What Is ERISA?

ERISA is a federal law that establishes the requirements for some voluntary retirement and health plans in the private sector. The law protects covered individuals by curbing the mismanagement of pension plans. Among other things, plans must provide participants with certain information, such as a description of the features and funding. Plans must also define fiduciary responsibilities, establish compliant and appeal procedures, and allow participants to sue for fiduciary duty and benefit breaches.

Congress has amended ERISA several times to expand the protections. For example, the Health Insurance Portability and Accountability Act (HIPAA) amended ERISA to protect covered persons against discrimination on health-related grounds. Also, the Consolidated Omnibus Budget Reconciliation Act (COBRA) amended ERISA to allow employees and their families to continue their employer-sponsored health coverage for a limited duration after a qualifying event.

ERISA doesn’t include group healthcare plans established by the government. It excludes plans that churches maintain for their employees or those solely maintained to comply with unemployment, workers’ compensation, and disability laws. Plans maintained outside the United States mainly to benefit nonresident aliens or unfunded excess benefit plans also do not fall under ERISA.

What Is the Purpose of ERISA?

Employers have the option to provide health insurance — there is no obligation. However, ERISA will hold you accountable for the promises made under the plan when you choose to do so. ERISA aims to ensure employers properly administer voluntary healthcare plans.

ERISA prioritizes federal reforms, streamlining compliance across the country. It sets the minimum standards and empowers the Employee Benefits Security Administration (EBSA) to enforce them. EBSA is a division of the Department of Labor (DOL) that ensures the integrity of covered plans. It investigates complaints and takes enforcement actions to safeguard the interests of participants and beneficiaries.

The Pension Benefit Guaranty Corporation (PBGC) also plays an instrumental role in ensuring the continuous receipt of pension benefits. The Internal Revenue Service (IRS) enforces provisions relating to ERISA plans in the Internal Revenue Code.

Plans Under ERISA

ERISA applies to retirement and health benefit plans:

1. Retirement Benefit Plans

There are two main classifications of retirement plans under ERISA. These are defined benefit plans and defined contribution plans. Defined benefit plans are pension or retirement plans that promise a specified monthly benefit during retirement. The benefits are fixed and pre-established. It can be a dollar amount or calculated based on the employee’s age, tenure of service, and earnings history.

Employers may contribute and deduct from their taxes annually, allowing them to provide substantial benefits. Businesses of any size can establish defined benefit plans, but the downside is that they can be complex and cost more than others.

Contrary to defined benefit plans, defined contribution plans do not promise a specified amount at retirement. Instead, the employer, employee, or both contribute to the employee’s account. The money in the account grows with any investment gains or losses. Examples of defined contribution plans are 401(k), 403(b), profit-sharing, and stock ownership plans.

2. Health Benefit Plans

Private employers provide various forms of health coverage, including group health plans and insurance coverage. Group health plans offer comprehensive coverage for hospitalization, preventive care, prescription drugs, and more. Depending on the coverage, eligible employers and their dependents may enjoy medical, vision, and dental benefits.

ERISA also applies to insurance coverage, such as health maintenance organizations (HMOs) and flexible spending accounts (FSAs). Other plans, like disability insurance, also fall under ERISA, although not employer-sponsored.

ERISA Requirements for Employers

Below are key ERISA compliance requirements employers must meet:

• Plan documents: ERISA requires employers to outline specific details in a plan document. Additionally, the plan must provide a comprehensive summary.
• Reporting requirements: Plan administrators have several reporting requirements under ERISA. For example, they must file Form 5500 annually, subject to exceptions.
• Enrolment opportunity: Employers must offer employees who meet the plan requirements the chance to enroll. Qualified employees must receive all notices, forms, and instructions.
• Fee disclosure: Employers must disclose participant fees annually.
• Notification requirements: Employers must notify participants of changes to the plan before the effective date.

The list above is not exhaustive, so consider partnering with a professional for personalized support.

Fiduciary Duties Under ERISA

Under ERISA, a fiduciary is an individual or entity with discretionary authority or control over the plan’s assets or management. Examples include employers, plan administrators, and service providers. The law sets standards for how these fiduciaries should conduct themselves, which include the following:

1. Act solely in the interest of participants and beneficiaries
2. Be transparent, loyal, and prudent in all their engagements
3. Exercise sound judgment, diligence, and skill in managing the assets
4. Diversify plan investments
5. Adhere to terms in the plan documents

Fiduciaries could be held accountable or liable for breaching their duties. Depending on the circumstances, the liability could be personal. For example, a court may order them to restore losses or pay back stolen funds.

Common Challenges in Achieving ERISA Compliance

There are some potential challenges with ERISA compliance, such as:

• Complexity of rules: The laws are comprehensive and challenging to understand.
• Changes in legislation: Keeping up with the changes in law can be daunting for some businesses.
• Strict reporting requirements: ERISA demands meticulous record-keeping and reporting, which can deter some employers.
• High fiduciary standards: ERISA sets high standards for fiduciaries, imposing an added burden on employers.
• Hurdles in training and education: Many employers lack the in-house resources to train staff on the ERISA requirements.

These pitfalls exist, but you can hire a trusted advisor to assist.

How Fort Pitt Capital Group Can Help

Fort Pitt Capital Group is a team of financial advisors knowledgeable about ERISA compliance requirements. We help sponsors establish and maintain retirement plans, leveraging our resources. Our professionals can provide fiduciary oversight and investment consulting to balance risk and return. We can monitor your retirement plans and assist with employee education and audit support. You do not have to worry about legislative changes and the potential impact on your plan.

Contact Fort Pitt Capital Group for Professional Support

Private employers providing retirement and healthcare plans may have to comply with ERISA. The rules and obligations are complicated, but Fort Pitt Capital Group can help. We have decades of experience in the industry, supporting businesses in complying with ERISA and related laws.

Fort Pitt Capital Group prioritizes personalized solutions because we believe every case is unique. Want to learn more or take advantage of our efficient services? Contact us now!

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While getting married again is exciting, it’s important to consider your financials before you tie the knot. Before getting married, you and your partner should consider your liabilities, assets, incomes, and expenses.

Consider Children From Your First Marriage

If one or both spouses pays or receives child support or alimony, you should discuss financials before getting married. You will also need to discuss expected education expenses, including public or private school, college funds, and extracurricular activities.

Review Important Financial Documents

You and your fiancé should review several documents before getting married, including:

• Bank accounts
• Tax returns
• Debts
• Assets

Even if assets are titled separately after marriage, they can become common assets under marital law in certain states.

Consider a Prenuptial Agreement

Prenups can be beneficial for many couples. These documents allow you and your spouse to determine what will happen with your finances if you decide to get a divorce. They’re a way to protect each individual. Prenups or postnups can also help determine how you plan to merge your finances.

Put Your Financial Plan Into Writing

Consider your goals as a couple and for your children, whether they’re from previous marriages or you’d like to have your own. You can think about where your kids may attend school, if you would like to buy a new home, or if you want more children. Financial plans help make these goals more visible and attainable.

Talk About Combining Finances

You and your partner should discuss whether you want to keep your finances separate or combine them. For example, if you have children from a previous marriage, keep your finances separate from your new spouse. Another reason to keep finances separate is if one of you has many more financial resources.

Often, having separate accounts and one joint account is the right course of action for people getting remarried.

Review Your Estate Plan

Reviewing your estate is something you should keep in mind when getting remarried. Determine if you intend to keep your children as your beneficiaries or if it’s a good idea to add your partner to your life insurance policy. Power of attorney is another area where you may need to make changes. Look at your wills, living wills, health care proxies, retirement savings accounts, and annuities.

Prepare Plans for Your Second Marriage Finances With Fort Pitt Capital Group

If you’re planning to marry again, speak with a financial advisor to get second marriage financial advice to ensure you have a plan. Trust our team for exceptional service and contact us online or visit our individual services page to learn more.

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What Is a Living Will?

If you’re terminally ill or injured and unconscious, the purpose of a living will is to give directions to your care provider about the medical treatment you want to receive.

It’s important to note that a living will is not a last will and testament. A last will and testament is what most people think of when discussing a general will. Last will and testaments become active after one’s death and determine the distribution of property. A living will becomes active when someone is still alive but unable to communicate their wishes.

What Is the Main Purpose of a Living Will?

A living will allows you to declare what kind of medical care you’d like to receive (or forgo) if you’re terminally ill or permanently unconscious and can’t decide on your treatment. Without a living will, your doctor or a third party, such as a parent, spouse, or child, will be in charge of making these decisions for you. These people may not know your desires or can choose not to follow them without the legal binding afforded by a living will.

Living wills are especially beneficial for those with a terminal illness, but every individual should consider having this document to account for unexpected life-threatening injuries. If you do become incapacitated, critical medical decisions can increase the strain on your family members. A living will eases the decision-making process for you and your loved ones.

What Is Included in a Living Will?

In your living will, you’ll specify if you want:

• To receive palliative care or care to decrease pain and suffering.
• To receive tube feeding/artificial hydration and for how long.
• Extraordinary life-sustaining measures taken to keep you alive, like CPR.
• To be kept on a ventilator or receive dialysis and for how long.
• To donate your organs, bodily tissues, or entire body after death.
• To receive an autopsy to determine the cause of death.
• To handle your remains through cremation, burial, or another means.

A living will can also appoint a health care proxy, which is an individual who will make medical decisions for the incapacitated person when they are unable to. Your health care proxy can step in to make any medical decisions your living will does not cover.

How to Write a Living Will

Requirements for a living will depend on your state. Some states have standardized forms to fill out for a living will, while others allow you to prepare your own customized document.

Many people choose to go through a lawyer to write their living will. However, if you want to avoid the fees associated with using an attorney, you can look into estate planning software. These programs allow you to create a living will, a last will and testament, designate a power of attorney, and much more.

During the writing process, you may find it helpful to consult with close family members or friends who would be responsible for overseeing your care. You can discuss your plans with them, so they know your wishes. These individuals may also provide additional insight into particular aspects of the will.

A doctor can offer medical expertise to help you choose your preferences. They will walk you through different treatment options and discuss the pros and cons of each so that you have the background information to make an educated decision about your care.

How Long Does a Living Will Last?

A living will lasts as long as you want or until your death. If you decide to cancel it or make significant changes, you can consult with your family members, doctors, and lawyer to notify them of the adjustments.

Who to Share Your Living Will With

After you make a living will, you may desire to keep it private, but it’s crucial to share it with a few parties. You should give copies to:

• Your doctor.
• Your hospital file.
• Your health care proxy.
• Your immediate family.

In other words, your living will should be easily accessible to anyone who may need to make a decision on your behalf.

Living Will vs. Living Trust

While working through the estate planning process, you may also hear the term “living trust.” This legal agreement is somewhat different than a living will. A living will specifies the medical treatment you would like to receive if you are incapacitated and unable to make decisions.

A living trust, on the other hand, deals with your assets. If you are incapacitated, the person you appoint as trustee essentially acts as the new owner of your financial resources and can make decisions on your behalf.

Consult With Fort Pitt Capital Group

While considering such important documents relating to the end of your life, think about getting your finances in order with Fort Pitt Capital Group. We’ll help secure your finances, and, in the event you become incapacitated, we’ll ensure all of your financial wishes are fulfilled. Learn more about our services today, or connect with us to discuss your options.

Want to learn more about estate planning?

Webinar: Estate Planning Advice for the Retired And High Net Worth

The post Why You Need a Living Will: The Purpose of a Living Will appeared first on Fort Pitt Capital Group.

Here are three ways for grandparents to give money to grandchildren:

1. Make an Outright Gift

One of the simplest ways to gift money to your grandchildren is to offer it to them directly. This method enables them to put the money toward whatever they want, whether they save it for college, apply it to their mortgage, or purchase a new car.

Keep in mind that there is a limit to how much you can give without taxation. The annual exclusion for gifted money changes each year. As of 2022, you and your spouse can give up to $16,000 to each grandchild without taxation. So, you can each provide $16,000 to one grandchild for a total of $32,000 of gifted money.

2. Contribute Toward Education and Medical Needs

Another method of gifting money to grandchildren is to pay providers for their school and hospital bills directly. This strategy ensures your relatives use the money for these purposes. You can take this route in addition to offering outright gifts, as it doesn’t count toward your annual gift amount.

You can also open 529 college savings plans for your grandchildren. These investment plans, which are sponsored by the state, allow you to create collections of funds that your grandchildren can apply to college expenses.

3. Invest Money

Finally, you can make investments that will benefit your grandchildren, whether you open a savings bond that pays interest or a guardian individual retirement account (IRA). You may also open various accounts for them, such as:

• Savings: This account will prepare your grandchildren for later expenses, such as attending college or purchasing a house.
• Custodial: Custodial accounts protect assets until your descendants reach the age of majority.
• Brokerage: This account contains your grandchildren’s assets and allows them to invest.

You can also invest in your grandchildren by paying for several meetings with a financial planner. That way, they can make more informed decisions concerning their assets.

Contact a Financial Advisor

Providing monetary gifts to grandchildren can be simple with the proper guidance. At Fort Pitt Capital Group, our in-house financial advisors can assist you with financial planning, wealth management, and investment management research. We can help you give money to your grandchildren effectively.

View our individual services page for more information on how we can help!

The post 3 Ways to Gift Money to Your Grandchildren appeared first on Fort Pitt Capital Group.

If you’re searching for a mortgage or want to refinance, you may have come across the term “conventional loan.” What does that mean?

The conventional loan is the most common type of loan. These are loans provided by private financial lenders and they do not receive backing from the government. In contrast, a government-backed or FHA loan receives support from the Federal Housing Administration, an agency that helps qualifying applicants secure loans. Such loans are only made by FHA-approved lenders and enjoy protection from default by mortgage insurance.

How Do Conventional Loans Work?

Various private lenders, including credit unions and banks, provide conventional loans. Lending institutions may also offer FHA loans. Conventional loans:

• May run from 15 to 30 years, with 30 years being the most common.
• May require you to pay private mortgage insurance if you don’t make a down payment of at least 20%.
• May require a credit score of anywhere from 620 to 660 or above.

Interest may vary based on your credit score: the higher your score, the lower your interest rate on a conventional loan.

How Is a Conventional Loan Different From a Government-Backed Loan?

Government backing typically allows for greater flexibility in lending terms. You can often qualify for an FHA loan with a lower credit score than you would need for a conventional loan. The security provided by government backing makes it easier for financial institutions to take risks. Someone with a credit score as low as 500 may qualify for a government-backed loan.

You can also qualify for a government-backed loan differently than a conventional loan. For example, the U.S. Department of Veterans Affairs lends to people serving in the military and their spouses or beneficiaries. You don’t need to make a down payment on a VA loan, and you won’t pay mortgage insurance, either.

Often, the same lenders who administer government-backed loans also offer conventional loans. Conventional loans can be riskier than government-backed loans. The right loan can depend on your circumstances:

• People with high credit scores and the means to make a 20% down payment may receive better interest rates and lower fees from a conventional loan.
• People with low credit scores, without the means to make a 20% down payment and who meet the stringent eligibility requirements may be better off with a government loan.

Government-backed loans charge a mortgage insurance premium, including an upfront fee calculated based on the loan amount and other charges rolled into your monthly fee. While government-backed loans appeal to those with low credit, these costs are one reason people may prefer to seek a conventional loan. Government loans also limit the amount loaned in different counties, usually setting the amount less than you can secure with a conventional loan.

What Are the Types of Conventional Loans?

The most common kinds of conventional loans are conforming and non-conforming loans. Conforming loans meet the Freddie Mac and Fannie Mae standards and don’t exceed maximum loan amounts, which can vary according to your geographic location. Other types of loans include:

• Jumbo: Allow you to borrow more than the maximum lending limit. Jumbo loans usually require a more significant down payment, higher credit score, and lower debt-to-income ratio than a conforming loan.
• Portfolio: Originate from a lender and are retained instead of put on the secondary mortgage market, a common practice. Portfolio loans often have higher interest rates.
• Subprime: Subprime loans charge higher interest rates and closing costs for people with lower credit rates and a debt-to-income ratio under 50%.
• Amortized: Set regular monthly payments through the amortized loan’s end and don’t include balloon payments.
• Adjustable: Adjustable loans begin with a fixed interest rate and then adjust based on rates in the market.

What Are the Advantages of a Conventional Loan?

Conventional loans generally have lower interest rates and higher lending limits. Many borrowers appreciate the greater flexibility of conventional loans, including the term lengths. Conforming loans meet Freddie Mac and Fannie Mae standards, making shopping for a loan easier and less stressful.

Choosing these loans means you can benefit from down payments as low as 3%. Or, if you put down a larger payment outright, you’ll pay less overall.

Obtaining a conventional loan is also appealing because as your credit score increases, your private mortgage insurance (PMI) and mortgage rate decrease. Government-backed loans tend to cost the same regardless of your Fair Isaac Corporation (FICO) score.

Another advantage of a conventional loan is that it only requires you to pay for mortgage insurance until you reach an 80% loan-to-value (LTV) ratio, or 20% equity, at which point you can cancel it. FHA and other loans require you to continue paying for insurance for a certain period or until you repay the loan. Over time, conventional loans are often a better value if they work for your financial position.

What Are the Disadvantages of a Conventional Loan?

People with lower credit scores have more difficulty obtaining a conventional loan. Non-government loans also demand higher down payments, and you must have 20% to avoid mortgage insurance. Conventional loans also have stricter qualifications because they incur more risk for financial institutions than government-backed loans.

An example of a firmer requirement is that you need a maximum debt-to-income (DTI) ratio of 45% to apply for a conventional loan. Also, you must reestablish your credit and pass various mandatory waiting periods if you’ve experienced past bankruptcy.

How to Qualify for a Conventional Loan

If you’re interested in pursuing a conventional loan, you should:

• Raise your credit score: Work on raising your credit score, especially if it is below 620.
• Seek loan preapproval: Getting preapproval for a loan lets you know how much you can qualify for.
• Reduce your debt: Reducing your debt-to-income ratio to 36% or lower will improve your chances of qualifying for a conventional loan.
• Save for your down payment: A down payment can reduce your monthly payment and remove the requirement for mortgage insurance if you put down at least 20%.

Conventional Loan FAQs

When deciding whether to apply for a conventional loan, you may have some critical questions. Here, we answer some of the top inquiries our team members receive about these loans and the process of acquiring them:

Do You Have to Put 20% Down on a Conventional Loan?

While putting 20% down on a conventional loan will help you have lower costs overall, you are not required to pay this much. You can put down a payment as low as 3%. Keep in mind that if you put down less than 20%, you will be required to pay for private mortgage insurance until you reach that amount in home equity.

Is It Better to Have a Conventional Loan or FHA Loan?

Whether you should apply for a conventional or FHA loan depends on your unique financial situation. Taking out a conventional loan may be more cost-efficient if you have a steady income, high credit score, and low DTI. Conversely, an FHA loan may be more suitable if your credit score is lower than 620 or your DTI exceeds 45%. There are several pros and cons for a conventional loan and FHA loan alike, so focus on picking one that works for you.

Is It Hard to Get a Conventional Loan?

The process of obtaining a conventional loan is simple, which explains why it is the most common option. Any difficulty you may experience is due to this loan’s stricter requirements.

How We Can Help

When Fort Pitt Capital Group starts managing your money, we provide advice and support for all aspects of our your financial life. We can talk our wealth management clients through loan recommendations using the lens of their exact situation. Plus, through our bank partners, like Focus Treasury & Credit Solutions, we can offer our clients mortgage and lending solutions for their home or business needs.

Do you need assistance working toward these goals? Fort Pitt Capital Group can provide the financial advising services you require. Contact us to speak with an advisor and discuss your financial future.

About the Author:

Skylar Riddle, CFP®
Financial Advisor
Fort Pitt Capital Group, LLC
680 Andersen Drive, Pittsburgh, PA 15220
(412) 921-1822 | sriddle@orchid-ibex-388317.hostingersite.com

The post What Is a Conventional Loan? appeared first on Fort Pitt Capital Group.

What Factors Help Determine How Much House You Can Afford?

A potential lender will look at your finances to determine if you will be a good candidate for their loan. Expect them to request information on your household income, debts, and savings. Before this review, we suggest you have about three months worth of any payments you regularly make in your savings.

The most important factor banks and other lenders use to determine if you qualify for a mortgage loan is your debt-to-income, or DTI, ratio. Your DTI ratio compares your debt to your gross income. The percentage of monthly income spent on monthly debts is your DTI. There are two types of DTI:

• Back-end DTI considers all monthly debts, including student and automobile loans. Your back-end DTI should be less than 43% to receive a qualified mortgage.
• Front-end DTI examines only your debts related to housing. Lenders want to see a front-end DTI of 28% or less for mortgage applications.

Alternative Loans

Many people have trouble getting approved for a conventional loan for various reasons. However, some special loans give potential buyers other available options on the path to homeownership.

• FHA loans: The Federal Housing Administration insures an FHA mortgage loan. FHA loans allow people with low credit scores or little savings to get a mortgage that a conventional loan might not cover. Down payments start at just 3.5%, and you can still get approval with a DTI of up to 50%.
• VA loans: This loan type is a mortgage loan insured by the U.S. Department of Veteran Affairs. It covers primary residences that are in “move-in ready” condition. The main benefit of VA loans is that there is no down payment. However, many other great perks come from VA loans, such as unlimited borrowing.

What Is the 28%/36% Rule?

The 28%/36% rule is an important equation that helps with knowing how much house you can afford. It states that when deciding how to spend your gross monthly income, you should allocate no more than 28% for housing and 36% for your total debt. This debt includes everything you owe in a month, such as payments for your student loans, mortgage, credit card, and car. You can use the remaining 64% for expenses such as food and entertainment or put some away in your savings account.

This rule helps you see how much you can afford to pay for a loan each month. While you can make adjustments based on how you want to spend your money, the 28%/36% rule is beneficial when deciding what size loan you can afford.

Most mortgage calculators account for this rule and help you know what kind of house you can afford after you insert pertinent information.

How Does Your Credit Score Impact Affordability?

Your credit score is a major factor when you apply for a loan. Banks use this element to calculate whether you are a risk and how much money they should let you borrow. A higher credit score will enable you to have a lower interest rate, allowing you potentially save hundreds of dollars a month.

Additional factors that affect affordability include your debt amount and how much of a down payment you apply to your house. Having a low DTI ratio and putting down a higher initial payment will assist you with enjoying a lower interest rate, as banks will have greater trust in your ability to pay them back.

How Does the Amount of Your Down Payment Impact How Much House You Can Afford?

You will probably notice that when you put a higher down payment into a “how much house can I afford” calculator, the house will ultimately be more affordable. Putting down a larger down payment on a house affects its affordability in several ways:

• Lowering the loan-to-value (LTV) ratio: An LTV ratio is how much you borrow compared to the value of your home. Having a lower ratio makes lenders more likely to approve your mortgage with reduced interest rates, as they will consider you to be less of a risk.
• Reducing your monthly payments: A large down payment can result in lower monthly payments for a shorter period, as you have already paid for most of the house.
• Requiring you to pay less overall: Lower interest rates help you pay less in the long run due to the larger amount you put down at the beginning.

Learn More About Mortgages From Fort Pitt Capital

If you’re looking for financial advice regarding your mortgage, contact Fort Pitt Capital. Our goal is to do what is best for you.

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When is the best time to gift your house to someone? What tax situations will your children run into with a gift from you? What can you gift a child while still alive? Our recent webinar on estate planning for retirees and high net worth individuals answered all of those questions and many more.

Brad Newman, our lead investment advisor in Harrisburg, moderated the informational webinar with special guest Vance E. Antonacci, Esquire, Chair, Estate Planning Group at McNees Wallace & Nurrick LLC. Vance shared that every estate plan is a blank slate, so you can account for any variables you want in the plan.

Estate Planning for the High Net Worth Retiree

Estate planning for high-net-worth individuals can be complex. In many cases, the beneficiaries of these individuals may face considerable capital gains taxes. Financial planning may be one way to lower the burden of these taxes. High net worth individuals also have larger estates, potentially with international assets and multiple beneficiaries, all with unique needs. Good estate planning offers peace of mind and ensures assets go where a retiree intends.

Below are some of the specific questions we covered in our virtual event and how they can help you form a strategy for estate planning:

What Are the Current Popular or Effective Estate Planning Opportunities?

Estate planning for the high net worth retiree involves a balance. These individuals want to retain the assets they need to live the lifestyle they like while simultaneously providing for beneficiaries and charities and avoiding excessive taxation. A popular option now is for highnet-worth individuals to gift real estate while holding onto other assets.

It is possible to give away property, up to current limits, without triggering gift tax or other taxes. However, it is important to be careful about the limits and the gift’s structure. Some parties may see a situation where someone has gifted a house but continues to live in it and pay rent, and the other party does not consider the home a “gift” — therefore, they may pursue that asset.

Should You Be Reviewing Your Estate Plans?

‘It’s important to review estate plans regularly, especially as a high-net-worth individual. Your needs and situation may change from year to year, as could your assets and the tax laws impacting your estate. Additionally, your marital status can change, and decisions about dividing up and leaving your assets to others can also shift. Updating your list of beneficiaries and your will, trusts, and estate plan give you and your beneficiaries the best protection possible.

What Roles Does Charitable Giving Play Right Now?

Charitable giving used to be structured as giving during a lifetime or setting up a family, private or community foundation. Today, donor-advised funds are popular. These allow you to set up an account and support your chosen charities while providing flexibility to how much money you give and when you distribute the funds. Donor-advised funds can also potentially be multigenerational.

Should You Be Making Gifts to Your Children and Grandchildren?

Gifts to children and grandchildren can help beneficiaries avoid taxes after a relative passes. However, it is worth considering which assets should go to which children and grandchildren. If a family member is fortunate also ta high-earning or high-net-worth individual, it may be best to avoid gifting an income-producing asset, which will add to that person’s tax obligation.

Explore Our Services for Guidance on Estate Planning

If you want to gift assets to children and grandchildren and seek to learn more about financial planning, see the range of services Fort Pitt Capital Group offers. Our commitment to exceptional client service, transparency, investment strategy, and internal expertise fully supports clients with financial and estate planning.

Interested in learning more? Why You Need a Living Will

*Content is provided for educational purposes only. Opinions provided include endorsements of the products and services provided by Fort Pitt; however, are not indicative of any specific client experience or testimonial.

The post Webinar: Estate Planning Advice for the Retired And High Net Worth appeared first on Fort Pitt Capital Group.

Why Is Having a Will Important?

Having a written Will and Last Testament helps ensure that all your wishes are carried out after your death. It names an Executor to administer your estate, who will receive your assets, and who will become guardians of your children and pets.

When there is no written will at your time of death, your local state government could determine your estate distribution.

Without the proper estate planning documents, distant family members may challenge your estate, potentially taking money away from your intended beneficiaries.

Wills Can (And Should) Change as Your Situation Changes

You don’t hold all of the cards when it comes to knowing exactly where you will be living, what you will have to pass down, or even loved ones that will be around when the will takes effect. Do not let these unknowns hold you back from putting your wishes in writing.

Instead of focusing on trying to make it perfect for your time of death (which you don’t know), make it fit your current financial scenario and life stage.

It is a fluid document that can and should change as your situation changes, such as a newborn or a new grandchild!

Advantages of Having a Will and Last Testament

Having a will helps assure that a portion of your Estate and savings will transfer to the heir and charities of your desires. Below are some of the most significant benefits of writing a will:

1. Put Your Loved Ones’ Minds at Ease

When you have a written Will and Last Testament, your loved ones won’t have to wonder about your wishes or who is responsible for specific tasks.  Naming an Executor, appoints specific duties to a friend or family member.

During a time of grief and sadness, providing written directives and guidance helps to eliminate stress and uncertainty, allowing your loved ones to focus on processing their grief.

2. Designate a Legal Guardian for Your Minor Children

If you have children under 18 years old, you should designate who you want to be a legal guardian in your Will and Last Testament. Holding a conversation with the potential legal guardian in advance helps ensure that they are aware of their responsibilities and won’t be shocked in the case of your death.

3. Distribute Your Assets and Name Your Beneficiaries

Distributing your assets after death is one of the main benefits of having a will. Carefully consider who should inherit your property, bank accounts, investments, and other assets. It is important to note, beneficiary designations on life insurance and retirement accounts (such as a 401(k) or IRA) transfer outside of the Will and Last Testament.

Just because you update your Will and Last Testament does not mean that you do not need to update your beneficiary designations.  Beneficiary designations take precedence over your Will and Last Testament and are an important part of your overall Estate Plan.

4. Leave Instructions for Your Digital Profiles

In this digital age, many of your assets may be stored on your computer, phone, online profile or in an online cloud. You can name a digital estate executor in your Will and Last Testament for any of your accounts and include information on what action you would like to be taken.

For example, you may want to pass along your digital photographs or writings to a family member or have your social media accounts permanently closed.

Talk With an Advisor at Fort Pitt Capital Group

Our advisors typically recommend adding an estate planning lawyer into the conversation. A detailed estate plan will help assure that a larger portion of your hard-earned wealth will ultimately pass to the people and organizations that matter most to you and in the manner that you intend.

We assist our clients in increasing control over the distribution of their assets, minimizing taxes, and address other estate planning issues such as addressing how to handle incapacity and eldercare and nursing home concerns. Contact us today to learn more.

About the Author:

Bryson Roof
Financial Advisor
Fort Pitt Capital Group, LLC
507 N. Front Street, Harrisburg, PA 17101
(717) 260-9281 | broof@orchid-ibex-388317.hostingersite.com

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If you have sufficient assets in your portfolio, you’re probably planning on leaving a portion of them to your children. While passing on your wealth gives your offspring a head start and safety net as they move forward in life, it’s crucial that they know the proper ways to handle their inheritance without spending irresponsibly or losing their sense of ambition. With the right guidance, stipulations, and assistance you can trust that your children will be ready to manage their newfound wealth and fulfill the legacy you intended.

Learn more about how to pass on your money without spoiling your kids by reviewing our inheritance tips.

Delay Wealth Transfer

A common worry parents have about passing on their wealth is that their children will spend all of it right away. Luckily, you can delay your wealth transfer by creating a trust that only gives your kids access to your assets after they reach adulthood. It can also be disbursed in phases, there are no requirements that it be distributed all at once.

One strategy is allowing your children to cash out their trust when they turn 50 years old. Though it may seem like a long wait, delaying the transfer to this age helps set your kids up for an easy and stress-free retirement.

Set Boundaries

Another effective way to prevent an inheritance from spoiling your kids is to establish specific conditions that will warrant or limit spending for your children. For example, they can only spend their wealth on emergency situations and serious investments, like buying a house, medical matters, or starting a business. Setting these conditions ensures that your offspring will use their money wisely rather than splurging on unnecessary purchases.

An additional boundary you can set for your kids is requiring them to use a wealth management company of your choosing when they receive their inheritance. When your children have a team of qualified financial planning and investment experts helping them manage their money, they’ll receive professional guidance when making spending decisions and ultimately preserve their inheritance.

Share Your Story

If you’re concerned about your children losing their sense of ambition when they inherit their wealth, consider sitting them down, and explaining how you got to where you are today. Talk about the sacrifices you made to secure a stable career and build your finances — and most importantly, talk about the sense of achievement you felt as a result of your hard work. 

Explain how and why you made that sum of money and have a conversation about what you hope your children will do with it in the future. Specify what assets you’re leaving behind and who will inherit what while emphasizing the importance of ambition and hard work.

Teach Heirs Values

Before you make plans to pass on your wealth, it’s important to talk to your kids about how they manage their own money. Give them a solid financial foundation by teaching them how to budget and prioritize their expenses so they understand the true value of wealth — and what can happen if they don’t manage it well. 

When your children understand the value of independently earning a living and making purchases with the money they’ve earned, they’ll be more likely to develop a serious work ethic in the future despite receiving an inheritance.

Manage Your Wealth at Fort Pitt Capital Group

You can prevent your inheritance from spoiling your kids by seeking wealth management services at Fort Pitt Capital Group. Our financial advisors have the knowledge and expertise to help you optimize your investments and create a personalized plan for the future. With transparent communication, exceptional client service, and proven investment strategies, we always do what we believe is best for you.

Contact us today to begin working toward your financial goals. 

About the Author:

Bradley Newman, CFP®
Lead Financial Advisor
Fort Pitt Capital Group, LLC
680 Andersen Drive, Pittsburgh, PA 15220
(412) 921-1822 | bnewman@orchid-ibex-388317.hostingersite.com

The post How to Pass on Your Money Without Spoiling Your Children appeared first on Fort Pitt Capital Group.

•     Wills & Trusts
•     Asset Protection
•     Nursing Home Issues
•     Medicaid Qualification
•     Estate Taxes

*Nothing in this webinar should be construed as a testimonial or an endorsement of Fort Pitt. Content is provided for educational purposes only.

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