By Maurice Stouse, Branch Manager and Financial Advisor

Many businesses and individuals in the world and America in particular are experiencing and benefiting from (in spite of the increased spread of the virus) a huge growth in the money supply, strong earnings, early retirements and the sales of their businesses. While there is much to acknowledge by the financial security these can bring, it also means considering the impact taxes can have. Add to that Washington has increased spending and increased tax plans on its current agendas.

When it comes to taxes and investing, there are three main strategies individuals might want to consider. Each has its own merits and distinguishes itself from the other. Any one or combination of the three may help address the accumulation of wealth and the preservation of it as well.

The three are: 1) Tax reduction strategies 2) Tax free strategies and 3) Tax deferred strategies.

Tax reduction strategies (for current and future tax liabilities for individuals and perhaps their estates). This involves charitable giving or moving assets out of their estates. Americans are among the most charitable people in the world and they can combine their philanthropy with reducing their current taxes with contributions directly to a charity of their choice (including churches, schools/universities and certain societal causes). Another way that is utilized and is an increasingly popular strategy of Donor Advised Funds (or DAFs). And some, depending on resources they have, might even establish their own private foundation. The impact is that it reduces (within certain limits) income taxes for the current year while also fulfilling their support for the causes they care about. There are also tax reduction strategies that can impact current and future taxes by utilizing things like Charitable Remainder Trusts (CRTs), Charitable Lead Trusts (CLTs). And some may be looking to get assets out of their estates to address the tax burden for their heirs (so no current tax savings for them) and utilize things like Spousal Lifetime Access Trusts (SLATs).

Tax free strategies focus on those investments where income is not taxed federally (and in some states as well). These can help reduce current taxes particularly in a year where income may be surging. The main investments available in this case are municipal bonds or municipal bond funds or exchange traded funds. Many of these are considered more conservative (and hence not growth oriented) investments and pay monthly, quarterly or semi-annual tax-free income. Social security recipients should take note that the income while not taxable does go into their earnings calculations. Lastly, certain retirement accounts like the ROTH IRA, when certain requirements have been met by the holder, might deliver tax free income (post 59 ½ years old and after a certain waiting period for owners or beneficiaries) for life.

Tax Deferred Strategies. Many Americans do this at every paycheck by contributions to their 401ks, 403bs, SIMPLE (Savings and Incentive Match Plan for Employees) plans or SEP plans. These contributions not only reduce your current taxable income but they also can grow on a tax deferred basis (without annual taxes on growth, capital gains or any income they produce). In theory that means the investments have an advantage to taxable investments. Of course, on the other end, when distributions are made, those distributions are taxed, at that time. Tax deferred strategies for IRAs have current contribution limits of $6000 per year ($7000 if over 50 years old). For 401ks that can mean contributions of up to $19,500 ($26,000 if over 50) with a total annual maximum of $63,500 given certain limitations from their salaries and those plans that involve a company contribution through a profit-sharing plan to add to that. SIMPLE plans work similarly but with lower limits (and might be attractive to small companies). There are merits and considerations for SEP plans as well. Lastly, some people, particularly in their 50s or 60s might be wanting or needing to catch up on retirement savings and there are plans such as Defined Contribution Plans (DBPs) where the individual can potentially contribute 100% of their earnings within limits. Those plans currently would max out at $230,000 per year in contributions. It is important to seek professional tax planning assistance when considering any of these.

At The First Wealth Management, we encourage our clients to 1) concentrate to accumulate and then diversify to preserve 2) to monitor and make changes to their strategies over time vs overnight 3) consider the impacts that taxes can have on their savings and investments.

The First Wealth Management is located at First Florida Bank, a division of the First, A National Banking Association, 2000 98 Palms Blvd, Destin, FL 32541 with branch offices in Niceville, Mary Esther, Miramar Beach, Freeport, and Panama City. Phone 850.654.8124.
Raymond James advisors do not offer tax advice. Please see your tax professionals. Email: Maurice.stouse@raymondjames.com. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC, and are not insured by bank insurance, the FDIC, or any other government agency, are not deposits or obligations of the bank, are not guaranteed by the bank, and are subject to risks, including the possible loss of principal. Investment Advisory Services are offered through Raymond James Financial Services Advisors, Inc.

The First Wealth Management First Florida Bank, and The First, A National Banking Association are not registered broker/dealers and are independent of Raymond James Financial Services.

Views expressed are the current opinion of the author, not necessarily those of RJFS or Raymond James, and are subject to change without notice. Information provided is general in nature and is not a complete statement of all information necessary for making an investment decision and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results.

Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Investors should consult their investment professional prior to making an investment decision.

Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.

Treasury Inflation Protection Securities, or TIPS, adjust the invested principal base by the CPI-U at a semiannual rate. Rate of inflation is based on the CPI-U, which has a three-month lag. Investing within specific sectors, or in small and mid-size companies, involves unique, additional risks. Those risks include limited diversification, regulatory risks, limited liquidity, and lack of operating history.

There is an inverse relationship between interest rate movements and fixed income prices. Generally, when interest rates rise, fixed income prices fall and when interest rates fall, fixed income prices rise.

Investors should carefully consider the investment objectives, risks, charges, and expenses of mutual funds before investing. The prospectus and summary prospectus contain this and other information about mutual funds. The prospectus and summary prospectus are available from your financial advisor and should be read carefully before investing.

By Matthew Vanderford, Claimology

By now, you’ve heard me speak of Hurricane season this time of year; it’s just so important to know what to do when trying to recover from a Hurricane’s aftermath, in many ways, but also as it pertains to your insurance claims. Hopefully, it doesn’t happen to you, but, if so, you’ll be ready. Key points to make the claim filing process a little easier:

– Take as many photos as possible. Those with the most documentation come out ahead.
– Take contemporaneous notes (real time notes as they happen). Make sure to write down who you talked to, when you talked to them, what they said and how long they were on site.
– Make an inventory list of all your damaged belongings. Write down what they are and how much it will cost to replace them.
– Try to provide your insurance company with photos of the property before the damage happened.
– Be true to yourself. If something doesn’t feel right or sound right, mention it. Ask to have an explanation in writing about what someone said or to elaborate their position.
– Read your policy. If you have questions about what certain parts mean, ask a professional for clarification, like me.
– Make sure to read all the paperwork that comes from the insurance company or insurance company representative. Some documents are time sensitive and can put the claim at risk if not turned in on time. If you receive less than what you were expecting or promised, you can always submit more information for a better result.
– Make sure you understand what you are signing before you sign it. Sometimes you can sign your rights away.

Remember, the insurance mechanism is just that. A mechanism. A machine – a finely tuned machine that has its own way of operating. And people work inside this machine, but have little wiggle room to maneuver outside the lines. Insurance is also deemed by the insurance companies as a way to lessen the blow of risk, not necessarily to make you whole after the risk you’re insured against has happened.

Far too often people end up losing their cool (both on the insurance company side and the insured side) due to overwhelming circumstances surrounding an event like this. If I can express one thought in the midst of this, it’s to remember that we’re all people meeting one another with all sorts of differences, prejudices, realities, backgrounds and life events that shape us as we are. If we can keep that in mind while attempting to communicate what we feel is important, and try to communicate in ways that are sincere to how we want to be treated (and treating others the same way too), then a lot more might be accomplished, roadblocks cleared and hurdles jumped over. You never know, the person who you thought was against you might become your greatest advocate and push your claim along to help it get settled.

By Joe Capers, Insurance Zone

In most states, including Florida, auto insurance is required to register and legally operate a vehicle. Like most lines of insurance in Florida, rates have been on a rise for the past few years. It may be tempting to only purchase enough coverage to meet our state’s minimum requirements. Don’t do it! These low limits are not enough to protect you and your family if the worst circumstances happen.

Your car insurance policy is an important financial tool. If your car or you are involved in a wreck, theft, or natural disaster (hurricane, flood or fire), the impact on your financial viability can be substantial. Your car insurance should be tailored to protect you, other people, and assets from most of the associated expenses and costs in the event you are involved in an accident. Your lender, who legally owns the car, may have their own requirements and will want to be financially protected if there is a collision or other damage.

There are six basic types of coverages for your auto, motor home, motorcycle and LSV’s that are registered with the state. They are liability coverages, medical payments coverage, uninsured/underinsured motorist, collision coverage and comprehensive coverage.

Liability – Coverage that offers protection against claims alleging that a driver’s negligence resulted in bodily injury or property damage to another party. This can include the driver and passengers of the other vehicle or vehicles involved, injured pedestrians and owners of the property where the accident occurred.

The more assets you need to protect, the higher the limits should be. For those with significant assets, an Umbrella policy is recommended for increased protection. In most cases, the Umbrella will require minimum underlying Liability limits of $250,000/$500,000.
Medical Expenses – Coverage for medical expenses because of bodily injury sustained by an insured caused by an accident. This covers your medical bills (not lost wages) regardless who is at fault in a crash. Usual limits offered $1,000, $5,000 and $10,000.

Uninsured/Underinsured Motorist Coverage – This coverage pays for your and your passengers’ medical bills and property damage if the driver at fault in an accident doesn’t have insurance, has insufficient coverage, or the incident is a hit-and-run. It is recommended to carry limits equal to the liability limits on a Stacked (broader) Basis rather than Non-Stacked.

PIP/Personal Injury Protection – Mandated by Florida, provides medical, disability, and death benefits to you and any passengers in your vehicle. Basic PIP covers up to 80% of your medical expenses and 60% of your lost wages.

Collision – Physical Damage coverage for your vehicle if it is impacted by another vehicle or damaged in an accident. This coverage is usually required by a lienholder on a leased or financed vehicle.

Comprehensive – Covers damage to your vehicle caused by an event other than a collision, such as fire, theft, vandalism, hail and flood damage. Like collision, this coverage is usually required by a lienholder on a leased or financed vehicle.

Other Recommended Coverages – There are many other coverages that should be considered when reviewing your Personal Insurance Program. Included are Loss of Use or Rental Reimbursement, Roadside Assistance, Accident Forgiveness, Gap, New Car Replacement, Diminishing Deductible, Pay-Per Mile Coverage, Customized Equipment and Original Equipment Coverage.

With the popularity of Uber and Lyft, one can now readily obtain Rideshare Insurance. This is supplemental coverage for drivers of the ride-hauling services, which is typically inexpensive. It provides valuable coverage for situations that are not covered by a driver’s personal car insurance policy or the rideshare company’s insurance policy. If you are a rideshare driver, please discuss options with your insurance agent.

Many of our neighbors and customers have golf carts, or LSVs (low speed vehicles). As long as they’re not rented, they can be written as a separate policy, or added to your auto policy if they are licensed for road use. The rental exposure can sometimes be written under a commercial liability policy, but the coverage is not as broad as an auto policy.

Many of our neighbors and customers have teenagers who are approaching the driving age and wonder how best to insure these exposures. If you have a new driver in the household, all insurance companies recognize the increase in risk with a new driver. Some insurance carriers will not insure new drivers, while others will charge higher premiums to make up for the increased exposure. There are some measure you can take to lower your insurance rate. Taking a driving course is beneficial, and many courses are available on line. This will help your new driver become more familiar with the rules of the road, and educate them on ways to avoid accidents. When you are a new driver, it is worth taking it slow. Stick to the roads you are familiar with, and avoid getting into stressful traffic situations where the chances of having an accident are higher.

The bottom line is to talk to your agent and get customized auto coverages that fit your personal needs. Don’t feel like you have to accept the first quote you are offered, and make sure you are aware of all discounts that are available. According to industry statistics, one of every three drivers are UNDERINSURED!

Insurance Zone, founded by Joe and Lea Capers, is a full service commercial and personal lines insurance agency serving Destin, Miramar Beach, Santa Rosa Beach (30A) and Inlet Beach. Visit their Video Library on www.ins-zone.com to watch our informative videos on ’Auto Insurance Made Easy & What To Do in An Accident’, or call 850.424.6979 and talk with one of our experienced Team Members.