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the 2018 road to

article guide

Financial Success

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2018 Individual Tax Overhaul and How It Affects You Give the Gift of Education with a 529 College Savings Plan

headline!!! New Year’s Resolutions: Don’t Overlook Your Finances

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Another Way To Consider Investment Risk Capitalizing on Bozeman’s Growing Real Estate Market for Wealth Creation Scouting Around for the Right Bank Account

Don’t Die Without A Will

08 09 10 12

Turning Your Home Equity Into Cash!

How to Find a Financial Advisor Make 2018 the Year Your Credit Works for You Planning For The Financial Stages Of Your Life

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ROAD TO FINANCIAL SUCCESS // 2018

Financial Knowledge for your

Memory Bank

T Protect your family. Prepare for their future. Dan Rust, Agent 1805 West Dickerson Bozeman, MT 59715 Bus: 406-587-8287 dan.rust.b60w@statefarm.com

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I can help with both. Stop by for your free State Farm Insurance and Financial Review . Like a good neighbor, State Farm is there. CALL ME TODAY FOR MORE INFORMATION.

State Farm, Home Office, Bloomington, IL

here’s an old saying that goes, “More money, more problems.” Once we’ve created a monetary nest egg for ourselves, it can be difficult to navigate the next steps. Do we invest our money? Upgrade our old investments? Can we afford to take some financial risks? Is it safer and smarter to continue sitting on a savings account? Road to Financial Success is here to help solve some of your financial woes. Find out how the 2018 Individual Tax Overhaul will affect you and what you can do to plan for your child’s future. Learn about risk and prepare for your retirement. Whether you’re thinking about selling your home or hoping to build your credit score, Road to Financial Success will get you where you need to go.

ROAD TO FINANCIAL SUCCESS // 2018

2018 Individual Tax Overhaul and How It Affects You By Elizabeth Coughlin, CPA – Rudd and Company, PLLC

he 2018 tax reform will have an impact on the majority of taxpayers and it is essential to understand how this overhaul affects your tax status. If the tax overhaul does not benefit you, the good news is most of the changes are temporary and will revert after 2025. The main difference taxpayers will notice pertains to itemized and standard deductions. The standard deduction doubles in 2018 to $24,000 if married filing jointly (MFJ), and $12,000 for single filers. The increase in the standard deduction will eliminate the benefit of itemizing their deductions because those deductions will not exceed the new standard deduction amount. This means that there may not be a tax benefit for mortgage interest, property taxes, state income tax, and charitable contributions. Further, other limited itemized deductions include: • State income and property tax deductions are limited to a combined deduction of $10,000. • 2% miscellaneous deductions eliminated. Deductions that fall under this category include unreimbursed employee expenses, tax preparation fees and investment fees. • Interest paid for home equity lines of credit are no longer deductible. • Deduction for mortgage interest is limited to $750,000 total mortgage debt ($1M prior). This applies to debt acquired after December 14, 2017. • Phase out of itemized deductions based on higher income eliminated. • Medical expense deduction is back to 7.5% of Adjusted Gross Income for all taxpayers (down from 10%).

• Personal casualty losses are no longer deductible. Additionally, personal exemptions, moving expenses and alimony payments adopted after December 31, 2018 are suspended through 2025. Although several deductions are eliminated, the tax reform act creates tax savings in a number of ways including: • Child tax credit doubled to $2,000/child under 17 and the income phase out thresholds increased significantly to $400K MFJ, $200K if filing single. • $500 credit available for non-child dependents. • Alternative minimum tax (AMT) exemption threshold amount increased by about 25%. • Estate tax exemption doubled to nearly $11M. • Kiddie tax rules changed - unearned income of kids under 18 is taxed at the same rates as trust and estates. • Penalty for not having health insurance eliminated (still in effect for 2017 and 2018 tax years). • 529 College Savings Plans are allowed to be used for elementary or secondary public, private or religious schools in addition to higher education costs up to $10,000 per student. Seven tax brackets remain, but the key changes are for income earners between $165k$315k now fall into the new 24% bracket for MFJ filers and wages over $600k MFJ have a max rate of 37% (39.6% prior and $470k wages). The tax reform act is making history for both individuals and businesses and it has only just begun!

Tax Free Exchanges • Bookkeeping & Payroll Services

Call us today to speak to one of our Tax Professionals

ROAD TO FINANCIAL SUCCESS // 2018

Give the Gift of Education with a

529 College Savings Plan

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you plan on giving the gift of education there’s no better time to start saving than the present, because the earlier you start the better. Contributing to a 529 College Savings Plan is a great way to help make college a reality for your child, grandchild, or loved one.

What Exactly Is a 529 Plan? Named after Section 529 of the Internal Revenue Code, a 529 plan is a tax-advantaged investment vehicle designed to help families save for college. Earnings on money invested in a 529 plan grow on a tax-deferred basis, and distributions are free from federal income tax when used to pay for the account beneficiary’s qualified higher education expenses. For more information on how 529 investments may impact your particular tax situation, please consult your tax professional.

Who’s in Control? The account owner does not select the individual securities held in the account; however, they do retain complete control of the account itself. For instance, the account owner has the ability to take distributions, access funds, and change the beneficiary. The account

owner can also change the account’s investment strategy once per calendar year or upon a change in the designated beneficiary.

What Happens If the Beneficiary Doesn’t Go to College? Since the account owner – and not the beneficiary – maintains control of the account, if the beneficiary does not go on to attend college, the account owner can either retain the account and change the beneficiary or withdraw the money, which would be subject to income tax plus a 10% penalty owed on the earnings.

The Next Step Before establishing a 529 account, consider informing other family members and close family friends, as they may wish to contribute to a 529 plan for the same beneficiary as well. Discussing the matter in advance can help prevent excess contributions. Investors should consider carefully the investment objectives, risks, and charges and expenses associated with a 529 College Savings Plan before investing money. The official program offering statement, which includes information on municipal fund securities, is available from your Financial Advisor and should be read carefully before investing. The value of a 529 College Savings account may fluctuate, and there is no guarantee that any investment portfolio will achieve the stated goal. Your investment may be worth more or less than its original value. Article provided by David Palagi, Senior Vice President/Investments with Stifel, Nicolaus & Company, Incorporated, member SIPC and New York Stock Exchange. He can be contacted in the firm’s Bozeman office at (406) 586-1385.

Parents and Grandparents

Planning today can make a difference in your child’s future. Help them pursue their dreams with a college savings plan. (406) 586-1385 | (800) 955-3443 toll-free 875 Harmon Stream Blvd., Suite 200 | Bozeman, Montana 59718 Stifel, Nicolaus & Company, Incorporated | Member SIPC & NYSE | www.stifel.com

ROAD TO FINANCIAL SUCCESS // 2018

How to Maximize Your Home Equity

ome ownership rates have steadily declined since 2004. According to the 2013-2016 Federal Survey of Consumer Finances, only 63.7% of Americans owned their home. Still, the U.S. Census Bureau reports that at retirement, 77% of the average American’s net worth is made up of home equity, or the value of a property less the amount of outstanding debt owed on the property. For many homeowners, their home is their largest investment. The greater Bozeman area has experienced an average annual 8.3% increase in median sales price over the last five years, prompting homeowners to consider cashing in or reinvesting their home equity. Preserving and maximizing home equity is a wise endeavor. For example, the NAR 2017 Remodeling Impact Report found that refinishing a hardwood floor results in a 100% return on investment. Having a positive impact on a buyer can lead to a higher price in less time, maximizing a seller’s bottom line. Hart Real Estate Solutions compiled Our 50 Top Tips to Sell Your Bozeman Area Home in 2018. Here are 20 of our favorite tips:

Curb Appeal/Exterior: There is no second chance to make a first impression. Paint the front door an inviting color and update light fixtures Make sure that the trim is neat and clean Clean, repair, and stain the deck if it’s dirty or weathered Make sure landscaping is trimmed and neat

1. 2. 3. 4.

Kitchen: Updates will increase the value of your home. 5. Repaint or reface dated cabinets 6. Change drawer pulls out for brushed nickel or stainless steel 7. Consider a new sink or faucet Bathrooms: A dim and dirty bathroom might deter a buyer from making an offer. 8. Add a new shower curtain for a fresh look 9. Replace dated light fixtures 10. Clean tile grout with baking soda or vinegar

re a l e s t a t e s o l u t i o n s Your Trusted Guides in Real Estate

hen you hire Hart Real Estate Solutions, you are hiring a team. As our name suggests, our objective is to better understand your needs, and position our team to meet those needs with great competency and care. We work on your behalf to market and sell your home for top dollar with the least amount of inconvenience. Let us find you your real estate solution! Thinking about selling in 2018? Contact us for more tips or a complementary home consultation. “i am an experienced buyer and seller of homes, as well as a person with high expectations- so don’t take this lightly: Tim and lori Hart truly floored me… i am telling everyone that when you hire the Hart Team, you are getting not just a “realtor”, but a paCkage Deal, comprised of people that know how to get it done with professionalism, integrity, and speed.” ~ Jen

“The team at Hart real estate Solutions did a wonderful job assisting us in selling our house. She very thoughtfully considered what price to sell our home at with much research to back it up and explained it all to us. There is so much more they did for us i can’t even cover it all but the team was stellar and i would suggest them to anyone!” ~ keri & Dave

““if you’re looking for extremely professional, honest, ethical, low ego, organized, HarD working representation, do yourself a favor, and meet this team before choosing someone to represent you.” ~ ross

Walls, Floors, and Ceilings: Think of your home’s color palette as an important backdrop— it’s important for potential buyers to imagine themselves living in your home. 11. Update or refinish worn or dated flooring 12. Repaint walls and ceilings to make your home feel inviting and warm 13. Remove any wallpaper— buyers may overestimate how much it costs for them to make the necessary changes because they are factoring in the cost, time, and inconvenience. Declutter/Depersonalize: Consider it a packing head start! 14. Take down photographs, sports memorabilia, rarely used and other personal items 15. Clear out the garage and organize items in storage bins

Tim Hart

lori Hart

Don Carr

Broker/owner

liSTing SpeCialiST

Buyer SpeCialiST

Denise Carr

Melissa Hanes

olivia Martin

Buyer SpeCialiST

TranSaCTion CoorDinaTor

MarkeTing CoorDinaTor

Clean and Maximize Light: A bright and cheery home is a sellable home. 16. Clean window tracts in each room 17. Remove heavy or dark draperies 18. Replace old or burnt out lightbulbs with warm white bulbs (we recommend 2700 or 3000 LED) 19. Clean out closets so that they are no more than 75% full 20. Remove overgrown bushes and trees to let in as much natural light as possible Sources 2013-2016 Federal Survey of Consumer Finances U.S. Census Bureau Raymond James Financial Planning Department courtesy of David Cole, CFP, Raymond James Financial Big Sky Country MLS for the period January 2013 through December 2017 NAR 2017 Remodeling Impact Report

www.hartres.com

(406) 585-0000 real estate solutions

ROAD TO FINANCIAL SUCCESS // 2018

New Year’s Resolutions: Don’t Overlook Your Finances

eciding to lose weight, eat healthier or finally get organized are popular New Year’s resolutions. But don’t overlook resolving to focus on your finances. You can make a number of financial New Year’s Resolutions that can pay dividends for years to come.

Retirement Savings

Consider maxing out your retirement-plan contributions. For 2018, you can add as much as $18,500 in savings to a workplace retirement plan, such as a 401(k), up from $18,000 in 2017. Workers over 50 years old can save an additional $6,000 in “catch-up” contributions. Can’t save up to the maximum? Be sure to consider contributing at least enough money to take advantage of any matching funds from your company. Because workplace retirement plans are tax-deferred accounts, you generally don’t pay income taxes on any earnings from your investments until you withdraw funds. For individual retirement accounts, the contribution limit remains $5,500 up until 2019. You have until April 17, 2018, to make contributions for 2017.

Family Gifts

With the costs of college tuition and housing both rising, you may resolve to help out family members financially with those or other large expenses. For 2018, the annual gift tax exclusion is $15,000. A 529 college savings plan is a tax-advantaged way to save for higher education and allow you to gift savings to your children, grandchildren, other relative or even a friend. With a 529, you can gift a lump sum—up to $75,000 in one year ($150,000 for married couples)—and then treat the gift as if it were given evenly over a five-year period.

Asset Allocation

Consider revisiting your asset allocation, or how your investments are divided among equities vs. fixed income vs. cash. Your asset allocation should reflect your savings goals and stage in life. For example, as you get closer to retirement age, you might consider moving some savings to a more conservative asset allocation, with a greater percentage of your assets invested in fixed income. Also, the multiyear bull market in stocks may mean that a greater share of your money might be invested in stocks than you are comfortable with. Your financial advisor can help you determine how your assets and overall financial plan can be aligned with your goals.

Estate Planning/Insurance Check-Up

The start of the year is a good time to make sure that you have updated all of the information for the beneficiaries named in your various policies and estate planning documents, such as life insurance policies, wills, and retirement plans.

Don’t have an estate plan, with a will, durable power of attorney or health care proxy in place yet? If not, you should resolve that this is the year you create an estate plan. Also, ensure that you have sufficient insurance coverage for your family. If your employer doesn’t offer disability insurance, you may want to consider buying a policy. Long-term care insurance can help protect you from hefty health care costs. An estimated 70% of people turning age 65 can expect to use some form of long-term care during their lives.1 If you tend to procrastinate, remember that the older you get, the more expensive the cost of some insurance premiums. Don’t forget to create a plan for your digital assets as well. Can your family members find the usernames, passwords and other necessary information to access your online accounts if needed? If you have aging parents, consider having a conversation with them about their estate planning so you’re prepared if they become ill or incapacitated.

Charity

Determine how much of your income and time you want to devote to charitable efforts in 2018. If you have a more substantial amount of money to donate, consider a donoradvisor fund. A DAF is a charitable-giving instrument that provides a simple and effective way for you to direct gifts, year-round, to your favorite charity from a single account.

Staying on Track

For many of us, resolutions are a distant memory by Feb 1st. To ensure that doesn’t happen to you, consider checking in with yourself in regularly to see the progress of your goals. Talk with your Morgan Stanley Financial Advisor (or find one here) to discuss your plans for 2018. 1 Source: Who Needs Care? U.S. Department of Health & Human Services: https://longtermcare.acl.gov/the-basics/whoneeds-care.html

Important Disclosures:

Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning, charitable giving, philanthropic planning and other legal matters. Life insurance, disability income insurance, and longterm care insurance are offered through Morgan Stanley Smith Barney LLC’s licensed insurance agency affiliates. Not all products and services discussed are available at Morgan Stanley. Asset Allocation does not assure a profit or protect against loss in declining financial markets. Investors should carefully read the Program Disclosure statement, which contains more information on invest-

ment options, risk factors, fees and expenses, and possible tax consequences before purchasing a 529 plan. You can obtain a copy of the Program Disclosure Statement from the 529 plan sponsor or your Financial Advisor. Investors should consider many factors before deciding which 529 plan is appropriate. Some of these factors include: the fees, conditions, restrictions, and limitations of the specific plan, the plan’s investment options and the historical investment performance, the plan’s flexibility and features, the reputation and expertise of the plan’s investment manager, plan contribution limits and the federal and state tax benefits associated with an investment in the plan. Assets can accumulate and be withdrawn federally tax-free only if they are used to pay for qualified expenses. Earnings on nonqualified distributions will be subject to income tax and a 10% federal income tax penalty. Contribution limits vary by state. Refer to the individual plan for specific contribution guidelines. Before investing, investors should consider whether tax or other benefits are only available for investments in the investor’s home state 529 college savings plan. If an account owner or the beneficiary resides in or pays income taxes to a state that offers its own 529 college savings or pre-paid tuition plan (an “In-State Plan”), that state may offer state or local tax benefits. These tax benefits may include deductible contributions, deferral of taxes on earnings and/or tax-free withdrawals. In addition, some states waive or discount fees or offer other benefits for state residents or taxpayers who participate in the In-State Plan. An account owner may be denied any or all state or local tax benefits or expense reductions by investing in another state’s plan (an “Out-of-State Plan”). In addition, an account owner’s state or locality may seek to recover the value of tax benefits (by assessing income or penalty taxes) should an account owner rollover or transfer assets from an In-State Plan to an Out-ofState Plan. While state and local tax consequences and plan expenses are not the only factors to consider when investing in a 529 Plan, they are important to an account owner’s investment return and should be taken into account when selecting a 529 plan. Investors should consult with their tax or legal advisor before investing in any 529 plan or contact their state tax division for more information. The discussion of frontloading contributions assumes that the gift giver did not make any frontloading contributions for the benefit of the same beneficiary during the immediately preceding four years as that may result in adverse gift tax consequences. The investor must also consider how a frontloading contribution to a 529 plan may reduce or eliminate the investor’s ability to use the annual gift tax exclusion for future gifts to the same beneficiary during the four years after the year in which the frontloading contribution is made. Morgan Stanley Smith Barney does not provide tax and/or legal advice. © 2018 Morgan Stanley Smith Barney LLC. Member SIPC. All rights reserved. CRC#1979198 01/2018

ROAD TO FINANCIAL SUCCESS // 2018

Experience has a local address. Be confident that your finances are going in the right direction. You don’t have to go far. Because right here in Bozeman, you’ll find a Morgan Stanley office staffed with capable, experienced Financial Advisors.

Morgan Stanley Bozeman Branch

2200 West Main Street Bozeman, MT 59718 406-522-2040 www.morganstanleybranch.com/bozeman

Morgan Stanley Financial Advisors can help you sort through the complexity of wealth management and investing. Call us today to set up an appointment. And find the experience you need. Right where you need it.

CRC1996950 FAS008 CS 9140992 01/18

ROAD TO FINANCIAL SUCCESS // 2018

Another Way To Consider

Investment Risk

was October on the Beartooth Plateau. After a September of still, sunshinefilled days, we relied on a weather plan of more of the same. Late that night, as the wind picked up and the clouds moved in, we realized leaving the tent in the truck was a bad idea. We were pretty fortunate. The risk my brother and I took simply led to a sleepless night under a tarp with his soaking wet, restless dog. Our rewards: a memorable lesson and a bit of character. Life, like investing, carries both risk and reward. For decades, the approach to managing investment risk has been asset allocation, or the mix of stock, bonds, and cash held within a portfolio. Like our hopes for the weather, this model depends on an unreliable assumption: that historic stock and bond returns can be used to predict future performance. Consider the utility company that relies on hydroelectric power. This company’s performance may be susceptible to climate change and drought, a phenomenon it has yet to experience, and is therefore unprepared to address. Most of us own a company’s stock, either directly or through funds, because capturing a

PLANNING

INVESTMENTS

share of a company’s growth can help us achieve some of our personal goals. We also want to avoid owning companies that ignore potential liabilities – like environmentally damaging practices, exploitive products, or toxic company cultures – that could make for bad headlines or otherwise limit future growth. While some funds consider the implications of these environmental, social, or governance (ESG) related risks when choosing the companies they own, many do not. If you haven’t thought about how these types of issues may impact your portfolio, consider doing some research on community banks, ESG-screened funds and Community Development Financial Institutions. Make direct investments in companies that monitor how issues like food security, political spending, and gender diversity impact their bottom line. Another option for managing risk is through corporate engagement. When we invest in stocks or funds that hold stocks, our ownership conveys certain voting rights. ESG-screened funds often use their large ownership positions to encourage companies to consider policies and practices – human rights standards for suppliers, political lobbying reporting, and executive compensation, among others – that can broadly reduce risks by promoting greater transparency and a more sustainable business model. Academic research has also shown that companies that address ESG concerns are deemed lower risk, as they are able to borrow money at more favorable rates than their peers. For individuals and families looking for a financial professional who goes beyond asset allocation to evaluate underlying risks within a portfolio, all someone has to do is ask. Bill Stoddart is the Founder and President of NorthFork Financial, LLC, a fee-only planning and advisory firm that embraces its fiduciary responsibility and is committed to helping clients understand and manage risk. All investments contain risk. Nothing in the article above is intended or should be construed as specific investment advice.

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ROAD TO FINANCIAL SUCCESS // 2018

Capitalizing on Bozeman’s Growing Real Estate Market for Wealth Creation

he Gallatin Valley’s real estate market is in a heavy growth stage. Everywhere you turn you’ll find new housing developments and a booming construction economy. All of this growth has some worrying about sustainability. According to an annual study released by Policom Corporation, Gallatin County was recently ranked the strongest economy of its size. The Daily Chronicle’s own Rachel Leathe recently reported that one of the reasons it ranked so high is because of its reputable long-term ability to sustain growth over the years. Real estate investments have been profitable and will likely continue to produce striking yields. Homeowners have already experienced wealth creation by simply staying put in their current home, and there are more ways to further enhance this wealth. The desire to live in Gallatin Valley is creating a huge demand for housing. Even with all of the new construction there is a housing shortage, especially for affordable housing. This shortage keeps many potential buyers renting, especially if they are unwilling to move outside of Bozeman to the surrounding areas.

Tips for Current Homeowners to Capitalize on the Real Estate Market Provided by Kari Francisco, Real Estate Lender at Big Sky Western Bank • One investment strategy is to take advantage of your current home equity. Chances are your home has appreciated upwards of 4-7% in the past several years. A Home Equity Loan or a Cash-Out Refinance could get you the cash needed for a down payment on an investment property or second home.

(406) 556-3876 NMLS# 1123666

“We Look for Reasons to Say Yes” NMLS# 472212

www.bigskybank.com

Whether you are a current home owner or looking to buy a home or investment property, start the conversation with a trusted lender like Kari Francisco at Big Sky Western Bank, today.

Big Sky Western Bank Kari Francisco Real Estate Lender Helping you invest in your future!

106 E. Babcock, Downtown Bozeman

1714063

Kari Francisco

• Rentals may enhance your wealth overtime as housing prices continue to increase. Depending on all factors, the tenant may pay for the holding and annual costs of maintaining the property and yield you some passive income. In addition, landlords enjoy tax benefits on rental properties which can reduce your overall tax bill. • Capitalize on your home equity with a remodel. Some struggle with the idea of selling their home while prices are high, but are then faced with the “sell high - buy high” dilemma. Remodeling could be a good choice to gain additional equity in your home. You can then use that equity to get a higher sales price or higher cash out refinance to further invest those funds. Keller Williams Realtor Nicole Blount is doing just that: “We looked at the neighborhoods we would want to live in along with what our needs were for a new home. It came down to the fact that we love our neighborhood and just needed to make few cosmetic updates to make it exactly what we wanted. It makes sense in today’s market to do some improvements to our home that would not only make our home more desirable for us, but in the end, would create more equity when we decide to sell. It’s a tough decision, but I think every homeowner should at least start a conversation with a lender and see where you sit like we did with Kari Francisco. Who knows, you may be pleasantly surprised to find what you can do with your equity.”

ROAD TO FINANCIAL SUCCESS // 2018

Scouting Around for the Right Bank Account? ARTICLE PROVIDED BY BANK OF BOZEMAN

Have you heard the adage, “There ain’t no such thing as a free lunch?” The “free lunch” in the saying refers to the nineteenthcentury practice in American bars of offering a “free lunch” in order to entice drinking customers. Those customers ended up paying a lot for the “free lunch”. The basic idea of the adage is that you don’t get something for nothing. There is no free lunch in banking services. If a bank is offering services for “free”, ask them to explain how they profit off your banking relationship. If you get a blank stare or the bank says that they just love to give stuff away, then you may want to find a bank that will be honest with you. A bank that is being transparent with their fees and has minimum balance requirements may actually cost you less money than the bank advertising “FREE”. How does a “free” account end up costing you? According to the Consumer Financial Protection Bureau, overdraft fees accounted for approximately 65% of revenues from consumer deposit accounts for banks over $1 billion in assets. Among the same sample of accounts, accountholders that incurred one or more

overdraft fees paid an average of $225 in fees per year. Couple the overdraft fee with other ATM, maintenance, and account use fees (for wires, etc.) and everyone is paying for these “free” accounts. Comparing accounts at different banks is difficult, because a checking account can house a bundle of services and the fee disclosures vary and can run up to 40 pages. The account that offers the monthly maintenance fee and a minimum balance could be the one that saves you a bundle. Without a lot of painful analysis and a lot of assumptions, how can you determine which bank account is right for you? The key to picking the right bank is to determine first who offers the services you need, that fit you, your business and your lifestyle. Then seek to understand what the bank wants from you. If you receive a notice that your bank is increasing their account service fees, talk with them to ascertain if the fee will actually impact you, or maybe there is another account option . If they are willing to talk and work with you, then you probably have a relationship focused bank and the right financial partner.

ROAD TO FINANCIAL SUCCESS // 2018

Don’t Die

Without A Will By Chronicle Staff

on’t be in the 51 percent to 62 percent of Americans ages 45 to 64 who die without one – unless you are fine with having your property divided by Montana intestacy statues.

What will the law do? If you die: • With only a spouse surviving, or with your spouse and children of both you and your spouse surviving, your spouse gets the entire estate. (Did you intend to leave something specific to each of your children, or some of them, or none of them?) • With only a spouse and your parents surviving, your spouse receives the first $200,000 plus three-quarters of the estate balance. Your parents receive one-quarter. • With a surviving spouse plus descendants who are not also descendants of your spouse (say, children from another marriage), your spouse receives $100,000 plus half of any estate balance. Your children receive the other half. (Is your spouse okay with this?) • With only your descendants surviving (children and grandchildren), or only your siblings surviving, the estate is divided equally among them. • With no relatives, the State of Montana thanks you. • Are you happy with these options?

Write That Thing By making a will, you decide who will receive your property, how much they will receive, when and, to some degree, what they can do with it. A lawyer is the best person to help you (and your spouse) manage your particulars. Before visiting one, give some thought to what’s to be done should you and your spouse die together. For some couples, that’s going to be the toughest consideration. When visiting the lawyer for the first time, it is acceptable to ask her/him to estimate the fee in advance. The Montana Uniform Probate Code also allows individuals to pass assets to specific individuals, educational institutions or charities through a contractual arrangement. There are two types: Payable on Death designations (PODs) and Transfer on Death designations (TODs). A lawyer can help with these too.

If you’re an adult with any amount of assets, or you have only a few valuable possessions but you know exactly who you want to have them when you die, you need a will.

Do It Yourself? You can write your own will, if you are 18 or older, of sound mind and not under undue influence. Verbal and videotaped wills are not recognized in Montana. To be legal, a self-written will must be in your own handwriting and signed by you. It does not need to be signed by witnesses. If you do ask witnesses to sign it, no witness should be a beneficiary of the will. Self-made wills can create problems for your heirs, however. If you’ve unknowingly made errors, the will may be denied probate. Or, the court handling the will may not interpret some words as you meant them. Wills written with computer programs also have pitfalls for heirs. Safest for everyone is getting assistance from a lawyer when drafting a will.

Storing and Updating Once it’s written, a will should be stored in a safe place where it can be found. Your home is not that place. A jointly owned safe deposit box may be. Another recommendation is to leave the will with the bank, trust company, lawyer or other person you have chosen to handle settling your estate. That person is called a personal representative. He/she does not have to reside in Montana, but it might be easiest if that’s the case. Montana law also provides for storing a will with your local district court. You should review your will periodically and especially when: you marry, divorce or remarry; children are born; a named beneficiary dies; you acquire additional property or your property increases in value; you move to another state; you wish to change beneficiaries or personal representative. Get more information from Montana State University Extension, www.montana.edu/estateplanning.

ROAD TO FINANCIAL SUCCESS // 2018

Turning Your Home Equity Into Cash!

and no risk of foreclosure as long as you live in the home as your primary residence and pay insurance, property taxes, and maintenance. (Of course you have to pay property taxes even if you don’t have a reverse mortgage.) If you can use home equity without risk of foreclosure from missing payments, then the old rule of having a paid-off home in order to be secure may no longer be the best option. The truth is that a home is a great place to store memories, but not a great place to store assets. If you are interested in learning how you can live more comfortably in your retirement years, contact us today!

any people feel that paying off their home and having no mortgage with lots of equity is the Holy Grail of retirement. Several people wait until their home is paid off before they retire and then feel they are safe to do so. The truth is that home equity is good – but it is not great because it is not liquid. In the face of fluctuating home prices along with nursing home and long-term care threats, it is typically better to have your equity in cash and in a form that you can control instead of relying on uncontrollable factors. With people losing their homes in the depression era of the 30s and in the latest round of the housing foreclosure crisis starting in 2008, there are many people who feel that having a paid off home in retirement is the safest way to go. The fact is that when a reverse mortgage enters the picture, the rules change because there is no payment

Amber Docken Loan Officer NMLS#1236912 Direct: 406-948-4459 Chris Opstedal Senior Loan Originator NMLS#121177 Direct: 406-599-0497 Copyright©2018 Fairway Independent Mortgage Corporation. NMLS#2289. 4801 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Lender.

ENJOY YOUR RETIREMENT… YOU’VE EARNED IT! Turn a portion of your home equity into tax-free* cash with a reverse mortgage loan. This loan gives qualified homeowners aged 62 and older the opportunity to enhance their cash flow while eliminating mortgage payments. (Required to pay taxes and insurance, and maintain the home.) This loan also gives you options of how you can receive your cash so you can enjoy your golden years. Some Potential Benefits of a Reverse Mortgage: • No monthly mortgage payments except for taxes, insurance, and maintenance • Increased discretionary cash flow • Ability to sell YOUR home at any time — the deed stays in your name • Minimal credit and property qualifications *This advertisement does not constitute tax advice. You should consult a tax expert for your specific situation.

924 Stoneridge Dr., Unit 2 I Bozeman, MT 59718 Direct: 406-948-4459 Fax: 406-534-0381 Mobile: 406-920-0856 amberd@fairwaymc.com www.amberdockenfairway.com Chris Opstedal Senior Loan Officer • NMLS# 121177

924 Stoneridge Dr., Unit 2 I Bozeman, MT 59718 Direct: 406-599-0497 Fax: 253-645-5998 chriso@fairwaymc.com nwhomeloanarranger.com

Copyright©2018 Fairway Independent Mortgage Corporation (“Fairway”) NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. All rights reserved. Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. The youngest borrower must be at least 62 years old. Monthly reverse mortgage advances may affect eligibility for some other programs. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and FW2524035 limitations may apply.

ROAD TO FINANCIAL SUCCESS // 2018

HOW TO FIND A

FINANCIAL

ADVISOR

The typical American is not good at handling money. Only 37 percent of us can pass a financial literacy test, according to a 2016 study by the FINRA Investor Education Foundation. So it may pay the other 63 percent of us to engage a financial advisor at some point in life.

lanners can help you identify financial problems and goals, suggest strategies, set priorities and save you time and hassle in a field you don’t understand. They can help you find agreement if you and your spouse disagree on some questions, often help implement your plans and help you feel more secure in your decisions. Choose an advisor who has many clients whose circumstances are similar to yours. That guarantees they are staying on top of all that matters most to you. Your accountant or attorney might recommend someone. Also ask friends and family. Or, look for an advisor through the National Association of Personal Financial Advisors (www.napfa.org) or the American Institute of Certified Public Accountants’ (www.aicpa.org) members who have completed the Institute’s Personal Financial Specialist program. Financial advisors may have all kinds of credentialing initials after their names. The ones that matter most are CFP®, or Certified Financial Planner, and ask if the credentials are current. Financial planners should be able to help with estate planning, investments, education funding, insurance and risk management, retirement planning and such senior issues as health insurance and long-term care. Get several names and research their websites, then choose a couple and ask for an introductory meeting. At that meeting, open the conversation by stating why you are there, how you found the advisor, your previous experience working with an advisor, and your goals (personal, family, business, etc.) Prepare a list of important questions and take notes on the answers. After the meeting, review the answers and reflect on your comfort level with each candidate to make your decision.

Sources: The National Association of Personal Financial Advisors “Pursuit of a Financial Advisor Field Guide” at www.napfa.org; author Eric Tyson’s “Personal Finance for Dummies”; How to Choose a Financial Planner, The Wall Street Journal, Dec. 17, 2008.

WHAT TO ASK POTENTIAL ADVISORS Questions recommended by the NAPFA and author Eric Tyson, author of “Personal Finance for Dummies,” include: • What percentage of your income comes from clients’ fees vs. commissions? Tyson and NAPFA suggest that the correct answer is “100 percent from fees paid by clients.” NAPFA believes a fee-only business model removes potential conflicts of interest that are inherent if an advisor works on commission. • Can I see your Form ADV? All Registered Investment Advisors will have this form, which is prepared according to regulations developed by the Securities and Exchange Commission. It details their business, including compensation, experience, service offerings and any disciplinary history. It may be on their website. • Will you sign a Fiduciary Oath? The oath ensures that each client’s best interests, not the advisor’s, are always the priority. • Have you ever sold limited partnerships, options, futures or commodities? For most middle income earners, the answers should be no – unless you fully understand all costs and risks. • What is your educational background? NAPFA suggests that a financial advisor should have an advanced education in financial planning topics such as investments, taxes, insurance or estate planning, plus a financial degree. • Do you carry liability (errors and omissions) insurance? This protects advisors from their own mistakes. • Will you provide references from other professionals you have worked with, and references from clients with needs similar to mine? • What is your business continuity plan? This answer tells you what would happen to you should the advisor leave the business. • Are there financial incentives for you to recommend certain financial products? • What personal financial issues will your services help me with? Comprehensive financial planning covers short- and long-term issues and addresses personal goals, objectives and significant life events. • Do you provide a written comprehensive analysis of my financial situation and recommendations? • Do you offer assistance to implement the plan? Or can I implement it on my own? • Do you offer periodic reviews of my financial affairs, including advice on non-investment financial issues?

ROAD TO FINANCIAL SUCCESS // 2018

Make 2018 the Year Your Credit Works for You

I n

a nationwide survey, credit reporting firm Experian ranked the people of Big Sky Country seventh in terms of high credit scores. Maybe it’s because we’re cautious and independent, don’t live beyond our means, and put value behind paying our debts. It’s just part of who we are. Still, your credit score can always be better, and that is where Sky Federal Credit Union comes in. We know unforeseen circumstances can affect credit scores. A low credit score can limit your ability to borrow money for a home, vehicle, or other major purchase. These limitations can have a cyclical effect: if you can’t buy a car because of your credit rating, you might not be able to drive to the job which can earn you more money to pay bills. Your cred-it score can become a trap that’s hard to escape. The sooner you begin working to improve your credit, the more opportunities you’ll have. As part of the commitment to helping members build strong financial futures, Sky Federal Credit Union offers a free credit score analysis program. Sky’s credit score analysis is de-signed to • create a plan to improve your credit score • lower your monthly debt • eliminate high interest credit card debt • protect you from predatory lenders who prey on those who struggle to secure loans with fair interest rates

A Sky credit expert will review your credit score and assess your financial position to help you identify where you can improve it—by budgeting to spend in a more deliberate fashion, moving debt from high-interest credit cards and loans to a consolidated low-interest loan or another tailored solution. By breaking down your credit score, income, and assets Sky can help make the daunting task of addressing your credit issues a lot more manageable. Sky offers other ways to help you improve your financial position as well, such as a Borrow & Save loan. By committing to put money into savings with each loan payment, members re-ceive a rate reduction on the loan—of up to 2%. With three saving levels, you can choose a realistic amount to commit to saving and factor in your rate reduction to help make it possi-ble. Money you save is placed in a high-interest savings account for the duration of the loan, meaning it’ll be waiting for you when the loan is paid off. Another resource is Sky’s personal finance manager. This feature lets you track your income and expenses to simplify budgeting and planning. The online resource can be set to view all of your checking and savings accounts, credit cards, and loans—regardless of the issuing bank or credit card company. Contact Sky Federal Credit Union today and start managing your credit the Montana way. It’s easier than you think. With Sky, you can pursue your dreams in the coming year— and for years to come. Montana Credit Score Ranking Source: http://www.governing.com/gov-data/economy-finance/average-credit-score-by-state.html

It’s what Sky Federal Credit Union does for our members every day. Sky offers credit score analysis, innovative accounts with incentives for saving, youth accounts, and a range of other tools to help your financial health be as good as it can be. Sky membership—so much more than checking, savings, and loans.

www.skyfcu.org

1-800-445-3328

Bozeman

Belgrade

Livingston

Big Timber

777 East Main Street | Bozeman, MT 59715

95 North Weaver Street | Belgrade, MT 59714

111 North B Street | Livingston, MT 59047

301 West 1st Ave | Big Timber, MT 59011

1718688

Federally insured by NCUA

PLANNING FOR THE FINANCIAL STAGES OF YOUR LIFE LIFE STAGE

LIFE EVENTS

FINANCIAL EVENTS

TIPS

Stage One

Enter workforce

Develop good financial habits

Track your spending to see where your money goes. Develop a budget to help you save. Live within your means. Create an emergency fund to cover 3 months’ expenses. Start retirement savings.

Purchase car

Marriage

Stage Two

Stage Three

Family grows

Begin creating credit history

Borrow only for things that provide long-term value. Check your 3 credit reports annually (www.annualcreditreport.com).

Purchase home

Talk about money management before you wed. Discuss and set joint goals. Coordinate and maximize employer benefits. Don’t overextend when buying a home.

Consider insurance needs

Insure for catastrophic losses and potential large expenses, not little things. Consider health, life, disability, home insurance. Take the highest deductible you can afford.

Write wills

Update beneficiaries to retirement, other accounts.

Teach kids about money

Begin saving for children’s college expenses. Understand child-care tax benefits. Invest wisely. Reconsider insurance needs, wills. Find financial advisor.

Career advancement

Max out retirement contributions. Begin estate planning. Consider disability insurance. Take retirement money with you when you switch jobs.

Major promotions

Review your tax planning. Regularly update wills, estate planning, insurance needs. Consider long-term care costs. Continue to invest wisely.

Nearing retirement Retirement Sources: Branch Bank & Trust Co., Personal Finance for Dummies by Eric Tyson

Plan financially and personally. Downsize. Know your budget. Reevaluate insurance needs. Enjoy.