FAQs

Diversification spreads investments across different asset classes, sectors, or investment types rather than concentrating everything in one area. It cannot eliminate investment risk or guarantee against loss, but it can help manage the impact that poor performance in one part of a portfolio may have on the overall investment strategy.

Tax preparation focuses primarily on reporting financial activity that has already occurred and filing the appropriate tax returns. Tax planning is more forward looking. It considers how financial decisions involving income, investments, retirement accounts, charitable giving, business activity, and other areas may affect taxes before those decisions are made.

Different sources of retirement income can receive different tax treatment. Withdrawals from certain retirement accounts, investment income, pensions, Social Security benefits, and other income may affect your taxable income differently. Coordinating withdrawals and income sources can be an important part of retirement planning.

A Roth conversion moves money from an eligible pretax retirement account into a Roth account. The converted amount is generally taxable in the year of conversion, while qualified Roth withdrawals may be tax free in the future. Whether a conversion makes sense depends on current and expected future tax rates, income, available cash to pay taxes, retirement timing, and other planning considerations.

Buying, selling, or holding investments can create different tax consequences depending on the type of account and investment involved. Capital gains, losses, dividends, interest, and retirement account withdrawals may all receive different tax treatment. Considering taxes as part of an investment strategy can help investors evaluate the potential after tax impact of financial decisions.

An estate plan may include a will, powers of attorney, health care directives, beneficiary designations, and, depending on the situation, one or more trusts. The appropriate documents depend on your family, assets, wishes, and state law. Estate planning documents should be prepared and reviewed with qualified legal professionals.

An estate plan should be reviewed periodically and after major life events such as marriage, divorce, the birth of a child or grandchild, a death in the family, a significant change in assets, a business transition, or a move to another state. Beneficiary designations on retirement accounts, insurance policies, and other accounts should also be reviewed.

Certain assets, including many retirement accounts and life insurance policies, can pass according to the beneficiary designation on the account or policy. Keeping these designations current can help ensure they remain consistent with your broader estate planning intentions.

Not everyone needs a trust. Trusts may be useful for certain estate planning, asset management, privacy, family, or legacy objectives. Whether a trust is appropriate depends on your assets, family circumstances, goals, and applicable laws. An estate planning attorney can help determine whether a trust belongs in your plan.

Life insurance needs depend on the financial obligations and goals that would remain if you died. Consider income replacement, debt, mortgage obligations, education costs, final expenses, business responsibilities, and the financial needs of dependents. Existing assets and insurance coverage should also be included in the analysis.

Long term care planning considers how you would pay for assistance if you need help with daily activities or extended care later in life. A strategy may involve personal assets, insurance, family resources, or a combination of approaches. Planning before care is needed can provide more time to evaluate available options.