Winter 2016 Newsletter - Highland Trust Partners

Winter / Spring 2016
Outlook for 2016
Be Part of Our New Family in 2016!
Highland Trust Partners had an entertaining end to 2015. We
celebrated with clients at our annual holiday luncheon and
enjoyed entertainment from the UGA Accidentals performance
group. Then, we gathered together with our spouses at the
home of Highland Trust Founding Partner Mark Cross where we
feasted on a wonderful dinner. We toasted the beginning of our
successful venture and the formation of a great team.
Be at war with your vices, at
peace with your neighbors, and
let every new year find you a
better man.
Benjamin Franklin
We are excited about 2016. You can expect to see additional
events and ways to engage with us in the coming year. Working
with us is like being part of our family. We want to provide
services that you value and enhance your wellbeing. Hearing
feedback from you is important to us. If you have an issue,
concern, idea or need, please don’t hesitate to let us know.
With the addition of Amy Parrish as an advisor, we have room to grow our family of clients. We have several
easy ways for someone to get to know us before they set up an appointment. Bring them to an event, ask
us to put them on our mailing list and direct them to our website, www.highlandtrustpartners.com.
All our best to you in 2016!
Highland Trust Partners
Decision Making in 2016
What Are the Tax Implications?
By Guest Columnist, W.H. “Kim”
Kimbrough, Jr., J.D., LL.M.
Know the Impact of Decisions Before You Make Them
Many people unknowingly make what they think are
good planning decisions; but, oftentimes, they incur
substantial adverse tax implications. On the flip side,
those who make well-informed decisions typically
enjoy significant tax savings. Below is an illustration.
Section 121 creates a capital gain exemption on the
personal residence up to $500,000). Further, had
he held it until his death, his sons could also sell it
without paying tax. A provision from the estate tax
allows the sons to receive a “stepped-up basis” of the
fair market value at the time of the client’s death.
The following facts are from a current client’s file:
A married client purchased his home in 1965 for
$100,000 (“cost basis”). In 1995, he gifted the home
to his two sons — a move which appeared harmless,
even prudent. The sons received the father’s
$100,000 basis, also known as the “carryover basis”
since it carries over to the sons. The client is now
92, and he and his wife still live in the home, now
valued at $600,000. If his sons were to sell it, they
would then pay at least $100,000 in capital gains.
Sale Price: $600,000
Carryover Basis: ($100,000)
Capital Gain:
$500,000 x 20% = Tax: $100,000
Now, had the client retained ownership, he could
sell it without paying any tax on the capital gain (IRC
Sale Price:
$600,000
Stepped-Up Basis: ($600,000)
Capital Gain:
$0.00 x 20% = Tax: $0.00
But what can be done for my client now?
The sons should give the home back to the father;
then, the father should transfer the home to a trust
containing certain tax provisions that allow the
Section 121 exemption and a stepped-up basis.
Thus, the home can be sold either during the
client’s lifetime or after his death without paying
any tax.
Ultimately, the family will save approximately
$100,000 in taxes.
What Is Your Definition of Priority?
By Founding Partner
Jason Norton, CFP®
Are You Motivated for the Long Term?
The start of a new year is a great
time to re-evaluate goals and
priorities. If you do a simple
Google search for the word
“priority,” you get a definition
like this: “something that is more
important than other things.”
Unlike search engines, our
brains define our priorities
for us, and it happens almost
subconsciously. Our brains do
a great job with immediate
prioritization. We find that when
the time horizon expands, our
brain’s ability to prioritize starts
to blur. The reason is simple and
ultimately our biggest complexity.
Variables, the unknown or just
Murphy’s Law create inefficiencies
over long periods of time. With
many investors, priorities can shift
even after they have been defined.
One example of priorities
gone wrong is the classic movie,
“Willy Wonka and the Chocolate
Factory.” The ultimate goal of
the golden ticket winners was
to make it to the end of the
factory tour. Why did so many
fail? Immediate priority taking
control over long-term goals was
the common theme. This is also a
common theme with investors.
At Highland Trust Partners, we
are experienced in helping our
clients stay focused on both their
short- and long-term goals. Let us
help you start 2016 with a clear
definition of your priorities.
Information & Tools for 2016
Women & Retirement
What Your Mother (Probably) Never Told you
As news reports, surveys and
even the President and Congress
continually point out, all
Americans should be saving and
investing more money. In its latest
annual Retirement Confidence
Survey, the nonpartisan Employee
Benefit Research Institute found
that even though 78% of full-time
workers report having saved for
retirement, 57% said that the total
value of their household’s savings
and investments--excluding the
value of their primary home and
any defined benefit plans--is
less than $25,000. This includes
28% who say they have less than
$1,000 in savings.1
Clearly, saving for retirement is
something that all of us should be
taking seriously, but for women,
in particular, the challenge can be
somewhat greater.
Long-Term Care
By Founding Partner Chris
Caldwell, CFP®, CRC®, AIF®, MBA
8 Things You Should Consider
As a board member of Highland Hills Village, a retirement community
in Athens, I am incredibly passionate about the well-being of seniors.
We all hope that we live a long, healthy life without the need for longterm care. However, almost 70% of those over 65 will need some form
of long-term care during their lives, and that percentage increases the
longer we live.² Here are a few points you need to consider:
1. Costs of long-term care run from $40,000 to $150,000 depending
on the type of care and the part of country in which you live.
2. Medicare does not cover long-term care.
3. Review your finances to determine if there is a need to insure.
4. Discuss with your family your preferences should you ever
need care.
5. Tour facilities and interview home health care agencies.
6. Many facilities have waiting lists, so get on a list before need arises.
7. Talk to your doctor about activities to reduce your risk.
8. Get your legal documents in order (e.g., will, powers of attorney,
medical directives)
Highland Trust Partners can assist with many of these points. We
have relationships with many care providers, attorneys and insurance
specialists to help you put a plan together.
¹LPL Independent Advisor, September 2015 ² longtermcare.gov
While there is clearly a gender
gap in earnings, data from
the Bureau of Labor Statistics
has shown improvements in
women’s income. Higher earnings
for women could mean the
potential for more investments.
Nonetheless, the bottom line
is that in order to make up for
differences in earnings and
benefits, and more retirement
years due to longer life spans,
women may have to invest more.
Contact your financial advisor
today to learn more.
Technology Corner
Looking
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Market Index Returns
Fixed Income
Current Yield 2/8/15
90-Day T-Bill0.27%
5-Year T-Note1.16%
10-Year T-Note1.75%
30-Year T-Bond2.57%
Source: Bloomberg
Index
Dow Jones Ind.
S&P 500
NASDAQ
MSCI EAFE
20162015
(1/1/16-2/8/16)
(One Year)
-8.85%
-2.23%
-9.82%
1.38%
-15.01%5.73%
-8.64%
-0.81%
Morningstar Research
Chart of the Quarter
Unemployment Rate
The unemployment rate peaked at 10%
in 2009 and moved lower in recent years
but remains above prerecession lows.
Source: LPL Research, Bureau of Labor
Statistics, Haver Analytics, 9/30/15
Shaded areas indicate recession.
The unemployment rate is the percentage
of the total labor force that is unemployed
but actively seeking employment and
willing to work.
Corporate Information
1077 Baxter Street, Suite 600
Athens, GA 30606
706-850-4965 (office)
www.highlandtrustpartners.com
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Highland Trust Partners, a registered
investment advisor and separate entity from LPL Financial.