Springfield Business Journal_2019-10-14

★ $2,500 Minimum Opening Deposit ★ Perfect for Business and Personal Deposits ★ Immediate Access With an Excellent Return ★ 2.05% APY* for balances below $100,000! Springfield’s Premier Small Business Bank legacybankandtrust.com 417.823.9600 R e s p e c t | C o m m i t m e n t | I n t e g r i t y | T e a m w o r k | T r u s t CELEBRATE FREEDOM FROM LOW INTEREST RATES WITH OUR NEW money market L E G A C Y L I B E R T Y & *Annual Percentage Yield. APY is accurate as of 9/5/19. Rates subject to change after account opening. Fees could reduce earnings on the account. Money Market Transaction Limitations: Regulation limits certain transfers and withdrawals to a maximum of six per monthly statement cycle. See bank for details. E X C L U S I V E 2.15 % APY ® Applies to accounts with a minimum $100,00 balance. SPRINGFIELD BUSINESS JOURNAL · 13 OCT 14-20, 2019 TAX & FINANCIAL PLANNING Financial, estate and tax planning should not be mutually exclusive activi- ties. It is difficult to have a conversation in one of these areas without consider- ations of the others. In 2019, there have been some hot top- ics that can touch on all three that are not part of most traditional planning. Below are four unrelated hot topics, where con- siderations for financial, estate and tax planning can be involved in each. 1. Gifting upstream. Many estate planning situations in- crease considerations for other financial and tax planning. The estate tax exemp- tion is now at $11.4 million per person, and the increase this year has planners considering options that were nearly unheard of in the past. The new estate tax exemption may change the mind- set for tax planning. One example is gift- ing “upstream.” In certain situations, we now may give con- sideration to gifting appreciated assets “upstream” to parents.  This approach may be used to take advantage of the par- ents’ available estate tax exemption and receive a step-up in basis at their death to help with tax planning and/or investment diversification strategies.   2. Planning considerations due to in- creased longevity. When preparing a financial plan, life expectancy is always part of the discus- sion. It is often used as a factor to identify the time horizon for investments. As life expectancies increase, so then does the time horizon for invest- ments. The Social Se- curity Administration creates tables to help calculate how long one might live. For instance, a male born in 1954 that turns 65 in 2019 is expected to live to 84.3 years, another 19-plus years past retirement age. The tables are not only used for planning purposes but also to calculate required minimum distribu- tions from IRAs. A World Economic Forum white pa- per – titled, “We’ll Live to 100 – How Can We Afford It?” – predicts the life expec- tancy globally for someone born in 2007 is 103. Can you believe it? That is 38 years past what is now considered retirement age. While just a prediction, the current trends are for increased longevity. There are several planning considerations at- tached to this issue, including the fact you may need to live off your retirement savings longer and an inheritance will likely transfer later in life for a recipi- ent. For those banking on an inheritance to support their lifestyle in retirement, they need to consider when that might be practical and prepare accordingly. 3. Opportunity Zone investments on the rise. The Tax Cuts and Jobs Act of 2017 brought some sweeping changes. One of the provisions that has started to get some traction is the Invest in Opportunity Act. It provides real estate investors the ability to invest in “opportunity zones” in a way that provides the potential for significant tax savings if they can meet stringent requirements. This program provides economic benefits for the investment in communities, or zones, designated by each state as distressed. Both new real es- tate investments and exchanges can par- ticipate in this planning opportunity but with significant tax, financial and estate planning considerations. 4. Planning for assets individually. A recent change in trust law moves Mis- souri from a delegated trust state to a di- rected trust state. Officials with Missouri Trust & Investment Co. in Springfield helped introduce the bill that ultimately changed this law. The new law basically allows for the assignment of management of an asset or block of assets to a directed trustee, bifurcating the responsibility and liability of the management of those as- sets from the rest of the estate. As plan- ners get comfortable with this change, we are having more conversations about planning at the individual asset level. As an example, a client has a closely held business or unique property that would best be managed by someone with a spe- cial knowledge of that asset, but the re- mainder of the estate should be managed by a corporate trustee. In this situation, you could divide the management re- sponsibilities and create a separate plan for each asset under one governing docu- ment. Staying connected to professionals that are in tune with planning trends and law changes can help you take advantage of such unique opportunities. Tim Parrish is president of Missouri Trust & Investment Co. He can be reached at  tparrish@missouritrustcompany.com. 4 hot topics for financial planning INDUSTRY INSIGHT Tim Parrish 103 Predicted life expectancy for someone born in 2007