While there are various ways to structure a retirement plan, many find financial success through living trusts. Living trusts are not just for elderly people or the idle rich. They are also for people with ambitious plans who want more time and sufficient capital to pursue their dreams. Living trusts are often not understood.

While living trusts are frequently praised for their ability to avoid probate and save taxes, there are also many other benefits. Living trusts can relieve you of the burdens of investment management, record keeping, bill paying, tax preparation and financial consolidation.

As your lifestyle and financial needs change during retirement, a living trust can change along with you. Through a revocable living trust arrangement, money you receive from inheritance, employment severance packages and exercised stock options can be integrated into your individually tailored portfolio. If you are going to travel for some period of time, become incapacitated or otherwise not available to handle day-to-day matters, a living trust can also provide continuity of financial management without the burden being placed on family members. As your circumstances change, the amount of service you expect from your trustee can change – all without rewriting or amending your trust. Additionally, you can cancel your trust at any time.

Revocable living trusts frequently contain instructions regarding the efficient distribution of trust property after your death. By incorporating a Pour Over Will into your estate plan, you can have your other assets transferred to your trust upon your death.

To understand how living trusts fit into a retirement or estate plan for you or a loved one, it is helpful to ask the following questions.

Is a living trust right for my situation or are other options available?
? There are many types of trusts, each specifically created to serve your estate planning goals. Your goals will determine whether a living trust or another trust service is appropriate for you.

Where are trusts located and when does a trust become operational?
? A trust’s location is typically in the state in which the trust is created, although it may be governed by the laws of, and taxed by, other jurisdictions. The physical assets may be held in many different locations. A trust may be drafted to be effective immediately or after you have passed away, such as a trust within your Will, or it may be drafted to be operational at a point in the future.

How are trusts managed?
? The trustee must invest trust funds prudently and productively and protect physical assets such as real estate. The trustee is responsible for making distributions in accordance with the terms of the trust and must fulfill its duties of care, loyalty and impartiality to the beneficiaries.

It’s never too early to start planning or considering a trust for your future needs. One of the greatest benefits of having a trust is that your finances are being cared for by a team of qualified professionals who are looking out for your well-being.

Univest National Bank and Trust Co. is Member FDIC.

The holidays are upon us. And in these times, couldn’t we all use a little extra cash and a lot of extra peace of mind? While you are checking items off your to-do list this holiday season, take some time for year-end portfolio evaluation and tax planning.

If there is one thing we’ve learned over the past few years, it’s that there is no way to guarantee profit or insure against loss, but you should still take a close look at your portfolio at least once a year. A little rebalancing, asset allocation or diversification can go a long way.

Often, one type of investment does particularly well and comes to represent a larger percentage of your portfolio than originally intended. Selling some of that asset class and using the profit to buy other types of investments will bring your portfolio back to an appropriate balance. Also, make sure your asset allocation is aligned with your financial goals and life situation.

Though tax implications should never be the primary driver of investment decisions, you should consider any tax consequences before making changes to your portfolio. It may be beneficial to wait until the first of next year, or even longer, to avoid capital gains taxes. Assets held for a year or less generate short-term capital gains, which are taxed as ordinary income. But capital gains from assets held for more than a year are taxed at much lower rates, as little as 0% depending upon your tax bracket. Similarly, your holding period can affect the treatment of qualified stock dividends, which are currently taxed at more favorable capital gains rates.

In addition to last-minute portfolio adjustments, the end of the year is your final opportunity to make tax-saving moves that can impact your 2010 bottom line.

Consider your projected income for 2011. A lower income may reduce next year’s tax rate, so you should take advantage of opportunities to defer income and accelerate expenses. Conversely, if you project a higher income, accelerate income and defer expenses for added savings.

Choosing the right retirement plan can also result in significant tax savings. Your pre-tax contribution to an IRA, 401k or similar employer-sponsored plan reduces your income and thus your immediate tax expenditures, while contributions to a Roth IRA are not deductible today.
If you own a small business or are self-employed, and you purchased property in 2010, extended legislation allows an additional 50% first year-depreciation deduction, and increases the amount that can be deducted for qualifying property placed in service during 2010.

Other tax-savings areas to examine include itemized deductions and personal and dependency exemptions, energy efficiency improvements to your home, required minimum distributions from retirement plans, and more.

For optimum tax savings and financial portfolio evaluation, contact a qualified financial professional.

For contact information and to learn more about our practice, visit www.SoloffWealth.com.
 
Securities and Financial Planning offered through LPL Financial, member FINRA/SIPC
Circ 230 Disclaimer
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein. This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided.

Adam Soloff, EA, CFP is a Federally Authorized Tax Practitioner and Certified Financial Planner Professional.

Let’s face it. America’s economy has seen better days. During the recent recession, consumers and businesses started carefully allocating their expenditures and protecting their incomes. Consumers found themselves getting back to a place where savings was more of a priority because they weren’t sure what the future was going to bring in terms of their income, their employment and their current investments.

But, for much of the previous decade, saving wasn’t a priority for most Americans. According to American Banker Magazine, the average annual personal savings rate fell to as low as 1.4 percent in 2005—the lowest level since the Great Depression. Now, the personal savings rate currently hovers around 6 percent, according to the Department of Commerce.

So, if saving money and healthy personal finance in general are things adults struggle with every day, how is the next generation supposed to learn how to save money?

Money Doesn’t Grow on Trees!
First, kids need to know how the economy works. They need to understand the ins and outs of the family economy. Help them understand the difference between things they want and things they need. Money is earned and you should only spend what you earn. Then, explain that people often save their money for items they want to buy.

Initiate an allowance for household chores and encourage your children to save a portion of their allowance for a special goal. As they save their money, you might reward them with a small additional amount, just like a bank pays interest. At the end of each month, calculate how much they have saved and then chip in a certain percentage as interest.

Banking and Borrowing
Once you see that your children’s savings have accumulated, take them to the bank to open their first savings account. When your children want something that they can’t quite afford, discuss the value of saving versus borrowing. If you let them borrow from you, use a written IOU, establish a repayment schedule, and charge interest. By doing this, you establish the framework for teaching them about lending.

Let Them Watch Their Savings Grow
To continue the learning process, construct a visual chart of their savings (include the goal) so they can easily see how their savings are growing. Remember to keep it as simple as possible, geared toward each child’s age bracket.

Remember that a solid money education is one of the best tools you can give your kids. By fostering a lifetime of savings habits with your children, you can help them understand cash, credit and consumerism, give them a sense of financial responsibility and help them plan for financial security down the road into adulthood.

About 3rd Federal Bank
Founded in Philadelphia in 1921, 3rd Federal Bank is headquartered in Newtown, Pennsylvania with branches serving Philadelphia and Bucks County, Pennsylvania and Mercer County, New Jersey.

The bank offers a full line of personal and commercial banking solutions, including a youth savings account, designed especially for younger customers, age 17 and under. With no service fees, a $25 minimum opening deposit and a competitive interest rate, the account automatically converts to a regular savings account at the age of 18. Visit www.thirdfedbank.com to learn more.

Kent Lufkin is 3rd Federal Bank’s President and CEO.

Women face special challenges when planning for retirement. Because their careers are often interrupted to care for children or elderly parents, women may spend less time in the workforce and earn less money than men in the same age group. As a result, their retirement plan balances, Social Security benefits and pension benefits often lower. In addition to earning less, women generally live longer than men, and they face having to stretch limited retirement savings and benefits over many years. To meet these financial challenges, you’ll need to make retirement planning a priority.

Begin Saving now

To maximize your chances of achieving a financially secure retirement, start with a realistic assessment of how much you’ll need to save. If the figure is substantial, don’t be discouraged—the most important thing is to begin saving now. Although it’s never too late to save for retirement, the sooner you start, the more time your investments have to grow.

Save as Much as you can—you Have Many Options

If your employer offers a retirement savings plan, such as a 401(k) or a 403(b), join it as soon as possible and contribute as much as you can. It’s easy to save because your contributions are deducted directly from your pay, and some employers will even match a portion of what you contribute. If your employer offers a pension plan, find out how many years you’ll need to work for the company before you’re vested in, or own, your pension benefits. Keep in mind, too, that because your pension benefits will be based on your earnings and on your years of service, the longer you stay with one employer, the higher your pension is likely to be.

Save for Retirement—no Matter What

Even if you’re staying at home to raise your family, you can—and should—continue to save for retirement. If you’re married and file your income taxes jointly, and otherwise qualify, you may open and contribute to a traditional or Roth IRA as long as your spouse has enough earned income to cover the contributions.

Plan for Income in Retirement

Do you worry about outliving your retirement income? Unfortunately, that’s a realistic concern for many women. At age 65, women can expect to live, on average, an additional 19.8 years. In addition, many women will live into their 90s. This means that women should generally plan for a long retirement that will last at least 20 to 30 years. So what can you do to ensure you’ll have enough income to last throughout retirement? Here are some tips:

Estimate how much income you’ll need. Use your current expenses as a starting point, but note that your expenses may change dramatically by the time you retire.

Find out how much you can expect to receive from Social Security, pension plans and other sources. What benefits will you receive should you become widowed or divorced?

Set a retirement savings goal that you can work toward and keep track of your progress.

Save regularly, save as much as you can, and then look for ways to save more—dedicate a portion of every raise, bonus, cash gift or tax refund to your retirement savings.

Consider purchasing long-term care insurance to protect your retirement savings and income from the high cost of nursing home care.

Adam Soloff is the President of Soloff Wealth Management Group.