When tax season rolls around and you see just how much of your income goes to the IRS, it can feel discouraging—especially considering how hard you work to build wealth in the first place. While taxes may feel like an unavoidable headache that only grows stronger as your net worth rises, that doesn’t mean you’re left without options.

Yes, it’s possible to legally and ethically optimize your tax situation. No, you’re not evading or avoiding taxes altogether, just making sure you don’t pay more than your fair share.

Thoughtful, year-end planning can make a meaningful difference, especially for those juggling multiple income sources, managing complex executive compensation, or navigating business ownership. Below are some of the most effective ways to minimize your tax bill and set yourself up for a stronger financial future.

Maximize Your Retirement Contributions

One of the simplest and most powerful ways to lower your taxable income is by maximizing your retirement plan contributions before the end of the year (or in some cases, by the tax deadline the following year).

In 2025, you can contribute up to $23,500 to a traditional 401(k) or 403(b) plan. If you’re 50 or older, you can make an additional $7,500 catch-up contribution, bringing your total to $31,000.¹ Contributions to these retirement accounts are tax-deductible, meaning they directly reduce your taxable income for the year.

New in 2025, people who are between the ages of 60 to 63 can take advantage of an enhanced catch-up contribution, sometimes referred to as a “super catch-up.” Eligible plan participants can contribute up to $10,000 or 150% of the standard catch-up limit (whichever is greater) to their employer-sponsored retirement plan—on top of normal contributions. Those who meet the criteria to contribute will have a valuable opportunity to shelter even more income from taxes during these final years leading up to retirement. For 2025, the super catch-up contribution limit is $11,250, bringing the total contribution limit up to $34,750.¹  

If you’re self-employed, consider a Solo 401(k) or SEP IRA, which are especially built for small business owners and can allow for significantly higher contribution limits than traditional IRAs. These options can be particularly valuable for freelancers, consultants, or small business owners looking to build retirement savings in a tax-efficient way (without the regulatory hassle of a larger corporate plan). Keep in mind that, if this is an option you’re pursuing, only a Solo 401(k) offers catch-up contributions! SEP IRAs do not have a catch-up contribution option. 

Don’t Forget About Roth Accounts

While traditional accounts lower your taxable income today, Roth IRAs and Roth 401(k)s offer tax-free growth and withdrawals in retirement. Contributions are made with after-tax dollars, but qualifying withdrawals are tax-free in retirement.

For 2025, the income limit to contribute directly to a Roth IRA is $165,000 for single filers and $246,000 for married couples filing jointly.¹ If your adjusted gross income exceeds these limits, a backdoor Roth IRA or mega backdoor Roth (for those with access through employer plans) may serve as a workaround. These strategies allow you to convert after-tax contributions into a Roth account—just keep in mind you’ll owe income tax on any amount rolled from a tax-deferred account to a Roth account.

Identifying Tax Opportunities in Your Business

If you own a business or do contract/freelance work, you have some additional tools at your disposal to potentially reduce your tax bill—though you’ll need to follow the IRS’s criteria carefully.

For example, the IRS allows you to deduct “ordinary and necessary” costs related to running your business, such as office supplies, software, marketing, and professional fees. However, you must document your receipts and proofs of purchase. Overstating deductions or mixing personal and business expenses can trigger unwanted IRS attention.

High-earning entrepreneurs and startup investors may also want to explore Qualified Small Business Stock (QSBS) exclusions, which can allow up to 100% of capital gains to be excluded from federal taxes when selling certain qualified shares. Again, this is provided specific requirements are met. You may want to consult with a financial advisor to learn more about managing QSBS.

Tax-Focused Investment Decisions

As the end of 2025 approaches, it’s worth reviewing your portfolio for opportunities to make tax-efficient adjustments. For example, if some of your holdings have declined in value, tax-loss harvesting enables you to sell those investments before December 31 and use the realized losses to offset capital gains elsewhere.

You may also want to explore Opportunity Zone investments, which allow you to defer capital gains taxes when you reinvest profits from the sale of other assets into qualified projects. If you hold the investment long enough, any additional appreciation may become tax-free. For certain investors, Opportunity Zone investments can be a powerful tool for building tax-efficient long-term growth.

Review Your Tax Withholding

Before year-end, take a close look at your recent paystubs to confirm you’ve had enough tax withheld throughout the year. This is especially important if you’ve had RSUs vest in 2025. Many employers don’t withhold sufficient tax on vesting RSUs, which can leave you with an unexpected tax bill in April. If you’re short on withholding, consider setting aside additional cash now or making an estimated tax payment before December 31 to avoid penalties and interest.

Are You Charitably Minded?

Donating stock that has increased in value allows you to avoid paying capital gains taxes on the appreciation while still receiving a charitable deduction for the full fair market value. If you plan on donating often or making substantial contributions, establishing a donor-advised fund (DAF) can simplify the process. A DAF enables you to make a single, tax-deductible donation now, grow assets tax-free, and make distributions to your favorite charities over time.

Year-End Tax Review with WealthChoice

As the calendar year closes, remember that effective tax planning can happen all year round. However, many of the strategies we mentioned above should be implemented before December 31 to count for the 2025 tax year.

Another important reminder? Your tax planning opportunities don’t end at the federal level. State tax laws vary widely, and high earners may face additional obligations depending on where they live, work, or own property.

At WealthChoice, we specialize in helping high-earning women make informed, strategic financial choices that minimize tax exposure while supporting long-term goals. Schedule a year-end tax planning consultation today to explore how you can reduce your 2025 tax bill.

Sources:

https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000

The post How Can High-Earning Women Reduce Their Tax Bill Legally? appeared first on WealthChoice.

Standing at over 1,000 pages, the bill permanently extends many provisions originally introduced in the 2017 Tax Cuts and Jobs Act (TCJA), while enacting changes across many facets of the federal government and tax code. Below, we’ve zeroed in on a few of the most prominent and impactful changes likely to make a difference in your tax bill over the coming years.

#1. Permanent TCJA Tax Cuts and Deductions

The OBBBA has permanently extended the TCJA-era tax brackets and standard deductions. Without this legislation, these benefits were set to expire in 2026. The top tax rate remains at 37%, and the standard deduction gets a small bump: $15,750 for single filers and $31,500 for married couples in 2025.  For many of you, taking the standard deduction replaced itemizing deductions with the TCJA changes. We’ll want to revisit this based on the changes to the SALT deduction (see below).

#2. New “Super Deduction” for Seniors

Starting in 2025, taxpayers 65 and older with income under $75,000 (or $150,000 for couples) can claim an additional $6,000 deduction, or $12,000 if both spouses are over 65. This benefit phases out for incomes above $175,000 for single filers and $250,000 for joint filers. For now, the super deduction will only be available through the 2028 tax year.

#3. Estate Tax Exemption Limit Remains High

Originally introduced in the TCJA, the elevated federal estate tax exemption will no longer sunset in 2026. In 2025, the estate tax and lifetime gift tax exemption limit is $13.99 million per person or $27.98 million per couple. Considering the TCJA doubled the pre-2018 estate tax exemption limit, this continuation can offer families with significant assets and estates more flexibility with their wealth transfer strategies.

#4. State and Local Taxes (SALT) Itemized Deduction Increase

We see this as the biggest impact for most of our clients.  The state and local tax (SALT) deduction limit increases from $10,000 to $40,000 in 2025, with gradual increases through 2029. High-income households will face some phaseouts, but the exemption limit will never drop below $10,000. This increase in SALT deductions is significant, as it could make itemizing more worthwhile (despite the elevated standard deduction), especially in states with higher state and local taxes like New York or California.

#5. Changes to Charitable Deductions

Taxpayers will have the option to take above-the-line charitable deductions of up to $1,000 per person ($2,000 for couples) starting in 2026. If you do plan on itemizing, however, you’ll only be allowed to deduct donations that exceed 0.5% of your adjusted gross income (AGI). You will have the option to carry forward unclaimed charitable donations to deduct in future tax years.  When it comes to choosing to bunch charitable giving, we would suggest reaching out to us or your CPA for guidance here.

#6.  Tax Benefits for Parents and Families

The Child Tax Credit (CTC) is now permanent and currently $2,200/qualified child.  This amount will increase for inflation, but there are still phase-outs.  For families with dependents who don’t qualify for the CTC, there is a now permanent $500 credit/dependent. There are some good changes to 529 accounts.  

The definition of a Qualified Expense has increased to include up to $20,000 for K-12 expenses, as well as continuing education and credentialed programs.  You may have heard of the Trump accounts-they are a new type of savings account for children under 18 beginning in 2026.  

They are tax deferred accounts and no withdrawals can be made until the child reaches age 18. Think of these as similar to IRAs.  If withdrawals are made before age 59 ½, there is a 10% penalty unless the money is used for higher education or up to $10k for a first time home purchase. The federal government will contribute $1000 automatically for children born between 2025-2028.  

Parents can contribute up to $5000/tax year adjusted for inflation, and employers can contribute as well.  We think these could be an option for additional savings once a family has contributed the maximum to their child’s 529 account but a 529 has much more flexibility and better tax advantages for parents’ contributions.

What Should Taxpayers Focus On Moving Forward?

While some provisions are permanent, others are set to expire in 2028, including the senior super deduction, tip and overtime deductions, and the extra Child Tax Credit. As you and your tax professional or advisor plan ahead, be mindful of these timelines. For example, with higher SALT caps and new available deductions, some taxpayers may benefit from temporarily itemizing instead of taking the standard deduction.

We’ll be addressing how these changes affect you personally when we meet but wanted to make sure you are aware of some of the key changes. If you have any questions or would like to review these changes together in more detail now, don’t hesitate to reach out today.

The post A Quick Guide to the One Big Beautiful Bill Act (OBBBA) appeared first on WealthChoice.

The gender pay gap sees women paid about 82 cents to every dollar earned by a man, according to analysis by the Pew Research Center in 2022. This pervasive divide is driven in part by gender and racial discrimination, workplace harassment, job segregation and a lack of workplace policies that support family caregiving, which is still most often performed by women.

Women who leave work to raise their children face decreased wages when they return. They also face very real biases about being less committed to their work, which can lead to a lack of growth opportunities. Age is another factor that is wrongly synonymous with “worth.” For women aged 45 and over, the pay gap extends to 73 cents for every dollar a man makes at the same age. When looking at race, the gap only grows.

As well as seeing my clients battle with this, I’ve experienced the gender pay gap firsthand.

After repeatedly confronting the unique financial challenges that women executives face, I knew I had to go my own way. WealthChoice was created as a place where I can do the work I love in a way I know will have the most impact, and that I am fairly compensated for.

It seems like the most basic request: to simply be paid the same as men who do the same work as us (or sometimes even less!). And yet a gender wage gap has been recognized in a shocking 94% of occupations, stretching all the way to the C-suite. The gender wage gap continues to permeate our professional lives, impacting the health, wealth and well-being of women across the whole of the US.

So What Can Be Done About the Gender Pay Gap?

My job is to advocate for the betterment of the lives of the women I work with. I take great joy in watching them find empowerment and satisfaction in their financial lives. So it really galls me when I hear of the unequal pay or stifled professional development they experience at work.

While I can’t change the numbers on their paycheck, a major way I can help my clients is by ensuring they use the money they do earn as wisely as possible. And the good news here is that there are certain wealth strategies we can put in place that will cushion their financial plan from the negative impact of the gender pay gap.

I recently took on a new client, a woman who is a top tier executive in a large tech firm. When discussing her income I sadly wasn’t surprised to learn of the pay disparity she experiences, despite her senior position.

We spent a lot of time chatting about how this affects her at work, and the mental and emotional toll it takes when feeling so overlooked and underappreciated by her male peers. Then – with an admitted glimmer of “We’ll show them!” – I set about telling her how I will help her work to negate this wage gap as much as possible through well considered and impactful financial choices.

Pay parity is a hugely important element we factor into our planning processes with our clients at WealthChoice.

After all, the earning power of women dictates our ability to live the life we want – and that is the hallmark of our approach to financial planning and the management of women’s wealth.

Working closely with our clients to understand their dreams, goals, ambitions and areas of personal fulfillment is integral to how we operate. Having a plan to maximize your income is critical for any executive – male or female – but it is a really important consideration for female executives, business owners and professionals who are battling an uneven playing field.

The Importance of Knowing a Woman’s Worth

When you’re not getting paid what you’re worth, you don’t get the opportunity to save as much as you should. That translates to lost incomes, lost social security benefits (which are scaled on your pay), and lost portfolio growth over time.

While we’re all familiar with the fact that women executives are paid less than men for doing the same jobs, a lesser known fact is that the average woman executive leaves a million dollars on the table over the course of her working life, simply by not knowing how much she is worth, or asking for what she deserves.

How is this possible, you ask? It starts with knowing your professional value. Where men generally have no problem asking (or overasking) for what they are worth, women seem instinctively averse to it. Moreover, women executives often don’t know the market value of their work. Women report salary expectations between 3 percent and 32 percent lower than those of men for the same job.

Failing to negotiate plays a significant role in wage disparity. A study from Carnegie Mellon University revealed that 8 times as many men as women graduating with a master’s degree negotiated the starting salary of their first job. The first job sets the tone for your earning potential over your entire career. By not negotiating, a woman stands to lose over $500,000 by age 60.

What Does the Gender Pay Gap Mean for Our Economy?

Gender equality around pay has long been an issue in the US labor market. June this year marked 60 years since the passing of the Equal Pay Act, which “prohibited discrimination on account of sex in the payment of wages”.

Yet the situation in the US is still only slightly better than the world average – where most women are paid around 20% less than men – but 18% less can still make a significant impact to a well-structured financial plan. This has a persistently negative impact on the American economy as a whole.

According to Moody’s Analytics, we can expect to see an additional $7 trillion injected into the global economy – that is about 7% – if the pay gap between men and women is narrowed more rapidly. The problem is, at the current rate, the gender pay gap will only be closed in about 132 years.

However, if women in the US were to receive equal pay, then it is anticipated that this would cut poverty among working women and add in the region of $482 billion to the American economy.

For example, in the state of California, where we have a number of clients, pay equality would equate to a significant economic boost. “If women were paid the same as comparable men in California, the state’s working women would have earned $51.8 billion more dollars, an earnings increase that, by itself, is greater than the entire economy of South Dakota ($45.9 billion)”, wrote the authors of briefing paper for The Institute for Women’s Policy Research, Heidi Hartmann, Jeff Hayes and Jennifer Clark.

How Does This Impact Women’s ‘Wealth Gap’?

As I wrote in my book, Corner Office Choices, no matter what industry you work in, being a woman in that industry will bring unique challenges that men don’t have to deal with. The response isn’t to resign ourselves, nor is it to get overly caught up in fighting for systemic change. Instead, the most constructive approach is to identify what those challenges are, and get the resources you need to overcome them.

Over the past two decades, very little has been done to fundamentally shift the status quo. This means more women play a juggling act with their time and their money, but with fewer opportunities to invest more into their own financial futures.

Just recently, the Center for American Progress think-tank released a paper determining that persistent gender pay gaps had cost American women $61 trillion in financial resources since 1967, when the Equal Pay Act was signed. While all women are impacted, Latina and Black women workers continue to be worse off.

The personal upshot of this is that women continue to be caught in a ‘wealth gap’, unable to catch up with their male counterparts. As Rose Khattar, Director of Economic Analysis at the Center for American Progress, said about the report’s findings: “That’s lost wages that could have been injected into the economy in the form of consumer spending. That’s wages that women could have used in terms of investments to build up their wealth.”

Just consider these three personal impacts that the wealth gap might be having on your own financial planning:

• Retiring in Style: The long-term implications of the gender pay gap are particularly noticeable when you start drilling down into the retirement income women can expect versus men. Since earnings over the course of a woman’s life are below that of a man, they receive less in pensions and Social Security which means that when it comes time to retire they can expect to have 70% of a man’s retirement income. Worryingly, many women go into retirement with less income than they had when they were working; making it impossible to maintain their standard of living.
• Emergency Fund Savings: As a female breadwinner, or as a working woman contributing to the family finances, some believe it is important for women to save even more into their emergency funds. This is, in part, due to the household demands on women and their more precarious standing in the labor market. And yet they have one hand tied behind their backs as they build up these savings.
• Investing in Stocks: Earlier this year a report by BNY Mellon noted that if women invested in the stock market at the same rate as men, there would be – at very least – an extra $3.22 trillion in assets under management. The gender pay gap was just one of the factors behind this imbalance highlighted in the report, the others being financial confidence, education around investing and less disposable income (which is where the pay gap really bites).

The Benefit of Women-Focused Advisory Firms

Many of the issues impacting how women accumulate wealth can be linked to personal preferences for investing – since traditionally women tend to be more conservative and have lower risk tolerances – but also because the financial world is geared towards men and, by and large, continues to be male dominated.

However, having a female financial advisor in your corner also makes a big difference. After all, women have unique financial needs and often find themselves handed cookie-cutter advice that might suit a man, rather than benefiting from crafted solutions that help them live their best life.

Women want more than just accepting what is pushed across the table at them, they value honesty and transparency, relationships built on trust and access to investing information that aligns with their personal values. Many women find they can get this by using a female advisor.

It’s important for women executives to recognize that no matter where they start, there’s only so much time they have left, and only so much money they can make within that time frame. It is vital to understand the long term implications of how they choose to use their resources.

My job is to help women executives understand that their current way of life is a choice, and to help them see what other choices are available to them. What do they need for their own life? What does quality of life mean to them? And what is involved in creating it?

At WealthChoice we tailor-make our clients a financial plan that not only takes the issue of gender pay disparities into account, but seeks ways to counter these issues and provide sustained financial stability and growth.

Please do get in touch if we can help you navigate any gender pay gap issues you’re experiencing. We stand as your advocate, support system, and ultimate cheerleader as you head to work every day and learn to bridge the gaping wage divide until the day eventually comes when we no longer have to. Until then, we’re here for you.

The post Women Executives and the Gender Pay Gap. What Can We Do? appeared first on WealthChoice.

I would suggest that rather than a philosopher, taking the stress out of tax season requires a dedicated team comprising your financial advisor and your Certified Public Accountant (CPA), who have the requisite skills and network to create an effective tax strategy for women business owners, professionals, lawyers and technology executives.

It’s one thing knowing the rules and regulations you need to adhere to when filling out your tax return, but for a busy professional it is almost impossible to keep track of tax law changes, as well as the specific implications these might have for your tax situation.

Seeking Expert Guidance

At WealthChoice we are fully versed in the most recent tax law changes and will ensure you are taking advantage of all options to lower taxes. Since our approach is personal and hands-on, we touch base regularly with our clients throughout the year, asking pertinent questions such as:

• Have your stock awards vested?
• Have you paid the estimated taxes on your business?
• Is your withholding on track?

A case in point is the recent passing of the Secure Act 2.0 by Congress. The Secure Act 2.0 is an important piece of legislation that has real implications for retirement and wealth planning.

While the legislation makes provision for accessing retirement funds during tough times, some of the key points which are particularly pertinent to our clients, and which may impact tax filing in the coming years, include:

• The increase in the age for Required Minimum Distributions (RMDs) to 73, rising to 75 in 2033.
• An increase of the annual catch-up contribution limit for individuals aged 60 to 64 to $10,000 starting in 2024 – notably this will be indexed for inflation in the coming years.
• For those 60-63, 401(k) catch up rises by 150 per cent of the normal catch up. For 2023 the catch up is $7,500.
• From 2024, individuals earning more than $145,000 and contributing to a 401(k) can only make catch-up contributions into a Roth account. This will affect taxable income, since Roth contributions are post-fax.

Bearing these changes in mind, it has never been more important to have a team of experts on hand who can offer a holistic approach to wealth management.

To help our clients navigate the complexity of tax season, WealthChoice works with CPAs who prepare and file tax returns on behalf of our clients – this close collaboration with your CPA helps us to avoid any ugly surprises from the previous year, allowing us to take appropriate steps before it’s too late to correct issues with your prior tax year.

This is a tight-knit relationship which yields discernable positives for our clients; specifically lowering the amount of taxes you pay so you get to keep and enjoy more of what you make. It means continuity of strategy and oversight. And it means that your financial advisor can include tax implications and opportunities in their helicopter view of your financial goals and aspirations.

Your Tax Filing Agenda

Having experts in your corner does not, of course, mean that you should abdicate all responsibility. It’s always advisable to stay informed about tax developments, if only to ensure that you are always asking the right questions and setting the agenda for your own tax strategy.

When I sit down with clients, we run through the issues outlined below. Then we work with your CPA to create an effective action plan that covers all the bases.

• Run through any changes and laws that might impact your tax return.
• Discuss ways in which to minimize your tax bill by making the most of tax deductions and tax credits.
• Talk about tax-advantaged (ether tax-deferred or tax-exempt) investments options and how to get the most out of them; from 401(k) plans to traditional IRAs, Roth IRAs and Roth 401(k)s, Health Saving Accounts and even Municipal Bonds.
• Discuss any life changes that may have taken place over the year, and what the implications are for your tax situation.
• Take the time to refine and refresh your existing tax strategy for optimal effectiveness.
• Discuss some of the new digital technologies available to help automate data entry and document collection.

Another important point to interrogate is your tax status. I stressed this fact in Corner Office Choices: The Executive Woman’s Guide to Financial Freedom, and it remains a critical point to cover during such discussions – particularly for women.

While your filing status will invariably change as your life circumstances change, there are very real impacts for women who, for instance, outlive their spouse and change their tax status to ‘single’. Utilizing the best personal tax filing status is a critically important consideration for reducing tax liabilities; so, I urge you to put it on the agenda this tax year.

The Ins and Outs of the 2023 Tax Season

Before delving into some practical tips for planning a stress-free tax season, let’s just recap the new deduction and credit amounts, and the primary deadlines, that you need to make note of:

• In 2023, tax filing deadline for federal tax returns and payments is April 18.
• If you apply for an extension, your extended filing deadline is October 16.
• The standard deduction for 2023 was increased to $13,850 from $12,950 in 2022 for single filers and married individuals filing separately.
• For married couples filing jointly, the standard deduction rose to $27,700 from $25,900 previously.
• The deadline to fund an IRA is your tax filing deadline (April or October).
• The deadline to make an employer contribution to your Solo 401k is your filing date.
• The deadline to have contributed to your 401(k) as an employee was December 31 of the previous year, but you can still take the other steps above to lower taxable income at this point.

Of course, in many cases it makes more sense to itemize deductions rather than taking the standard deduction. This approach allows you to lower your tax burden by deducting items like charitable donations, medical and dental expenses above 7.5% of adjusted gross income, state and local income or sales tax up to $10,000, and mortgage interest on loans up to $750,000 for married couples, or $375,000 for singles. You can also add investment interest and gambling losses to your itemized deductions.

However, as I explain in Corner Office Choices, it is extremely important to discuss with your CPA whether itemized deductions will make a material impact to your tax filing. This approach takes more effort and planning, but for individuals and couples whose expenses exceed the standard deduction, it does have advantages.

Stress-Busting Tax Planning Tips and Dates to Diarize

Planning, keeping abreast of paperwork, and remembering key days in the tax filing process will go a long way to ensuring that you have a relatively stress-free experience in the lead up to tax filing time.

Ideally, tax should be approached as an ongoing and month-to-month area of focus. Over the course of the year, be sure to keep a note in your tax folder of major life events that could have an impact on your tax situation, this might include getting married or divorced, or the death of a parent, a big promotion at work, buying a house (or even a holiday home or a yacht), and even suffering losses as a result of a flood or fire at your home.

It also takes into account business expenses, a liquidity event (such as your company going public), vesting stock awards or receiving a big bonus. It is important to pass this information onto your financial advisor and your tax specialist.

January is usually a big month for annual tax preparations, so I would suggest starting the new year by collecting all necessary documents, receipts and information – this might include proof of charitable donations, your employer’s W-2 withholding form and your W-4 withholding certificate.

If you’ve had stock awards vest, look out for 1099 forms from your brokerage accounts. For independent contractors or freelancers, a 1099 or W-9 form would be required, this is also often the case for female lawyers, many of whom practice as solo 1099 lawyers or in small firms of less than 10 attorneys. Law firm partners will require a K-1.

Most CPAs will want to receive your tax documents some time in February, if your goal is to file in April.

An Expert Helping Hand

I typically check in with clients in June to go through withholding, in order to make sure they are on track given their income year to date.

For clients with vesting stock awards, I encourage them to contact me throughout the year – each time they vest – so we can ensure enough tax is withheld in a savings account dedicated to taxes. We do this because, for those in the higher tax bracket, typically only 22% is withheld.

If the mere thought of working through this tax ‘to-do’ list has your blood pressure racing, then I invite you to get in touch and make a time to join me for a coffee or a glass of wine so, together, we can put a strategy in place to streamline your tax filing experience.

The post The Ultimate Guide to a Stress Free Tax Season appeared first on WealthChoice.

A recent conversation with a client brought up a wonderful analogy for this unique time as we discussed how best to prepare for what is likely to be a financially uncertain 2023: the unknown unknown. ‘Unknown unknowns’ are those unidentified and challenging risks which are hard to manage and even harder to predict; but they have a profound ability to derail carefully made plans.

There will always be things in life that we can’t quite grasp and events that throw us off guard. There is always the possibility that new ‘unknowables’ are just around the corner. Known as the Johari Window, this concept was created by psychologists Joseph Luft and Harrington Ingham in 1955. Designed to help people better understand their relationship with themselves and others, it’s a useful tool for understanding the importance of risk planning in personal finance.

The Financial Known and the Unknown

Life is filled with knowns and unknowns, and starting off a new year in acceptance of this fact means we can approach it with grace, but also – and more importantly – we can prepare for uncertainty and enable ourselves to remain steadfast no matter what the new year brings our way. In no area does this become more important than that of our financial lives.

Right now we are living through a time of ‘unknown unknowns’. On the outer edges of a global pandemic, our economy may be in turmoil, but this doesn’t mean your financial life needs to be. If we are prepared to lay down the right foundations, we can navigate a clear path through this ambiguity and anxiety with careful, mindful and meticulous planning.

Always Plan for the Unknown

‘Unknown knowns’ – like a bank or currency collapse – are rare, although we know in theory that they are possible, which is why strategies like diversification are so important. It is also absolutely possible to mitigate against ‘known unknown’ risks by making provisions for things like sickness, technology disruptions, or market shifts.

And, of course, ‘known knowns’ ask us to pay attention to saving, having insurance and a balanced portfolio. Even those true surprises – the ‘unknown unknowns’ – won’t hit you as hard if you have a plan in place.

During times of uncertainty, a plan is your best friend. It provides peace of mind and the comfort of knowing that you’ve built in some level of protection. With that surety beneath you, you can step out into each new day with the confidence to live life to its fullest, and on your own terms.

Women, Planning and Flexibility

The mistake we as women executives, business owners and professionals can often make, is that we view our financial plans as “an all-or-nothing proposition”. This is a common issue I address in my book, Corner Office Choices.

If we stray from our financial plan, we believe all progress has been wiped out. We treat it like a weight loss program or fitness regime. We’re hard on ourselves and become disillusioned if the clear road ahead starts twisting and turning before our eyes.

This adds huge mental stress at a time when the best advice is to hold true to intentions of the plan, to let the built-in protection mechanisms do their work, and recognize that the path to financial success is long and winding.

Throughout my career I’ve come to appreciate that real wealth comes down to living life on your terms. But it also means being flexible enough to know what you can’t control, such as:

• The Economy: Our economy is riding a tumultuous wave right now. In fact, the entire global economy is weathering a storm of historic magnitude.
  Effects of Covid-19: Bloomberg calls the pandemic “a catalyst for lasting economic change” in the US, from remote work to automation and a growing wealth divide.
• High Inflation: More rate hikes on the cards by the Federal Reserve.
• Unemployment and Job Losses: Right now, we are working with clients who have lost jobs, who are unemployed and who are deeply concerned about their future and that of their families.
• An Erratic Stock Market: Many of our clients are worried by the erratic performance of the stock market and the impact this is having on passive income.

These are real and understandable concerns, which impact people and livelihoods, but fortunately it is exactly in these conditions where financial planners can make a difference. By providing guidance in uncertain times, and by making sure that all our clients have the protection of a well-crafted plan, we can help you ride out this storm and thrive – even in uncertain times.

Your Best Support Against the Unknown

Our goal at WealthChoice is to help our clients live full lives. We do this by offering a holistic approach to financial, career and personal planning. We understand that the women we work with are fascinating and multifaceted individuals – and that each one is truly unique.

So, we focus on achieving an alignment between professional and personal goals. To do this requires time. Time to talk things through, to explore all the options on the table, to build a relevant financial plan, and design a tailored approach.

If you’ve just lost your job in tech, if your company is downsizing or your business is struggling. If – like so many Americans – you’re worried about your retirement, tax implications, rising debt, the cost of healthcare and college expenses, then help is at hand. We can work with you by putting your existing financial plan on the table, delving into the solutions, and unpacking the steps to get you back on track.

Over the years I’ve seen how women with clear financial plans have better money habits, peace of mind, in-built back-ups and emergency funds than those who don’t. So, I know this approach works.

Working together we can tackle the unknowns of the new year and beyond by putting the right plan in place and helping you make the best financial choices. Start the new year on the right foot, and give us a call today.

The post How to Live with Confidence, Despite Life’s Uncertainties appeared first on WealthChoice.

Achieving equity partner status in a law practice is a demanding role that comes with considerable financial responsibilities. Each partner is expected to maintain and grow the book of business they bring to the firm over time. This requires female lawyers to focus time and attention on marketing themselves and their skills, and leveraging their networks.

Make no mistake, there is still gender bias to be overcome, even at this level, so having a strong and supportive team is key as you make this career transition. Among your trusted inner circle should be a financial advisor who can help you navigate the wealth management implications that derive from becoming an equity partner.

Financial Implications of Becoming an Equity Partner

There are a host of financial considerations that need addressing in the lead-up to becoming an equity partner, as well as the day-to-day management of your finances in the future.

In recent months I’ve worked closely with my female lawyer client as she deals with the mindset shift of now being paid once a month as a K-1 business partner employee, without having taxes withheld, as was previously the case.

A considerable change to incorporate into your new financial habits is the fact that each partner is responsible for reporting her own share of the firm’s income and paying the applicable federal and state taxes. This requires financial discipline to estimate quarterly tax payments and save the necessary funds each month.

Depending on the firm in question, benefits may also no longer be covered. If this is the case in your situation then it is vitally important to pay careful attention to the best ways in which to manage considerations like retirement and healthcare plans, which may end up becoming the full financial responsibility of the new equity partner. This has profound effects for cash-flow planning.

In my client’s case, her law firm also mandated the use of cash balance plans to increase her retirement contributions, a requirement which we used to take advantage of significant pre-tax retirement savings.

This stipulation also necessitated careful planning on our part around the implications for her budgeting. Cash balance plans are based on average career earnings and enable the holder to shift contributions into six figures and build large retirement funds quickly.

In addition, since equity partners are required to make capital ‘buy-in’ contributions to the law practice, usually payable over several years, this debt to the firm also needs to be planned for.

In some cases, it is possible to make monthly contributions, sometimes year-end bonuses can be utilized and, in some instances, bank loans are taken out as a financing method. Each new equity partner needs to strategize carefully for these buy-in payouts and how they impact cash-flow and take-home pay.

How to Adjust Your Wealth Management Strategy

For female lawyers taking on the pressure of equity partner responsibilities, it is inevitable that the time and attention focused on building and growing a successful law firm will feature highly among your personal milestones for some time to come. After all, responsibility for the success or failure of the firm now rests partly on your shoulders.

This may initially leave little time for dealing with the new personal complications associated with tax returns, asset allocation, budgeting, insurance cover or managing changes to your estate planning. That’s where a team of professionals comes in, to manage those issues on your behalf, while ensuring that you can also enjoy the spoils of your success.

In my experience, planning carefully for this transition is crucially important – from the build up to becoming an equity partner to how you handle your finances and financial milestones thereafter.

Female Lawyer to Equity Partner: Points to Ponder

Even before you make partner, you should be pre-planning for this career shift by raising the following issues with your financial advisor:

• If you are on track to become an equity partner, consult with your advisor up front to discuss cash-flow implications and ways in which to increase your line of credit for the future.
• Undertake due diligence on your own firm by asking for copies of the firm’s accounts to determine the future financial risk you’ll be taking on. Ask for information about profit per partner expectations, whether the office premises are owned or leased, and the personal liability carried by partners.
• Ask for details of the firm’s provisions around capital buy-in contributions and what the implications are for leaving the partnership.

Once you’ve become an equity partner, pay attention to the following:

• Buy-in implications: Are you required to pay cash up-front towards the capital contributions required of new partners? Or will this be taken from earnings over time? If so, over what period?
• Managing cash flow: Not only do you need to set aside funds for taxes, you may also find yourself covering additional retirement and healthcare contributions.
• Make provision for extras: Factor in requests for charitable and sponsorship donations, since most partners are personally liable for these.
• Beware lifestyle creep: The pressure to vacation in the same spots as your fellow partners, send your children to select schools or move into up-market neighborhoods can be great, so use your financial advisor as a trusted sounding board about what you can afford now, or defer to a later stage.

Build Your Support Team

As an advisory firm that specializes in serving female executives and professional women such as female lawyers, we understand that setting goals in life – and in wealth planning – is a critical component for living your best life. I delve into my own experience of setting priorities and developing milestones in my book, Corner Office Choices.

For women in the law looking to take the next step into equity partnership, my recommendation is to do so mindfully and by ensuring alignment between your professional and personal goals. If you need a helping hand on this journey, contact me today. I look forward to hearing from you.

The post Female Lawyer to Equity Partner: The Financial Implications appeared first on WealthChoice.

The balance of assets and liabilities is a significant challenge for any small business owner. Moreover, you’d consider a small business owner who wasn’t precisely aware of their cash flow to be incompetent, correct?

But what happens when we look at our personal finances in the same way? Making sure our income outweighs our outgoings is something we all do – whether we sleepwalk through it, firefighting as we go, or budgeting down the last penny.

We are constantly navigating through cash flow challenges, day in and day out. And when your professional life also impacts your finances in subtle and sometimes unnoticed ways, the need to have everything efficiently organised comes into even tighter focus. But managing cash flow doesn’t come naturally to everyone.

Identify and Manage Your Cash Flow Challenges

The failure to manage cash flow challenges is one of the four clear derailers for a professional woman’s life. Completely understanding your cash flow is one of the fundamental building blocks of your financial plan, taking care of the everyday, here and now expenditures as well as facilitating the long term goals, dreams and aspirations. So, necessarily, it becomes one of the first steps that I take with new clients.

Most of my clients are very high-earning women, but I see their money causing them stress and worry. It’s weighing them down. They’re not enjoying their lives as they ought to be, their spending is chaotic and not knowing where all their money is going every month causes them stress, worry, and shame. Some of my clients realize they are vastly overspending in some areas, and underspending in others. They are not able to enjoy their money in the way they want and deserve to.

By spending some time working on their cash flow challenges and becoming aware of where and how their money is being used, my clients gain a sense of security and control that they hadn’t previously been able to benefit from. Having this increased awareness of your cash flow means that you can make positive changes to your spending habits, and start ticking off those goals. You are not just taking control of your money right now, but for your financial future too.

The First Step to Cash Flow Management

When I sit down with a client, the first thing to do is to create a snapshot of their financial landscape. I want to see exactly where they are now, and that way we can more successfully plot a roadmap to where they want to be in the future. But that snapshot isn’t immediate. Rather, it’s like taking a picture with a really slow shutter speed, that takes in all the more light.

I ask my clients to make no immediate changes to their money and their spending decisions. I ask them to carry on exactly as they are, earning, spending, and saving as much as they are accustomed to doing, and I ask them to do that for two months. I have some personal finance tracking software at my disposal, so we hook up their accounts and away they go. Then when those two months are up, we can look through exactly how and where they spent their money.

My clients are high achieving women, being compensated well for the work they do. However, they are busy. What this first exercise of money tracking often shows us is that they have been unable to keep track of how and where they are spending their money. That signals one thing to me. It shows me that they are highly unlikely to be spending their money where it is most meaningful to them.

Free Up Funds to Finance Your Goals

This is a hugely important part of your financial plan. You simply must be spending your money funding the things that are important to you, to enable you to live the life you want and the life you deserve. You must be able to spend your money on the things that you hold to be most important – and you need to have a very clear idea of what those things are. Not having a sharp focus on those most important goals, wishes and desires is another derailer, and is so often overlooked.

So the second stage of tracking money habits, after we have just spent some time monitoring spending over a few weeks, is breaking down those expenditures into two categories. We look at fixed expenditures, and then we look at discretionary spending. Fixed expenses are the ones that are pretty much exactly the same every month. It’s your mortgage, your bills, your basic grocery spend, your car or transport costs. For most people, these won’t fluctuate much or at all from month to month.

Then we look at discretionary expenses. These are the more frivolous expenses – anything that you don’t absolutely have to spend money on to get by each month. When I want to identify the money available to fund a client’s goals or wishes, I start by looking at their discretionary spending. We absolutely need to find money to fund my client’s goals, and this is where we’ll begin to find it. We can start to close that discretionary spending down, shifting the funds into more meaningful areas of the client’s life, be it retirement saving, kids’ education, travels with family.

Once we have brought some awareness to their discretionary spending, we can look at their fixed expenses. Can any changes be made here? These may feel like more drastic changes; you may want to consider downsizing your home for example, to lessen the monthly mortgage payment. Or you could relocate to a cheaper neighborhood. Often you may find you can save some money by running a cheaper car or looking at ways to cut your bills. There’s often savings to be made on your fixed expenses; once again, this money can nearly always be used in more meaningful ways.

The Facets of Business Cash Flow Challenges

If you’re a business owner, you have to deal with cash flow issues in duplicate. Firstly, you will be managing your business’ finances, tracking income against outgoings with the aim of creating as much profit as possible, in turn using some of to reinvest and grow the business further. (And again, there are plenty of parallels here with managing your personal financial affairs.)

However, in addition, you will no doubt come across some expenses that blur the lines between personal or business expenses. You need to keep a close eye on these and make sure that your business, or your work, isn’t costing you more than it is worth.

You need to constantly be aware of whether you would be making a purchase or spending on meals out, travel and events if it weren’t for your job or career. You may well consider these necessary costs to get you to where you want to be professionally, and that’s okay. It’s the acute awareness which is important to keep you on track.

If you are a business owner, you can also think in terms of fixed and discretionary expenses. After all, any cash that you can prevent being spent is going to drive your profit margins up, and increase your take-home earnings from your business.

For example, I have a client whose business has hit some tough times recently. It’s meant that she wasn’t able to fund her retirement strategy and had badly fallen behind. We went through some cash flow exercises with her personal finances, stripping unnecessary discretionary and fixed expenditures away. Then we turned our attention to her business finances.

We were fairly savage with both her discretionary and fixed business expenses. We minimized her rental costs by finding cheaper rent. We found a way that she could run her business with one fewer employee. This saved thousands of dollars, and this significantly moved the needle; her business was now operating comfortably and generating more income to fund her goals.

A Cash Flow Strategy – A Must-Have for Any Financial Plan

By identifying patterns in your spending habits, you can see where you need to, and can, make the most meaningful and impactful changes to your financial situation. Ensure that you are spending only an appropriate sum on the more frivolous things such as clothing and entertainment – this will allow you to prioritize funding your most impactful goals.

This is about living YOUR best life. What does that best life look like for you? What do you need to fund to create that best life? Make spending decisions which reflect what is important to you, and make sure you are spending your money most meaningfully.

You need to employ an effective, efficient cash flow strategy so you can make the most of your money and make it work for you into the future. If you can just about get a handle on your budget issues now, but investing for your retirement feels like a challenge, or if freeing up time and money to pursue other professional goals, then maybe you would benefit from a session with a financial advisor.

At Wealthchoice, we do our best work with executive and professional women because, from our own career experiences, we understand fully the challenges you face. Budgeting and financial planning is often last on the list of priorities when you are keeping so many plates spinning. If you feel you would benefit from our financial expertise, from planning a budget to managing your retirement finances, please do get in touch. We’ll be only too happy to help.

The post Solving Cash Flow Challenges For Female Executives appeared first on WealthChoice.

We make hundreds of choices a day, all the time, every hour. And every single choice is important, and can have a huge ripple effect. We give little regard to many of them, and don’t think much about the impact of the choice we made. It’s a good thing we don’t – if we thought about all of them, we’d get nothing else done all day.

The ambitious, driven career women that I work with every day are expert choice makers, and the choices they’ve made along the way are a huge part of their success. And I have to say it, choosing to hire a financial advisor is just another of their very wise choices as a professional woman. It’s a choice that stands to serve both them and their career very well indeed.

Challenges, Choices and Competing Priorities

My clients are predominantly female lawyers and female executives – although I do have wonderfully rewarding and successful relationships with clients in other areas too. I gel with these clients because I fully understand the challenges they face, and the choices they have to make. Why? Because I’ve faced the same challenges, and confronted the same decisions. And I help all my clients to see that their choices are the key to their freedom, and their success.

But female lawyers and female executives are terrifically smart, capable, brilliant people. So why, you might ask, would they need help with their finances? Why on earth would a lawyer hire a financial advisor? Why would a high-powered executive who is at the helm of a successful company need help with financial planning? They may well oversee a budget of millions of dollars at work.

It might not be obvious at first. Let’s look a bit closer.

Managing Debt, Chasing Promotions and Choosing Life

I have a client of mine in mind. She’s a lawyer; let’s call her Sarah. Sarah just made partner at her firm, and she’s only 37. She absolutely flew to the top, and she is earning a considerable sum each year. But she realized recently that she had been so focused on achieving her career goals, that she’s paid little attention to anything else along the way.

She still has a mountain of student debt, as ever since she graduated she’s just been paying minimum repayments. She got married fairly recently, and she and her husband bought their first home. It’s a lovely place, but they’ve got a sizeable mortgage. So it just feels like they are swimming in debt, despite the healthy paychecks. And what she wants more than anything is to start a family, but not jeopardize her career too badly. Besides paying into a 401(k), she’s not yet given retirement planning any thought whatsoever.

While Sarah is an exceptional person, I’ve got to say, she is quite a typical client. Female lawyers as well as executives make many choices and decisions as they get swept along with the current of their career – and often those choices feel like sacrifices. They work incredibly hard and earn well, but spending and maintaining a lifestyle gets expensive. And it’s almost impossible to get off the treadmill and make the right choices for themselves.

Why Should a Female Executive or Lawyer Hire a Financial Advisor?

Lawyers and executives have a stressful time of it; they work long, unpredictable hours that don’t lend themselves well to family life. Often the choice to have a family means a choice to reduce working hours or income, meaning more stressful financial decisions, juggling the family’s needs and wants.

There’s also a high chance of career burnout, especially when raising a family too. A study showed that female lawyers are more likely than their male colleagues to retire early. They’re also more likely to slow to part time work for at least part of their career. So the professional (and financial) life of a female lawyer or female executive might be less consistent than that of a man in the same position.

Still, why should a female lawyer or female executive hire a financial advisor? Because it can dramatically change their lives for the better in an extremely short space of time. It can help them to dominate their cash flow, manage their debts and turn them into assets. It can help them to make intentional choices about their financial lives which will leave them empowered, feeling in control of their lives, with real, sincere peace of mind. It can help them to live the life they deserve to live now, as well as in the future.

How?

Collaboration and Teamwork

A female lawyer or executive is juggling multiple priorities and competing goals at once. Multiple demands on their valuable time. And hiring a financial advisor is like extending their own personal team to get their jobs done. When a professional woman hires a financial advisor, she should benefit from a network of professionals just like her.

For example, when I meet a client and establish her needs and goals, we look at all the moving parts that go into making her financial plan. This often involves bringing in other experts; I’ll connect my client with career coaches to help them leverage more income from their role, or put a career progression plan in place. I’ll connect my client with estate planning, accountants, tax professionals – any experts that I’ve identified that we need on the team.

Creating a Flexible Plan That Works for You, Always

So from the outset, the financial plan is multidimensional, and perfectly tailored to meet the client’s particular needs. It’s adaptable and flexible too – it will change when it needs to.

One of the key benefits of using a financial advisor is just handing over the weight of the financial planning; it’s having someone say, “I’ve got this, go and spend time with your loved ones instead of worrying about this.” But more importantly than that, it’s about giving my busy, time-poor clients the gift of empowerment. I am guiding them through the choices they need to make for themselves, to use their financial resources in the wisest way possible, and live the lives they choose for themselves.

It’s about setting crystal clear priorities, and manageable goals, helping them achieve them one by one. It’s about helping each client to live her life on her own terms, knowing that she is creating financial security for herself and her family. It’s about having something to show for all the hard work, and fully enjoying life.

If you want to send your kids to college, pay off your home, grow your business or take the next step in your law firm, we will talk about all your choices surrounding all those goals. And then we will celebrate with you as you tick off each victory, small and big.

It’s Time to Enjoy the Financial Freedom You’ve Earned

So it’s more than just financial planning and wealth management for lawyers and executives. It’s career coaching, it’s retirement planning, it’s life coaching; it’s about empowering YOU to make the right financial choices for YOU. It’s making responsible money moves and supporting your passions and personal goals at the same time. It’s about choosing true financial freedom.

If you’re a female lawyer or female executive and would like to speak to a financial advisor to learn more about what your financial freedom might look like, please don’t hesitate to get in touch. Give us a call to schedule a no-obligation initial appointment. We’ll be thrilled to hear from you.

The post Why Female Lawyers and Executives Should Hire a Financial Advisor appeared first on WealthChoice.

Even if you haven’t personally experienced any financial losses or hardship, the last twelve months have thrown up so many challenges that our attention has been spread pretty thin. It would be no surprise at all if you hadn’t given your financial planning and wealth management the attention it needed.

And 2021 is certainly going to hold some more challenges; it would be shortsighted of us to think differently. While you’re dealing with changes to your professional life, to your social life and to your family life, you don’t want to lose your way with your financial life. But with just a little refocusing where it really counts, you can keep your money working hard for you. Here’s what wealth management should look like for female lawyers in 2021.

It’s All Change for Lawyers and Financial Planning

While they may have healthy salaries, female attorneys are not people who are time-rich. As it is, their work hours are long and often unpredictable; and then 2020 really changed the working environment for many female lawyers. A female lawyer’s work always competes with her family life, but 2020 really took that to new levels.

Many lawyers experienced a decrease in demand, and many partners have taken significant pay cuts. Bonuses have been cut, raises postponed. Others have been laid off all together due to firms needing to suddenly downsize to weather the storm. On the other hand, lawyers in some sectors saw a rise in demand thanks to the instability of 2020. For instance, sadly, but maybe unsurprisingly, the demand for family lawyers surged in the middle of the year. Contract lawyers have been more in demand too, as have those attorneys with employment practices.

But whether or not there were significant changes to the amount of work you were getting, female lawyers certainly experienced a significant amount of upheaval in the way in which work was done.

So the theme of 2020 was change, and I saw women all around me rising to meet the challenges they were facing. But if your financial planning didn’t accommodate those changes, then you may well be seeing some disconnect now. And you know the best way of looking after your money while you have other things on your plate? Delegate.

Make It All Feel a Bit Easier – Delegate!

Accomplished women attorneys tend to get to their level of profession by excelling in their field, often by taking on a tremendous amount of work personally. With the added demands the pandemic has brought, finances for many have become an afterthought.

There are many ways you can get help with your finances to make sure you’re steering the right course. Conduct a review of your circumstances with a financial planner or even just with your spouse or partner if that feels like a more comfortable first step.

Take thorough stock of your financial position. Look at your income against your expenses and ask yourself if you are using your money wisely. Could you curb spending in one area to bolster investments or savings elsewhere? Or could you spend your money differently to allow you to enjoy your free time more, enhancing your quality of life in the here and now?

Getting another opinion on your circumstances is always beneficial and serves to help you see where things could be improved. And truth be told, having someone else involved holds us to account – and many of us need it.

Tax Season for Lawyers

Tax season is fast approaching, and this can definitely be a challenging time for lawyers. Once again, it’s about finding hours in the day that are often just not there. It’s one more arduous task to add to the to-do list, isn’t it? Plus none of us want a higher tax bill than absolutely necessary, and we can often miss areas to be more tax-efficient if we don’t give it the attention it deserves.

Consult with a tax professional, and make sure you’re making the most of your income and using tax-efficient savings accounts. Given the tax law changes the Biden Administration has proposed, now is an especially important time for high earners to reach out to your CPA for guidance. Ensure that you’re fully informed about things like tax rates and possible deductions, and any actions you can take to lower your tax obligation.

If you’ve not paid off your student loan from law school, don’t forget about student loan interest deduction. The added complication for 2021 is that student loan interest from federal loan agencies has been temporarily suspended due to the impact of Covid-19. You need to check to see if you have any months of interest accrued that could still be deducted this year.

Maximize Your Savings: Know Your Limits!

Contribution limits to savings accounts changed this year too. Make sure that you’re fully informed, and that you’ve used your income as efficiently as possible by maximizing contributions to savings accounts.

The contribution limits to 401(k) plans as well as IRAs have changed only subtly this year. 401(k) plans have retained the same $19,500 limit in place for 2020 for employees’ contributions, and catch-up contributions after the age of 50 have also stayed at $6,500. However, the amount that an employer can contribute has increased.

As part of your financial review, check other possible vehicles for saving. If you have children that you intend to send to college, you should maximize your contributions to a 529 plan. And if you’d like to make sure you’ve got some money set aside especially for medical expenses, make the most of a health savings account too. 2020 changed the eligible expenses that can be paid for by money in health savings account, so make sure you fully understand how they work and what they cover.

Asset Allocation

Wealth management and a robust financial plan should always take asset allocation into account. There is no point in having investment accounts if you don’t regularly review them and make changes so that your money is working as hard for you as possible.

If 2020 changed your financial landscape in any significant way, you may well want to make adjustments to your investment portfolio. This might mean adjusting your risk tolerance, but not forgetting to review your asset allocation and make changes if needed. This may well be something that you’ll want to talk through with a financial advisor.

2020 might have knocked the wind out of your sails a little financially, or it may have freed up a bit more cash. Either way, it may be reassuring to know that you have enough cash to manage if anything happens to your income. Generally, it’s a good idea to have six months’ fixed expenses available in cash at any one time. So if you need to free up some capital, asset reallocation can be a good way of doing this.

Wealth Management for 2021: Adapt to Change

Wealth management for female lawyers in 2021 is going to hinge on your ability to react to change, as well as to accommodate the changes that have already happened. If you let your finances slip by the wayside a little over the last year or so, don’t be hard on yourself – there was a good reason for that. Refocusing now on your financial plan will put you right back on track. Now, at the beginning of the year, is the perfect time to do it.

Enlisting the help of a financial planner who specializes in working with lawyers and other highly driven professional women can really help. Then you can be sure that they will understand the demands on your time and the unique challenges that you face. They’ll help you to manage your money efficiently, freeing up time to pursue your hobbies and to spend time with people you love, securing your financially stable future at the same time.

If you feel that you’d benefit from a consultation, please do reach out. I’d be delighted to schedule an appointment to see if I can help you with your wealth management in 2021.

The post Wealth Management: What Should It Look Like for Female Lawyers in 2021? appeared first on WealthChoice.

Recovery Rebates-
These are the checks everyone has been hearing about. They are essentially credits against 2020 taxes, and will be received as a check. Who is eligible, and the amount for which you are eligible depends on tax filing status and income. Income is based on the 2019 tax year, or if not yet filed, based on 2018.

Single filer with maximum income of $75k receives $1200 Married filing jointly maximum income of $150 receives $2400 Head of Household maximum income of $112k receives $1200 Each child under the age of 17 receives $500

If you earned over these amounts there are Phase Outs that decrease the amount you will receive.

Action step-If you have not yet filed your tax return for 2019 and it was a low-income year that would qualify you for a Recovery Rebate check, we suggest you file your return as soon as possible. If your 2020 income will be less than 2019 and will qualify you, you will receive the benefit when you file your 2020 taxes.

TAX AND RETIREMENT PROVISIONS

Changes have been made to retirement account withdrawals, Required Minimum Distributions, and taxes that may provide financial support to you.

Retirement account withdrawals-
You can now take a withdrawal of up to $100k from an IRA/employer retirement plan, or combination of both. The withdrawal must be taken in 2020 and must meet the following criteria-

• You, your spouse, or a dependent was diagnosed with COVID-19
• You have suffered adverse financial consequences as a result of COVID-19 (for example, no access to childcare)
• You have suffered from reduced business hours, or your place of employment has been forced to close

This provision waives the 10% penalty from early withdrawal, waives mandatory withholding typically required from employer retirement plans, and allows you to spread tax payments from the withdrawal over 3 years.

Action step-If you meet the specified criteria and need to take a withdrawal from a retirement account, let’s talk first. That said, the process is that you call the plan administrator and tell them you have been a victim of the virus and your withdrawal qualifies as a COVID-19 related distribution. It might be in your best interest to pay the taxes due in 2020 if your income has dropped substantially.

Loans from Employer retirement plans-
The maximum you can now take is $100k. You can also take a withdrawal of 100% of your vested balance, and any payments due on the loan will be delayed one year.

Changes to Required Minimum Distributions (RMDs)–
RMDs required for 2020 have now been suspended. This applies to not only IRAs, but Inherited IRAs.

If you have taken an RMD within the past 60 days, you can roll it back in an IRA. Any RMDs taken earlier in the year cannot be rolled back.

Unemployment Compensation Relief-
Changes have been made to provide for unemployment compensation for self employed persons and 1099s who were previously not eligible for unemployment.

There is no waiting period, and coverage starts the first week of unemployment.  Essentially, this benefit provides an additional $600/week to the unemployment benefit for four months.  Be careful here, and consider having taxes withheld from unemployment.  Otherwise, you may have a rude awakening when taxes are due next year.

BUSINESS RELIEF PROVISIONS

There are two separate programs that apply to small businesses affected by the COVID-19 pandemic. We have attached a separate brochure from the US Chamber of Commerce further detailing out what you need to know about these loans. In a nutshell, they are-

1. Economic Injury Disaster Loans (EIDL)-These are available now by applying directly to the SBA at sba.gov
2. Paycheck Protection Program (PPP)– These will not be available until late April, but you can apply for EIDL now, and convert it to a PPP loan later. You’ll also apply for these through SBA.

Economic Injury Disaster Loans-

• Available to small businesses and non profits that have suffered working capital losses from the disaster. Must have no more than 500 employees.
• Loans of up to $2million that can be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster.
• You can request an advance of up to $10,000
• Maximum interest rate is 4% for businesses, 2.75% for non profits
• Up to 30 year loan repayment
• No collateral required for loans below $25,000, but lack of collateral will not lead to a loan declination
• These loans will not be forgiven

Paycheck Protection Program-

• Must have 500 employees or less
• Maximum loan amount is $10million or 2.5 times the average monthly payroll cost of the prior year and excluded employee compensation greater than $100k.
• Must be used to pay Payroll, salary, rent, mortgage, utilities, gas, water, electric, transportation, phone, internet, group health plans, business expenses incurred before 2/15/2020
• Loan must be used within 8 weeks of receipt for the above expenses.
• Must have the same number of employees from 2/15-6/30 as you did during the period of 1/1- 2/15/2020 and you cannot cut employee compensation by more than 25% if it is under $100k.
• These loans are forgiven if criteria are met.

Action step-You’ll want to contact your local SBA office to get this process started asap. You can also apply online at sba.gov.

Employee Retention Credit-

This is a credit equal to 50% of wages paid to each employee with a maximum of $10k per person to cover payroll taxes. The credit continues to end of 2020 or when revenue is greater than 80% of the same quarter in 2019.

Eligibility-

• Business must be suspended either partially or fully
• Revenue has decreased by 50% from same quarter in 2019

Deferral of Payroll Taxes-

For any employers, this provision provides for deferring the employers portion of Social Security payroll tax until 1/1/2021 with half due by 12/31/21 and the second 50% due 12/31/22

OTHER RELIEF PROVISIONS 

Student Loan Deferrals-

All Federal student loan payments can be deferred until 9/30/2020. Loans will NOT accrue interest during this period.

Action step-Payments will automatically be stopped, so there are no steps you need to do here.

H.S.A./FSA changes-

Over the counter medicines will now qualify for H.S.A/FSA payment

There are quite a few financial relief resources here that you might consider taking advantage of.  For employers, we suggest speaking with your CPA regarding the PPP or EIDL loans, and with respect to anything tax related.  We would also suggest speaking to your financial planner before making moves around your RMDs or taking funds from retirement accounts.  You can also reach out to us with any questions on navigating the CARES Act.

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