4-Minute Money Ideas

How to Avoid Tax Mistakes When You Receive an Inheritance

By Douglas Goldstein, CFP®

When receiving an inheritance, it’s important to avoid making tax mistakes. Certain tactics, such as opening a U.S. brokerage account (see below for an interactive tool) can help. Watch out for these mistakes:

Mistake #1 – Taking money out of an IRA

To maintain the tax-deferred status of an inherited IRA (Individual Retirement Account), the money must remain in a specially titled account. As an heir, you can transfer the IRA into a “beneficiary IRA” (a.k.a. “stretch IRA”) and not pay taxes on the account’s capital growth until money is withdrawn. Transferring the money overseas jeopardizes the tax beneficial status. As many overseas bankers and investment advisors may not know this crucial piece of information, work with professionals who are well-versed in cross-border investing and tax law.

Mistake #2 – Choosing the wrong investments for an IRA

The IRS allows U.S. citizens not to pay capital gains tax (or tax on interest and dividends) when they sell stocks for a profit inside an IRA. Since you don’t pay capital gains tax on profits, your growth is compounded, because you’re not giving a piece away every year to the government. Generally, annuities, municipal bonds, and other tax-advantageous investments should not be part of an IRA.

Mistake #3 – Not strategizing for estate tax

American citizens who bequeath their estates to their American children are exempt from estate tax if the estate (as of 2015) is under $5.4 million. If you think your future inheritance will be above that amount, strategize with your investment advisor and tax professional to minimize potential taxes. If you live in a different country than your beneficiary, make sure that your strategy includes avoiding tax mistakes.

If you think you might inherit an American IRA, use this free interactive tool to help you realize why opening a U.S. brokerage IRA account may be a good tax saving strategy. Try it at www.Profile-Financial.com/Interactive and then call our office with questions (02-624-2788).

Doug Goldstein, CFP® is the director of Profile Investment Services, Ltd., a firm that specializes in cross-border investing and helping people open U.S. brokerage accounts from overseas. He is a licensed financial advisor both in America and Israel, and does not give tax advice. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Call 02-624-2788 for a consultation about handling your U.S. investments from Israel.

Why You Might Benefit from Having a U.S. Brokerage Account

By Douglas Goldstein, CFP®

Unsure of the benefits of a U.S. brokerage account? Use a free interactive form to find why it may be helpful to keep some of your investments in America even though you live in Israel. See the URL below.

One of the most common financial problems Americans living in Israel face is when their U.S. investment company closes their account because of their Israeli address.

There is no legal reason why you can’t have an Israeli address on American brokerage and IRA accounts. In fact, while some investment companies balk at your foreign address, others have no problem. (My company, Profile Investment Services, Ltd., specializes in dealing with people who live outside the United States but still want to have their investments held in America.)

This issue can affect you even if you don’t have an American investment account

Often, clients initially call my office when they receive an inheritance from a family member in America. American brokerage houses are used to domestic business, and dealing with foreign addresses is difficult for them. Other than the time difference, there’s often a difference of culture. Most American financial advisors don’t have foreign clients and aren’t familiar with the basics of cross-border investing, dual tax codes, and international retirement planning. I’ve even seen cases where foreign clients are given incorrect forms, which can create all sorts of problems. For example, American citizens living abroad should sign a W-9 form, not a W-8BEN, even if they have a foreign address.

What forms are needed?

As a cross-border investment advisor who specializes in helping people living in Israel with American brokerage accounts, I recognize the need for easy-to-understand information on how to manage U.S. investments from Israel. I created an interactive tool to clarify the forms you need to sign when opening an account and which investments you can buy.

The form takes less than five minutes to fill out, and can save hours down the line: Try the form at www.Profile-Financial.com/interactive, and then watch a few videos on the topic that you’ll find there.

Call (02) 624-2788 if you have any questions about managing a U.S. investment account from Israel.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

Why You Might Benefit from Having a U.S. Brokerage Account

By Douglas Goldstein, CFP®

Unsure of the benefits of a U.S. brokerage account? Use a free interactive form to find why it may be helpful to keep some of your investments in America even though you live in Israel. See the URL below.

One of the most common financial problems Americans living in Israel face is when their U.S. investment company closes their account because of their Israeli address.

There is no legal reason why you can’t have an Israeli address on American brokerage and IRA accounts. In fact, while some investment companies balk at your foreign address, others have no problem. (My company, Profile Investment Services, Ltd., specializes in dealing with people who live outside the United States but still want to have their investments held in America.)

This issue can affect you even if you don’t have an American investment account

Often, clients initially call my office when they receive an inheritance from a family member in America. American brokerage houses are used to domestic business, and dealing with foreign addresses is difficult for them. Other than the time difference, there’s often a difference of culture. Most American financial advisors don’t have foreign clients and aren’t familiar with the basics of cross-border investing, dual tax codes, and international retirement planning. I’ve even seen cases where foreign clients are given incorrect forms, which can create all sorts of problems. For example, American citizens living abroad should sign a W-9 form, not a W-8BEN, even if they have a foreign address.

What forms are needed?

As a cross-border investment advisor who specializes in helping people living in Israel with American brokerage accounts, I recognize the need for easy-to-understand information on how to manage U.S. investments from Israel.  I created an interactive tool to clarify the forms you need to sign when opening an account and which investments you can buy.

The form takes less than five minutes to fill out, and can save hours down the line: Try the form at www.Profile-Financial.com/interactive, and then watch a few videos on the topic that you’ll find there.

Call (02) 624-2788 if you have any questions about managing a U.S. investment account from Israel.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

The Best Way to Pay for a Wedding

By Douglas Goldstein, CFP®

After accepting all the good wishes and mazal tovs, the first thing parents of a newly engaged couple need to think about is the best way to pay for a wedding.

Making a wedding can be costly. If you have savings to cover the cost, great. That’s the topic of today’s article. If you haven’t saved for the big day, however, you’ll need to adjust your child’s expectations since you should certainly not take on debt to cover a four-hour party (no matter how much your bank – or children – encourage you).

From which account should you withdraw?

If you have retirement accounts, don’t use those funds to pay for a wedding. Those funds were earmarked to pay for your retirement, and will likely be subject to onerous taxes and fines if you withdraw them before retirement age.

If you have some well-performing assets and some under-performing assets, which ones should you sell? Though it’s not written in stone, analysis of stock portfolios often shows that winning stocks tend to outperform losing stocks going forward. So all else being equal, sell the stocks that are at a loss. Another benefit of selling positions that have declined is that you won’t have to pay capital gains tax.

Sometimes people accumulate a large cash position in their savings or investment account. Although cash is a safer investment than stocks and bonds, today’s interest rates won’t make you rich, so depending on your other investments, it may be wise to withdraw the cash. Just make sure you don’t use your emergency fund to pay for the wedding.

A pre-nup?

Before writing any checks to pay for the wedding, make sure the bride and groom sign a halachic prenuptial agreement. Not sure why? Send me an email ([email protected]) and I’ll send you a copy of the article I wrote about it.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

The Best Way to Pay for a Wedding

By Douglas Goldstein, CFP®

After accepting all the good wishes and mazal tovs, the first thing parents of a newly engaged couple need to think about is the best way to pay for a wedding.

Making a wedding can be costly. If you have savings to cover the cost, great. That’s the topic of today’s article. If you haven’t saved for the big day, however, you’ll need to adjust your child’s expectations since you should certainly not take on debt to cover a four-hour party (no matter how much your bank – or children – encourage you).

From which account should you withdraw?

If you have retirement accounts, don’t use those funds to pay for a wedding. Those funds were earmarked to pay for your retirement, and will likely be subject to onerous taxes and fines if you withdraw them before retirement age.

If you have some well-performing assets and some under-performing assets, which ones should you sell? Though it’s not written in stone, analysis of stock portfolios often shows that winning stocks tend to outperform losing stocks going forward. So all else being equal, sell the stocks that are at a loss. Another benefit of selling positions that have declined is that you won’t have to pay capital gains tax.

Sometimes people accumulate a large cash position in their savings or investment account. Although cash is a safer investment than stocks and bonds, today’s interest rates won’t make you rich, so depending on your other investments, it may be wise to withdraw the cash. Just make sure you don’t use your emergency fund to pay for the wedding.

A pre-nup?

Before writing any checks to pay for the wedding, make sure the bride and groom sign a halachic prenuptial agreement. Not sure why? Send me an email ([email protected]) and I’ll send you a copy of the article I wrote about it.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

Should You Have a Shared Savings Account With Your Spouse?

By Douglas Goldstein, CFP®

What’s the best way to invest with your spouse? Should you have a shared savings account or separate accounts?

Whenever I help a couple set up U.S.-based brokerage and investment accounts, I ask whether they want a “joint” account, or whether they want to keep their money separate.

Shouldn’t couples always invest together?

In an ideal world, spouses would combine both their personal and their financial affairs. But given the complexities of today’s family structure, one account type doesn’t meet everyone’s needs. Some couples enter matrimony on equal financial footing, while others have children from previous marriages, and debts from the past. Before deciding on the structure of the account, therefore, consider each party’s assets, obligations, and needs. Money should not become a power tool in a marriage.

Benefits of a joint account

A joint account often makes sense as either owner can give trade orders in a joint brokerage account and write checks to withdraw money. On the other hand, bank-to-bank wire transfers require both signatories on the account to sign. In the event that one party dies, there is paperwork that the surviving spouse must sign before accessing the money. Depending on how quickly the forms are filed, and how fast a proper “release” comes, it could take quite some time before the money becomes available. A good trick, therefore, is to make sure that each spouse has access to enough funds to pay the bills for several months in the event that the joint account gets frozen.

Should second marriages set up a joint account?

Consider important factors like prenuptial agreements and the need for financial independence (which doesn’t mean financial secrets) when deciding whether to combine funds in a second marriage. Many times, spouses agree to each keep a separate account for personal investing but also a shared account for household expenses. If you’re in this situation, listen to a financial podcast on the topic of shared savings accounts: www.GoldsteinOnGelt.com/2-Marriage.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

Should You Have a Shared Savings Account With Your Spouse?

By Douglas Goldstein, CFP®

What’s the best way to invest with your spouse? Should you have a shared savings account or separate accounts?

Whenever I help a couple set up U.S.-based brokerage and investment accounts, I ask whether they want a “joint” account, or whether they want to keep their money separate.

Shouldn’t couples always invest together?

In an ideal world, spouses would combine both their personal and their financial affairs. But given the complexities of today’s family structure, one account type doesn’t meet everyone’s needs. Some couples enter matrimony on equal financial footing, while others have children from previous marriages, and debts from the past. Before deciding on the structure of the account, therefore, consider each party’s assets, obligations, and needs. Money should not become a power tool in a marriage.

Benefits of a joint account

A joint account often makes sense as either owner can give trade orders in a joint brokerage account and write checks to withdraw money. On the other hand, bank-to-bank wire transfers require both signatories on the account to sign. In the event that one party dies, there is paperwork that the surviving spouse must sign before accessing the money. Depending on how quickly the forms are filed, and how fast a proper “release” comes, it could take quite some time before the money becomes available. A good trick, therefore, is to make sure that each spouse has access to enough funds to pay the bills for several months in the event that the joint account gets frozen.

Should second marriages set up a joint account?

Consider important factors like prenuptial agreements and the need for financial independence (which doesn’t mean financial secrets) when deciding whether to combine funds in a second marriage. Many times, spouses agree to each keep a separate account for personal investing but also a shared account for household expenses. If you’re in this situation, listen to a financial podcast on the topic of shared savings accounts: www.GoldsteinOnGelt.com/2-Marriage.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

Some people say the next best thing to being personally financially successful is having rich kids. However, teaching children good financial habits can be challenging. Here’s where Tom Corley and his book Rich Kids comes in handy. This is a great resource for teaching children (of all ages) about money.

The three paths to wealth

There are three paths to wealth:

• Live below your means. If you put 20% of your monthly salary into savings, as well as save all raises and bonuses, you are setting yourself up for a safer future. This is because not only do your savings increase with compound interest, but you avoid increasing your lifestyle beyond your means.
• Expand your means. Find efficient ways for generating more income, such as a side job.
• Use both strategies together. By saving properly and increasing your earnings you can effectively build your wealth.

Starting young

While these paths sound like they may only apply to adults, children can - and should - acquire these habits. If you give your children an allowance or if they have a job, they should save part of their income.

Your wallet shouldn’t be the sole source of your kids’ income; encourage them to work and learn the powerful life lesson of self-reliance. Whether your child babysits, walks the neighbor’s dog, or gets a regular part-time job with a tlush (paystub), he or she learns personal and financial responsibility. Children who internalize these lessons are less likely to grow into dependent adults… who expect their parents to pay off their debts.

To find out more about rich habits and how to teach them to your children, listen to my discussion with Tom Corley on The Goldstein on Gelt Show at: www.GoldsteinOnGelt.com/RichKids.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

Some people say the next best thing to being personally financially successful is having rich kids. However, teaching children good financial habits can be challenging. Here’s where Tom Corley and his book Rich Kids comes in handy. This is a great resource for teaching children (of all ages) about money.

The three paths to wealth

There are three paths to wealth:

Starting young

While these paths sound like they may only apply to adults, children can - and should - acquire these habits. If you give your children an allowance or if they have a job, they should save part of their income.

Your wallet shouldn’t be the sole source of your kids’ income; encourage them to work and learn the powerful life lesson of self-reliance. Whether your child babysits, walks the neighbor’s dog, or gets a regular part-time job with a tlush (paystub), he or she learns personal and financial responsibility. Children who internalize these lessons are less likely to grow into dependent adults… who expect their parents to pay off their debts.

To find out more about rich habits and how to teach them to your children, listen to my discussion with Tom Corley on The Goldstein on Gelt Show at: www.GoldsteinOnGelt.com/RichKids.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.

Note: After reading the following true story, try the free Investment Evaluation Tool to determine if you are invested more aggressively than you should be. Details for accessing the tool are below.

When I talk with people about how they should structure their U.S. investment accounts, one of the common questions I ask is how long do they plan to keep the money invested. Folks who see themselves as “long-term” investors can often take on the added risk of the stock market.

What about long-term investors who don’t need growth?

I recently met with a couple who were good earners, solid savers, and on top of it all, had inherited a sizeable amount of money. They told me that they thought they should invest mostly in the stock market.

“Why do you need to take on the added risk of stocks?” I asked.

They felt that they should invest for growth because “that’s what everyone does.” I told them that even though the media and popular websites might tell people that they must invest in the stock market if they’re long-term investors, it’s not always true. In fact, there might be a much better way for them to invest. Rather than focusing on growing their money in the long term, they could consider improving their life in the short term.

I explained that they could convert some, or all, of their portfolio into investments that would produce regular income and then they could cut down the number of hours they worked. Alternatively, they could use some of that extra income for enjoyable expenses like vacations and renovations.

“I’m surprised you say that, Doug,” the wife said. “I assumed you would tell us to invest in the stock market.” I replied that people should invest not only based on their tolerance for risk, but also on their specific needs.

Is your portfolio invested more aggressively than it should be? Try the free “Investment Evaluation Tool” at www.Profile-Financial.com/investment-evaluation or call (02) 624-2788. Consult with a financial advisor before investing to better evaluate the risks, costs, and potential benefits given your specific situation. An investment suitable for one person may not be suitable for another.

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.Profile-Financial.com. He is a licensed financial professional both in the U.S, and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.