Champion Tax Service’s Guide to Estate Planning for Digital Assets

Champion Tax Service’s Guide to Estate Planning for Digital Assets

Technology has certainly shifted our society over the last 15 to 20 years — you can see it right here in the South bay area.

So much so, that it's time we discuss estate planning with a technological twist.

Before we get there though, may I offer you this important reminder: the only "magic" we can do on a tax return is a "reaction" to what is being done right now.

What I mean by that is that preparing a tax return is historical reporting. And yes, we're certainly better equipped to find every possible historical deduction than some Joe down the street or a piece of robotic software (however many CPAs might be "on call" to assist the robots) — but we can only respond to what has already occurred.

In other words, if you want to make changes to your tax situation with smart planning, give us a call ((310) 327-1985) or head over to the contact page to shoot me a message and let's talk. Let's get ahead of the game.

Otherwise, we're just cleaning up after the fact.

Now, all that aside, there are a few key pieces when forming an organized estate plan, but here are a few pointers when it comes to your personal, digital assets for the sake of future management and allocation.

Champion Tax Service's Guide to Estate Planning for Digital Assets

"A man who does not plan long ahead will find trouble at his door." -Confucius

This isn't particularly a "fun" topic, but again, this day and age calls for it. If you have a lot of important business and data online (most of us do) let's ensure that nothing is ever lost.

Define "Digital Asset"

Before we go any further, the following could be considered digital assets in your name:

  1. Emails
  2. Social Media Sites
  3. Blogs
  4. Financial Accounts
  5. Music Files
  6. Photographs
  7. Videos
  8. Customer Database
  9. Cryptocurrency

The list goes on, but these are a few common personal online assets.

Taking Inventory

Have you created a will? If so, estate planning for digital assets works similarly in theory.

And a huge component of the planning phase is to get your assets in order. The list provided is a great place to start. Are those items listed organized? Are they saved onto an external hard drive? Do you have them under certain files in your computer? ("The files are in the computer!")

Side: After compiling this list, it's important to decide if you want a fiduciary to disperse and allocate the information accordingly.

In addition to the items on our list, you should list out all of your passwords and security questions. But you probably shouldn't keep those in a Word Document or Google Doc. There are numerous password services that will keep those passwords safe for you. (Although most password managers cost a little cash, your privacy and safety are worth it in the end.)

As for social media, you do not need to leave login information for many social media accounts, according to their policies — simply the username and information for how to contact the company is sufficient. These "deceased user" policies are often buried deep in their "help" sections and can be hard to find.

Here is a list of policies we located for the major companies:

Google

https://support.google.com/accounts/answer/3036546?hl=en&ref_topic=2382809

Facebook

https://www.facebook.com/help/1506822589577997/

Twitter 

https://help.twitter.com/en/rules-and-policies/contact-twitter-about-a-deceased-family-members-account

LinkedIn

https://help.linkedin.com/app/answers/detail/a_id/2842/kw/deceased

Instagram

https://help.instagram.com/151636988358045/

Pinterest

https://help.pinterest.com/en/article/deactivate-or-close-your-account

Yahoo

https://help.yahoo.com/kb/yahoo-account/SLN2021.html

WordPress

https://en.support.wordpress.com/deceased-user/

Take a few moments and familiarize yourself with each site's policies that matter to you.

If you take the time now to record which social media sites you have accounts and what you would like to happen after your death, your family will not have to guess after the fact, try to remember where you had accounts, or try to figure out what you would have wanted. They will see your instructions and know what to do.

Make a Plan and Stick to It

After collecting and listing out your digital assets, it's up to you and the fiduciary to make a plan for the future. Execute this kind of plan within your will, and come to an agreement on asset alignment or destruction in the event of death or disability.

It's important to factor in the terms of use and agreement on your most important accounts (yep, those boxes you check and say you "read").

Winston Churchill once said, "Plans are of little importance, but planning is essential." And although we can't be certain the "plans" of our life, "planning" makes the uncertainty a little more bearable.

Need any help or clarification? Please reach out and give me a call. I'd love to walk you through some necessary, financially-sensitive steps in this information (and digital) age.

 

Warmly,

 

Andre Sugars

(310) 327-1985

Champion Tax Service

 

Andre Sugars’ Four Common Investment Mistakes

Andre Sugars’ Four Common Investment Mistakes

The stock market has caused some alarm as of late. Will investors wake up panicked or encouraged tomorrow? It's hard to say.

But one thing is clear: basing your peace of mind on market signals is no way to live.

That said, I'd love to see my South bay clients be wise about how they are approaching their savings and investment strategies. For some, it's a simple admonition: start investing.

And for others, it's avoiding certain common mistakes. Tolstoy once wrote: "Everyone thinks of changing the world, but no one thinks of changing himself."

Perhaps it's time that we take a look in the mirror — together — and make some changes that would help you better build for the future.

So today let's look at four mistakes you can avoid when it comes to stock market pitfalls.

Andre Sugars' Four Common Investment Mistakes

"Beware the investment activity that produces applause; the great moves are usually greeted by yawns." -Warren Buffett

Before I get to these mistakes, I must hasten to add: every person's situation is different. And without looking at the specifics of your financial picture, it's impossible to make the right recommendation. And some recommendations require specific licenses in order to make them. So, consider this a disclaimer: nothing in this article is intended to be a specific piece of investment advice for your situation.

That said, here are some common mistakes I've seen when people begin financial investments…

1. Eggs in One Basket

You know the expression, but have you divulged in its (tempting) strategy? To research one company and invest in them alone is a mistake. Plain and simple. Especially if you think "but they're doing great lately" is a good enough reason to invest.

This is where diversification (and sectors and asset classes) comes into play, and it's vital to your wealth. The kind of investing you should pursue is another topic for another day.

But for now, please avoid the "all in on one approach". Fretting over which individual stock to buy will only cause stress and limit your chance of investing success.

2. Playing the Compare Game

It's been said to "never count another man's money". And the same goes with investing.

Yes, you can have mentors in this area, but this is ultimately YOUR money and YOUR investment. Stocks are so nuanced (especially when you get into international investments) that comparing your investments to other "seemingly successful" moves is not wise for your own strategy or psyche.

3. You're Too Patient

Waiting for the right time to invest isn't a problem at the beginning … but it does become a problem the longer you wait.

Although the market is volatile, many fret over when to buy or sell. As a result, many sell off their investments when the market is trending downward. But many also end up regretting that decision when the market inevitably rises again.

The key: it's not the time you choose to enter the market — it's the amount of time you're willing to stay in.

4. Neglect

Don't get 20 years down the line only to wonder, "What if I had started investing 20 years ago?" It's one of the reasons investing in something like a 401(k) is so important now. It will only grow with time — which means patience on your part!

If you've never explored various investment strategies, perhaps now is the time to consult somebody who can come alongside you, with wisdom. I would hate for you to just not invest because you don't understand some basic principles of investing. There are many South bay people who would love to help you.

I am definitely one of those people in your corner. Let me know if I can help in any way.

Warmly,

 

Andre Sugars

(310) 327-1985

Champion Tax Service

 

How South bay Residents Can Donate for Dorian Relief

How South bay Residents Can Donate for Dorian Relief

Unfortunately, this is a follow-up piece to some advice I shared in the spring — March to be exact.

When tornadoes ravaged Lee County, Alabama, the country rushed to its aid. Although nature is beautiful in various forms, it's also equally unpredictable. And that unpredictability sometimes leads to loss of life and communities.

If you've turned on the news anytime in the last couple weeks, you've watched Hurricane Dorian sweep through the Bahamas, up along the east coast and even reach Canada.

A reported 70,000 residents in the Bahamas are now searching for what to do next — for their families and communities.

Before I get to how you can help their community, please know that if you, or any friend or family member, are ever personally affected by a natural disaster, I will be here to walk you through pertinent tax questions related to your losses. There is a great IRS resource page which helps walk victims through tax-related issues following natural disasters.

Tuck this info away for a day I hope never comes.

And one last thing: On Monday, September 16th, estimated taxes for the third quarter are due. Plan accordingly.

How South bay Residents Can Donate for Dorian Relief

"You have not lived today until you have done something for someone who can never repay you." – John Bunyan

In the spring, I was struck by how different my daily existence was, from the devastation wrought in the disaster zones. The same is true here … and almost every time news of this sort hits the wires.

I must confess to feeling some "disaster fatigue" setting in.

It seems that the world keeps spawning disaster after disaster…

But that doesn't mean we can turn away.

It's good to keep your mind clear from the political and cultural "battles" of our day so that we can focus on the things that really matter.

And things like THIS really do matter. In fact, it's a good practice to consider donating towards disaster relief causes each and every time — however small the amount — simply for the sake of your own soul, and what it signals to yourself about the "hold" that your bank accounts might have upon your heart. We truly do live in a world of abundance.

And that is especially obvious in contrast to those whose worlds have been most recently wrecked.

So, if you donate to Dorian relief using this link to the Red Cross, your contribution will go towards hurricane relief and help communities across the Bahamas who are rebuilding from rubble. Our South bay community can be a part of helping those in need across the world with a few clicks.

An even easier option? Text the word "DORIAN" to this number: 90999. You'll automatically donate $10 to relief efforts, and the charge will simply show up on your phone bill.

Or if you want to donate a little closer to home, The National Association of the Bahamas will help provide food and shelter for hurting victims.

It's hard to fathom how many animals were affected by the hurricane, but donating to the Humane Society will assist (foreign and domestic) efforts to aid animals unfortunately caught in Dorian's path.

When you donate, are those contributions tax-deductible? Yes. But more importantly, when debating over a gift to these organizations, know the day may come where you or someone you know is affected by a natural disaster. When it's humanity versus nature, other problems fade to the background when we realize we're all in this together.

If you have any questions about the tax ramifications following a natural disaster, please give me a call so I can walk you through the options available.

I'm on your side. Now go let hundreds of strangers know you're on theirs.

Warmly,

 

Andre Sugars

(310) 327-1985

Champion Tax Service

 

Three New Tax Implications for Buying or Selling a House in the South bay Area

Three New Tax Implications for Buying or Selling a House in the South bay Area

Sometimes real estate is more art than science.

Because every homebuyer's situation is nuanced from home to realtor to geographic location, there's no cut-and-dried way to go about it, and that's whether you're investing, moving or selling.

But there are a few things you should know about — whether you're a long-time homeowner or just beginning your search. Because buying a home is one more thing the Tax Cuts and Jobs Act (TCJA) affected last year — so it's time for a little homebuying update and explanation of the changes that have occurred.

There are three, in particular, that you should keep in mind.

Three New Tax Implications for Buying or Selling a House in the South bay Area

"The ache for home lives in all of us, the safe place where we can go as we are and not be questioned." -Maya Angelou

If you have any additional questions about the following information, please reach out with a phone call. I'd love to discuss these tips and more in greater detail: (310) 327-1985

Lower Deduction Cap

Currently, South bay homebuyers are only allowed to deduct mortgage interest they spend on up to $750K in debt for a new home. If the buyer is filing separately while married, the total is $375K.

Prior to the TCJA, total mortgages (of up to $1M) were fully deductible if they were owned as primary residences.

Also, if you bought your home before the TCJA went into effect, and plan to refinance your home, the "up to $1M" of total deductible mortgages rule still applies.

Property Tax Deduction

We've talked a little in the past about state and local tax (SALT).

In short, there is a $10K SALT deduction limit that applies to items like real estate and local income taxes. Before the TCJA there was no limit. Now, homebuyers need to pay a little more attention when it comes to SALT regulations.

(I'm here to help with this too!)

Tax Breaks for Sellers
This is kind of a "bonus" tip, but I figure if you or someone you know is buying a home, there is a chance that selling a house also applies to the situation.

In that case, the tax implications of selling a house can be positive.

Something the TCJA did not affect was the fact you don't have to pay capital gains taxes on the profit you make from selling a home. Now, you still need to meet the requirements for living in the house long enough to earn money from the sale. But this perk could make the stress of buying and selling a house worthwhile for your bank account.

I hope these brief tips help you or someone you know.

Even though the TCJA shifted some laws around, note that the law is liable to change in 2025. It's not set in stone, and things could change in just a few years' time.

All the more reason to form a relationship with a trusted South bay expert for all the changes (most likely) to come.

Warmly,

 

Andre Sugars

(310) 327-1985

Champion Tax Service

 

A Powerful Example of Tax Planning For South bay Families And Individuals

A Powerful Example of Tax Planning For South bay Families And Individuals

It's wild to think that there are only four more months in 2019.

As we get older, time sure does fly. And unfortunately, many get stuck in a rut from year to year. Specifically related to taxes — many do not look at, or even think about, their tax situation until the winter or early spring. But if you can take just one piece of advice from today:

Not only can you start planning your taxes in advance, it is by far the wisest thing you can do for an accurate, stress-free April (or at least less stress than usual).

And if planning ahead is the first item of importance, having someone to plan with is a close second. If you are planning your taxes alone, please give me a call so we can meet and discuss everything from strategy to accuracy when addressing your taxes.

Let's examine a hypothetical situation, and the kind of strategy we could put in place together…

A Powerful Example of Tax Planning For South bay Families And Individuals

"Stop setting goals. Goals are pure fantasy unless you have a specific plan to achieve them." -Stephen Covey

Pretend you were considering taking money out of a pension (401k) to finance a down payment on a house. This kind of strategy happens all the time. However, to complete the transaction without consulting a knowledgeable South bay professional beforehand might result in a four- (or five-) figure mistake.

In this specific situation, I would ask you a few simple, necessary questions. And then, depending on the answer, would likely advise you to roll the money ($10,000) into a Traditional IRA. That way, you could withdraw the money at a savings of $1,000. This is because money used for a first home, up to $10,000, is penalty-free when taken from an IRA but not a 401K.

That's called strategy. When you benefit from that kind of strategy, it's called tax planning. It's not only related to housing, 401K or IRA allotment — I want to help you experience all-around financial success moving forward.

While we're on the topic, here are other "penalty-free" retirement account withdrawal opportunities (Note: these are NOT "tax-free" — only penalty-free):

* Unreimbursed Medical Bills
* Total and/or Permanent Disability
* Health Insurance Premiums After 12 weeks of Unemployment
* Death
* Higher Education Costs
* Pending Senate Approval: Qualified Birth And Adoption Expenses

Also note that there are specific caveats to each of these options. We can discuss your best route when we talk about your individual situation. There are a few other obscure situations available, but again — these decisions are best made under consultation.

Although, when working with us, there's no certified promise of saving money (because every situation is so nuanced and unique to each South bay client). But I can guarantee this: If you don't speak with us in advance, we won't have the chance to save you all we possibly could on your 2019 taxes.

Don't wait until winter. Please don't wait until spring. Let's get some strategy started … right now.

Warmly,

 

Andre Sugars

(310) 327-1985

Champion Tax Service

 

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