Business Succession: Strategies for Leaving a Business to Family

Transferring a business to family members is more than just a financial decision, it’s a deeply personal one. Your business represents years, if not decades, of hard work, sacrifice, and dedication. It’s a legacy that you want to see thrive for generations to come. However, without proper planning, a transition can create unnecessary tax burdens, financial strain, and even family disputes. Understanding the available strategies ensures that your business remains a source of security, not stress, for your loved ones.

Successfully passing down a business requires a plan that aligns with your financial goals, tax considerations, and family dynamics. Some strategies allow you to retain control and income for years, while others enable an immediate transition. Additionally, post-mortem planning can safeguard your family’s financial future if the unexpected happens. Below are some key strategies for business succession, including their tax implications, income opportunities, and control dynamics, helping you choose the best path forward.

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Family Limited Partnership (FLP)

A Family Limited Partnership (FLP) allows a business owner to transfer ownership gradually while maintaining control. The owner retains decision-making authority as the general partner, while family members receive limited partnership interests over time. This structure not only protects the business from mismanagement but also creates an efficient method for reducing estate tax liability.

FLPs provide valuation discounts on transferred shares, lowering estate and gift tax exposure. However, income taxes depend on profit distributions and the entity’s structure. Beneficiaries inherit the owner’s original cost basis, which may result in capital gains taxes if they later sell the business. The owner can continue receiving income through management fees or partnership distributions, ensuring financial security while slowly transitioning ownership. While control remains intact initially, it gradually diminishes as more shares are transferred. This method works best when started 5–10 years before a full transition to maximize tax advantages.

Selling the Business to Family

Selling a business to family members provides liquidity for the owner while ensuring the company remains within the family. The sale can be structured through an installment plan, a promissory note, or a self-canceling installment note, which cancels any remaining payments if the seller passes away before full repayment.

This strategy spreads capital gains taxes over the life of the installment payments, easing the tax burden. Buyers may deduct interest payments on financed purchases, while SCINs can reduce estate tax liability when properly structured. However, IRS scrutiny requires careful compliance. The owner benefits from continued income through installment payments or an advisory role while stepping away from daily operations. Control is gradually transferred, allowing the next generation to gain experience under the seller’s guidance. Ideally, this strategy should be implemented 3–7 years before retirement for maximum flexibility.

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Grantor Retained Annuity Trust (GRAT)

A Grantor Retained Annuity Trust (GRAT) allows the business owner to transfer ownership while receiving annuity payments for a predetermined period. Once the trust term ends, remaining assets pass to the beneficiaries with reduced tax liability, making this an effective wealth transfer tool.

GRATs minimize estate tax exposure when structured correctly. If the business appreciates in value, the excess growth transfers to beneficiaries tax-free. However, if the owner passes before the trust term ends, assets revert to the estate, negating tax benefits. This strategy provides an income stream during the annuity period, ensuring financial stability. Control diminishes over time, as the owner must fully relinquish business ownership at the end of the trust term. Best results are achieved when implemented at least five years before the intended transition.

Equipment Leaseback: a Passive Income Strategy

Instead of retaining key business assets, the owner transfers ownership of business equipment to the next generation and then leases those assets back from them. This allows the family member to receive passive rental income while the owner maintains operational use of critical resources.

Lease payments offer a predictable and taxable income stream to the beneficiary while helping reduce the overall estate value for the original owner, reducing estate and gift tax exposure. For the business, the lease payments are deductible, increasing tax efficiency. The owner creates a passive income stream for the next generation while maintaining business continuity. Control over asset use remains functionally with the original owner through lease terms, but legal ownership, and thus long-term strategic control, shifts to the heir. This strategy can be set up at any time but is most beneficial when coordinated well in advance of retirement or sale.

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Post-Mortem Planning Strategies

Even with a solid succession plan, post-mortem strategies ensure heirs can manage taxes and business operations effectively after the owner’s passing. Without proper planning, heirs may be forced to sell the business to cover estate taxes, disrupting the legacy you worked so hard to build.

Section 6166 estate tax deferral allows heirs to defer estate taxes on a closely held business for up to 14 years, preserving liquidity. A Qualified Terminable Interest Property (QTIP) Trust ensures a surviving spouse receives income while ultimately passing business ownership to designated heirs. Buy-sell agreements establish clear terms for ownership transfers, reducing potential disputes. Additionally, a stepped-up basis adjustment allows heirs to inherit business interests at fair market value, minimizing capital gains taxes upon sale. These strategies help prevent forced sales and ensure continuity, keeping the business intact for future generations.

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Choosing the Right Strategy

Each business succession strategy offers unique benefits depending on the owner’s goals for control, income, and tax efficiency. Whether transitioning gradually through an FLP, structuring an installment sale, leveraging a GRAT, or ensuring post-mortem tax efficiency, proper planning is essential. With expertise in tax and legacy planning, I help business owners craft a succession plan that protects both their business and their family’s financial future.

Business succession is one of the most complex areas of financial planning, and these strategies are just a handful of possibilities. Every business owner’s situation is unique, and the right solution depends on personal financial goals, family dynamics, and tax considerations. To ensure a seamless transition that protects both your wealth and your legacy, schedule a time with me to create a tailored succession plan that works best for you and your family.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

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Enduring a Bear Market: How to Stay Steady When the Markets Drop

If you've been watching your investment accounts lately and feeling a little anxious — you're not alone. Bear markets, while a normal part of investing, can test even the most seasoned investor's patience and nerves.

But here's the truth: markets fall, and markets rise. The investors who come out stronger are the ones who stay steady, stay thoughtful, and stick to their long-term plan.

Let's talk about what a bear market really means, and how you can weather it with confidence.

📉 What Is a Bear Market?

A bear market is typically defined as a decline of 20% or more in a major stock market index, like the S&P 500, from its recent peak. While they can feel alarming in the moment, they're a natural part of market cycles. While the most recent dip into bear market territory was quick, and we are not ‘in a bear market’ currently, let’s dive into a few specifics to get a better understanding. Whether it’s this current market volatility or the next, we will most definitely experience more bear markets in the future.

Historically, bear markets have occurred about once every 6 years on average. They tend to be shorter than bull markets, with the average bear market lasting approximately 1-2 years.

That means even though downturns feel intense while you're in them, they tend to be temporary chapters in a much longer investing story.

The chart below puts bear markets into perspective when thinking about the long-term history of the stock market. While painful to endure, they are blips on the radar if you stay invested.

How to Endure a Bear Market Without Losing Your Mind (or Your Money)

Zoom Out and Look at the Big Picture

It's easy to get caught up in day-to-day market swings, but real wealth is built over decades, not days. In the chart above, take note of how every downturn is eventually followed by a recovery and new highs. While past performance is not a predictor of future performance, the stock markets have continued to reach new highs. 

Stick to Your Financial Plan

If your portfolio was built with your time horizon, goals, and risk tolerance as cornerstones in your financial plan, it's likely designed to withstand market downturns. Are your goals still the same? Is your timeline intact? If so — stay the course. If you are a client of mine, we prepared for a downturn and have a plan in place for what to do - now is the time to act on that plan. 

Focus on What You Can Control

You can't control interest rates, inflation, or the markets. But you can control how you react.

• Keep your emergency fund intact. Spend wisely.

• Continue regular contributions to retirement accounts and savings plans if at all possible. Remember, there are buying opportunities now that weren’t there a few months ago!

• Stay disciplined…even when it hurts.

Use Market Declines as an Opportunity

Bear markets often create chances to buy high-quality investments at lower prices. It's like a sale for long-term investors.

If you have extra cash or have been waiting to invest, now is the time to intentionally deploy that cash into your investment strategy. 

Don't Go It Alone

Money decisions get emotional in volatile markets. Having a trusted financial planner by your side can help you make thoughtful, objective choices when emotions run high.

If you're feeling anxious about your investments or future plans, let’s chat. A 20-minute conversation might be all you need to feel grounded again. 

Final Thought

Bear markets aren't fun, but they aren't forever. History has shown that patient, disciplined investors tend to be rewarded over time. The key is to endure the tough seasons and take advantage of the opportunity at hand so you're positioned to enjoy the growth that follows.

If you need a listening ear, a portfolio review, or a fresh perspective on your financial strategy, I'm here for you.

Let's schedule a conversation.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

Feeling Anxious About the Market? Focus on What You Can Control

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Market volatility can feel nerve-wracking, and it's completely normal to feel uneasy during downturns. But remember this: market fluctuations are a normal part of the economic cycle. Instead of feeling helpless, let's focus on actionable strategies you can control to weather the storm, manage your emotions effectively, and avoid panic decisions driven by fear or uncertainty.

It's understandable that market volatility causes anxiety. Whether it's driven by economic news, geopolitical events, or trade tensions, the market's ups and downs can feel unpredictable and unsettling. However, history provides a valuable perspective: market downturns aren't anomalies; they are a recurring feature of the economic landscape. We've seen this play out in the past with significant events like the COVID-19 downturn in 2020, the Global Financial Crisis in 2008, and the Dot-com bubble in 2000.

Here's a crucial point to consider: missing just a few of the market's best days can significantly reduce your long-term returns. This is why letting emotions dictate your investment decisions can be so detrimental. The chart below illustrates the potential impact on your growth if you missed some of the best trading days.

Mastering Your Emotions

One of the biggest challenges during volatile periods is managing our own emotions. Fear can lead to panic selling at market lows, while greed might tempt us to chase fleeting gains. Often, controlling these emotional responses is the most significant factor within our control and can have a profound impact on our investment outcomes.

It's helpful to be aware of common behavioral biases. Loss aversion, the tendency to feel the pain of losses more strongly than the pleasure of gains, can drive poor decisions. Similarly, herd mentality, following the crowd without considering your own individual circumstances, can lead to buying high and selling low.

Here are some practical tips to help manage your emotions during market volatility:

• Focus on your long-term investment plan. Remember the goals you set and the reasons behind your investment strategy.

• Limit how frequently you check your investment accounts. Constant monitoring can amplify short-term market noise and trigger emotional reactions.

• Educate yourself about market cycles. Understanding that downturns are a normal part of the process can help reduce anxiety.

• Consider seeking advice from a financial advisor. Advisors play a crucial role in providing emotional support and guiding you through challenging times. They can act as an "emotional circuit breaker" to help you avoid impulsive decisions that could harm your long-term financial health.

Controllable Investment Strategies

While market movements are outside our direct control, there are several investment strategies you can utilize to navigate volatility.

• Dollar-Cost Averaging: This strategy involves investing a fixed amount of money at regular intervals, regardless of the market price. When prices are low, your fixed investment buys more shares, and when prices are high, it buys fewer. Over time, this can help reduce the risk of buying high and potentially lower your average cost per share, especially during downturns. Consistency is key to the effectiveness of dollar-cost averaging.

• Account Rebalancing: Maintaining your target asset allocation (the mix of assets like stocks and bonds based on your risk tolerance and time horizon) is crucial. Market downturns can cause your portfolio to become skewed, with some asset classes potentially becoming overweighted or underweighted. Rebalancing involves selling some assets that have performed well and buying those that have underperformed to bring your portfolio back to its target allocation. This strategy can help you buy low and sell high over time and stay aligned with your intended risk level.

• Roth Conversions: A Roth conversion involves moving funds from a traditional IRA or 401(k) to a Roth account. While you'll pay taxes on the converted amount in the current year, future withdrawals in retirement can be tax-free. A market downturn, when asset values are lower, can be a potentially opportune time for a Roth conversion, as the tax bill on the conversion may be lower. However, it's essential to carefully consider the tax implications and your future tax rates before making this decision.

• Tax-Loss Harvesting: Tax-loss harvesting is a strategy of selling investments that have lost value to offset capital gains taxes you may owe on other investments. The proceeds from the sale can then be reinvested in a substantially different security to maintain your desired asset allocation, being mindful of the wash-sale rule, which prohibits repurchasing the same or substantially identical security 30 days before and 30 days after. This strategy can potentially reduce your current tax burden.

• Staying Invested and Reviewing Your Long-Term Plan: It's crucial to remember that historically, the market has recovered from previous downturns. Selling out of your investments during a downturn can lead to missing out on potential rebounds. Downturns can also be a good time to revisit your overall financial goals and ensure your investment strategy still aligns with them.

“The four most dangerous words in investing are: This time it’s different.”

— Peter Lynch

Historical Perspective

Looking back at historical events like the COVID downturn in 2020, the 2008 Global Financial Crisis, and the 2000 Dot-com bubble, we can see a common pattern. While these periods were marked by significant market declines and uncertainty, the market eventually recovered and continued its long-term growth trajectory. This historical context reinforces the importance of a long-term investment perspective. Here is what the positive and negative years have looked like since 1926.

Staying the Course for Long-Term Success

Market volatility is an inherent part of investing, but by focusing on controllable strategies and maintaining a long-term perspective, you can navigate these periods effectively. Stay disciplined, stick to your long-term financial plan, and avoid making impulsive decisions based on short-term market fluctuations.

If you don’t have a long-term financial plan, then now is the time to create one. If you would like help, feel free to reach out and connect.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Making the Most of Cash Balance Plans: A Simple Guide for Business Owners

If you own a business and want to save more for retirement while paying less in taxes, a cash balance plan might be a great option. These plans may allow you to save more money than a regular 401(k) and offer major tax benefits.

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What is a Cash Balance Plan?

A cash balance plan is a type of employer-sponsored retirement plan where the business makes annual contributions on behalf of employees. These contributions grow at a predetermined rate and are designed to provide a stable retirement benefit. Unlike traditional 401(k) plans, where employees contribute and take on investment risk, a cash balance plan ensures the employer funds the account and assumes the investment risk.

Key Benefits of Cash Balance Plans

1. Higher Contribution Limits

A 401(k) has limits on how much you can put in; $70,000 per year ($77,500 if you're 50 or older) for 2025. A cash balance plan lets you save significantly more, sometimes exceeding $300,000 per year, depending on age and income. This is especially helpful for business owners who want to accelerate their retirement savings and take advantage of tax-deferred growth.

Source: Joe Nichols, DWC - The 401(k) Experts.

2. Substantial Tax Savings

Source: Joe Nichols, DWC - The 401(k) Experts.

Contributions to a cash balance plan are tax-deductible, directly reducing taxable income. This is particularly valuable for high-income business owners looking to lower their annual tax bill. Additionally, the plan's assets grow tax-deferred, allowing for compounding benefits over time.

This video is an audible version of this article. Feel free to listen while reading, or watch it independently.

3. Enhanced Employee Retention and Satisfaction

Offering a strong retirement plan helps businesses attract and retain skilled employees. A cash balance plan provides a predictable benefit, making it an appealing option for employees seeking long-term financial security. Business owners who offer these plans often find that they increase employee loyalty and job satisfaction.

4. Flexibility in Plan Design

Cash balance plans can be customized to meet the needs of the business. Contributions can vary based on employee roles, tenure, or salary levels, allowing business owners to structure the plan in a way that best serves their financial and workforce goals. Additionally, these plans can be paired with a 401(k) for even greater retirement savings potential.

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Challenges of Cash Balance Plans

1. Required Annual Contributions

Unlike profit-sharing contributions in a 401(k), which can be discretionary, cash balance plans require mandatory annual contributions. This means businesses need a consistent and predictable cash flow to maintain the plan over time.

2. Administrative Complexity

Cash balance plans involve more administrative work than traditional 401(k)s. Business owners must comply with government regulations, complete annual actuarial evaluations, and file IRS reports. Engaging a third-party administrator (TPA) is necessary to ensure compliance and smooth plan operation.

3. Funding Requirements

Since the employer is responsible for funding the plan and ensuring returns meet the guaranteed rate, market downturns could lead to additional funding obligations. For example; a plan with $1 million of accumulated benefits could experience an investment shortfall of 5% based on market performance. This would require an additional $50,000 of employer contributions on top of the annual contribution requirements. It should be noted that any losses may be amortized over a 15-year period. 

Source: Joe Nichols, DWC - The 401(k) Experts.

4. Higher Setup and Maintenance Costs

Compared to 401(k) plans, cash balance plans typically have higher setup and maintenance costs. Employers must factor in administrative fees, actuarial costs, and investment management expenses when determining if the plan is a viable option.

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Is a Cash Balance Plan Right for Your Business?

A cash balance plan is a powerful tool for business owners who want to accelerate retirement savings and take advantage of significant tax breaks. While these plans require mandatory contributions, careful planning can ensure long-term benefits that often outweigh the administrative and funding challenges. For high-earning business owners with a steady cash flow, a cash balance plan can provide a strategic way to maximize retirement savings while significantly reducing taxable income.

These plans are particularly beneficial for professionals such as doctors, lawyers, and consultants who have stable profits and seek to invest heavily in their future. By assessing your financial stability and working with experts, you can determine if a cash balance plan aligns with your long-term business and retirement goals while also offering valuable benefits to your employees.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

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Tax-Smart Retirement Withdrawals: How Discipline today results in freedom tomorrow.

One of the most overlooked aspects of retirement planning is your withdrawal strategy—how you take money from your accounts. Without a plan, you could end up paying more taxes than necessary, reducing the longevity of your investments. By strategically withdrawing from your accounts, you can optimize your tax bill and potentially extend the life of your portfolio. 

Do not be fooled into thinking that this is something you don’t have to think about until you near retirement age - that could not be further from the truth! The flexibility of your retirement withdrawal strategy is directly tied to the cash flow planning, tax planning, and savings strategy you implement in your working years.

The Three Main Buckets of Tax Diversification

Understanding how different types of retirement accounts are taxed is crucial to a well-structured withdrawal strategy. There are three main tax buckets to consider:

1. Ordinary Income Bucket

These funds are taxed at ordinary income rates, which currently range from 10% to 37%, depending on your marginal tax bracket.

Examples include:

• W-2/1099 wages

• Business income

• Rental income

• Ordinary dividends and interest from a taxable brokerage account

• High-yield savings interest

• Short-term capital gains from a brokerage account or sale of other assets

• Withdrawals from traditional IRAs, 401(k)s, and similar tax-deferred accounts

2. Long-Term Capital Gains Bucket

Long-term capital gains are taxed at preferential rates of 0%, 15%, or 20%, depending on your taxable income.

Examples include:

• Sales of long-term securities in a brokerage account

• Profits from the sale of long-term assets (i.e. rental home, business assets, etc.)

3. Tax-Free Income Bucket

These funds are entirely tax-free when withdrawn under the right conditions.

Examples include:

• Roth IRA and Roth 401(k) withdrawals (if qualified)

• Principal from savings accounts or after-tax contributions to brokerage accounts

Having a proper ratio of your portfolio in these different tax buckets will not only save you in taxes over your entire lifetime, but it also can add flexibility to other aspects of your financial plan as you near retirement, such as healthcare.

Consider Healthcare Challenges

Be Aware of Health Care Opportunities - Managing taxable income wisely may allow you to qualify for subsidies on the Health Insurance Marketplace by minimizing withdrawals from tax-deferred accounts.

Mind the Medicare IRMAA Surcharges – Medicare premiums are subject to an income-related monthly adjustment amount (IRMAA), based on a two-year look-back period. Large withdrawals from tax-deferred accounts could push you into a higher Medicare premium bracket, unnecessarily increasing healthcare costs.

Focus on What You Can Control

Financial headlines often focus on what’s beyond your control—market fluctuations, Federal Reserve interest rate decisions, or potential tax law changes. Worrying about these external factors can lead to anxiety and inaction. Instead, shift your focus to what you can control: how you save, where/how you invest, and how you structure your future withdrawals.

By diversifying your retirement savings across different tax buckets, you gain more flexibility in deciding how to draw income in retirement. This strategy can help minimize taxes, stay within favorable tax brackets, and strategically pass wealth to heirs.

A Balanced Approach

The best withdrawal strategy depends on your tax bracket, investment returns, and most importantly, your future financial needs. Your specific goals should be the drivers of your financial plan. By taking a thoughtful, tax-aware approach, we can do our best to control what we can, regardless of the noise around us. 

It’s never too early to start thinking about tax diversification within your investment portfolio. The discipline you apply during your working years translates to flexibility and freedom in retirement. If you’d like to explore how a tax-efficient savings strategy can impact your financial future, let’s connect!

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

Fiscal Fitness: The Behavioral Connection Between Consistent Exercise and Retirement Savings

What if I told you that the time you spend in the gym can help you maximize the amount you save for retirement? Consistently exercising and saving for retirement share underlying behavioral traits, including goal-setting, delayed gratification, and self-discipline. Exploring these parallels can offer insights into building better habits for physical and financial well-being.

Shared Behavioral Foundations

Physical fitness and financial planning are parallel journeys, both requiring long-term goal setting and consistent effort. For example, whether you aim to shed a few pounds before a vacation or save for a larger home as your family grows, success depends on creating a broad plan and adjusting the details as you progress. The most challenging step is often getting started, but once you do, the benefits compound. Practicing delayed gratification strengthens your ability to prioritize future rewards, making it easier to develop lasting habits. Over time, these small, incremental changes lead to significant outcomes—such as increased metabolic rate in fitness or the growth of wealth through compound interest. These benefits come together beautifully, enabling us to maximize energy and health as we age. This not only reduces medical expenses but also extends the freedom to travel and engage in activities during retirement, enhancing overall quality of life.

Psychological Benefits of Consistency

Consistency in exercise and financial saving offers psychological benefits that extend across both domains. Regular exercise helps build resilience by fostering mental toughness, a quality that directly translates to the discipline needed for financial planning and saving. Additionally, studies show that exercise reduces cortisol levels and improves cognitive function, leading to lower stress and more rational decision-making—critical factors in managing finances effectively. Furthermore, success in one area, such as achieving fitness goals, creates a positive feedback loop, boosting confidence and reinforcing habits that can be applied to other areas, like saving for the future. These interconnected benefits illustrate how consistency in one domain can enhance overall well-being and success in life. I’m excited to have partnered with Justin Merriman on this article, owner of FitLyfe Training. As a Physical Trainer with a Bachelors in Clinical Exercise Science from Grand Valley State University, he brings a unique perspective to the changes he sees in his clients’ healthy habits. If you’ve been thinking about working with a Physical Trainer feel free to schedule a meeting with him or follow him on Instagram @jman_merriman. Here’s his take on the matter.

Trainer’s Perspective

Justin Merriman, OWNER OF Fit Lyfe Training

For most people, acquiring discipline can be quite the tall task. This typically comes when facing a goal we are not quite sure how to even begin working towards. With all the information out there in today’s world, some of which is very conflicting, it can be very hard to determine the “perfect route” to take. That is the thing though, trying to create a flawless routine is going to lead to trying many different extreme strategies that may not ‘fit’ into our lives, thus making it very hard to establish discipline. The key to creating a solid foundation of discipline is to make small changes in our lifestyle that we know will be sustainable. If it takes roughly 21-days for something to become a habit, all we need to do is act consistently on a very simple task for the course of that duration, and we can begin to build something very valuable. This is basically the brick & mortar process to set that foundation for building discipline. An example of a small task that can lead to a healthier lifestyle is finding a mode of exercise that you enjoy. This can be as simple as going for a walk through your neighborhood, swimming with your kids at the local pool, or going for a bike-ride. It doesn’t always have to be hitting a high-intensity workout at the gym. Once you find that mode of physical activity that you enjoy, then you build it into your routine on a regular basis. The more you do, the more you begin to enjoy the “doing.” This is where the discipline really solidifies. Eventually, you may start dabbling in other forms of exercise (weightlifting, group classes, yoga, etc), because of all the positive returns that you see and feel from that initial step you made. It’s a beautiful cycle.

Lessons From Research

Baumeister’s Strength Model of Self-Control gives us a great way to understand the connection between staying consistent with exercise and being disciplined with money. His research shows that self-control works like a muscle—the more you use it, the stronger it gets. When you stick to a workout routine, you’re not just building physical strength, you’re training your ability to delay gratification and stay committed to long-term goals. That same discipline makes it easier to make smart financial decisions, like saving for retirement. The cool part? Building willpower in one area of life naturally spills over into others, proving that self-control isn’t just something you’re born with—it’s a skill you can develop and use to create lasting success.

Practical Tips to Cultivate Habits in both Domains

Just like tracking your finances, monitoring your body’s progress is key. Big goals are great, but success often comes from setting manageable benchmarks. For example, rather than jumping straight to 10,000 steps a day, start by adding 2,000–3,000 steps daily—about a 30-minute walk. Over a few weeks, gradually increase your activity. Small choices, like taking the stairs or parking farther away, add up and make movement a natural part of your lifestyle. A step-counter is just one way to track progress. Many apps can help monitor food intake, strength training, running, and more. Find a metric that works for you—it will keep you motivated and push you toward greater achievements. Like gradually increasing your step count, building financial stability starts with small, manageable steps—like creating a basic budget and contributing to your employer-sponsored retirement plan. As you progress and push your limits, consider fine-tuning your approach by analyzing your diet and seeking expert guidance. Whether in fitness or finance, a professional’s perspective can help you optimize your strategy, avoid costly mistakes, and accelerate your progress. Tracking and refining both your physical and financial habits will keep you on a sustainable path toward long-term success.

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References:

https://www.researchgate.net/publication/228079571_The_Strength_Model_ of_Self-Control

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Estate Planning: Advanced Strategies for Wealth Management

Estate planning encompasses more than the preservation of wealth; it is a sophisticated exercise in financial security, tax minimization, and the cultivation of an enduring legacy. For individuals with complex asset portfolios or professional obligations, a nuanced estate plan is essential to address multifaceted personal and professional objectives while protecting assets for succeeding generations. Below, we examine advanced estate planning techniques and their strategic applications.

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Foundational Strategies in Estate Planning

Revocable Living Trusts

A Revocable Living Trust represents a cornerstone of estate planning, offering unparalleled flexibility and control over assets. It is particularly advantageous for individuals managing diverse holdings, as it consolidates ownership of business interests, real estate, and liquid assets into a unified structure. By avoiding probate, this mechanism ensures the expeditious distribution of assets, maintains confidentiality, and obviates the complexities associated with ancillary probate in jurisdictions beyond one’s domicile.

Irrevocable Life Insurance Trusts (ILITs)

An ILIT is a sophisticated instrument designed to exclude life insurance proceeds from the taxable estate. When coupled with Crummey provisions, it permits annual tax-free contributions to beneficiaries within the parameters of the federal gift tax exclusion. The trust subsequently utilizes these contributions to maintain the life insurance policy.

For instance, consider an individual anticipating a substantial estate tax liability. By employing an ILIT, the resulting liquidity can offset estate taxes or fund a buy-sell agreement without diminishing other estate assets. This ensures the preservation of wealth while securing operational continuity for closely held enterprises.

Testamentary Trusts

A Testamentary Trust, activated through provisions within a will, offers an easily executed yet robust framework for structured inheritance. This trust is invaluable for managing distributions to minors or dependents and shielding assets from creditors’ claims or imprudent financial decisions by beneficiaries.

As an illustrative scenario, a professional seeking to ensure incremental wealth transfers to their children might establish a Testamentary Trust stipulating disbursements at defined life milestones, such as ages 25, 35, and 45. Concurrently, the trust could provide for a surviving spouse, ensuring both immediate support and the long-term financial stewardship of future generations.

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Sophisticated Business Transfer Mechanisms

Business succession planning demands precision and foresight to mitigate tax exposure while ensuring operational stability and intergenerational continuity.

Buy-Sell Agreements

Buy-Sell Agreements are indispensable in delineating ownership transitions in the event of death, disability, or retirement. Funded through life insurance, these agreements provide liquidity to facilitate the acquisition of the deceased owner’s share by surviving stakeholders.

For example, a small enterprise with two co-owners might implement a Cross-Purchase Agreement. Should one owner predecease the other, the agreement enables the survivor to acquire the decedent’s stake at a predetermined valuation, thereby safeguarding the business and providing equitable compensation to the deceased’s heirs.

Qualified Interest Trusts

Instruments such as Grantor Retained Annuity Trusts (GRATs) or Qualified Personal Residence Trusts (QPRTs) are pivotal in transferring appreciating assets while minimizing taxable estate values. These trusts effectively "freeze" the asset’s value for estate tax purposes, allowing beneficiaries to inherit appreciation free of tax liability.

A family business owner might, for instance, transfer shares into a GRAT. During the trust’s term, the grantor receives an annuity, while the appreciating residual interest transfers to heirs upon expiration of the trust, all within a highly tax-efficient structure.

Valuation Discounts for Business Gifting

Strategic gifting of minority interests in a closely held business capitalizes on valuation discounts for lack of marketability and minority control, thereby reducing the taxable value of transferred assets.

Over time, an owner could utilize annual gift tax exclusions to transfer minority shares to heirs or trusts, systematically diminishing the taxable estate while preserving family control over the enterprise.

Family Limited Partnerships (FLPs)

FLPs embody the "family bank" philosophy, serving as a vehicle for intergenerational wealth transfer while retaining centralized control. By transferring limited partnership interests to heirs, significant valuation discounts may be realized for estate and gift tax purposes.

Consider a family enterprise structured as an FLP. The general partner retains decision-making authority, while limited partnership interests are distributed to heirs, fostering shared ownership and financial stewardship across generations. This approach not only reduces estate tax exposure but also instills a legacy of collaborative asset management.

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Advanced Philanthropic Strategies

Charitable giving serves dual objectives: it aligns with personal values while achieving meaningful tax optimization. High-net-worth individuals often integrate philanthropic endeavors into their estate plans to magnify their impact and minimize liabilities.

Charitable Remainder Trusts (CRTs)

CRTs facilitate the transfer of highly appreciated assets, enabling donors to sidestep immediate capital gains taxes while deriving a steady income stream. Upon termination of the trust, the remaining assets pass to designated charitable organizations.

For instance, transferring appreciated stock to a CRT eliminates capital gains taxes, generates lifetime income for the donor, and secures a legacy contribution to a favored nonprofit institution.

Donor-Advised Funds (DAFs)

DAFs provide a streamlined platform for strategic philanthropy. Contributions yield immediate tax deductions, while donors retain advisory privileges over grant disbursements to qualified charities.

Envision a scenario where a family consolidates their annual charitable contributions into a DAF. This structure simplifies administration, engages younger generations in philanthropy, and perpetuates a tradition of giving.

Private Foundations

Private foundations afford unparalleled control over charitable endeavors, albeit with heightened administrative complexity. They are well-suited for individuals seeking to establish a lasting institutional legacy.

A private foundation might, for example, fund educational scholarships or community initiatives aligned with the founder’s values. Beyond tax benefits, such entities foster active family participation in governance and amplify philanthropic impact over generations.

Avoiding Strategic Pitfalls

Even meticulously constructed estate plans are susceptible to errors that can compromise their efficacy. Common pitfalls include:

• Improperly Funded ILITs: Failure to fund this trust appropriately jeopardizes the tax-exempt treatment of contributions.

• Liquidity Deficiencies: Inadequate planning for estate tax liabilities or business buyouts may necessitate a premature liquidation of assets. Life insurance and carefully calibrated gifting strategies work to mitigate this risk.

• Outdated Valuations: Periodic appraisals ensure that asset values remain accurate, particularly for closely held businesses.

• Underutilized Philanthropic Opportunities: Neglecting charitable mechanisms can result in unnecessary tax exposure and diminished legacy impact.

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Estate planning transcends mere financial management; it is a deliberate exercise in legacy cultivation, tax strategy, and familial continuity. By employing tools such as ILITs, FLPs, GRATs, and philanthropic vehicles, individuals can craft plans that are both comprehensive and tailored to their unique circumstances.

Engaging with seasoned legal and financial advisors ensures the realization of these strategies in alignment with overarching objectives. The earlier these measures are implemented, the greater the flexibility and efficacy of the resulting plan.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

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A Prescription for Raising Financially Savvy Children

Just as we prioritize early intervention in healthcare, teaching your kids about money early sets them up for a healthy financial future. Children develop money habits from a young age, so it's crucial to guide them toward smart financial decisions. Here are some ideas to nurture your children’s financial literacy, broken down by age group.

Young Children (Ages 3-7): Building a Strong Foundation

• Save, Spend, Give: Make it visual! Use three jars labeled "Saving," "Spending," and "Giving." This helps young children grasp the concept of balancing different financial goals. For example, they could save for a coveted toy, spend some on an ice cream treat, and donate to a cause they care about, like an animal shelter.

• Needs vs. Wants: Explain the difference between needs (things we must have to survive, like food and shelter) and wants (things we'd like to have, like toys and candy). Involve them in grocery shopping and explain how you prioritize needs and stick to a budget.

• Delayed Gratification: Teach patience! Help them set small savings goals. "If you save your allowance for two weeks, you can buy that awesome robot!"

• Fun and Games: Make learning about money enjoyable! Play money-themed board games like Monopoly Jr. or Life.

Middle Childhood (Ages 8-12): Developing Key Skills

• Money = Time: Connect effort to earnings by offering paid chores or an allowance. Help your children understand that buying a video game requires a certain number of chore hours. This reinforces the value of hard work and mindful spending. Want to dive deeper? Check out my full blog post on this topic.

• Budgeting 101: Introduce the concept of budgeting. Give your child a small allowance and help them create a simple budget, perhaps using a whiteboard or spreadsheet to track income and expenses.

• Savvy Shopper: Turn shopping into a learning experience. Teach comparison shopping, looking for deals, and using coupons. They'll feel empowered seeing their money go further!

• Banking Basics: Open a savings account for your child and explain how interest works (and the magic of compound growth!). Encourage them to deposit a portion of their allowance regularly. To make it exciting, find a bank with a good new account promotion or help them compare interest rates to find the best deal.

Teenagers (Ages 13-18): Preparing for Adulthood

• Credit and Debt: The Good and the Bad: Explain the responsible use of credit cards and the dangers of high-interest debt. Discuss credit scores and how they can impact getting a loan for a car or a house in the future.

• Real-World Experience: Encourage your teen to get a part-time job. This provides valuable experience with earning, managing money, and developing essential workplace skills.

• Investing for the Future: Introduce basic investment concepts like stocks, bonds, ETFs, and mutual funds. If they have earned income, consider opening a custodial Roth IRA to help them start investing for their future with tax-free growth!

• Setting Financial Goals: Help your teen set realistic financial goals, such as saving for college, a car, or a down payment on a house. Discuss the costs and benefits of different choices, like whether a pricey college is worth the investment. “Price is what you pay, value is what you get.” -Warren Buffett

Essential Principles for All Ages:

• Open and Honest Communication: Create a safe environment for money conversations. Encourage your child to ask questions without fear of judgment.

• Be a Role Model: Your kids are watching! Model good financial habits and be open about your own financial journey (within appropriate boundaries).

• Personalized Approach: Every child is different. Tailor your teaching to their interests and learning styles. If your child loves sports, use sports analogies to explain financial concepts.

• Tech-Savvy Tools: Utilize apps like Greenlight to give your child hands-on experience with budgeting and managing money in today's digital world.

• Mastering Money Emotions: Help your child understand how emotions can drive spending decisions. Teach them strategies to manage impulsive spending and stay calm when the stock market takes a dip.

By investing time and effort in your children's financial education, you're empowering them to make sound financial decisions and achieve lifelong financial well-being.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Financial Love Languages: A Couple’s Guide to Building Wealth Together

For many couples, financial conversations can be a source of tension. Working with clients, I’ve noticed that often this tension stems from a misunderstanding of each other's natural tendencies and values. Sometimes it's difficult to understand and identify our own deep-seeded values - doesn’t everyone just think like I do?!

Understanding each other’s "financial love language" can transform these discussions into opportunities to strengthen your relationship and work toward shared goals. Clarity is kindness!

What Are Financial Love Languages?

The concept of financial love languages adapts the idea of love languages—how people give and receive love—to the world of money. Everyone has a unique relationship with money shaped by their upbringing, experiences, and values. Recognizing your partner’s financial love language can help you navigate differences in spending, saving, investing, and planning habits.

Here are five common financial love languages:

1. The Saver

• Core Traits: Loves building a financial safety net and prioritizes long-term security over immediate gratification.

• How They Operate: Savers often prefer maintaining a robust emergency fund (at least six months of living expenses) and shy away from unnecessary risks.

• How to Support Them: Celebrate their commitment to stability and work together to define clear savings goals, such as retirement planning or purchasing a home.

2. The Spender

• Core Traits: Enjoys treating themselves and others, valuing experiences, travel, or material comforts.

• How They Operate: Spenders might allocate a specific portion of their budget for indulgences, such as a travel fund or a splurge account.

• How to Support Them: Encourage their zest for life by creating a financial plan that accommodates flexible spending while ensuring long-term goals are still prioritized. A bucket strategy can work wonders here!

3. The Investor

• Core Traits: Focuses on growing wealth through calculated risks and strategic decisions.

• How They Operate: Investors thrive on understanding the details of holdings and might allocate a small portion of their portfolio to speculative opportunities.

• How to Support Them: Engage with their enthusiasm by discussing investment strategies and aligning their goals with the broader financial plan. Having a hobby/play account for speculative investments can be a great solution to keep the financial plan on track.

4. The Planner

• Core Traits: Thrives on structure, setting budgets, and meticulously tracking financial goals.

• How They Operate: Planners love detailed financial plans and tracking progress through spreadsheets or planning software.

• How to Support Them: Provide the nitty gritty details of the cashflow plan and retirement projections. Collaborate with your advisor on creating a detailed financial roadmap and schedule regular check-ins to review progress and pivot as needed.

5. The Giver

• Core Traits: Finds joy in sharing resources through gifting or charitable contributions.

• How They Operate: Givers prioritize supporting loved ones or charitable causes. Working with a great advisor allows for maximum tax-efficiency, making your dollar as generous as possible.

How to Support Them: Work together to incorporate charitable giving into the financial plan, ensuring it aligns with other priorities like savings and investments. Charitable planning is a proactive process that should be woven into the financial plan all year long.

Building a Financial Partnership

Identifying your financial love languages can give you a great starting point to understand deeply held values within one another. Pinpointing your money motivators helps align your approaches and build a stronger financial foundation together. 

Having different financial motivations doesn’t mean you can’t create a cohesive plan. With proactive planning and open communication building and sticking to a financial plan can bring a lot of joy to your life!

Money doesn’t have to be a source of stress in your relationship. Instead, it can become a way to deepen your connection and work toward shared dreams. This Valentine’s Day enjoy a heartfelt conversation about your financial future. After all, what’s more romantic than building a life and accomplishing goals together?

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

Featured In: ApartmentGuide

Kristiana Daniels, CFP®, EA, BFA™ was named an expert in an ApartmentGuide article, a subsidiary of Redfin. Check out the featured article: Tips for Couples Cohabitating for the First Time | ApartmentGuide.com

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Recent Articles Written by Kristiana:

Equity Compensation: Strategies for Business Owners and Executives

Equity compensation: whether it’s stock options, restricted stock units, deferred compensation plans, or other incentives can be powerful for both wealth-building and as a tool to retain and grow top talent. For business owners and executives, it offers an opportunity to align your financial success with the growth of your company. But without a strategy, these rewards can quickly become a source of unnecessary complexity and risk.

Here we’ll explore key considerations for managing equity compensation effectively while highlighting strategies to minimize tax burdens and maximize long-term benefits.

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Understanding Equity Compensation: A Quick Overview

Equity-based compensation comes in several forms, and each has its own rules and opportunities. Here are the most common:

Incentive Stock Options (ISOs)

• Offer favorable tax treatment if you meet holding period requirements.

• If sold too early, gains are taxed as ordinary income instead of capital gains.

Nonqualified Stock Options (NSOs)

• Taxed as ordinary income at exercise, based on the difference between the exercise price and market value.

• Any subsequent growth is subject to capital gains tax when sold.

Restricted Stock Units (RSUs)

• Taxable as income upon vesting, with the stock’s market value determining the tax hit.

• Holding shares after vesting exposes future gains to capital gains taxes.

Deferred Compensation Plans

• Allow you to defer taxable income to a future date, ideally when your income—and tax rate—are lower.

• Planning payout timing is critical to avoid high tax bills.

Net Unrealized Appreciation (NUA)

• This is a strategy for 401(k) holders with company stock, where you can reduce taxes on the growth of your stock by shifting it from ordinary income to long-term capital gains.

Each of these compensation forms has the potential to have a lasting, positive effect on your wealth; but only if you navigate the accompanying tax and financial complexities strategically.

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The Tax Factor: What You Need to Know

Taxes are the single biggest factor to consider when managing equity compensation. Poor timing can mean losing a significant portion of your rewards to tax liabilities. Here’s a simplified breakdown:

• ISOs and AMT

  Incentive Stock Options are a tax-friendly tool, but exercising too many in one year can trigger the Alternative Minimum Tax (AMT). Proper planning, like spreading exercises across multiple years, can help mitigate this.

• RSU Vesting and Taxes

  When RSUs vest, you’re hit with ordinary income tax on their full value. Depending on how frequently you’re issued RSUs and if your company stock is performing well, you may be tempted to hold onto those shares. But this could leave you overexposed to a single stock.

• Deferred Compensation Risks

  Deferred compensation allows you to kick taxes down the road, but you’ll need to carefully coordinate distributions with your broader income to avoid bumping into higher tax brackets. Additionally, depending on how the agreement is written, there may be additional risks such as if the company goes bankrupt, is sold, or employment separation isn’t in alignment with the terms of the agreement.

• NUA Benefits

  If you hold company stock in a 401(k), rolling it into a brokerage account under NUA rules lets you pay long-term capital gains rates on its growth instead of ordinary income tax rates often cutting your tax liability nearly in half.

Giving thoughtful consideration to your tax strategy ensures you’re making the most of what you’ve earned while keeping more in your pocket.

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Strategies to Maximize Equity Compensation

Managing equity compensation isn’t just about taxes—it’s about using these assets to meet your broader financial goals. Here are three strategies to get you started:

Diversify to Manage Risk

As passionate as you may be about the outlook of your company, holding too much company stock ties your financial future to one asset, leaving you vulnerable even if the only risk couldn’t have otherwise been planned for. As soon as RSUs vest or you exercise stock options, consider selling to diversify your portfolio into other investments. This spreads risk while still allowing you to benefit from your company’s success.

Plan the Timing of Exercises and Sales

For ISOs and NSOs, timing is everything. Aim to exercise stock options in years when your taxable income is lower to minimize the impact. Similarly, holding shares long enough to qualify for long-term capital gains can significantly reduce the taxes you pay on appreciation.

Leverage Tax-Advantaged Strategies

Tools like deferred compensation and NUA are underutilized opportunities to save on taxes. Deferred comp payouts scheduled during retirement years, when your income is typically lower, can make a huge difference. Likewise, using NUA rules for company stock in your 401(k) can transform a steep tax bill into manageable long-term capital gains.

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The Bigger Picture

Equity compensation is about more than just growing wealth. It’s about aligning your decisions with your long-term financial goals. Whether you’re a business owner structuring a succession plan or an executive navigating your compensation package, the right strategy can help you turn potential into reality.

That said, equity compensation is rarely one-size-fits-all. Your strategy should account for your risk tolerance, income level, and long-term goals. A financial advisor can be a valuable partner in navigating these complexities, helping you optimize your decisions at every step.

If you’re ready to take the next step in managing your equity compensation, start by evaluating your current position and identifying opportunities to optimize. And remember thoughtful planning today lays the foundation for tomorrow’s success.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

Financial Planning Feature: Wealth Think Wisdom, vision, wealth: How parents can instill enduring financial habits

Kristiana Daniels, CFP®, EA, BFA™ had the privilege of being featured in Financial Planning, where she shares insights on the importance of instilling enduring financial habits in the next generation.

Kristiana emphasizes the need for proactive and intentional thought behind how we incorporate our children and our client’s children in building solid foundations and generational wealth.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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2025 Financial Wellness Checklist: 7 Steps to a Healthier Future

Here we sit in 2025! It’s that time of year when everywhere you look, you’re encouraged to reflect on the previous year and set new goals for the one ahead. Physical and mental health goals, career moves, and personal bucket list items often take center stage. But amid all the dreaming, don’t forget to take the temperature of your financial health.

To improve your overall financial well-being this year, here are a few steps to get you started and position yourself for long-term success.

1. Eliminate Unnecessary Expenses

Start by taking inventory of your subscription services. Remember when you signed up for that free trial of Apple Music or HelloFresh six months ago and forgot to cancel it? Oops! Comb through your credit card statements to identify recurring charges for services you no longer use and cancel them.

Go one step further: For services that have increased their prices—like your internet or cable provider—call and ask if there’s a better offer available. You might be surprised at the deals you can secure simply by asking.

2. Review Your Insurance Coverage

If you own a home, chances are its value has increased in recent years. Now is a great time to review your homeowner’s insurance policy to ensure adequate coverage. Did you know an insurance company will only fully cover damage to your home if your policy covers at least 80% of the home’s total replacement value? Keeping your coverage up to date can save you from financial headaches down the line.

Also, review your life insurance. Is the coverage amount still appropriate given your current expenses, income, and anticipated needs? Regular reviews help ensure your family’s financial security remains intact.

3. Automate Your Savings

One of the easiest ways to build your savings is to automate the process. Set up monthly direct deposits or automatic transfers from your checking account to a brokerage account, high-yield savings account, or IRA. Once it’s set up, you’re less likely to miss the money, and your savings will grow without additional effort.

4. Increase Retirement Plan Contributions

Contributing to your employer-provided retirement plan is a relatively painless way to save for the future. Instead of contributing a flat dollar amount, set a percentage of your salary to defer. This way, your contributions automatically increase as your pay grows.

Consider going one step further by increasing your contribution rate by 1-2% this year. A small adjustment like this can have a significant impact over the course of your career.

Additionally, depending on your financial situation, explore deferring income to the Roth feature of your employer’s retirement plan. This option can provide more flexibility in retirement and potential tax savings over your lifetime.

5. Review Estate Planning Documents

Life changes, and so should your estate plan. Ask yourself:

• Are the people you’ve named in your will or trust still the right choices?

• Is your medical durable power of attorney assigned to the best person to advocate for you in an emergency?

• Have your children reached adulthood, and are you now comfortable naming them as successor trustees instead of your sibling?

These details are easy to overlook but crucial to keeping your estate plan aligned with your wishes.

6. Reevaluate Your Financial Goals

Take time to reassess your financial goals. Are they still aligned with what you hope to achieve in the future? Have your priorities shifted? Organize your list of goals and determine what’s most important to you right now.

Also, consider whether you’re making forward progress. If not, identify the roadblocks that might be holding you back. Evaluating your financial health requires reflecting on where you started, understanding where you want to go, and objectively tracking your progress.

7. Explore Tax-Saving Opportunities

Proactive tax planning can save clients significant money over the course of the entire lifetime. Take advantage of tax-advantaged accounts like HSAs and IRAs. Review your withholdings to ensure you’re not giving the government an interest-free loan or facing a big tax bill come April.

If you’re a small business owner or self-employed, consider strategies like maximizing retirement contributions or claiming proper deductions. Tax planning is a year-round activity that will enhance your financial health.

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If your financial plan needs a wellness check, let’s connect.

It’s a privilege to walk alongside you on your journey to optimal financial health. By tackling these steps, you can set yourself up for a brighter financial future in 2025 and beyond.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

House Rich, Cash Poor: Managing Wealth When Your Largest Asset is Real Estate

For many Americans, homeownership is their most significant financial asset. However, real estate investments can leave much of your wealth tied up in real estate, and limited liquidity for a more balanced investment strategy.

Fortunately, several strategies exist to manage real estate wealth tax-efficiently, turning equity into liquidity while preserving long-term value. Below, we explore tools like 1031 exchanges, Delaware Statutory Trusts (DSTs), and 721 exchanges (UPREITs) to help you make informed decisions about your financial future.

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Strategies for Real Estate Wealth Management

1031 Exchange

The 1031 exchange is one of the most commonly used tools for managing real estate capital gains. This IRS-approved strategy allows you to defer taxes when you sell an investment property and reinvest proceeds into another “like-kind” property.

Pros

• Capital Gains Tax Deferral: By deferring taxes, you keep more capital available for reinvestment, enhancing the potential for your wealth to grow over time. This strategy can be applied multiple times as your portfolio evolves, enabling you to align your investments with changing goals or market opportunities.

• Estate Planning Benefits: Upon inheritance, heirs receive a stepped-up cost basis, eliminating the deferred capital gains taxes that have been accumulating by using this approach.

Cons

• Stringent Timelines: You must identify a replacement property within 45 days of selling your current one and complete the purchase within 180 days.

• Active Management Required: You remain responsible for property upkeep and operations unless you combine this strategy with a passive structure like a DST. More on that to come.

• Strict Property Rules: Only real property, such as land or buildings, qualifies under 1031 exchange rules, excluding personal property, stocks, or other asset types. This limitation narrows flexibility for investors who may wish to diversify beyond real estate.

When to Use It: Ideal for active investors aiming to upgrade properties, defer taxes, or diversify their portfolios while staying involved in management.

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Delaware Statutory Trust (DST)

DSTs provide a way to own fractional shares of large, professionally managed properties while retaining eligibility for 1031 exchanges.

Pros

• Passive Investment: Investors enjoy hands-off property ownership with management handled by professionals. This is perfect for those seeking income without operational headaches.

• Access to High-Quality Assets: DSTs often include institutional-grade properties like office buildings, multifamily units, or industrial spaces. They offer diversification across geography, tenant types, and sectors.

• Ongoing 1031 Eligibility: You can defer taxes on the eventual sale of DST shares by reinvesting through another 1031 exchange.

Cons

• Limited Liquidity: DST shares are illiquid, with investors needing to wait for the property’s eventual sale to access funds.

• Lack of Control: Investors have no say in operational or sales decisions, which could impact returns.

When to Use It: Best for investors looking for passive income while still leveraging the tax benefits of 1031 exchanges.

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721 Exchange (UPREIT)

The 721 exchange allows property owners to convert real estate into operating partnership (OP) units in a Real Estate Investment Trust (REIT), offering exposure to a diversified real estate portfolio.

Pros

• Tax Deferral: Immediate deferral of capital gains taxes during the exchange process.

• Diversification: Instead of holding a single property, you gain fractional ownership in a REIT, which may include residential, commercial, and industrial properties across markets.

• Improved Liquidity: REIT shares are easier to sell compared to physical real estate, offering greater flexibility if you need cash.

• Simplified Estate Planning: REIT shares can be divided among heirs more easily than physical properties.

Cons

• No Re-Entry to 1031: Once in a REIT, you cannot use 1031 exchanges for future tax deferrals.

• Market Volatility: The value of REIT shares can fluctuate, introducing new risks compared to holding a single property.

When to Use It: Ideal for investors ready to exit property management entirely, seeking diversification and either a more liquid portfolio or access to cash.

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Choosing the Right Path

Deciding on the right strategy for managing real estate wealth requires careful consideration of your financial goals, risk tolerance, and long-term priorities. Each option—whether a 1031 exchange, DST, or UPREIT—offers specific benefits that cater to different needs, but also comes with trade-offs that must be weighed.

For those seeking to maximize growth, strategies like the 1031 exchange allow for tax-deferred reinvestment, enabling properties to evolve alongside your financial objectives. If diversification and passive management are priorities, transitioning into structures such as DSTs or UPREITs can provide exposure to a broader range of assets without the burdens of direct property management. When planning for future generations, these tools also facilitate tax-efficient wealth transfer, simplifying estate planning and easing the complexities of distribution.

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Ultimately, the best approach depends on how you balance factors like liquidity, diversification, and tax efficiency against your personal and financial goals. Thoughtful planning and a clear understanding of your options are essential to ensuring that your strategy aligns with both current needs and future aspirations.

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Recent Articles Written By Andrew:

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

Connelly v. United States: What it May Mean For Your Business

Last month I spoke to the importance of a buy/sell agreement amongst business owners. To continue that conversation, the recent Supreme Court decision in Connelly v. United States has given even more for small business owners to consider. The case has significant implications that extend well into the owner’s estate planning, and it should prompt them to reconsider how they handle succession plans and ownership structures, especially when buyout agreements are involved. In this article, we’ll break down the key lessons from this case and how they could affect your business.

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A Quick Look at the Connelly Case

In Connelly v. United States, the Supreme Court addressed the valuation of life insurance proceeds used in business buyouts, specifically for estate tax purposes. The case involved two brothers, Thomas and Michael Connelly, who co-owned Crown C Supply, a closely held C corporation. They had a buyout agreement in place that allowed the company to redeem the deceased brother’s shares using life insurance proceeds. The crux of the legal dispute was whether those life insurance proceeds should be included in the company’s value for estate tax purposes.

The IRS contended—and the Court agreed—that life insurance proceeds used for this kind of buyout must be counted as a corporate asset when determining the value of the business. This decision increases the taxable value of estates in similar situations and has several important consequences for business owners, especially those relying on life insurance-funded buyouts.

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What This Ruling Means for Small Business Owners

If you’re a small business owner or operate a closely held company, Connelly raises serious questions about how buyout agreements are structured and the role of life insurance in those agreements. For many, this decision should serve as a wake-up call to reassess existing plans. Here are some key areas that deserve your immediate attention:

1. Reevaluate Your Buy-Sell Agreement

   Buy-sell agreements are designed to ensure business continuity when an owner passes away or exits the business. In many instances, life insurance policies fund these agreements, with the company using the proceeds to buy out the deceased owner's shares. Prior to Connelly, many business owners believed that the obligation to redeem shares would offset the life insurance value when calculating the company's estate tax valuation. That’s no longer the case.

   What you should consider: If your current buy-sell agreement is structured as a redemption agreement (where the business purchases the shares), you could face a higher estate tax bill than anticipated. Now might be the time to explore restructuring your agreement into a cross-purchase plan. In this structure, surviving owners directly purchase the deceased owner's shares, with life insurance proceeds going to them, not the company—thus avoiding an increase in the company’s valuation for tax purposes.

2. Review Your Estate Plan

   The Court’s decision underscores that life insurance proceeds—even when earmarked for business continuity—are considered part of the business’s taxable value. This could dramatically alter the estate planning outcomes for business owners who have carefully crafted their plans to minimize tax burdens.

   The estate tax exemption is set to decrease significantly in 2026 as the Tax Cuts and Jobs Act (TCJA) sunsets, and many states have even lower thresholds than the federal government. This ruling could make the difference between owing estate taxes or avoiding them altogether.

   What you should consider: Now is a great time to work with your estate attorney to reassess your plan. If life insurance is part of your business’s buy-sell structure, consider whether a cross-purchase arrangement or a trusteed buyout might offer better protection from the kind of tax exposure highlighted in Connelly.

3. Prepare for Broader Financial Implications

   The valuation changes resulting from Connelly aren’t limited to estate tax—they could affect your business’s financial health as well. Increasing the company’s value due to life insurance proceeds could put unexpected pressure on liquidity and cash flow. If your heirs are forced to sell assets or take on debt to cover an unanticipated tax bill, the future stability of your business—and your intended legacy—could be at risk.

   What you should consider: You may want to consider purchasing additional personal life insurance to cover potential estate taxes resulting from a redemption agreement. Alternatively, you might explore restructuring the business to protect its value through trusts or family-owned LLCs, which are designed to limit estate tax exposure.

4. Cross-Purchase Arrangements: A Smarter Option?

   One of the biggest lessons from Connelly is that cross-purchase arrangements, where individual owners hold life insurance policies on each other, may offer better protection against valuation complications. With a cross-purchase arrangement, the business’s value remains insulated from life insurance proceeds, and surviving owners receive a stepped-up basis in the shares they purchase.

   What you should consider: If your business has multiple owners, a cross-purchase agreement may be a more attractive option than a redemption agreement. While cross-purchase plans can be more complex to manage—especially as the number of owners increases—they can offer significant tax advantages over time. Just keep in mind that each owner will need to hold policies on the others, which can complicate the arrangement.

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The Bottom Line

The Connelly decision is a reminder of how critical it is to keep a close eye on the structure of your business succession plans. For closely held businesses that rely on life insurance to fund buyouts, the landscape has shifted in ways that could have serious financial repercussions.

Now is the time to review your buyout or succession planning agreements. Determine whether a redemption or cross-purchase arrangement is the best fit for your business, and make sure your estate planning documents reflect the current legal and tax environment. While Connelly may not be the final word on these matters, it’s a clear call for business owners to be proactive and thoughtful about how they plan for the future.

Smart planning today will go a long way in protecting your business and ensuring your legacy.

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

2024 End of Year Financial Checklist

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Completing an end-of-year financial checklist is essential for setting yourself up for success in 2025. This process will allow you to review your progress and goals from 2024 while also helping you refresh and enhance your financial plan as you head into the new year.

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Cash Flow Review

Whether you like to budget or not, assessing your spending habits is the essential first step. All financial progress stems from spending less than you make. If you consistently budget, this is the time to figure out what worked well and what needs to be changed. Think about these questions as you forecast for next year.

• How will household income change in 2025?

• What significant expenses am I anticipating in the coming year that I can plan for?

• Am I saving and investing enough of my income?

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Prepare for Tax Season

Much of your tax planning will have to wait until next year, but getting a few items in order can be helpful before tax season. You can collect business expenses, charitable giving receipts, childcare expenses, and other tax-deductible items.

The final piece of preparation for tax season would be to decide how you plan to prepare your taxes. You could do it yourself or hire it out. There is no wrong way to go about it, but now is the time to reach out and find a good CPA that you can work with to optimize your tax situation.

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Max Out Your Contributions

The end of the year is the perfect time to review your annual contributions to your retirement accounts. In 2024, employer-sponsored plans such as 401(k), 403(b), or 457 allow you to contribute up to $23,000. It's important to note that this amount does not include any employer match. If you are 50 years old or older, you are eligible for a "catch-up" contribution, allowing for an extra $7,500 of contributions. This raises your total maximum contribution to $30,500 for the year.

The contribution limit for individual retirement accounts (IRAs) in 2024 is $7,000, with a $1,000 catch-up contribution available for those 50 or older.

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Review Your Investments

If you have a financial advisor, they should have scheduled a year-end planning meeting by now. 

If you manage your investments independently, this is an excellent time to review your strategy, assess your performance, and rebalance your portfolio. If you feel it's time to seek professional help, consider finding a fiduciary advisor who prioritizes your best interests.

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Consider a Roth Conversion

Roth conversions involve transferring pre-tax dollars into a Roth account, which will then grow tax-free. This approach can be great for someone nearing retirement with much of their wealth in pre-tax accounts. It can also benefit young professionals with plenty of time for the investment to grow. However, this only makes sense for some, so consult a financial professional to weigh the pros and cons of this option.

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Open Enrollment

Open enrollment occurs at different times of the year and is dictated by your employer. It is most commonly presented around early November and allows you to review or change employee benefits options. 

This is an excellent time to ensure you get the best insurance plan value. You and your spouse may even qualify for additional plans, such as term life insurance or disability coverage, at little to no cost.

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Confirm Beneficiaries

While this does not change often, it is necessary to ensure that it is up to date. Here are some accounts that should have a beneficiary associated with them. 

• Retirement/Investment Accounts (401k, 403b, 457, and IRAs)

• Bank Accounts

• Life Insurance Policies

Properly assigning beneficiaries can help you have peace of mind that your loved ones will be cared for. 

This checklist can help you clearly assess your financial situation and prepare for success in 2025.

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References

https://www.irs.gov/newsroom/401k-limit-increases-to-23000-for-2024-ira-limit-rises-to-7000

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Protecting Your Business’s Future: The Critical Role of Buy/Sell Agreements

Business owners should strongly consider buy-sell agreements to safeguard the interests of both the business and its owners. These agreements are invaluable in setting clear guidelines for ownership transitions in various situations, from unforeseen events to changes in business dynamics. They typically cover:

• Regulation of the owners' relationships

• Management of the business

• Transfer of ownership interests

• Privileges and protections for owners

Buy/sell agreements help mitigate risk by preparing for unexpected events, ensuring business continuity, and avoiding costly disputes that can arise without proper planning. Let’s dive into the key components of buy-sell agreements, triggering events, and methods for determining a purchase price.

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Triggering Events in Buy/Sell Agreements

Buy/sell agreements are activated by specific "triggering events" that require the sale or transfer of an ownership interest. These events typically fall into three categories, each representing a potential risk to the business:

1. Third-Party Sale Triggers

   Business owners are often concerned about a potential sale to outsiders, as a new owner could disrupt the company’s decision-making process. To prevent unwanted transfers, such as shares falling into the hands of an ex-spouse following a divorce or creditors following bankruptcy, buy/sell agreements often include protections against third-party sales.

2. Owner Viability Triggers

   An owner's physical or mental incapacity can impact the smooth operation of a business. Buy/sell agreements ensure that the company has a plan in place to manage ownership transitions in the case of death or disability. In many cases, the agreement may also outline the use of life or disability insurance as funding mechanisms for the buyout.

3. Relationship Severance Triggers

   When an owner leaves the company, whether through resignation, retirement, or termination, it can create complications for the remaining owners. A buy/sell agreement mitigates this risk by defining the terms for how shares will be handled, preventing a former owner from joining a competitor or disrupting the company's future.

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Key Provisions in Buy/Sell Agreements

A well-structured buy/sell agreement should include provisions that address potential challenges and outline clear solutions. These provisions help ensure a smooth ownership transition:

• Purchase Price Determination

  Methods for determining the purchase price can vary. Common approaches include:

• Fixed price (e.g., book value)

• Agreed-upon formula (e.g., multiple of earnings)

• Agreed-upon methodology (e.g., market-based)

• Third-party appraisal by a qualified business appraiser

• Restrictions on Transferability & Rights of First Refusal

  To protect existing owners' interests, buy/sell agreements may restrict the transferability of shares. This provision ensures that owners cannot sell their shares to outsiders without first offering them to other owners or the business itself.

• Employment & Non-Compete Clauses

  These provisions help protect the business from former owners who may attempt to start a competing company after leaving. The agreement can restrict such actions, safeguarding the company's market position.

• Call & Put Options

  Call and put options allow owners to buy or sell shares at a predetermined price, giving them control over the timing and terms of ownership changes.

• Funding & Terms of Purchase

  Buy/sell agreements often specify how the buyout will be funded, such as through insurance proceeds, company profits, or loans. This ensures the transaction is financially manageable for all parties involved.

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Types of Buy/Sell Agreements

There are several types of buy/sell agreements, each with its own advantages depending on the business structure and ownership:

1. Cross-Purchase Agreements

   In a cross-purchase agreement, individual owners purchase life insurance policies on each other. Upon a triggering event, the remaining owners buy out the departing owner’s shares.

• Pros: Owners maintain control over their shares; favorable tax treatment for surviving owners.

• Cons: Becomes complicated with multiple owners due to the number of policies required.

2. Entity-Purchase Agreements (Stock Redemption)

   In this arrangement, the business itself buys the departing owner’s shares, using a single insurance policy on each owner.

• I’ll be discussing this in greater detail next month as the Supreme Court has just issued a ruling that affects how entity purchases are taxed moving forward.

3. Combination of Third-Party & Business Purchase Arrangements

   This hybrid address both cross-purchase and redemption arrangements and may provide right of first refusal provisions for the remaining owners and the business.

• Pros: Offers flexibility to decide at the time of the event; suitable for changing business circumstances.

• Cons: More complex to structure and manage due to the number of options available.

More on Methods to Determine the Purchase Price

Valuing a business for a buy/sell agreement is essential and can be approached in several ways:

• Fixed Price

  A simple approach where the owners agree on a fixed price for the shares. However, this method may become outdated quickly if not regularly updated to reflect changes in business value.

• Agreed-Upon Formula (e.g., Book Value or Multiple of Earnings)

  Formulas offer a straightforward method of valuation, such as using a multiple of the company's earnings. This method is low-cost but can oversimplify the valuation process, potentially leading to inaccuracies.

• Agreed-Upon Methodology (Market-Derived)

  This method employs an agreed-upon market-based valuation approach to calculate the price. It provides more accurate results than formulas, particularly for businesses that undergo rapid changes in value.

• Appraisal by a Qualified Business Appraiser

  An appraisal performed by a third-party expert can ensure an accurate and fair valuation. While this is often the most reliable method, it can be time-consuming and expensive.

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A well-crafted buy/sell agreement is crucial for any business with multiple owners. It provides a clear plan for ownership transitions, helps protect against unexpected events, and ensures fairness for all parties. Whether you opt for a cross-purchase, entity-purchase, or a combination of both, having a buy/sell agreement in place will help secure the future of your business and avoid costly disputes.

It’s essential for business owners to work closely with legal and financial professionals to tailor the agreement to their specific needs, ensuring it is regularly updated as the business grows and changes.

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Recent Articles Written By Andrew:

Recent Publications Featuring Andrew:

Podcasts Featuring Andrew:

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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.

Financial Goal Setting: 5 Simple Steps for Success

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I want to make my case for why goal setting matters for your financial picture. A study by Gail Matthews at Dominican University showed the benefits of goal setting, specifically the advantages of having written goals with accountability. Feel free to check out the study yourself, but she found that having written goals gave people a 33% higher chance of success compared to those with unwritten goals. Here are 5 steps to help guide you through your financial goal-setting and give you more confidence in your financial plan.

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Step 1: Define Specific Goals

I got my bachelor’s degree in exercise science, and in my program, every class emphasized goal setting. Whether discussing exercise and nutrition or personal finance, achieving a goal must be done with strategy in mind. The strategy I find the most effective in goal setting is called SMART goals. SMART stands for specific, measurable, attainable, relevant, and time-bound. By being specific, you can track progress and know when you’ve achieved your goals. For example, “I am going to invest 5% of my monthly income into a Roth IRA for the next year”.

• Specific: Investing into a Roth IRA

• Measurable: 5% of monthly income

• Attainable: 5% is a manageable contribution

• Relevant: Relevant for someone starting to invest

• Time-bound: The next year

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Step 2: Prioritize Your Goals

The reality is we can’t focus on a bunch of goals at one time. When we try to accomplish too many goals at once, they all suffer, hurting our chance of accomplishing the most important ones. I recommend prioritizing your list of SMART goals down to your top 3. This could be due to urgency or importance. Examples include creating a budget or maxing out your IRA contribution for the year. Jot down all the goals, but don’t set the expectation that you can do them all at once.

If your goal seems too big, break it down into a few smaller goals that will help you see the progress quicker. For example, break down a goal to pay off all debt into paying off credit card debt first, then student loans, and then car loans. This way, you break down a goal that would take 3 years, allowing you to check off one goal each year, making it more manageable.

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Step 3: Create A Plan and Track Progress

Now that you’ve established your SMART goals and broken them down by priority, the rubber can hit the road. There are multiple ways in which this can be done well, so find what works for you and stick with it. Research shows that written goals with accountability give you the highest chance for success. Whether you write your goals in a journal, your phone notes, or an app, the important part is that you do it.

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Step 4: Use Goals to Cultivate Consistency

This point could be summed up if you read the book “Atomic Habits” by James Clear. If you’re interested, I can’t recommend that book enough. Clear makes the point that small habits that are successfully implemented over time lead to major changes. Essentially, it is easier to make three small changes than to make one major change. This is where accountability comes into play. 

If you’re married, you have a built-in accountability partner. One that will likely share the same goals as you. If you’re single, find a trusted friend or family member who can help keep you on track with your goals over time. The beauty of financial goals is that these individual goals often turn into habits that can be automated. In my earlier example of putting 5% of your monthly income into a Roth IRA, by doing this, you build a habit that can be repeated year on year with minimal effort.

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Step 5: Learn from Setbacks and Adjust

News Flash: Setbacks will happen for everyone. Nobody is perfectly consistent, and a lack of consistency will lead to setbacks. I don’t say this to discourage you, but hopefully to encourage you. A setback does not equal failure when it comes to goal setting. By readjusting instead of giving up, you give yourself a chance to still be successful. Your financial life is a constantly changing picture, and your goals should be no different. Having goals in place, even after adjusting for unforeseen circumstances, will still put you in a better position than if you had never set the goals to begin with.

Goal setting is an incredibly important way to implement changes to your financial picture. It is how you intentionally go from getting out of debt to saving for retirement and having a bulletproof retirement plan. The beauty of goal setting is that it benefits everyone from the 18-year-old college student to the 72-year-old retiree and everyone in between. Use these steps to sit down and see the benefits for yourself.

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References

https://www.dominican.edu/sites/default/files/2020-02/gailmatthews-harvard-goals-researchsummary.pdf

https://success.oregonstate.edu/learning/smart-goals#:~:text=In%20general%2C%20SMART%20goals%20are,able%20to%20celebrate%20your%20accomplishment.

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Should I Buy an Annuity?

Annuities can be a very hot button issue.

People seem to really love them or really hate them.

I’m not one of those people.

I think they are great in the right situation and not so great in others.

Therefore, instead of giving you an answer about whether they are good or not, I thought I would put together a quick video that breaks down the framework I use when considering whether to buy an annuity.

Based on the video, what are your thoughts? Do you think an annuity might be right for you?

This information is for educational purposes only and should not be taken as advice. Past performance does not guarantee future results.

Monte Carlo Simulation Link

“I am passionate about helping people improve the efficiency of their finances!”

— Andy Cole

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

MoneyGeek Feature: Average Cost of a Wedding

Leanne Rahn had the privilege to be featured in MoneyGeek to talk to readers about the “Average Cost of a Wedding”.

Ever wonder why wedding prices seem to skyrocket? From personalized touches to seasonal trends and logistics, there are several factors that can inflate the cost of your big day. Leanne dives into the reasons behind these wedding markups and offers practical tips on how couples can manage their wedding budget without compromising on what matters most.

Discover how to prioritize key elements of your special day while keeping costs under control!

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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