Zinnia Wealth Management – Florida Financial Services

Investment Management

Setting up your Investment Plan takes goals, calculation, investment strategy and the creation of investment policy statement. Investment planning is the process of matching your financial goals and objectives with your investment resources.

The basics of investment planning are establishing goals, understanding risk tolerance and appropriately allocating assets. A successful plan encompasses all of these components and more.

Your short and long-term goals and your overall estate are the driving forces behind an investment plan. We work with you to determine investment strategies that fit with the other elements of a well-rounded, comprehensive plan.

Risk Management

One definition of risk management is the forecasting and evaluation of financial risks together with the identification of procedures to avoid or minimize their impact. Did you feel the 2008 market hit? Were you wondering why you had to call your advisor to tell them to sell? Knowing your exit strategy is one of the most important components to risk management. It’s crucial that we implement this conversations to ensure that everyone is on the same page and that a plan will be enforced. Trust and transparency is key in planning your exit strategy, but understanding it is the most important. We offer a comprehensive risk analysis to make you are not taking too much risk for the reward you might be receiving.

Efficient Tax Planning Strategies

Find ways to help create a strategy that defers, manages, and reduces taxes.

Tax-loss harvesting is when you sell an investment like a stock or bond for a loss and use that loss to offset realized capital gains from other securities or other income. Tax-loss harvesting can be a useful way to help you keep more of what you earn. Each taxpayer is allowed to use capital losses to offset capital gains, and can use any remaining losses to offset up to $3,000 of ordinary income each year. Any losses not used in a given tax year can be carried forward and used in future years. So selling losing investments and using those losses to offset gains can be used to reduce your tax bill.

Most people experience investment losses from time to time, and if handled properly, the strategy can potentially improve overall after-tax returns. The challenge is that a systematic tax-loss harvesting strategy requires disciplined trading, diligent investment tracking, and detailed tax accounting. It’s important to consult a financial advisor and CPA because you need to be aware of the wash-sale rule which could get you in trouble with the IRS if not considered.

Tax Deferral Investing is a way to take after tax money and invest it without having to pay short term or long term capital gains tax on it until you decide to withdraw from this type of account. If you don’t qualify for an IRA or don’t have the opportunity to create a 401k, then this is a viable option.

Tax Free Income planning can help offset future taxes in case legislation raises tax rates during your retirement. There are a few instruments for tax free income planning and the key to success is starting early enough so there is enough time for the investment to grow through Roth IRA contributions, Roth IRA conversions or maximized life insurance contracts.

Tax Management – Fee Structure Plus

Fee structure plus is an innovative tax management program for attorneys working under contingency fee agreements. This program offers plaintiffs and attorneys a unique alternative to traditional structured attorney fee options.

Fee Structure Plus allows attorneys to have their contingency-based attorney fees placed in a program that will enjoy market related returns.

The introduction of Fee Structure Plus represents the next generation of structured attorney fees. In addition to tax deferral on contingency fees, deferred funds may be allocated to market-related investment portfolios. Attorneys and plaintiffs can select a passive or active investment management approach using a respected trust company.

Through our consultation, we can walk you through the simple process of setting up this more effective method.

Estate Planning

Planning your legacy can have many moving parts and can be quite complicated. It’s important to make sure you have your estate plan worked out or your money could be going to someone you didn’t plan for it to go to and you could have more taxes than planned due to estate taxation.

Deciding on a will or a trust? It’s important to understand why you would need one or both as part of your plan.

Deciding whether you should turn your life insurance policy into an irrevocable life insurance trust (ILIT) to reduce estate taxes? These are small details that must be considered when creating an estate plan.

After discussing your goals, we will analyze the existing pieces of your plan to identify gaps and issues that could inadvertently trigger probate action and tax exposure. A well-designed plan can alleviate anxiety and secure your legacy for generations to come.

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Legacy & Estate Planning
Understanding the Basics

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Guaranteed Income

Do or don’t you add annuities to your retirement income plan? This is not a cookie cutter approach and doesn’t fit everyone’s retirement needs. Learn how annuities can help generate a stream of income or increase your current saving. Annuities are investment products that may be used to help you increase savings, protect your savings, or generate a stream of income. The four the types of annuities are:

1. Deferred annuities offer tax-deferred growth potential, with underlying investments that can be fixed or variable.
2. Immediate income annuities can turn a portion of your savings into income for either the rest of your life or a set period of time, starting immediately or at a later date.
3. VARIABLE ANNUITIES provide no safety when the market goes down and charges excessive fees. This type of annuity can provide an income stream if needed and death benefit if you pay an extra fee.
4. FIXED INDEX/HYBRID ANNUITIES give you more flexible growth and income option than the deferred or immediate annuity with little to no fees or loss to the account value when the market goes down.

These annuities can turn a portion of your savings into a guaranteed income stream, starting on a date in the future. Some allow access to assets before or after income payments begin.Some are also only for growth incase you are not interested in income, but more tax deferral and conservative growth without the worry of fee or market crash lowering your account value.

If you own an annuity, a tax-free exchange to one of our companies may help you accumulate more for retirement with lower fees. If you have a penalty, there is a likelihood we can find another company that suites your needs that will offer a bonus so that you still start out ahead of the game with the move.

WHO IS THIS APPROPRIATE FOR: Investors who want to increase their tax deferred retirement savings beyond the contribution limits of an IRA or 401(k), with the ability to invest in a wide range of investments potentially without fees including equity, bond, fixed and index funds.There is not a required minimum distribution at age 70.5 like with other retirement accounts or IRA’s. This is a good option for tax efficiency and estate planning.

Retiring Your Business

You have grown your business and now it’s time to retire it well. We offer a step by step comprehensive and tax efficient approach to retiring your company. We offer structures to defer taxes through a 1031 and other tax efficient options to keep as much of the business profits in your pocket without having to pay Uncle Sam a huge capital gain.

Building your company took drive, creativity and execution. Let us take the stress out of retiring it because business owners are unique in the additional challenges they face when planning their estates. Our job is to help you navigate buy/sell agreements and Structured Installment options.

We help business owners determine the most effective company structures to reduce liability exposure and solve income, estate and asset preservation issues.

Structured Settlements

CASE STUDY

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HYPOTHETICAL EXAMPLE: A 50-year-old attorney represented a client in a personal injury court case. The client settled the case and as a result the attorney is due $1,000,000 as a contingent fee. In this hypothetical example, the attorney typically has four options to consider:

OPTION 1: Take the full $1,000,000 up front and pay all the taxes this year. Upfront taxes would include Federal and state ordinary income tax as well as FICA. This may create an effective tax rate of about 58%.

OPTION 2: Structure the contingent fee and create an immediate stream of income. If the income is started within 30 days, the attorney would receive $105,548 per year for 10 years based on current rates. If no other income is earned each year and taxes remain the same, the effective tax rate would be about 31%. The attorney would net $1,055,480 which has an annualized return of 0.54%. If the attorney were to pass away before the 10 years of payments has concluded, his beneficiary could continue the payments.

OPTION 3: Structure the contingent fee and create a deferred stream of income. If the income is started 10 years from now, the attorney would receive $158,709 per year for 10 years based on current rates. If no other income is earned each year and taxes remain the same, the effective tax rate would be about 33%. The attorney would net $1,587,090 which has an annualized return of 2.34%. If the attorney were to pass away before the 10-years of payments has concluded, his beneficiary could continue the payments.

OPTION 4: Structure the contingent fee into a Fixed Index Annuity to capitalize on returns in addition to creating a deferred stream of income. If the income is started 10 years from now, the attorney would receive $96,523 per year for life based on current rates. If no other income is earned each year and taxes remain the same, the effective tax rate would be about 31%. If the attorney lives until age 85, he would net $2,413,075 which has an annualized return of 2.55%. When the attorney passes away, if there is money left in the account value it would be paid as a lump sum to his beneficiary. The account value grows based on indexed gains minus any income payments.

The benefits of structuring a contingent fee are that payments are secured by a highly-rated insurance company, taxes are deferred and, if certain tax rates are reduced or eliminated, the client would benefit from potentially lower taxes.

In addition, structuring a contingent fee could set up income for retirement as well as protect an attorney’s beneficiaries in case the attorney were to pass away.

DST 1031 REAL ESTATE

Many people who own highly appreciated investment property feel trapped from cashing out due to the high tax bills they face on their gains. Passive real estate investing allows owners of real estate to sell their investment real estate and potentially defer capital gains taxes through the use of Delaware Statutory Trusts (DSTs).

DSTs are an investment vehicle for investors who want the benefits of owning real estate without becoming a “landlord”, as well as current real estate investors who no longer want the responsibilities of being a landlord. Contact Zinnia Wealth Management to learn more about DSTs.

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