Financial AND ESTATE Planning for YOUNG PROFESSIONALS Presented By Tucker McDonald ’07 and Elizabeth Volney Newton ’06 May 2, 2018 Securities offered through Private Client Services, Member FINRA/SIPC. Advisory products and services offered through US Advisory Group, a Registered Investment Advisor. Private Client Services and US Advisory Group are unaffiliated entities. Further, Tucker McDonald, PCS and Elizabeth Newton are not affiliated.

Financial planning: How to start It is Never Too Soon to Start Building a Financial Plan! Start with Drawing up: Balance Sheet (What You’re Working With) Cash Flow Statement (Income vs Expenses) and Current Budget (Breakdown your Expenses) Identify Discretionary vs. Non-Discretionary Spending

Goals-based financial planning Identify Goals and Differentiate between Short- Medium- Long-Term Goals Ex: Saving for a Trip; Wedding; Down Payment for a Home Savings for Kids’ Education; Rainy-Day Fund Saving for Retirement Develop a Budget and Plan to Attack Each Goal Prioritizing Goals is Practical and Important!

Different methods of saving for different goals Short Term: Savings Accounts, Money Markets, CDs, Health Savings Accounts (HSAs) Medium Term: Investment Accounts, College Savings Plans Long Term: Investment Accounts, Retirement Accounts Individual or Employer-Sponsored Retirement Plans Real Estate is an Investment too! Importance of Liquidity for short-term; short-term instruments are less volatile; risk vs reward; Methods to manage risk in investment accounts

Quick rundown of retirement Accounts Put your Assets to Work & Take Advantage of Long Time Horizon Benefits of Tax-Deferred Growth Employer-Matching of Contributions Flexibility When you Change Jobs Emphasize Long Time Horizon – Easiest Way to Manage Market Risk

Different types of investment plans Retirement Plans: 401(k) vs. IRA vs. Roth IRA vs. 403(b) Plans College Savings Plans (529s) Fee-Based vs. Brokered Investment Accounts

Other financial planning considerations Risk Management – Use Appropriate levels of Life Insurance Tax Planning – Protecting Your Assets from Uncle Sam Healthcare Planning – Considerations for Parents/Grandparents Protecting Their Assets Establishing Beneficial Designations, Asset Titling, Charitable Contributions Trusts for Minors & Special Needs Can Add your Alma Mata as a Beneficiary Syncing your Financial Plan with your Estate Plan Communication between generations is key for inter-generational planning. Healthcare expenses are among fastest-rising expenses in America. Medicaid kicks in after spending down assets.

What is an Estate Plan? Testamentary estate plan documents Incapacity estate plan documents Coordinating beneficiary designations Asset reallocation for estate tax minimization (taxable estates only) Most people know they need a Will, but not many people know what an “estate plan” is. An estate plan is made up of two, possibly three assets. (1) documents that protect and distribute your person and your assets (your estate) during life and upon death; (2) beneficiary designations that coordinate with the testamentary estate plan documents; and (3) for taxable estates, reposition assets to minimize estate taxation

Who Needs an Estate Plan? Short answer: Everyone, in order to make your wishes clear Most critical: Persons wishing to avoid disposition through the intestacy laws Married couples without children Parents with minor children Persons with charitable inclinations Persons with taxable estates If you die without a Will, the state has a law indicating to whom your property would be distributed. This is called intestacy. Most notably, in Massachusetts, if you are married but do not have children, your parents are entitled to a portion of your estate. If you want to avoid the distributions that the state set up, you need a Will. Other scenarios where an estate plan is most crucial: (1) parents with minor children – can name a guardian in a Will; can set up a trust where you appoint a trustee to manage the property for your children if both parents die while the children are young; (2) persons with charitable inclinations – charities are not entitled to a portion of your estate under intestacy rules; (3) persons with taxable estates – certain trusts you can set up to minimize or eliminate estate tax

Basic Estate Plan Will Durable Power of Attorney Health Care Proxy Advance Directive (a/k/a Living Will) HIPAA Release Release of Electronically-Stored Information Declaration of Homestead

Will 1. Document’s Purpose Who gets the property? Whose responsibility is it to distribute the property? Naming a guardian for minor children What is NOT covered by the Will? Non-probate property (JTWROS; Beneficiary Designations) Lifetime management

Incapacity Documents Durable Power of Attorney: Financial decision making Health Care Proxy: Medical decision making Advance Directive: Expression of wishes; not legally binding HIPAA Release: Authorizes release of protected health information Release of Electronically Stored Information: Authorizes release of “digital assets” Homestead Declaration: Protects home from creditor claims up to $500,000

Using Trusts in Estate Planning Protecting assets for minor children Minimizing or eliminating estate tax Removing the value of life insurance from your taxable estate Preserving assets in the case of a long-term care need There are many types of trusts that you can incorporate into an estate plan. Some minimize estate taxes, some remove the death benefit of life insurance policy from one’s taxable estate, some are a vehicle to hold assets until your children reach a certain age where they are able to responsibly manage the money for themselves.

Financial AND ESTATE Planning for YOUNG PROFESSIONALS Thank you for attending tonight! Financial AND ESTATE Planning for YOUNG PROFESSIONALS Securities offered through Private Client Services, Member FINRA/SIPC. Advisory products and services offered through US Advisory Group, a Registered Investment Advisor. Private Client Services and US Advisory Group are unaffiliated entities. Further, Tucker McDonald, PCS and Elizabeth Newton are not affiliated.