The Financierge – May 2022

Dear Clients and Friends,

The purpose of The Financierge is to discuss several of the latest topics that reflect the diversity of planning and thought leadership we provide our clients. In this month’s issue of The Financierge, we start by covering a few tax saving numbers you should know for 2022. We also share some ideas on helping to navigate the financial elements of a divorce. Then we discuss how to help make a business succession plan successful. We conclude with some thoughts on health & wellness, days to celebrate in May, and share some inspirational Bible verses. Hopefully you will find something interesting to your own unique circumstances. Off we go …

Tax Planning

A Few Tax Numbers to Know for 2022

One of the most important services your CPA can offer you besides completing your tax return accurately in proactive tax planning. Areas like managing tax brackets, optimizing deductions, and taking advantage of tax saving opportunities. Here are a few tax numbers to know for 2022:

  1. 401(k) pretax contribution limits – The employee contribution limit for 401(k) plans has increased to $20,500.
  2. 401(k) catch-up contribution limit – Catch-up deposits for employees age 50 and older will remain at $6,500.
  3. Annual Health Savings Accounts (HSA) contribution limits for individuals – HSA contribution limits have increased to $3,650.
  4. HSA contribution limits for family coverage – For those with family plans the contribution limit has increased to $7,300.
  5. HSA catch-up contributions – For employees 55 and older, a extra $1,000 can be contributed to their HSA.
  6. High-Deductible Health Plan (HDHP) minimum deductible for individuals – The minimum annual deductible limit is $1,400 for individual coverage.
  7. HDHP minimum deductible for family – The minimum annual deductible limit is $2,800 for a qualifying high-deductible health plan for family coverage.
  8. HDHP maximum out-of-pocket amounts for individuals – Out-of-pocket maximums are $7,050 for individual coverage.
  9. HDHP maximum out-of-pocket amounts for family – Deductibles, copayments and other amounts that do not include premiums have a maximum limit of $14,100.
  10. Flexible Spending Account (FSA) contribution limit – The limit for employee contributions to flexible spending accounts, made pretax through salary reductions, is $2,850.
  11. FSA carryover amount limit – For FSA plans that permit the carryover of unused amounts, the maximum carryover amount for 2022 is $570.

Financial & Estate Planning, and Risk Management

Six Ideas to Help Navigate Divorce

No one goes into a marriage thinking it will end in divorce. It is a stressful time with many decisions and emotions. Here are a few considerations to help you, or to help a friend, persevere through the process:

  1. Wise Counsel – surround yourself with wise counsel like trusted friends who love you, a respected family law attorney, and a holistic and comprehensive financial advisor to help you with financial planning, estate planning, insurance, and taxes.
  2. Net Worth Identification – In a divorce it is important to identify all your assets, liabilities, income, and expenses as there will be an equitable separation of marital net worth. It is a complex task that requires an understanding of your state of residence rule and what is considered marital and non-marital (earned prior to marriage or inheritance received during the marriage, and not commingled with marital assets). Also, tax consequences are an important part of the equitable division of assets.
  3. Tax Planning – Most couples file their tax return as married filing jointly, which means all income is included on one joint return. After a divorce, individuals will file their taxes individually, as a single taxpayer or head of household. In many instances, income is primarily earned by one party to the marriage while the other party stays home to raise children or maintain the household. After the divorce, the primary income earner is likely to be in a much higher tax bracket than their former spouse. To equalize the division of assets, it is important to recognize the taxability and income-producing status of each owned asset.
  4. Financial Planning – As part of the process it is important to run a financial plan under your new financial and family goals. Your financial advisor can input your assets, liabilities, income, expense to provide you with your net worth, lifetime cash flows, and roadmap for retirement.
  5. Risk Management – Once a financial plan is in place, it is important to look for are where you have risk like property, health, life, and long-term care. After a divorce, it’s common for one or both parties to move into a new residence. Make sure the new home is adequately insured, including necessary riders for items of value such as jewelry, art and collectibles. You should also make sure your new policies have a personal liability umbrella to protect your assets in case a claim exceeds home or auto insurance liability coverage limits. If you plan to stay in your existing home (or purchase a new home), the divorce decree often requires that a mortgage is refinanced, or a new mortgage is taken out in the divorcing party’s individual name. If the homeowner does not have an income stream that will support a mortgage without alimony, work with a qualified home loan officer to determine the requisite duration of alimony payments to secure a mortgage. Work these terms into your decree to ensure all parties meet their financial obligation. Another area to review is life insurance. Who owns what policies, who is making payments, and who are the beneficiaries?
  6. Estate Planning – A divorce requires a complete overall of your estate plan, which generally includes five documents: will, revocable living trust, durable power of attorney, medical power of attorney, and living will. Prior to a divorce, many spouses serve as each other’s agents, making financial or medical decisions on their spouse’s behalf if they’re unable to do so. Be sure to update powers of attorney to designate a new agent post-divorce. Another consideration is who should inherit your assets upon your death. Be sure to update your will and trust as well as beneficiary designations on assets that pass outside of your will or trust, e.g., qualified retirement accounts, IRAs, life insurance policies, etc.

Business Planning

Ideas for Business Succession Planning Success

Here are several key ideas to make your business succession plans (and your overall wealth planning) successful:

  1. Have a Strategy – Make sure you have a strategy that anticipates the potential risks your business may face in the future along with adequate contingency planning. The best way to do this is through thorough “what if” analysis.
  2. Keep it Simple – While it is important to save on taxes or provide creditor protection, do not make your plan so complicated that it takes too long to be implemented. Make sure family politics and bureaucratic governance are structured in a way to be easily developed, and implemented, and understood.
  3. Quarterback Your Wise Counsel – Every business has advisors: lawyers, CPAs, bankers, and other specialists and everyone has their own unique perspective. What happens is that problems arise when the advice of one professional conflicts with the advice of another or is inconsistent with management. In this instance a trusted advisor with fiduciary care, needs to balance, analyze and quarterback the plan to ensure optimal success.
  4. Have an Ongoing Process – There should be a defined process and succession planning should be an ongoing process that is flexible and adaptable to changing internal and external events.
  5. Trust, Transparency, and Collaboration – There must be a culture that fosters trust, transparency, and collaboration. There will inevitably be unexpected future events and actions needed to be taken by all levels of both the business and all generations of the family for the business to be resilient.
  6. No Fear! – It is important to dedicate the time to complete a succession plan and not fear the business will suffer if time is spent on planning. This is a critical effort that can determine the long-term success of the business.
  7. Financial Viability – Make sure your plan is commercially viable and sustains the life and health of the family business.
  8. Communication – Communication is key to developing a successful family business succession plan. Often, communication within the family can be strained as different parties seek to shape the future of the family business. Parents can be too-control oriented. Children can also be resistant to the advice and experience of their parents and their older generations. As part of the planning process, communication issues need to be resolved to ensure the success of the development process.
  9. Prepare Family Members – Make sure the family business succession plan is structured in a way that the individual family member’s future role in the business is every bit as important as making the plan itself. While not all members of the family can be included in the succession plan, it is important for the family to know what to expect and to be available to explain your decisions. If you do not take the time to prepare them by explaining the “whys” of your plan while you are here, the unanswered questions can lead to real resentment and damaged relationships among family members in the future.
  10. Keep the Business and Family Separate – Many family business owners want to keep the family involved in the business but what’s best for the family and the business is to hire the right person for the job. Also, sometimes it is better, for the family, if the ownership of business does not remain inside the family exclusively. Selling the business to a third party and using the profits to invest in a new business for the family members may be in the best interest of the family. Sometimes, selling part of the business to secure a retirement fund for a member and dividing up the remaining parts among those members still personally invested in the business is the best course of action. Don’t assume that the best course of action is to keep the business intact and in the family. Maybe it is better that the family-owned business evolves into a family that owns businesses.

Health & Wellness Planning 

Help to Find the Right Doctor

If you are looking for a new doctor, has a quick and easy system to find and compare doctors and other providers. All you have to do is go to the website, enter your location, and select “Doctors & Clinicians” under the Provider Type. You can also search by specialty, review doctor details, and compare up to three different healthcare providers you are interested in.

Health & Wellness Defined

People often use the terms health and wellness interchangeably, but the terms do have different meanings. The primary difference between health and wellness is that health is the goal and wellness is the active process of achieving it. Health refers to a state where the physical body is free from disease, while wellness refers to an overall balance of a person’s physical, social, spiritual, emotional, intellectual, environmental, and occupational well-being. Wellness is achieved when someone strives for balance in their life by constantly making choices to further their health and fulfillment. Wellness has a direct influence on overall health.

Wellness in the workplace improves employee health and improves an organization’s bottom line. Creating a worksite culture of health and wellness boosts and maintains employee morale, improves the lives of employees, and helps drive an organization’s overall success.

Here are some ideas to improve your health and wellness:

  1. Eat Whole Foods – Diet tends to be primarily viewed to impact physical health. However, food has a well-understood link between food and mental health, including boosting memory and improving mood. A natural way to ensure adequate nutrients is by consuming whole foods rather than boxed and processed products. Balancing the diet with whole grains, fruits and veggies, lean and plant-based proteins, and healthy fats.
  2. Exercise Regularly – Exercise stimulates a healthy mind and body and the American Heart Association recommends at least 150 minutes of physical activity weekly. Regular exercise helps lower blood pressure, manage weight, and boost mental health. Also take a break from a structured workout and mix things up by walking the dog, hiking with friends, biking to work, and taking the steps over an elevator.
  3. Don’t Forget Mental Exercises – Mental exercises is equally as important as getting physically fit. Mental exercises can help you achieve your goals more sufficiently and boost brainpower. Examples of brain exercises include puzzles, learning new skills, and artwork. You can also use yoga or other combinations of mental and physical activities to help promote a better attitude towards health.
  4. Get Quality Sleep – Sleep is important for your mind and body, as adequate and sufficient sleep strengthens memory and concentration, lowers stress, increases daily energy, diminishes cravings, and regulates hunger levels. You can also take short naps and get a full night’s rest on a regular basis. The National Sleep Foundation encourages healthy adults to have seven to nine hours of quality sleep per night. If you are having trouble sleeping, it might be useful to stay consistent with bedtimes, power down from electronics, optimize your room environment, don’t drink alcohol, and practice relaxation techniques. If still struggling, talk to your care provider or a sleep specialist.
  5. Take a Day of Rest – In addition to adequate sleep, allow yourself days of rest and recovery. Make sure to take one day out of the week to do something you can look forward to. This could be as simple as going for a leisurely walk in the park, spending time with loved ones, or relaxing with a movie.
  6. Be in Community – Social circles and support networks are invaluable for overall well-being and a sense of purpose. Good relationships keep us happier and healthier and as humans the need to feel connected to others is one of our basic needs.
  7. Enjoy Your Journey – No matter what your health goal, sustainability relies on actively going through the different components of wellness. Do not feel overwhelmed, take small steps, surround yourself with grateful and positive people, and enjoy life!.

Just for Fun

The Lord bless you and keep you; the Lord make His face shine on you and be gracious to you; the Lord turn His face toward you and give you peace. – Numbers 6:24-26

Celebrate May!

May is named for the Greek goddess Maia. Here are some fun days to celebrate in May:

  • May 1 – Hawaiian Lei Day
  • May 2 – Brothers and Sisters Day
  • May 3 – National Teacher Day
  • May 4 – Star Wars Day – May the 4th be with you!
  • May 5 – Cinco de Mayo, Nurses Day, Childcare Provider Day, Military Spouses Day
  • May 7 – Kentucky Derby Day
  • May 8 – Mother’s Day
  • May 13 – Leprechaun Day
  • May 15 – Police Officer’s Memorial Day
  • May 21 – Armed Forces Day
  • May 30 – Memorial Day

Inspirational Quotes from the Bible

No matter what your circumstances, reading these inspirational verses is an excellent way to lift your spirits and gain a new perspective on life.

For I am convinced that neither death nor life, neither angels nor demons, neither the present nor the future, nor any powers, neither height nor depth, nor anything else in all creation, will be able to separate us from the love of God that is in Christ Jesus our Lord. Romans 8:38-39

The steadfast love of the LORD never ceases; his mercies never come to an end; they are new every morning; great is your faithfulness. Lamentations 3:22-23 

So we do not lose heart. Though our outer self is wasting away, our inner self is being renewed day by day. For this light momentary affliction is preparing for us an eternal weight of glory beyond all comparison, as we look not to the things that are seen but to the things that are unseen. 2 Corinthians 4:16-18

Greater love has no one than this: to lay down one’s life for one’s friends. John 15:13

Now to him who is able to do immeasurably more than all we ask or imagine, according to his power that is at work within us. Ephesians 3:20

Be strong and courageous. Do not be afraid or terrified because of them, or the LORD your God goes with you; he will never leave you nor forsake you. Deuteronomy 31:6

There is no fear in love. But perfect love drives out fear, because fear has to do with punishment. The one who fears is not made perfect in love. John 4:18

What, then, shall we say in response to these things? If God is for us, who can be against us? Romans 8:31

May the God of hope fill you with all joy and peace as you trust in him, so that you may overflow with hope by the power of the Holy Spirit. Romans 15:13

Be strong, and let your heart take courage, all you who wait for the LORD! Psalm 31:24

Fear not, for I am with you; be not dismayed, for I am your God; I will strengthen you, I will help you, I will uphold you with my righteous right hand. Isaiah 41:10

But they who wait for the LORD shall renew their strength; they shall mount up with wings like eagles; they shall run and not be weary; they shall walk and not faint. Isaiah 40:31 

Cast all your anxieties on him, because he cares for you. 1 Peter 5:7 

But Jesus looked at them and said, ‘With man this is impossible, but with God all things are possible.’ Matthew 19:26

I can do all things through him who strengthens me. Philippians 4:13

Therefore, my beloved brothers, be steadfast, immovable, always abounding in the work of the LORD, knowing that in the LORD your labor is not in vain. 1 Corinthians 15:58

Trust in the LORD with all your heart, and do not lean on your own understanding. In all your ways acknowledge him, and he will make straight your paths. Proverbs 3:3-6

Be watchful, stand firm in the faith, act like men, be strong. Let all that you do be done in love. 1 Corinthians 16:13-14

Give thanks to the LORD for He is good: His love endures forever. Psalm 107:1 

“For I know the plans I have for you,” declares the LORD, “plans to prosper you and not to harm you, plans to give you hope and a future.” Jeremiah 29:11

Taste and see that the LORD is good; blessed is the one who takes refuge in him. Psalm 34:8

And we know that in all things God works for the good of those who love him, who have been called according to his purpose. Romans 8:28

Sing to the LORD a new song; sing to the LORD, all the earth. Sing to the LORD, bless his name; proclaim his salvation day after day. Tell his glory among the nations; among all peoples, his marvelous deeds. Psalm 96: 1-3

Fear of man will prove to be a snare, but whoever trusts in the Lord is kept safe. Proverbs 29:25

As a mother comforts her child, so will I comfort you. Isaiah 66:13

 Her children rise up and call her blessed; Her husband also, and he praises her. Proverbs 31:2

Bottom Line

At The Bahnsen Group, our objective is to provide you and your family with comprehensive and holistic wealth management services to help you grow, protect, and steward your wealth, success, life, and legacy. Please reach out to me if you have any questions or if there is anything I can do for you.

Have a blessed, healthy, and prosperous month ahead!

Warm and best regards,

Don B. Saulic, CFP® CPA

Managing Director, Partner

Internal Revenue Service (IRS) is the source of all tax data

The Bahnsen Group is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

Third-party links and references are provided solely to share social, cultural and educational information. Any reference in this post to any person, or organization, or activities, products, or services related to such person or organization, or any linkages from this post to the web site of another party, do not constitute or imply the endorsement, recommendation, or favoring of The Bahnsen Group or Hightower Advisors, LLC, or any of its affiliates, employees or contractors acting on their behalf. Hightower Advisors, LLC, do not guarantee the accuracy or safety of any linked site.

Hightower Advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client’s individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for related questions.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.

About the Author

Don B. Saulic

Managing Director, Partner

Don is a Managing Director and Partner in the team’s Private Wealth Management practice, where he advises on comprehensive strategies to help clients achieve their long-term goals. Areas of focus include investments, estate and tax planning, financial planning, risk management, real estate, wealth transfer, life management, and charitable planning.

With over four decades of C-Level corporate executive and financial advisory experience, Don previously worked at several private and Fortune 1000 global companies holding positions such as Independent Board Director, President & Chief Operations Officer, and Global Chief Information Officer. Don has an M.B.A. from DePaul University and a bachelor’s degree in Accounting with Economics minor from Illinois State University.