Congress Passes New Coronavirus Relief Package

By Benjamin Trujillo, JD, LLM – Senior Advisor and Lauren Randazzo, CPA – Advisor

Lawmakers agreed on Monday, December 20, 2020 to the terms for additional economic stimulus after months of haggling.  Congress reached an accord on approximately $900 billion dollars of relief for struggling Americans, less than half the aid provided under the original CARES Act in March.  The full text of the as-yet unnamed legislation has not yet been released, but the highlights include:

Stimulus Checks

$600 stimulus checks for adults and dependents under the age of 17.  Stimulus checks begin phasing out for adjusted gross incomes in excess of $75,000 for individuals, $112,500 for head-of-household filers and $150,000 for married couples filing jointly.

Unemployment Benefits

Congress is adding $300 to weekly unemployment benefits for 11 weeks.  Lawmakers also extended the program expanding the pool of people eligible for unemployment benefits and the duration of the benefits.

PPP Loans

The government set aside roughly $284 billion of the package for additional forgivable Payroll Protection Loans.  Small businesses may receive a second PPP loan if they have fewer than 300 employees and can demonstrate that revenue has fallen by at least 25%.  The maximum loan for a second PPP loan is capped at $2,000,000.

Expense Deductibility

Expenses paid using PPP loan proceeds will now be fully deductible.  This overrules the Treasury Department’s position that such expenses would not be deductible, which largely obviated the benefit of the initial PPP loans.   It appears that deductibility will be retroactive to cover the initial round of PPP loans as well as the second round.

Other Benefits

Additional funds have been set aside for schools ($82 billion), COVID vaccination and testing ($31 billion), and transportation ($45 billion).  Qualified families who are not able to make rent or pay off past-due rent will be getting a boost with assistance to make rent and utility payments ($25 billion).  The Supplemental Nutrition Assistance Program (SNAP) is receiving funds as well ($13 billion).

The CWCJ Team at Moneta will provide updates to this developing story as they become available.

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© 2020 Moneta Group Investment Advisors, LLC. All rights reserved. These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified; trademarks and copyrights of materials linked herein are the property of their respective owners. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.

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Ask The CFP: What Are The Most Common Estate Planning Mistakes?

Hello everyone and welcome to this month’s Ask the CFP segment. This month’s question is, “What are the most common estate planning mistakes?” Over my career I’ve witnessed many estate planning mistakes and most of them come down to simple human error. Mistakes simple happen. However, this may help you double-check your estate plan so they hopefully don’t happen to you.

First, the most common estate planning mistake I see as a financial planner is when tools like a trust aren’t being used properly. For example, if you have a revocable living trust, but it hasn’t been incorporated into your assets or your estate, it may not even be used if you were to become disabled or pass away. I’ve met numerous people that have trusts, but their house isn’t owned by the trust, their investments aren’t owned by the trust and their bank accounts aren’t owned by the trust. In some situations, it may be better for the trust to be the beneficiary of certain assets instead of the owner, but the idea here is that the trust really isn’t being used properly. Attorneys typically aren’t involved in this process, so it’s a common mistake. If your attorney gave you something called a “funding memo,” read it and follow the instructions on funding your trust.

Second, I often see minor children as beneficiaries of investments or life insurance without consideration for guardianship or what happens if the minor actually inherits money at age 14. You can generally name anyone the beneficiary of your assets, but their ability to actually become the new owner of real estate, bank accounts or IRAs is a different story. Speak with a professional about how this works if you have a minor listed as a beneficiary.

Lastly, creating a will, a trust or other estate planning documents is rarely described as fun. It’s no wonder people tend to put off estate planning in general. For those that do draft documents, it’s common to see that such documents aren’t kept up to date. Maybe someone passed away that’s mentioned in a will or grandchildren are now in the picture and weren’t before. It’s important to maintain these documents, just as you would maintain the engine in your car.

Whether you have a complex estate plan or something more straightforward, don’t let these common mistakes take you off track. Estate planning may not be fun, but it feels good when proper planning is in place. If you have a question about this topic or have a question for next month’s video, please send it to dtroyer@MonetaGroup.com. Thanks for watching and we’ll see you next month.

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Please speak with a qualified tax or legal professional before making any changes to your personal situation.

© 2020 Moneta Group Investment Advisors, LLC. All rights reserved. These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.

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Year-end Tax Planning Considerations

2020 has been an unusual year to say the least. As we have adapted to “new normals” throughout our lives, following are some important changes to consider as the year closes for your tax strategy.

Required Minimum Distributions (RMDs): One normal year-end item you don’t have to worry about this year is taking a RMD from your IRA. Thanks to the CARES Act, the RMD requirement for 2020 was suspended.

Charitable Contributions:Even if you are not itemizing your deductions this year, the CARES Act created a charitable deduction of up to $300 for cash contributions to qualifying organizations. Contributions to Charities, Donor Advised Funds or Private Foundations need to be arranged with your advisor early in December to allow proper time for processing with custodians.

Tax-Free Family Gifts: The annual 2020 gifting limit is $15,000 per person with no gift tax, reporting requirements or tax consequences to the recipient. Talk to your Moneta Advisor before year-end to allow time to process.

Health Savings Account (HSA) Contributions: Maximum contribution amounts for 2020 are $3,550 for individuals and $7,100 for families (these limits will go up slightly for 2021). The annual “catch up” amount for people age 55 or older is $1,000. The actual deadline to contribute to an HSA for 2020 is April 15, 2021. At a minimum, you should consider contributing enough to cover your annual health plan deductible.

Leftover Flexible Spending Account (FSA) Funds: FSAs are generally “use-it-or-lose-it” plans. If you participate in your employer’s FSA, you will need to check with your particular employer’s plan to see if it has any of the following special provisions. A carryover provision may allow up to $550 of unused funds to be rolled into the next calendar year. A grace period may allow a period (which can be up to 75 days after year-end) for which you can submit 2021 expenses against your 2020 account dollars. A plan may allow either the grace period or a carryover, but it may not allow both. A run-out period is how long after year-end you can still get reimbursed for 2020 expenses (usually up to 90 days).

Retirement Plan Contributions: The maximum employee deferral limit for 401(k), 403(b), and several other employer plans for 2020 is $19,500 for employees under age 50 and $26,000 for employees aged 50 and older. Check with your employer for the deadline to make any end-of-year changes.

If you have any questions or concerns about your specific year-end considerations, Moneta, your Family CFO, is here to assist.

© 2020 Moneta Group Investment Advisors, LLC. All rights reserved. Moneta Group Investment Advisors, LLC is an SEC registered investment advisor and wholly owned subsidiary of Moneta Group, LLC.  Registration as an investment advisor does not imply a certain level of skill or training. Moneta is a service mark owned by Moneta Group, LLC. The opinions presented by the Moneta University Speaker Series guests do not necessarily represent those of Moneta.

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