OWE Estate Planning 2023

Planning with community property trusts

BY JESSE T. MOUNTJOY, ESQ.

SULLIVAN

MOUNTJOY, PSC

During its 2020 General Session, the Kentucky Legislature enacted new laws enabling the creation in Kentucky of a “Kentucky Community Property Trust” that will assist married couples in possibly saving significant federal and Kentucky capital gain tax dollars they would otherwise incur when real estate, stocks and bonds and/or other assets are sold.

I. CAPITAL GAINS TAX — HOW IT WORKS

1.1 Capital gains taxes are taxes that accrue when asset appreciation is real-

ized. This occurs when a capital asset is sold at a higher value from what it was originally purchased for, resulting in a gain. What you pay for something is known as a basis, in tax lingo. So, if you purchase an asset for $100,000 that is your basis in the property.

1.2 Similarly, a basis can also be established when you inherit an asset for a decedent. As an example, if you inherited a property that is worth $300,000 then your basis in the property is $300,000. The Federal government measures capital gains based upon the difference between your basis in the asset versus the price for which you sell it.

1.3 The following example will help briefly illustrate capital gains taxation: A husband and wife own a piece of property which they bought for $50,000. Over a ten-year period, the property’s value increased, and the property is now worth $150,000. If the property is now sold for $150,000, the couple will have to pay a minimum of 15% tax on the proceeds of the property, or $15,000 in capital gains taxes on the $100,000 realized gain (assuming they make over $81,000 together as a married couple).

II. WHAT IS A STEPPED-UP BASIS?

2.1 A “step-up” in basis occurs

when an asset with a lower basis is increased to a new, higher basis. This step-up occurs when an individual dies and passes property on to his or her heirs or beneficiaries, typically their children or other loved one. (This does NOT occur if the same individual makes a lifetime gift to the same persons, who in such ca receive the same “carry-over” basis as the donor.”

2.2 An example of a step-up in basis is as follows: A father owns property he purchased in 2000 for $200,000. The $200,000 purchase price is father’s basis in his property. In father’s Last Will,

SEE TRUSTS/PAGE S5

During

Do Iqualify for Medicaid?

Am Igetting all the VA benefits Ideserve?

What will happen to my retirement?

OUR SERVICES

Do Ihave to drop my health insurance to get Medicaid? How do I protect my property?

If Ihave assets will Ihave to privately pay for care?

How will Ipay for long term care?

Who can help me?

ASSET PRESERVATION: you spend alifetime accruing assets and building legacies. We help keep those safe, so they don’t get trapped by nursing home expenses and income restraints.

MEDICAID REPRESENTATION: with ever changing laws, many applicants can be taken advantage of or misled. We help maximize benefit procurement and become an advocate who stands up for your rights.

WE HELP VETERANS. Many veterans and their spouses are unaware of benefits they could be receiving. We help veterans maximize their VA pension

benefits by working within the system to get veterans the help they deserve.Wealso help veterans who have previously been denied; allowing them to receive their benefits.

WHY CHOOSE ELDER ADVANTAGE? This is one of the most difficult situations for you and your loved one We taketime for you to clearly understand the process and overload of information. We help ease your mind, provide guidance and help alleviate some of the stress.

Letushelp you or your loved one get the benefits you deserve.Call today for a FREE consultation.

an already difficult time,it’seasy to get lost when confronted with long term care.What choices to make? What to do?Who can help? At Elder Advantage,webelieve wise choices are why you accumulated your assets. Working with the RIGHT professionals will ensure that you keep them. When you have questions, we have answers. Elder Advantage,LLC &Meghan P. Johnson Law, PLLCthe wise choice in asset protection.

What to know about life insurance

Millions of adults go to great lengths to protect their assets. Those measures run the gamut from simple everyday efforts like utilizing two-factor authentication when accessing financial accounts via online or mobile banking apps to more complicated undertakings like estate planning. Life insurance is a component of estate planning that is vital to anyone looking to protect their assets in the event of their death.

eXPLAInIng LIFe InsurAnCe

Life insurance is both similar to

and different from other types of insurance. Like homeowners and auto insurance policies, life insurance provides financial protection in difficult circumstances. A life insurance policy is a contract between an insurance provider and a policy holder that guarantees a payout to beneficiaries designated by the insured individual in the wake of that individual’s death.

PersOnAL HIsTOrY

Insurance providers differ, but individuals interested in life insurance

can expect to be asked about their medical histories and lifestyle habits when discussing policies. Prospective policy holders will often be asked to sign waivers that allow providers to access their medical records. This is necessary so companies can get an idea of the health of the person applying for life insurance, which will determine the cost of a policy. That information, as well as family history, is important because it can serve as an indicator of future health risks. Some variables, including lifestyle habits like smoking, won’t necessarily

appear on an individual’s medical history. In an effort to address that, insurance providers typically ask prospective policy holders to answer a variety of questions about their lifestyle, including whether or not they smoke and how much alcohol they consume. It’s vital that individuals answer these questions honestly, as companies can deny payouts to beneficiaries if they determine policy holders misled them during the application process.

TRUSTS

he leaves the property to his daughter. When father dies, the property is worth $400,000.00. The daughter now receives a “step-up” in basis equal to the fair market value of the property at father’s death (in this case $400,000). Now, if the daughter sells the property for $400,000, the daughter will not incur any capital gains tax because she is selling the property at her actual “stepped-up” basis.

III. CAPITAL GAINS TAX FOR JOINTLY OWNED MARITAL PROPERTY

3.1 Married couples in Kentucky do not have the same step-up in basis on jointly owned property. These couples only receive a one-half (1/2) “step-up” in basis at the first spouse’s death. As such, if property is sold after one spouse’s death, the surviving spouse would still recognize capital gains tax if sold at a gain.

3.2 Here is an example of how it works. If a husband dies, and the wife decides to sell the property, the wife only receives a one-half (1/2) stepup in basis. If the original basis was $200,000 and the property is now sold for $400,000 at the husband’s death. The realized gain is $200,000. What is the “recognized” (i.e., taxed) gain?

3.3 In order to calculate the onehalf (1/2) step-up in cost basis, the original basis is added it to the fair market value of the property at husband’s death which is then divided by two. So, in this example: $200,000 + 400,000 = $600,000. We then divide the total of $600,000 by 2 which equals $300,000, establishing wife’s new basis. Or, stated another way: Wife has an original basis in her one-half (1/2) (i.e., $100,000), plus her basis in the one-half (1/2) she “inherited” from her husband (ii.e.,½ of 400,000=200,000) If the wife now sells the property, she would only pay capital gains tax on $100,000 gain ($300,000 — $200,000 = $100,000). Assuming there is a 15% capital gains tax, the actual tax would be $22,500 (15% x $100,000 = $15,000).

3.4 Despite the one-half (1/2) step-up in basis in this scenario, the amount of taxes being paid could have been prevented if the couple had placed their property in a Kentucky Community Property Trust.

IV. HOW A KENTUCKY COMMUNITY PROPERTY TRUST WORKS

4.1 A Kentucky Community Property Trust (“CPT”) is a type of trust that allows married couples (in Kentucky) to place properties (personal or real) into a trust in order for the surviving spouse to receive a full (100%) step-up in basis for the assets upon the first spouse’s death. The basis is determined by the market value at the time of death of the first spouse to die. This complete step-up in basis substantially minimizes the amount of capital gains taxes realized on capital assets placed into the CPT if said assets are subsequently sold.

4.2 First Example: If a couple has a collective asset basis of $300,000 in a community property trust and the husband dies shortly thereafter, the wife will receive a full (100%) stepped-up cost basis to the market value of the property, which may be several hundreds of thousands of dollars. If the wife decides to sell shortly thereafter, she will pay no capital gains tax if the property is sold at market-value.

4.3 Second Example: If you purchase 1,000 shares of stock in 2020 for $5 per share (for a $5,000 investment) and that stock is now worth $100 per share, the fair market value of your investment is $100,000. You have a gain of $95,000. As such, if you sold the stock today, you would pay $14,250 in capital gains taxes; however, if that stock was held in a Kentucky Community Property Trust, your spouse would receive a complete step-up in basis equal to the market value of the stock at your death. If the stock is then sold, there would be no capital gains tax.

4.4 CPTs can be used with real estate investments, stocks, collections, and digital assets such as cryptocurrencies that have had substantial capital appreciation. These types of trusts can also be very beneficial when one spouse is the primary person managing certain assets the trust holds.

4.5 Special Note: Personal Residences: Your personal residence has a built-in capital gains tax emption. Meaning there are no capital gains taxes paid on your personal home up to a certain limit. The exemption limit for married couples is currently $500,000 while the individual exemption is $250,000. Under these exemptions, if your capital gains from your personal residence is less than $500,000 or $250,000, then there are

no capital gains taxes. This exemption only applies to your personal residence, not investment properties or vacation homes and is subject to a few other requirements.

V. CREATING A KENTUCKY COMMUNITY PROPERTY TRUST

5.1 The process of creating a Community Property Trust is similar to the creation of a basic revocable “living” trust. When a CPT is created, the creator transfers property into the trust. The creators, commonly known as the grantors or settlors, are co-trustees during their lifetime. Co-trustees control any and all property within the CPT and may use the property within the trust for their benefit just as if they personally owned it.

5.2 Community Property Trusts were created by a separate property (common law) state like Kentucky (without CPT’s), to allow couples in Kentucky achieve the same tax benefits that couples in other community property states such as Texas and California enjoy with the IRS. Separate Property states do not have the same laws that allow a surviving spouse to receive a stepup cost basis. As discussed, surviving spouses only receive a one-half (1/2) step-up in basis on jointly owned property. Because of this disparity, the Kentucky Legislature created the Community Property Trust Act to give its citizens the same tax advantages as those residing in community property states.

VI. OTHER MATTERS

6.1 Divorce. What Happens to Community Property Trust Assets if a couple gets divorced? One of the major downsides to the Kentucky Community Property Trust is that Kentucky law mandates that if such couple has a CPT and subsequently divorce, all property within the CPT must be split 50/50 between them, regardless of who previously owned (or contributed to) the CPT assets. Before creating a CPT, make sure you and your spouse fully understand the consequences of dissolving the CPT by divorce.

6.2 A Last Word. Kentucky Community Property Trusts are a good way to minimize or even prevent capital gain realizations. CPTs can help save thousands of dollars if they are properly created and funded. In some circumstances it makes more sense to create a Community Property Trust than a basic revocable living trust (without CPT provision).

INSURANCE

FROM PAGE S4

COVerAge

Coverage needs vary depending on the individual. Life insurance is intended to provide for loved ones in the aftermath of a policy holder’s death. How much money will those individuals need to pay their bills? Young adults who are just starting their families may want more coverage than aging adults who have already paid off their homes and saved a considerable amount for retirement. The National Association of Insurance Commissioners recommends that individuals ask themselves how much of the family income they provide and if anyone else, such as an aging parent, depends on them for financial support. Answering these questions can help individuals determine how much coverage they need.

TYPes OF COVerAge

Insurance providers offer various types of life insurance policies. Term life policies are among the most popular because they tend to be affordable while offering substantial coverage. There are different types of term life policies, but policies tend to run for anywhere from 10 to 30 years and expire around the time individuals reach retirement age. That’s because many people save enough for retirement and don’t have the sizable expenses, such as a mortgage, to account for at this point in their lives. That means loved ones won’t necessarily need to be provided for in the wake of a policy holder’s death.

Permanent life insurance policies last until the policy holder’s death so long as he or she continues to pay the premiums on time. Financial advisors can help individuals understand the ins and outs of the various types of permanent life insurance policies, which differ from term life policies because they can serve as investment vehicles and sources of loans in certain instances.

Life insurance is a vital component of asset protection that can offer peace of mind to policy holders who want to ensure their loved ones are provided for in the wake of their death.

Life gets complicated; money is tight. I need to get smar ter about our finances – and ta xes. Not just for April 15th, but for our future.

“Life gets complicated; how can I keep up with the estate ta x law changes ever yone is talking about? I need a plan to protect my family and someone to help me make the right decisions .”

Alexander spends years preparing for moments just like these.

For tax & financial advice based on exceptional knowledge, experience & education, ask Alexander.

•Need help planning your estate? Ask Alexander

•Does your estate plan need amending? Ask Alexander

•Looking for gifting strategies? Ask Alexander

•Do loved ones need assistance with daily finances and business duties? Ask Alexander

•Need Estate and Trust ta x preparation? Ask Alexander

2707 Breckenridge St., Suite 1 270-684-3237

Serving Owensboro for over 100 years

Explaining wills and trusts

It’s never too early for adults to think about estate planning. Estate planning is an important part of money management. While it’s easy to think of estate planning as just a way to dictate how your assets are allocated after your death, estate planning also can protect people and their money should accidents or injury make them incapable of managing their finances on their own.

Some familiar terms may come up when people begin planning how they hope to transfer their assets. Two more common terms are wills and trusts. Understanding the dis -

tinctions between the two can help people as they begin estate planning.

WHAT IS A WILL?

The online financial resource

Investopedia notes that wills are legally enforceable documents that dictate how people want their affairs handled and assets allocated in the wake of their deaths.

Wills should include a host of information, including who a person wants to assume guardianship of their minor-aged children should they pass away. This is especially important information to include in a will, as surviving relatives may have to go to

court to contest guardianship if parents do not dictate who they want to serve as guardians in their wills.

WHAT IS A TRUST?

A trust is a relationship in which another party is given authority to handle a person’s assets for the benefit of that person’s beneficiaries. When making a trust, a person will need to designate someone as a trustee, who will be tasked with distributing assets in accordance to the terms dictated in the trust.

There are many types of trusts, and working with an attorney who specializes in estate planning can help men

and women determine which type of trust, if any, is best for them.

IS IT BETTER TO HAVE A WILL OR A TRUST?

Both wills and trusts can be useful when estate planning. In fact, wills are often used to establish trusts, and many people have both a will and a trust.

Estate planning is an important part of managing one’s finances. A qualified attorney who specializes in estate planning can help people write their wills and, if necessary, establish trusts that can help surviving loved ones in the wake of their death.

Retirement accounts are often, along with your home, the largest asset of an individual’s estate. Prior to the SECURE Act, which was enacted in 2019, naming a child as the beneficiary of your IRA or 401(K) allowed the account to pass to them outside of probate and permitted the beneficiary to take distributions over their life expectancy.

Using trusts to save taxes for IRA beneficiaries

BY THACKER, HODSKINS & KNIGHT, LLP

Under current tax laws, individuals can shield nearly $13,000,000 in assets from estate tax at their death. A married couple could therefore pass up to $26,000,000 to their heirs without paying a penny of estate tax. Given this historically large exemption, most families are not concerned with estate taxes when they are designing their estate plans.

Frequently overlooked, however, are the income tax consequences of your estate plan. While receiving an inheritance is generally not taxable to the recipient, distributions from retirement accounts do trigger income taxes for the recipient. According to the Federal Reserve, approximately $13.2 trillion in assets are held in IRAs.

Retirement accounts are often, along with your home, the largest asset of an individual’s estate. Prior to the SECURE Act, which was enacted in 2019, naming a child as the beneficiary of your IRA or 401(k) allowed the account to pass to them outside of probate and permitted the beneficiary to take distributions over their life expectancy. This meant that the beneficiary could stretch out the payments to minimize the income taxes that they had to pay on the distributions. With few exceptions — such as surviving spouses — beneficiaries now must withdraw the full balance within 10 years of the IRA owner’s death.

In some circumstances, that

deadline is shortened to 5 years. By establishing a Charitable Remainder Trust and designating the trust as the beneficiary of their retirement account, the child can receive distributions over their lifetime, and, over time, be taxed at a lower tax rate.

As an illustration, let us assume that the first spouse leaves their IRA to the surviving spouse and the surviving spouse then designated a charitable remainder trust as the beneficiary of the IRA at their death. This trust will pay out a fixed percentage to your surviving child, and for this illustration we will set the annual payout at 5%.

Since 1928, the S&P 500 has returned approximately 9.8% on investments. If the IRA was worth $1,000,000 at the surviving spouse’s death, then the child would receive $50,000 in the first year. If the trust grows at a 9% rate, then each year the distribution to the child would increase.

Over the course of 20 years, the child would receive over $1,475,000 in distributions. Since the trust grew at 9% each year and only distributed 5%, the value of the IRA after 20 years would be approximately $2,158,000.

As the name of the trust suggests, this remaining balance is distributed to the charity or charities of your choice. If you would rather leave more to the surviving child, then you can create a trust that pays a higher percentage to the child.

If instead of paying 5% to the son

or daughter the trust pays 11%, then over 20 years that child would receive $1,782,000 in payments with approximately $630,000 passing to charity.

Because Charitable Remainder Trusts are tax-exempt entities, they do not pay taxes on the income the trust earns and, like IRAs, grow tax free. The recipient will pay income tax on the distribution, but once the initial $1,000,000 is paid out and taxed at ordinary income rates, the remainder is taxed at capital gains rates assuming the trust was invested in capital assets such as stocks and mutual funds.

Utilizing this structure provides your surviving child or children with an income stream for their lifetime and allows you to make a meaningful gift to the charity or charities of your choice. The son or daughter is limited to the annual payout that you establish in the trust, and for some individuals that may be a good thing. The assets owned by the trust are also protected from your children’s creditors in the event of an unfortunate accident or divorce.

Estate planning is very dependent on each individual’s situation, and one trust is not a solution for all situations. However, for those individuals interested in leaving money to a favorite charity while also using retirement accounts to benefit their children in a tax efficient manner, Charitable Remainder Trusts are great tools due to the changes enacted by the SECURE Act.

The importance of estate planning

BY KAYLEE GORDON HOSPICE & PALLIATIVE CARE OF WESTERN KENTUCKY

Estate planning is an important and everlasting gift you can give to your friends and family right here at home. Having an up to date will facilitates the process of distributing your property and belongings. Without a will, the court will make the decisions on your behalf. It is best to have a legal professional create your last will and testament. HPCHospice & Palliative Care of Western Kentucky has several local resources if you need help choosing a financial planner or estate planning attorney.

Identify your priorities through planned giving; if there is a char -

itable organization you hold near and dear to your heart, make sure you distinguish what you want to be left to them. There are several benefits of planned giving. By making a planned gift, you not only makes a lasting impact on a cause that is important to you, but also help to secure the future of the charity you support. May offer tax savings for the donor or the donor’s heirs. For example, charitable remainder trusts are tax exempt. And when a

donor makes a gift of real estate, they receive an income tax deduction equal to the value of the property and avoid capital gains tax. Donors over 70 1 / 2 can use Qualified Charitable Distributions to make tax-free gifts from their IRA while still meeting their Required Minimum Distribution.

Many people may not have the means to make annual or major contributions to charity during their lifetime, but that doesn’t mean that they

wouldn’t do so if given the opportunity. By utilizing planned giving, supporters can make a gift that does not affect their immediate income, and still benefits the organization they choose. Planning for the future ensures that YOU determine how your gifts are spent.

Please consider naming a gift to HPC- Hospice and Palliative Care of Western Kentucky, a 501 © (3) organization, in your will or estate plan. If your financial planner or attorney is in need of our EIN, it is: 31-1010160.

To learn more about making a legacy or planned gift, please contact our Outreach & Donor Liaison Kaylee Gordon 270.926.7565.

Many people may not have the means to make annual or major contributions to charity during their lifetime, but that doesn’t mean that they wouldn’t do so if given the opportunity.

The many roles played by different types of lawyers

The legal profession casts a wide net. Lawyers and attorneys wear a number of different hats, and knowing how to distinguish between the many types of legal professionals can help people find the right fit when they’re looking for legal representation or guidance.

• Defense lawyer: Thanks to Hollywood, the general public has a good idea of what defense lawyers do, even if most people will never need one. Defense lawyers defend people who have been accused of breaking the law. According to the Legal Information Institute, the Sixth Amendment guar-

antees the right to a defense lawyer. People accused of crimes who cannot afford to hire a private attorney can be assigned a public defender to represent them as the legal process plays out.

• Family lawyer: Family lawyers specialize in many different areas. Some family lawyers may specialize in divorce cases, while others may specialize in child adoptions. Lawyers who specialize in domestic violence cases also may qualify as family lawyers.

• Estate planning lawyer: Over time, just about anyone might require the services of a lawyer who specializes in estate planning. These profession-

als help people with their wills and can help ensure asset transfers go as smoothly as possible. Estate planning lawyers also can help people establish trusts.

• Personal injury lawyer: Commercials for personal injury lawyers dot the television landscape, making these professionals among the most recognizable legal professionals. Personal injury lawyers specialize in civil litigation while representing clients who may have been injured at work or in public or in another setting.

• Real estate lawyer: Homeowners utilize real estate lawyers when buying

their homes. These lawyers can represent both buyers and sellers (though not both at the same time) as the parties negotiate the sale of a home, essentially serving as intermediaries between the two parties. Real estate lawyers are often present when closing documents are signed. Real estate lawyers also work on disputes between tenants and property owners.

Lawyers serve in various capacities and specialize in many different areas of the law. Knowing which professional to look to when in need can help people successfully navigate any legal issues that arise.

Financing funerals

According to Lincoln Heritage Funeral Advantage, the average funeral costs between $7,000 and $10,000.

It can be easy to overlook planning for such a large expense, and many people may think their funeral costs will be covered by their life insurance policies. However, that isn’t always the case and certain complications can arise.

The funeral planning information guide Funeral Basics states that sometimes insurance policies become invalid if payments have not been made. Policies may have liens on them, or some named beneficiaries may no longer be alive. This can stall the process as issues are worked through.

In addition, it can sometimes take between six and eight weeks for beneficiaries to receive life insurance policy payouts.

Since many funerals take place

within a week of a person’s death, it’s unlikely that surviving family members will be able to finance funerals with life insurance payouts. In addition, some policies may not be assignable, which means the benefits cannot be assigned to go to a third party who will file the claim for you (i.e., the funeral home or an assignment company with which the funeral home partners).

It’s important to determine if an existing policy is assignable and to take appropriate measures if it is not. Individuals may want to consider burial insurance or preneed funeral insurance.

Another option is to use preplanning services, which allow people to prepay for funeral expenses and make planning decisions regarding the services and burial so that family members will not be tasked with financing and/or planning a funeral during a difficult time in their lives.

Tips to improve financial literacy

Financial planning is a key component of successful money management. When financial plans are established and put in place, individuals are in much better position to achieve both short-term goals, like financing a dream vacation, and long-term aspirations, like retiring with enough money to live your golden years without worry.

No one is born knowing how to handle and manage money. Financial literacy is an acquired skill, which means anyone can learn how to manage money effectively. The following are a handful of ways individuals from all walks of life can improve their financial literacy.

• Crack the books (and magazines). A wealth of resources are available to anyone looking to become better at managing money, and many of those resources are

books and magazines. Printed works are available for people with varying levels of financial literacy, so it’s unlikely that any single text or magazine will benefit everyone equally. Find a text that speaks to your level of literacy and build from there.

• Pay attention to financial news. The days when financial news was limited to industry insiders or a handful of industry publications are long gone. Various online entities and cable television channels are now exclusively devoted to financial news. Anyone can benefit from paying attention to financial news, which can shed light on investments, real estate and financial industry trends that can

help people better understand their portfolios and assets.

• Read your emails. Adults who already have retirement accounts and other investments may also have an invaluable resource right inside their email inboxes. Investment management firms like The Vanguard Group, Inc., routinely host online information sessions and discussions for investors that are promoted through email and other lines of communication with account holders. When promotional emails announcing these sessions are announced, take note and resolve to participate. Many don’t require active participation, but they often provide insight

into financial products, markets and strategies to successful investing.

• Ask questions. It seems simple, but one of the most effective ways to gain greater financial literacy is to ask questions. If you work with a financial planner or are interviewing professionals to help you manage your money, ask that person to explain their financial strategy and the strategy espoused by their firms. When a new short- or even long-term goal pops up on your radar, ask your financial advisor to explain ways in which you can achieve that goal. Such discussions can reveal strategies that even well-informed individuals may be unaware of.

Financial literacy can help people achieve their life’s goals. Various strategies can help people from all walks of life improve their financial knowledge and take greater control of their finances and futures.

Financial literacy can help people achieve their life’s goals. Various strategies can help people from all walks of life improve their financial knowledge and take greater control of their finances and futures.

SMART MOVES for investors after a down 2022

BY EDWARD JONES

Many investors were glad to see the end of 2022. But what’s ahead this year? And what moves can you make in response to last year’s results?

To begin with, here’s what happened: 2022 was the worst year for the financial markets since 2008, with the Dow Jones Industrial Average dropping nearly 9%, the S&P 500 losing more than 19% and the technology-heavy Nasdaq falling 33%. Several factors contributed to these results, including the moves by the Federal Reserve to aggressively hike interest rates to combat inflation, the Russia-Ukraine war, recession fears and increased concern over COVID-19 cases in China.

However, 2023 may be different. Many experts believe that inflation may moderate considerably, especially during the second half of the year. If that happens, the Fed may well pause its interest rate hikes and perhaps even consider cutting rates — a move that is often positive for the financial markets. Also, if a recession emerges, but it’s relatively short and mild, as expected, the rebounding economy may be favorable for the investment outlook.

Regardless of what transpires this year, though, you can help move toward your financial goals by following some basic steps that make sense in all investment environments. Here are a few to consider:

FOCUS ON THE LONG TERM

It can be disconcerting to look at investment statements containing negative results, as was the case for many people throughout 2022. But it’s important to view a single year’s outcome in the larger context — and historically, the stock market has had many more positive years than negative ones, though, of course, past performance is not a guarantee of what will happen in the future. In any case, it’s generally not a good idea to overreact to short-term downturns and make moves that could work against your longterm strategy.

KEEP ADEQUATE CASH IN YOUR PORTFOLIO

The value of your investments may have gone down in 2022 — but you didn’t really sustain any actual losses unless you sold those investments for less than what you paid for them. To avoid having to sell investments to supplement your income or to pay for unforeseen costs, such as a major home or car repair, try to build the “cash” portion of your portfolio, so it covers a few months’ worth of living expenses. When you’re retired, and it becomes even more imperative to avoid selling investments when their price is down, you may need an even bigger pool of available cash.

LOOK FOR OPPORTUNITIES

Although 2022 was certainly a down year for the financial markets, some developments have presented new opportunities for investors. For one thing, the contribution limits have increased for IRAs, 401(k)s, and Health Savings Accounts (HSAs), all of which are pegged to inflation. Also, with interest rates considerably higher than they were a year ago, fixed-income investments may offer more income and provide added stability in portfolios during times of economic weakness.

When you’ve been investing for a long time, you will experience down years in the market, such as the one in 2022. These years are an inevitable part of the investment process. But since you can’t control what happens in the financial markets, you need to concentrate on what you can control — and that may be a lot more than you think.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones. Member SIPC.

How to make a charity a beneficiary

Giving to charity can be a rewarding endeavor that makes a difference in the lives of people in need. Many people donate throughout their lives, and some people may want to impart a more lasting legacy by continuing to support a charity even after they have passed away.

Incorporating a charity into an estate plan is a great way to continue giving after you pass away. Individuals may not know how to make charities beneficiaries in their wills. A financial planner, attorney or accountant can answer the more complex questions

individuals have about naming charities as beneficiaries in a will. In the meantime, this general guide can serve as a solid foundation for individuals who want to give back in their wills.

Most people think of beneficiaries as loved ones, but a beneficiary can be any person or entity one chooses to leave money to, including nonprofit organizations. It’s relatively the same process to name a charity as a beneficiary as it is an individual. According to the resource Trust & Will, first identify the charity that will be sup -

ported, including getting its Employer Identification Number or Taxpayer Identification Number. Next, determine which type of gift to make, which may be a predetermined financial contribution, a gift of property, or other assets like stocks. For large donations like real estate or cars, it may be best to contact the charity in advance to ensure they are able to accept such gifts. Finally, be sure to include your wishes in an estate plan. A qualified attorney can help clients draft a will that spells out their wishes in detail.

Keep in mind that charities also can be named as beneficiaries on life insurance policies or individual retirement accounts. They also can be listed on bank accounts. Again, people are urged to discuss all options with estate planners to ensure their plans fully reflect their wishes.

When naming a charity as a beneficiary, it can be wise to inform family members and other beneficiaries so no one is caught off guard upon your death. This way the charitable gift is not held up by delays in executing the will.

A GREAT RESOURCE Senior Centers are

for the community

BY BECKY BARNHART SENIOR COMMUNITY CENTER

Agreat resource for senior adults in any town or city is the local senior community center, where seniors can find classes or workshops on estate planning, making final arrangements with a local funeral home, as well as free legal advice, among many events and activities.

In Kentucky, each county is mandated to have a senior services provider

that offers a variety of events, activities, and resources to meet varying senior adults needs. Staff at these senior centers will bring in experts from the community to discuss issues that are appropriate for those 60 years and older.

These offerings will look different at each senior center, but could be in the form of one-on-one appointments, such as with Kentucky Legal Aid, or in a resource fair setting, where several

providers are present to answer questions and provide information.

Organizations will also sponsor events at the local senior center, which is another opportunity to distribute important and critical information to seniors, as well as set up appointments for further discussion. Topics such as estate planning and making final arrangements will require additional time to properly discuss and plan.

Having a central focal point for

senior adults is critical to any community, as it provides a place for seniors to gather, socialize, exercise, share meals, access resources, and participate in events that they might otherwise not have. And it’s always nice to be in an environment with folks in your season of life.

Check out your local senior community center and find out what they offer and/or how you can get involved.

Vice-President President