Freeman's Blog


August 22, 2014
August 22nd, 2014 by

Gift Tax

The federal gift tax applies to gifts of property or money while the donor is living.

The federal estate tax, on the other hand, applies to property conveyed to others (with the exception of a spouse) after a person’s death.

The gift tax applies only to the donor. The recipient is under no obligation to pay the gift tax, although other taxes, such as income tax, may apply. The federal estate tax affects the estate of the deceased and can reduce the amount available to heirs.

In theory, any gift is taxable, but there are several notable exceptions:

  • Gifts of tuition or medical expenses that you pay directly to a medical or educational institution for someone else are not considered taxable.
  • Gifts to a spouse who is a U.S. citizen are not subject to the gift tax.
  • Gifts to a qualified charitable organization are not subject to the gift tax.
  • Gifts to a political organization are not subject to the gift tax.

You are not required to file a gift tax return unless any single gift exceeds the annual gift tax exclusion for that calendar year. The exclusion amount ($14,000 in 2014) is indexed annually for inflation. A separate exclusion is applied for each recipient. In addition, gifts from spouses are treated separately; so together, each spouse can gift an amount up to the annual exclusion amount to the same person.

Gift taxes are determined by calculating the tax on all gifts made during the tax year that exceed the annual exclusion amount, and then adding that amount to all the gift taxes from gifts above the exclusion limit from previous years. This number is then applied toward an individual’s lifetime applicable exclusion amount. If the cumulative sum exceeds the lifetime exclusion, you may owe gift taxes.

The 2010 Tax Relief Act reunified the estate and gift tax exclusions at $5 million (indexed for inflation), and the American Taxpayer Relief Act of 2012 made the higher exemption amount permanent while increasing the estate and gift tax rate to 40% (up from 35% in 2012). Because of inflation, the estate and gift tax exemption is $5.34 million in 2014. This enables individuals to make lifetime gifts up to $5.34 million in 2014 before the gift tax is imposed.

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM I work with an expert panel of specialists that can help keep your money safe.  Contact me today for a free consultation so we can evaluate your retirement strategy.
Toll Free: 1-833-313-7233 | MD, VA & DC. 
August 20th, 2014 by

boomers booming in work force

Oldest Working Baby Boomers Turned 65 in 2011

In recent studies, Baby Boomers are showing might and strength. According to a 2014 Gallup poll, there is almost an equal number of Baby Boomers, Generation X and Millennials in our current US work force. Only a small number of people, born before 1946, are still actively working. That says a lot about what retirement means today versus what it used to mean 50 years ago.

Retirement Planning For Your Retirement Dreams

Some may argue that the reason some Baby Boomers are still working is because they have to. With the economic struggles over the past decade, many pre-retirees had to forego their plans of retirement because they lost their nest egg dollars. Retirement planning is an essential and critical part of your career years. You should be actively planning, evaluating and adjusting to the current economy in anticipation of the retirement you want to have. Don’t wait another day. Let’s look at your retirement strategy together and make sure you’re making the most of today for a golden retirement.

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM I want to help you plan more effectively for your retirement. Contact me today for a free consultation.
Toll Free: 1-833-313-7233 | MD, VA & DC. 
August 19th, 2014 by

In a survey of Americans aged 45 and older, 57% described retirement as a new chapter in life, seeing it as an opportunity to explore new options and pursue their dreams. Many pre-retirees don’t envision a traditional retirement at all, but want to reinvent their careers by entering a new field of work.1

Retirement Planning and Expectations
Whether your own retirement is approaching quickly or remains a distant goal, it’s important to consider the lifestyle you want to attain. Clear planning and communication now could prevent disappointment down the road. Here are a few key aspects you might want to address.

When will you retire?

Your retirement age might be a moving target, but it helps to have an age in mind as you envision other aspects of your retirement lifestyle.

You and your spouse may want to compare how your claiming ages for Social Security could affect your lifetime benefits. There are advantages to working until your full retirement age (66 to 67, depending on birth year) or until 70, when you would receive your maximum benefit. If you want to retire earlier, you may need to be more aggressive in your retirement planning strategy.

Will you continue to work?

Although almost seven out of 10 current workers plan to work for pay in retirement, the experiences of current retirees suggest this may be more difficult than expected — only 25% report that they have worked for pay in retirement.2 A second career could be rewarding on both a financial and personal level, but you might be better off setting your retirement nest egg goals so that working is an option rather than a necessity.

Where will you live?

Some people downsize their homes to reduce expenses and add some home equity to their retirement nest egg. Or they may move to a more retirement-friendly community or somewhere closer to family. Others prefer to “age in place” and take advantage of having paid off their mortgages. These are all reasonable options. But as with the goal of working for pay, it’s generally wise to leave your home out of retirement money calculations.

What activities do you want to pursue?

You may want to travel, volunteer for an organization with goals you share, work on your golf game, take up tennis or pursue a new hobby. But keep in mind that some retirement activities are more costly than others so you must include the estimated costs of your retirement fun before you use it.

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM Whatever you imagine, it’s important to set money goals that reflect your retirement dreams and have the potential to help those dreams come true. To plan more effectively for your retirement, contact me for a free consultation.
Toll Free: 1-833-313-7233 | MD, VA & DC. 

1) Yahoo! Finance, May 6, 2013
2) Employee Benefit Research Institute, 2013

August 15, 2014
August 15th, 2014 by

Financial Map - Letter of Instruction
Your financial life is probably more complicated than you realize. You may have multiple bank, retirement, and retirement accounts; insurance policies; a safe-deposit box; and more. You have bills to pay and perhaps a mortgage and other outstanding loans. And then there are the people you might depend on for financial matters: your attorney, financial advisor, insurance agent, and accountant, just to name a few.

How Would Your Family Navigate This Financial Sea?

A letter of instructions can help guide your loved ones. Because a letter of instructions is not a legal document, you can simply sit down and write it yourself. Here are some topics you may want to include:

1. A list of documents and their locations, including (but not limited to) your will, financial account documents, insurance policies, tax returns, real estate deeds and mortgage documents, vehicle titles, Social Security and Medicare cards, marriage and/or divorce papers, and birth certificate.
2. Contact information for the professionals mentioned above as well as others who may be helpful, such as a business partner or trusted friend.
3. A list of bills and creditors, including when bills and payments are typically due.
4. Passwords and logins for any important online information.
5. Your final wishes for burial or cremation, a funeral or memorial service, organ donation, and charitable contributions in your memory.

Keep your letter of instructions in a safe, accessible place

Tell your loved ones where it can be found. It would also be wise to give the letter to the executor of your estate and other trusted friends or advisors.

A letter of instructions is an important step to help your family during a difficult transition period. Because your wishes may change, be sure to update the letter regularly.

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM For better money management and to plan more effectively for your retirement, contact me for a free consultation.
Toll Free: 1-833-313-7233 | MD, VA & DC. 
August 5th, 2014 by

Why Women Need Life Insurance

Women comprise almost half the U.S. labor force, and their contributions to family finances are more important than ever.1

A record 40% of households with children under age 18 include mothers who are either the sole or primary breadwinner. In 1960, only about 11% of women carried this level of financial responsibility.2 And, about 37% of “breadwinner moms” are married women who earn a higher income than their husbands. The other 63% are single mothers.3  Of course, many working women might not earn more than their spouses but still make a contribution to the family’s finances.

Stay-at-home moms also contribute to family stability, even if they don’t bring home a paycheck. Based on wages that would be paid for common household tasks, the annual “value of mom” in 2013 was $59,862.4  And, here is the irony. Despite the growing importance of their financial contributions, women are less likely than men to have life insurance (see chart). Those women who do have insurance often have lower coverage amounts — an average of $169,000 for married mothers versus $215,000 for married dads.5

But, it isn’t as costly as you might imagine. The most cost-efficient way to obtain coverage is typically term life insurance. One study found that consumers tend to overestimate the cost of life insurance by almost three times the actual cost.6
Time have changed since the 1960’s. Women are actively in the work force and are actively participating in contributing to the family finances. So, whether you’re the breadwinner, a co-provider, or a stay-at-home parent, be sure that you have enough coverage to protect your family in the event you are no longer there to provide for them.

1) U.S. Bureau of Labor Statistics, 2013
2–3) Pew Research Center, 2013
4) Journal of Financial Planning, June 2013
5), January 9, 2013
6) LIFE Foundation, 2012

Freeman Owen, Jr - Host of "Safe Money Talk" on CBS Radio The Big Talker 1580AM For better money management and to plan more effectively for your retirement, contact me for a free consultation.
Toll Free: 1-833-313-7233 | MD, VA & DC.