By Carl Trevison and Stephen Bearce Consider these three suggestions if you inherit a trust. David “Chico” Esparza, senior fiduciary strategist with Wells Fargo Wealth & Investment Management, remembers meeting two clients, a brother and sister whose parents had passed away. “Unfortunately, their parents had not discussed their estate plans with the adult children. When the siblings learned they were the beneficiaries of a sizable trust,” Esparza recalls, “they had no idea what to do next.” The brother and sister had many questions. Who handles the estate? What are the terms of the trust? And what should their next steps be? “The bank was appointed as successor trustee, so we explained the timeline and process for settling the trust estate,” Esparza says. “It helped to ease their minds to know that professionals would be handling the numerous tasks required for an orderly estate settlement.” As Esparza’s clients found, stepping into the role of beneficiary can feel a bit like stepping into the unknown. Here, Esparza offers three suggestions for those in similar situations. Build an advisory team A good first step for the beneficiary is to meet with the trustee who is tasked with executing the terms of the trust. It may be an individual, such as a CPA or lawyer, family member, or potentially a corporate trustee such as Wells Fargo Bank. “There will be a lot of questions, so it’s important to establish a communication plan and outline tasks that need to be accomplished along with a general timeline for how long it will take to settle the estate,” Esparza says. In some instances, once the estate is settled, a new trust is funded with the beneficiary’s share of the estate; in other cases, assets will be distributed outright to the beneficiary. If the assets will be…
By Carl M. Trevisan and Stephen M. Bearce A donor-advised fund offers a middle ground between participating in simple “checkbook charity” and starting a nonprofit foundation. Often considered smaller and nimbler cousins of private foundations, donor-advised funds offer many of the benefits of foundations, including the ability to: Involve multiple members of the family, friends, or other advisors Research potential recipients Recommend how funds are distributed But, unlike foundations, donor-advised funds require less legal and financial paperwork, such as an annual tax filing that is subject to public inspection, regulatory requirements, and excise taxes. How do you contribute? Donor-advised funds allow you to contribute cash, stock, real estate, or other assets, such as business interests. These contributions can be bunched to combine multiple calendar years’ worth of gifts into one year, which may offer tax benefits if you are close to your standard deduction limit. You may partner with a donor-advised fund sponsor or the sponsor may run your fund. A fund sponsor can be a financial institution or a community, educational, or religious institution. Grants may then be recommended by you or your designee to your charities of choice. Rather than keeping track of gift receipts from multiple charities, a donor-advised fund serves as your single source for tax receipts and grant-recipient information. Keep in mind, your potential deduction is based on your contribution(s) to the fund itself, not the individual grants distributed from the fund. More potential considerations for donors and recipients Donor-advised funds are gaining popularity for other reasons, including: Anonymity. When you give gifts to a charity through a private foundation, those gifts become public record through IRS form 990-PF. In contrast, you can choose to make your gifts from a donor-advised fund anonymously. Recurring gifts. Many donor-advised funds have recurring gift options so you can…
By Carl Trevison and Stephen Bearce When it comes to Social Security and retirement, you may have conflicting viewpoints: On one side, you may hope to collect your benefits as soon as you are eligible due to cash flow needs or other goals. On the other side, you know that if you wait, your monthly benefit amount will be greater. While it may make sense to wait as long as you can, Sherman Hohenberger, lead business growth strategy consultant at Wealth & Investment Management, Wells Fargo Bank, N.A., recommends you reevaluate your situation every year in retirement before deciding whether to continue delaying the beginning of Social Security benefits. “Because each individual, couple, widow, and widower has a unique lifestyle and unique income needs, I believe a year-by-year evaluation prior to beginning benefits is the best approach,” Hohenberger says. One item you need for that annual retirement review is a current copy of your Social Security benefit estimate from ssa.gov. This provides personalized estimates of future benefits based on your real earnings and lets you see your latest statement and your earnings history. Here, Hohenberger outlines a comparison of claiming now vs. later and offers key considerations as you review your strategy each year. Comparison: Claiming sooner vs. later Let’s start with a hypothetical example: John Doe was born in 1960, is retired, and he decided to claim benefits as soon as he became eligible at age 62, or five years before his full retirement benefit age of 67. His monthly benefit in today’s dollars is $2,106. If he had delayed receiving benefits until he was 70, he’d receive $1,625 more a month, or $3,731. And he would make up for the eight-year delay in not taking any benefits in about 10 years. “Unlike personal assets that can be exhausted,…
Courtesy of TFCU The economic environment has shifted dramatically in recent years. Inflation, higher interest rates, and uncertain markets are putting pressure on household budgets. Many people are struggling with rising auto loan payments, credit card balances and mortgage costs. Against this backdrop, credit unions have never been more relevant. Unlike traditional banks, credit unions are not-for-profit, member-owned financial cooperatives. Their mission is to serve members rather than generate shareholder profits. This difference translates directly into lower loan rates, better savings returns, and fewer fees—benefits that can provide crucial relief for families right now. One credit union standing out in this regard is Transportation Federal Credit Union which began by serving the employees, retirees, and families connected to the U.S. Department of Transportation but that now serves all residents of the DMV area. The Credit Union Advantage Lower Borrowing Costs With the Federal Reserve maintaining higher rates to fight inflation, banks have passed those costs onto consumers. According to the Consumer Financial Protection Bureau Credit, many consumers have higher than normal credit card debt with APRs now averaging 20%–25%. Couple that with the increased cost of living and high personal debt, credit unions offer financial solutions that could save a household hundreds—even thousands—of dollars over the life of a loan. For example, refinancing a $5,000 credit card balance from 22% to 11% could cut your monthly payments nearly in half and help you keep more of your hard-earned money. Higher Returns on Savings As households work to rebuild emergency funds drained during the pandemic and recent inflation spikes, where you save matters. Credit unions offer above market rates and help you to build meaningful ways to grow money faster while keeping it liquid. Fewer and Lower Fees Fees may seem small, but in a tight budget, they add up fast….
By Carl Trevison and Stephen Bearce Single parents often face unique challenges, not just raising kids, but also creating a financial path toward success. With the cost of health care, food, school, and more ever increasing, being successful on one income is a huge barrier for more than 37 million parents — or roughly 30% of households in the United States.¹ While many moms and dads report struggles with finances, there are ways to help improve your finances and be proactive with your financial future in the short- and long-term. Live Within Your Means No one really enjoys creating a budget, but it can help you manage your current situation with recurring expenses as well as plan ahead for unexpected costs or emergencies. Creating a budget can be stressful, but when you have one, it can help minimize stress over time. Start with your monthly income, after tax, then plan for your essentials like groceries, gas, mortgage/rent, and utilities. Don’t forget any spousal support, child support payments, or other sources of income. Once you have those covered, branch out and look at things you want to do within your budget, like eating out, taking a trip, or buying gifts. Make sure your budget allows for saving. Rainy days will come as well as eventual retirement down the road. Along with budgeting, consider applying for a credit card to help establish a credit history. Create a Wealth Management Plan Another key to your financial health is creating a plan to manage some of the risk and uncertainty about the challenges ahead. Start with goals, short-, medium-, and long-term. One-third of single parents don’t have life insurance or disability insurance.2 These products help protect your loved ones and provide comfort should the unexpected happen. Don’t be afraid to ask for help. Single…
By Carl Trevison and Stephen Bearce How much thought do you give your charitable giving? Do you simply write some checks, or do you visit organizations’ websites, make donations, and then get on with your day? If so, you’re not alone. But is that really the most fulfilling way to do it? Here are some insights from Meredith Camp, philanthropic services senior regional trust manager with Wealth & Investment Management, Wells Fargo Bank, N.A.: Having supported the philanthropic efforts of many clients over the years, I have seen clients enjoy so many incredible benefits of giving, but not without obstacles that need to be overcome to get the most out of the experience. First the benefits: I have seen first-hand how giving one’s time, money, and energy on behalf of others can enrich personal and cultural relationships, enhance well-being, and build stronger, more vibrant communities. Now the obstacles: Making meaningful decisions about how, when, and how much to give is not always easy. With over 1 million charities in the U.S. and social, environmental, and economic uncertainty, the choices can be overwhelming, even stressful. As a result, I have seen some individuals restrain their charitable activity despite their strong desire to give back. Others I encounter worry that their giving is scattered, often reactive, and as a result, only moderately satisfying. Fortunately, there are ways to enhance the process of giving so that it’s a more rewarding and joyful experience for both donors and the recipients of their generosity. When my clients ask how to make the most of their charitable giving, I tell them it starts with meaning (not money). Together, we explore their values, passions, and objectives to help bring focus and intention to their philanthropy. How can you transform your giving into a more meaningful, fulfilling endeavor?…
By Carl Trevison and Stephen Bearce Once you realize how many resources may be available and begin your research on college financial assistance, you could be on your way toward easing some of the anxiety often associated with paying for higher education. According to the College Board’s “Trends in College Pricing and Student Aid 2024,” approximately $257 billion in student aid in the form of grants, Federal Work-Study (FWS), federal loans, and federal tax credits and deductions was awarded to undergraduate and graduate students in 2023 – 2024. During that academic year, undergraduate students received an average of $16,360 per full-time equivalent (FTE) student in financial aid: $11,610 in grants, $3,900 in federal loans, $760 in education tax credits and deductions, and $90 in FWS. 5 Lessons for Seeking Help with College Costs Start planning during the high school years. Look to reposition assets or adjust income in the calendar years before your child’s sophomore year. For example, if the student is applying for financial aid for the 2025-2026 school year, the federal aid application will include income from the 2023 tax year (two years prior). Assume you’re eligible for aid … until you’re told you’re not. There are no specific guidelines or rules of thumb that can accurately predict the aid you and your child may be offered. Because each family’s circumstances are different, keep an open mind as you consider financial aid alternatives. Two forms will be key to your aid application process: the Free Application for Federal Student Aid (FAFSA) and the College Scholarship Service Financial Aid Profile (CSS Profile). The FAFSA helps you apply for federal aid, and many states use it to determine a resident student’s eligibility for state aid. Many schools use the CSS Profile to collect additional information before awarding their own funds,…
Courtesy of TCFU June is National Homeownership Month, a perfect time to think about what it means to purchase a home. Buying a house is a huge step, and the loan you choose can shape your financial future for years. While excitement is normal, it’s smart to ask your lender the right questions before you agree to anything. Here are five things you should ask to avoid stress and hidden costs. Which Loan Works Best for My Situation? Home loans aren’t one-size-fits-all. You’ll see fixed-rate, adjustable-rate, FHA, VA, and more. Each option comes with its own rules and perks. Ask your lender to walk you through each type and suggest the best fit for your income, credit score, and how long you plan to stay in the house. What Will My Interest Rate and APR Be? The interest rate affects how much you pay over time. The APR takes it a step further and shows the full cost, including lender fees. Make sure you know both numbers. Ask whether the rate stays the same or changes later. How Much Do I Need for a Down Payment? Many hear “20% down,” but some loans need less. Find out your required down payment and if you’ll need private mortgage insurance (PMI) for putting down less. PMI can bump up your monthly bill, so ask What Are the Closing Costs? Closing costs can be a surprise if you don’t ask. These fees usually fall between 2% and 5% of your loan and cover things like origination, appraisal, and title insurance. Request a full list of fees and see if you can negotiate some away, or if the seller can pay a share. How Are Property Taxes and Insurance Paid? Some lenders bundle taxes and insurance into your monthly payment, while others leave you…
By Carl Trevison and Stephen Bearce During times of heightened stress, such as when there’s extreme market volatility, a person can quickly become overwhelmed and struggle to do things that might be considered simple or obvious. It can be helpful to focus on the things you can control, identify actions that you can take, and complete those action steps. Here are four action items for you to consider: Review your investment plan Before you start making changes to your investment portfolio, consider your goals. Are you saving for retirement? Do you need to build a college fund for your children? Did a recent event create a need to adjust your plan? If your goals have changed or if you haven’t updated your plan in a while, review and, if necessary, update your investment strategy to support reaching your goals. Understand your risk tolerance Risk is a key principle in investing. Some investments are riskier than others, but every financial decision involves risk. Since risk is inescapable, the key is to understand your risk tolerance and manage how much you are taking, which should be based on your long-term financial goals. If your tolerance for risk has changed, review your strategy and make sure you are still comfortable with the amount of risk you’re taking. Stick to your plan When the market gets volatile, investors often react emotionally and may want to pull out of the market to try to avoid loss. However, remember that moving or selling investments during a market decline will likely lock in losses; staying invested may allow you to benefit if the market comes back. Before reacting, take time to step back and try to respond using logic rather than emotion. Organize and update important documents Are your important documents up-to-date and accessible to those who…
By Carl Trevison and Stephen Bearce The beginning of a new year is often a time when we look at the progress we’ve made toward our goals and set or reset goals so we can continue to see improvement. Physical well-being tends to top the list of resolutions, but financial well-being is just as important. As you’re considering your goals and developing new money habits, think about ways to pay yourself first. This is about prioritizing your long-term financial well-being. Here are four actions that can help you define this strategy in a way that works best for you. Determine your “money jobs” — what you want your money to do “Money jobs” are the things we want to accomplish with our money. They can be short-term, like buying a car or home, or long-term, like funding retirement. Michael Liersch, head of Advice & Planning at Wells Fargo says, “When we align what we want to accomplish in life with our money, it can clarify whether money is truly working hard for us to get us to where we want to go. But that requires us to be intentional about what we want in our life [and] the jobs we want money to do for us.” Once you assign a purpose to your money, you should have a better understanding of why you should pay yourself first. You might even consider naming different accounts after specific money jobs: New Car Fund, New Home Fund, etc. With a clearer purpose, you may better prioritize your spending and giving to help ensure your overall investment plan is on track. Keep down or pay off debt A clear next step for how you pay yourself first is chipping away at any debt you may have. Over time, this should free up more funds…
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