Worley Erhart-Graves Financial Advisors

STANDARD PRESORT NEWSLETTERKNOWLEDGE IS YOUR POWER
US POSTAGE THIRD QUARTER 2016
PAID
Upcoming Workshop: Retirement Planning
INDIANAPOLIS, IN
PERMIT NO. 937

3500 DePauw Blvd. | Suite 1035 You have worked and
Pyramid One, Third Floor saved for years and
Indianapolis, IN 46268 now you want to retire.

317.872.5090 Phone Perhaps you have questions, such as:
855.872.5090 Toll Free How do I make my portfolio last my
317.872.5095 Fax lifetime? How do I take money out of my
retirement accounts? What do I need to
wefinancialadvisors.com know about Social Security? What taxes
do I need to know about in retirement?
We will address these questions, and
more, at our upcoming Retirement
Planning workshop.

Juli Erhart-Graves, CFP® is hosting this
workshop designed for those who want
to prepare for retirement.

WORKSHOP DETAILS:

Insurance While Outside the U.S. This workshop is open to anyone, so feel WHEN: Wednesday, Oct. 12, 2016 from
free to pass this information along or invite 6:00-7:30pm
Traveling abroad is an exciting endeavor many look forward to. A lot of time and effort is put into planning the adventure and then a friend who is interested in this topic. Light
preparing to go. We stop the mail, board the dog, and put the house lights on timers. We call the credit card companies so our credit refreshments will be served. WHERE: The Pyramids (3500 DePauw Blvd.)
cards will work and we pack everything we think we need in as few suitcases as possible. What many fail to realize, however, is we Pyramid Three, lower level, conference room A
have forgotten to address one very important item in our travel arrangements: health insurance.
RSVP: By Friday, Oct. 7 by calling 317-872-5090 COST: None, but space is limited.
Most health insurance plans do not cover individuals while outside the United States. In fact, HMO health insurance plans, those or email [email protected]
plans that require you to use a specific network of providers, may not provide coverage outside your region of the U.S., putting you at
risk even while traveling within the United States! Worley Erhart-Graves Financial Advisors is a Registered Investment Advisor. Registration as an investment advisor is not an endorsement of the firm by
securities regulators and does not mean the advisor has attained a particular level of skill or ability. All expressions of opinion reflect the judgment of
Before you travel, contact your health insurance provider to verify your health insurance will be in force. If it is, make sure to inquire the authors as of the date of publication and should not be construed as personalized investment advice. Different types of investments involve varying
about any additional out-of-pocket expenses you may incur if you seek treatment abroad and any activities that may exclude degrees of risk, and there can be no assurance that any investment will either be suitable or profitable for a client’s portfolio. Worley Erhart-Graves Financial
you from coverage. If your policy does not cover you while traveling, purchase a travel health insurance policy, including medical Advisors is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
evacuation. Illness and injury can occur at any time, even while on vacation. Be prepared so you can enjoy your time away. Worley Erhart-Graves Financial Advisors, Inc., is affiliated with Smitson Erhart-Graves Tax Advisors, LLC, through common control and ownership. Smitson
Erhart-Graves Tax Advisors provides accounting and tax preparation services. If you require such services, we may recommend you use Smitson Erhart-
Graves Tax Advisors, although you are under no obligation to do so. Fees for financial planning and investment advisory services are separate and distinct
from the fees Smitson Erhart-Graves Tax Advisors charges for their services.

Should You Buy or Lease Your Next Car? The Taxation of Life Insurance

Juli Erhart-Graves, CFP® Pam Smitson, CPA, Financial Planner

This is a common question for many in the market for a new This payment can be thousands of dollars. In addition, the Life insurance is not meant to be used as an investment, While life insurance death benefits avoid income and capital
car. For those with older cars facing repair bills, the thought lease will allow for normal wear and tear on a vehicle, but rather to replace a financial loss. It can’t be purchased on gains tax, it is not always tax-free. When a person dies,
of having a new car under warranty is attractive. Over the anything above that will result in additional fees. Finally, just anyone; there must be a legitimate reason of financial everything owned, including the life insurance death benefit
long run, though, buying your vehicle and driving it for eight leasing your vehicle means you will always have a car suffering should the insured die. Therefore, the Internal value, is considered a part of the estate. If the estate exceeds
to 10 years, or more, will be the least expensive route. payment. Revenue Code doesn’t subject a death benefit to income or the federal estate and gift tax exemption, $5.45 million per
capital gains tax. individual in 2016, the death benefits are subject to federal
No doubt, leasing a vehicle has its perks. With most leases Of course, buying your next vehicle has advantages, too. As estate tax.
lasting 36 months or less, leasing means you will drive a mentioned before, purchasing is the least expensive option Unlike a death benefit, life insurance cash value is taxed like
new car with the most current safety features and technical over longer periods. This alone is the reason most people a qualified retirement plan. As long as the money stays in the Benjamin Franklin wrote in a 1789 letter, “Our new
gadgets. More importantly, the car will likely be within its buy their vehicles. In addition, owning your car removes life insurance, there is no tax on the gains. However, if the Constitution is now established, and has an appearance that
factory warranty for the duration of the lease. That doesn’t restrictions on the miles you put on it and the wear and tear gains are taken out during the life of the insured, they are promises permanency; but in this world nothing can be said
mean there won’t be costs – you will continue to pay for it receives. You can do with the car what you wish. taxed as ordinary income, not as capital gains. to be certain, except death and taxes.” If only he knew how
maintenance as well as the general costs associated with his observation on death and taxes lives true still today, 227
owning a vehicle – but you can usually expect the warranty There are some disadvantages to owning your vehicle as One way to avoid paying tax on money taken from a life years later!
to cover repairs. Finally, a monthly lease payment will be well. Upon purchase, you will have a larger cash outlay. You insurance policy is to take it as a loan from the cash value.
less than a monthly loan payment if the car is purchased and will need a down payment to avoid being upside down on It is then tax-free, as the IRS taxes withdrawals not loans.
financed. a loan, and depending on the size of your down payment, Given certain circumstances, this can be a source of funds,
the loan payments will still be higher than lease payments. which would never need to be paid back. When the insured
Leasing does have its drawbacks. First and foremost, leases In addition, when the factory warranty ends, you are on the dies, the life insurance policy will pay the loan, along with
limit mileage over the course of the lease period. Leases hook for repair costs. Depending on the car and its issues, accrued interest, out of the insurance death benefit. The
commonly cap miles at 12,000 per year, although some these can be costly. caveat? The policy must remain active for the rest of the
leases may be more and some less. It is critical to make sure insured’s life! If the policy is cancelled or lapsed, the loan
your driving habits fit within the mileage limit before leasing, In the end, whether to lease or buy will be a personal counts as a withdraw and will then be subject to taxes on the
as each excess mile will be billed at the end of the lease. decision based on the advantages and disadvantages that gains in the year it ceases. And, as noted above, it would not
Most leases will also have a large payment due at signing. apply to your situation. be taxed at the preferred capital gains tax, rather it would be
taxed at the taxpayer’s ordinary income tax rates.

The Evolution of Crime THERE IS NO ARTICLE FROM ELIZABETH BRADEN BECAUSE SHE IS CURRENTLY ON MATERNITY LEAVE.

Bonnie Struck, CMFC®

During prohibition, alcohol was very lucrative for crooks. Today, We strongly encourage all investment clients that have online the client, so we can and do send encrypted emails. Feel free Schwab is also doing their part and in an expeditious manner.
cybercrime has taken its place. You cannot turn the news on access to view their Schwab accounts, to take advantage of the to request an encrypted email and we will provide a few simple As a matter of fact, the morning I wrote this, we received an
without hearing of someone having their identity stolen or email free two-step verification to help protect against fraudulent instructions to initiate the process. “alert” someone may have obtained a client’s username and
hacked. As information continues to move at the speed of light account access. Schwab will mail you a keychain “token” to use, password to log into their account. To protect the client,
through different social media and electronic channels, this is which will produce a new code every 30 seconds. Each time you Knowing our clients and monitoring their account activities Schwab restricted the online account access and will actively
only going to become a bigger and more expensive problem for log into your accounts you will input the 6-digit code the token allows us to detect unusual requests. For example, if a client monitor that client account for suspicious activity. This allows
everyone. produces after your password. Let us know if you need help in makes an email request to transfer funds electronically from us to notify the client immediately and suggest they run a virus
requesting a token. a Schwab account to a bank, don’t be surprised if you receive check on their computer.
Our firm, as well as our investment custodian, Charles Schwab, a phone call from our office verifying you made that request.
has worked hard to stay ahead of the onslaught of fraud If we communicate via email, we remove personal client Hackers break into emails and request to redirect those types of Remember the old slogan “help take a bite out of crime”? Don’t
attempts. We want to share with you some of the precautions information (i.e. full account numbers, social security numbers, transfers and I can assure you they are not going to request they be a victim of the evolution of crime, and take the necessary
implemented to protect our clients. etc.). In some cases, this sensitive information is requested by go into the client’s bank account. steps to protect your information. We will stay vigilant as well.