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Midyear Financial Review: 5 Things Your Wealth Advisor Wants to Discuss

A volatile stock market and the new tax law make it essential to schedule a midyear review with your wealth advisor this year.

couple talking with advisor

In this fast-paced world, a lot can happen in six months. Even if you’ve had no personal or professional changes since January, there’s a good chance that you have been impacted by the recent return of volatility to financial markets — not to mention the much-publicized Tax Cuts and Jobs Act passed at the end of 2017.

What this means: Scheduling an annual midyear review with your wealth advisor or wealth planner is a good idea, as it can help you keep your wealth plan on track with your goals.

“Setting the expectation for a broader midyear review discussion will allow you and your advisor to work collaboratively toward your overall financial well-being,” says Joshua Bruner, Senior Wealth Planner at Wells Fargo Private Bank.

While every individual will have a unique list of concerns, the five questions listed here can provide a good starting point to help guide your midyear review conversation — and open up additional areas of conversation.

1. Has your risk profile changed over the past six months?

Many investors have benefited from the extended bull market, but as the current economic cycle continues, financial markets may grow more volatile, Bruner says.

“Now is an important time to meet with your advisor to discuss your risk profile and how to proactively manage the risk in your portfolio against a potential market down-turn,” Bruner says.

Investors and advisors should consider a holistic approach to managing all of their investment portfolios as part of a coordinated investment strategy. This will allow for greater consistency in regard to diversification and risk management.

2. What updates do you need to make to your estate plan?

“Have there been any changes to your family’s structure — death, marriage, divorce, new children, new grandchildren?” Bruner asks. “In my opinion, life events should always warrant a meeting with your advisor to confirm that your objectives are still being planned for.”

External changes, such as the new tax law, are also important to consider. For example, the amount of your estate exempt from taxation grew from $5.49 million to $11.18 million for individuals, and twice that amount for married couples who do appropriate planning.

Trusts may be helpful wealth-transfer tools for both taxable and nontaxable estates, so this may be a good time to evaluate their potential role in your estate plan.

3. Are you taking a tax-efficient approach to funding expenses, such as education for a child or grandchild?

If you have a child or grandchild headed to college or attending a private K–12 school, changes to the tax law create additional ways to support them, Bruner says.

For 2018, the annual gift exclusion has increased to $15,000. Among other things, that’s money that could be used to help fund a 529 plan, a tax-exempt savings account for qualified education expenses.*

Specific to 529 plans, an individual may accelerate up to five years of annual exclusion gifts to a beneficiary. However, future gifts to that beneficiary may have gift-tax implications until the acceleration period has elapsed. Before employing this strategy, keep in mind the amount you contribute could be subject to “recapture,” meaning it may be included when calculating the value of your estate for estate tax purposes, if you pass away in the next five years, including the year you make the contribution.

Bruner further clarifies that the new tax legislation allows up to $10,000 per year from a 529 plan to fund K–12 qualified educational expenses.

What about a child or grandchild who is approaching schooling in the near future? Qualified tuition expenses made directly to an educational organization may qualify for an unlimited gift tax exclusion.

4. Have you considered potential impacts of tax reform on any commercial real estate holdings?

Provisions in the new tax law have increased and extended the bonus depreciation that real estate investors may allocate through year-end 2021, Bruner notes. Furthermore, the deductibility for capital expenditures, Section 179 Deduction, has also increased for the purchase of qualified property placed in to service in that tax year.

For real estate investors, Bruner points out another provision in the Tax Cuts and Jobs Act: the potential 20 percent deduction on qualified business income for pass-through entities.

5. Have you determined whether you are eligible for new deductions as a business owner?

The 2017 tax law lowered income tax rates for businesses. Corporate tax rates, Bruner notes, dropped from 35 percent to 21 percent. Pass-through businesses and entities, where corporate profits are taxed on the owner’s income tax returns, may be eligible for up to a 20 percent deduction in their business income.

“This is another area where you’ll want to work closely with your tax and legal advisors because not all pass-through entities may qualify,” Bruner says. And like real estate investors, business owners may be eligible for the expanded bonus depreciation and capital expenditure deductions.

Mark Tosczak is an experienced business writer and marketing consultant based in North Carolina.

What can Wells Fargo do for you?

Talk to us about crafting strategies for managing both sides of your balance sheet.

*Please consider the investment objectives, risks, charges, and expenses carefully before investing in a 529 savings plan. The official statement, which contains this and other information, can be obtained by calling your financial advisor. Read it carefully before you invest.

  • Section 529 plans are subject to enrollment, maintenance, administrative, and management fees and expenses.
  • Nonqualified withdrawals are subject to federal and state income tax and a 10 percent penalty.
  • College savings plans offered by each state differ significantly in features and benefits. The optimal plan for each investor depends on his or her individual objectives and circumstances. In comparing plans, each investor should consider each plan’s investment options, fees, and state tax implications.
  • The Tax Cuts and Jobs Act includes a provision that allows 529 plans to be used for K–12 education expenses, including private school tuition and elementary and secondary school expenses. While the Act creates federal guidelines for 529 plans, it still allows states to create their own parameters. Before taking a distribution for a K-12 education payment, be sure to understand your state’s view to avoid any potential taxes, penalties, or recapture of a prior year’s tax deduction or credit.

An investor should consider, before investing, whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits, such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s 529 college savings plan.

Wells Fargo Wealth Planning Center, part of Wells Fargo Private Bank, provides wealth and financial planning services through Wells Fargo Bank, N.A., and its various affiliates and subsidiaries.

Wells Fargo & Company and its affiliates do not provide legal advice. Wells Fargo Advisors does not provide tax or legal advice. Please consult your tax or legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared.


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