquire about the structure of the firm you’re partnering with. Advisors can, for instance, pass tests and acquire some of the industry’s best credentials, but work for a company that only offers one line of products and services. It’s extremely important to understand that you’re not just partnering with an advisor, but the firm he or she operates under. Knowing if your advisor can solicit a number of different broker dealers, insurance brokers, and investment custodians in structuring your financial plan could mean the difference between decent results, and great results.

For greater peace of mind, it’s important that you are able to trust your financial advisor explicitly and trust that they are making investment decisions that are in your best interest (instead of their own). To get the best possible performance from your financial planning, look for a professional firm with fiduciary responsibility that can customize a plan for you, your assets, and your lifestyle.

Choose Toomey Invest Management in Wallingford, CT

Toomey Investment Management, Inc. (TIMI) is an independent RIA, and we believe our business model enhances our ability to enhance our client experience. We realized long ago that the financial industry dedicated many resources to capture money from prospective clients but much less to service and accountability for existing clients. At Wallingford, Connecticut-based TIMI, we listen carefully, keep in touch, and return your calls and communications quickly, so you can count on us. We will work effectively to optimize your financial situation and solve your problems. Call us at 203-949-1710 or visit our website for more information.

• toomeyinvest
• Finance
• March 1, 2021

Capital Gains Tax in Mutual Funds – What You Should Know

Investing in mutual funds is something you may have heard about before. Those looking for a solid way to invest their assets will often choose these types of investments because they can offer the chance to invest in a more diversified portfolio.

Even if you’ve never looked into options for managing your finances before, there are some important things you’ll want to keep in mind as you pursue Mutual Funds.

Understanding Capital Gains Taxes

Capital Gains Taxes, which you may be responsible for, are something many dismiss when they’re first getting started but there are many reasons to factor this in as you plan for your future.

Both long-term and short-term capital gains should be considered. When these are in a taxable account, and depending on how much you’ve earned for the year, your tax bill could come as a surprise.

Currently, there are some benefits to keeping the investments for longer than one year as it may provide greater tax savings versus selling quickly.

Understanding these different working parts may require working with a trusted investment management firm. At Toomey, we can help our clients create tax-efficient portfolios. That means using more than actively managed mutual funds – like ETFs, individual stocks/bonds, and index funds – that may minimize unfortunate tax surprises at the end of the year.

Planning for the Future

Of course, we can’t talk about Capital Gains Tax without also talking about the hot topic issue in the press right now that many investors are keeping an eye on. And that is the emerging threat of taxation of long-term capital gains which the current administration has hinted at possibly enacting.

If this were to pass and become reality, there are a number of different things that could occur in the larger market you would want to be aware of.  For example, substantially higher rates could spark mass selling in 2021 and impact the market as many become leery and take money off the table before 2022. And that’s only the start.

So what should you do? Work with a team that understands all of the parts working together and that can implement strategies that will mitigate your tax burdens for the long term.

Talk to Toomey Today!