Category Archives: Banking

Suddenly Single: Planning to Go It Alone

Untitled-logo trustMost of us cannot imagine the sudden loss of our spouse. Yet, difficult as it may seem to accept, U.S. Census data indicates that the overwhelming majority of married women will be on their own for a significant number of their later years. Should this happen to you, you might be thrust into economic self-survival at a time when you may feel particularly vulnerable and least able to cope. Nevertheless, serious decisions would have to be made, often having a lasting impact on your future financial well- being.

Planning for the Unimaginable

There is an unpredictable aspect of “sudden loss” in that we never quite know how we will react to certain events until they actually occur. While no one can ever be totally prepared to deal with personal trauma compounded by legal and financial matters, there are steps you can take to help you navigate through this difficult period.

The key is to find a way to help provide structure in your life at a time when structure may be disintegrating.

It Happened. . .What Do I Do?

When the initial shockwaves hit, there are matters that will require immediate attention: notification of family and friends; funeral arrangements; and contacting an attorney to review the will and handle the legal aspects of your spouse’s estate. Let your closest friends and most trusted advisors help you with some of these details and short-term decision-making, but proceed with caution regarding major financial decisions such as whether to sell your home, borrow or lend money, invest, make major purchases, and make work/career changes.

During this period, you will most likely face competing demands on your financial resources. If your spouse was the primary income earner, it may take some time to assess your financial situation. During the first few months, pay bills that need to be paid, but spend cautiously, paying attention to cash flow and liquidity.

Rebuilding After the Shockwaves

Certain timetables (e.g., timely filing of tax returns) can’t be overlooked, but much of the financial recovery process should be orchestrated to match your emotional recovery. Some of the important aspects that will have to be addressed eventually will include assessing the needs of dependent children; making housing decisions; determining your income needs; making decisions about insurance settlements; evaluating your insurance needs; and managing money on your own.

Many of these decisions may flow naturally from an appraisal of your needs (and/or desires) to participate in the workforce. Will you want to work? Will economic necessity dictate that you must work? If you are currently employed, will you stay in the same position? If you have not worked for some years, how well will your skills fit the job market? Will you need to acquire more education or enhance your technical skills?

While professional advice will be helpful, don’t allow yourself to be pressured in areas in which you need more time. Your goal should be to develop a sense of command and control concerning your financial future. Align yourself with advisors who will have the patience to work with you at your pace, advisors who will help you gain the knowledge and confidence necessary to go it alone.

Obviously, the earlier you begin to educate yourself concerning financial matters, the better prepared you will be to withstand the impact of facing sudden loss. The quality of your life may depend on your financial skills and your willingness to take responsibility for managing your own financial affairs.

If you have questions about the financial implications of divorce, email our Certified Divorce Financial Analyst, Marcia.Henderson@syb.com, for help!

Resource information provided by Financial Media Exchange.

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Financial Considerations for Single Women

Untitled-logo trustIf you’re divorced or separated, money management will become an important part of your life. While it may be true that money can’t buy or ensure happiness, your ability to manage your finances can play a large role in your financial future, and to a large extent, your ability to live life on your terms.

A huge amount of time is not necessarily required to get your finances moving in the right direction. It is often simply a matter of attending to the “basics.” The following steps may help you stay on track:

1. Pay Yourself First. Transfer a set amount from your earnings to your savings each month. Even a small amount in the beginning helps.

2. Reduce Consumer Debt. Avoid high credit card finance charges by paying off the balances each month, or if you must carry a balance, use only cards offering low finance rates beyond the introductory period.

3. Maintain Good Credit. You can obtain one free annual credit report from each of the three major credit bureaus: TransUnion, Equifax, and Experian. Good credit is required for obtaining loans and low interest rates. Monitoring your credit can also help you guard against identity theft.

4. Diversify Your Savings. Develop a plan for your short- and long-term needs. Consider your liquidity needs, risk tolerance, and time horizon for retirement. Be sure to consult a qualified financial professional to determine an appropriate strategy for your financial future.

5. Take Advantage of Tax Benefits. If you qualify, contribute to an Individual Retirement Account (IRA), an employer-sponsored 401(k) plan, or another similar retirement plan. These plans offer tax benefits that may help enhance your retirement savings.

6. Update Your Estate Plan. Have your will and any trusts reviewed by a legal professional. Prepare advance directives, such as a durable power of attorney, living will, and health care proxy. This is important for everyone at any time, regardless of age.

7. Review Your Insurance Needs. Periodically review your risk management program. Your life, health, and disability income insurance needs will likely change as you progress through various life stages.

8. Plan for Future Care. Consider your possible long-term care needs. Have you ever thought about your future care needs, should you one day require help with activities of daily living, such as meal preparation, personal care, dressing, and housekeeping? Long-term care insurance increases your care options, should the need arise by helping to cover care at home, an assisted living facility or in a nursing home.

9. Build a College Fund. College tuition, at a public or private institution, continues to rise. So, relying on your children to receive scholarships or financial aid may not be the most practical strategy. Look into opening a 529 college savings plan or other college planning account. As soon as possible, begin saving for your child’s education. Eighteen years can pass quickly.

10. Set Long-Term Financial Goals. Establish one-, three-, five- and10-year goals. Evaluate your progress yearly and make adjustments, as appropriate, to achieve long-term success.

Whether you’re divorced or separated, straightening out your finances can become a top priority. Make a commitment now to start this planning process. Attention to the basics may help you meet your financial goals and improve your emotional and financial well-being.

Visit https://www.syb.com/wealth-management-and-trust/how-we-serve-our-clients/ to see how Stock Yards Bank and Trust can help you.

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Resource information provided by Financial Media Exchange

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Divorce and Retirement Plan Proceeds

Untitled-logo trustDivorce can be “taxing” enough, but need not be made more difficult by the mismanagement of the division of assets in a retirement plan. As more Americans participate in 401(k) plans and other defined contribution retirement plans, dividing vested retirement plan assets in divorce situations can be complicated. In addition, defined benefit plans can involve numerous concerns, such as the participant’s death before retirement, and the form of the benefit payments at retirement.

A Qualified Domestic Relations Order (QDRO) is a legal document that enables a retirement plan to transfer money or other plan assets to the non-employee former spouse. A QDRO must meet very specific requirements of the Internal Revenue Service (IRS) and the Employee Retirement Income Security Act of 1974 (ERISA). Note that without a QDRO, a transfer of retirement plan assets cannot occur.

Entitlement to your former spouse’s retirement plan benefits depends on the type of plan. For a defined contribution plan, whereby each plan participant has his or her own individual account, a former spouse may be entitled to 50% of the vested and non-vested benefits that were credited or accrued during your marriage. Depending on the type of defined benefit plan, you can receive a portion of the retirement benefit based on the amount of time of your marriage during plan participation and the total amount of time the employee former spouse participates in the plan through retirement.

Since many issues need to be thoroughly discussed regarding divorce and retirement plan benefits, be sure to consult your tax and legal professionals for guidance about your unique circumstances.

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7 Tips for Choosing a Financial Caregiver

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According to the National Council on Aging, almost 90 percent of the financial abuse committed against older Americans is done by someone they know. More than ever, it is imperative for seniors to select a trustworthy person to properly manage their finances and personal affairs.

Fraudsters often prey on seniors experiencing cognitive decline, limited mobility and other disabilities that require them to rely more heavily on others for help. Appointing someone you trust to handle your financial matters aids tremendously in the fight against these crimes.

In recognition of May as Older Americans Month, we want to share seven tips to help choose the right financial caregiver and prevent financial abuse:

  • When delegating financial decisions, make sure it’s someone you trust. If you are unable to facilitate financial transactions, carefully choose a trustworthy person to act as your agent in all financial matters.
  • Know who is in your home. Conduct a thorough background check on all individuals you hire for personal care or home care services. Check references and credentials before you let them into your personal space.
  • Never sign something you don’t understand. Consult with a financial advisor or attorney before signing any document that appears suspicious or unclear.
  • Understand the terms of assigning a Power of Attorney. Granting someone POA gives them the authority to act and make decisions on your behalf, including managing and having access to your bank and other financial accounts. Make sure you fully understand the terms and conditions of consenting a legal agent before you do so.
  • Always trust your instincts. Exploiters and abusers are very skilled. They can be very charming and forceful in their efforts to exploit you. Don’t be fooled – if something doesn’t feel right, it may not be.
  • Safeguard your personal information. Shred old bills, junk mail, bank statements and other personal documents you no longer need. Leaving unwanted personal documents around the house could lead to the misuse of your information. If you come across keepsake documents opt to store them in a locked cabinet or safe deposit box at your nearest bank.
  • Keep personal items out of plain sight. Lock up checkbooks, credit cards and other monetary instruments to prevent unauthorized use.Resource information provided by the American Bankers Association.

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Market Update

by Mark Holloway & Paul Stropkay

Stock Yards Bank Wealth Management and Trust

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markApril 3, 2018

Dear Clients and Friends,

We were all spoiled by last year’s 21% return and low volatility in the stock market.  Yesterday’s 458 drop in the Dow was just the most recent of several days with large point declines in the major stock market indices that began with the 1,032 point drop on February 5th.  The market is now down approximately 3.0% year to date.

Market volatility is traumatic for investors who forget that, while stock prices may be erratic, the fundamental value of quality businesses is actually quite stable.  Over time, price and value tend to converge.  Alert investors can take advantage of opportunities that price volatility provides.  We are encouraged by the growth in corporate profits that we are seeing this year and remind ourselves that stock valuations are reasonable in the context of history.

That said, what is causing the wild market swings?  Increasing interest rate expectations from the Federal Reserve have added a level of uncertainty.  Late last year, most analysts believed that we should expect two and possibly three increases in rates during 2018.  That expectation is now up to four increases based on the strength of the economy and renewed inflation fears related to full employment.  Full employment generally brings increasing wage pressure and has historically been an omen of future inflation.  Increasing interest rates are a threat to economic activity, increase costs for companies that borrow, and pose competition to stocks for new investment dollars.

Secondly, the drama and political turmoil in Washington has added to uncertainty.  The high rate of turnover in key areas of the Trump advisory team including Secretary of State and Chairman of the Economic Advisors rattled the markets.  The failure of Congress to pass an acceptable budget also added to the feeling of political dysfunction.

The third and most important cause of the recent volatility is the discussion of tariffs.  The Trump administration wants to impose tariffs on imported steel and other products.  Tariffs are essentially taxes on imported goods.  Exporting countries seldom sit by idly and accept these taxes.  They retaliate with tariffs of their own.  Remembering our economic history, tariffs were one of the reasons the great depression was so severe and prolonged.  The global trade war that resulted set back economic growth for a decade.  Fear of slowing global growth resulting from a new trade war has rattled markets.  We can only hope that this is part of the “art of the deal” and that the new administration is trying to force our trading partners back to the negotiation table.

We still believe that we are in a secular bull market for common stocks.  A secular bull market is a market in a general uptrend with higher highs and higher lows in absolute index price levels.  This does not mean that there will not be corrections.  The attached chart shows that stock market declines in secular bull markets of 5%, 10%, or even 20% should be expected.  Larger declines have only happened during recessionary periods.  There are no signs that the economy is heading for a recession in the near future.  In fact, economic growth is accelerating.stock vot.jpg

It is important to keep things in perspective.  The 500 point drop in 1987 represented a 21% decline.  The nearly 500 point drop yesterday was only a 1.9% decline on today’s much higher market level.

Remember, no one can time the market.  It is against human nature and too many consecutive correct decisions must be made very quickly to ever be successful.  It is important to stay invested for those good days that make all the difference in portfolio performance.  As the attached chart shows, many times these bounce-backs happen immediately after days like yesterday.neg days.jpg

We appreciate your continued trust and confidence.

The Wealth Management & Trust Group

Stock Yards Bank & Trust

 


The Wealth Management Group

KATHY THOMPSON, J.D., Senior Executive Vice President, (502) 625-2291
E. GORDON MAYNARD, J.D., Managing Director of Trust, (502) 625-0814
MARK HOLLOWAY, CFA, Chief Investment Officer, (502) 625-9124
SHANNON BUDNICK, CTFA, CFP®, Managing Director of Investments, (502) 625-2513
PAUL STROPKAY, CFA, Chief Investment Strategist, (502) 625-0385

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE


We provide the information in this newsletter for general guidance only. It does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, investment, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, expressed or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

7 Worthwhile Ways to Use Your Tax Refund

 

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According to the Internal Revenue Service, more than 70 percent of the nation’s taxpayers received a tax refund averaging nearly $3,000 in 2017 and will get a similar amount this year. As Americans receive their refunds along with additional benefits coming from the Tax Cuts and Jobs Act passed in December, we have highlighted seven tips to help them use their money wisely.

To help consumers make the most out of their money, We have provided you with the following tips.

  • Save for emergencies.  More than 60 percent of Americans are not prepared for unexpected expenses. You can prepare by opening or adding to a savings account that serves as an “emergency fund.” Ideally, it should hold about three-to-six months of living expenses in case of sudden financial hardships like losing your job or having to replace your car.
  • Pay off debt.  Pay down existing balances either by chipping away at loans with the highest interest rates or eliminating smaller debt first.
  • Save for retirement, your child’s education or future health expenses. Open or increase contributions to a tax-deferred savings plan like a 401(k) or an IRA. Your bank can help set up an IRA, while a 401(k) is employer-sponsored. Look into opening a tax-advantaged 529 education savings plan to ensure school expenses will be covered when your child reaches college age. Or save for future health expenses with tax-free dollars by investing in a Health Savings Account.
  • Pay down your mortgage or student loans.  Make an extra payment on your mortgage or student loans each year to save money on interest while reducing the term of your loans. Be sure to inform your lender that your extra payments should be applied to principal, not interest.
  • Invest safely with U.S. savings bonds or municipal bonds. The U.S. Treasury allows for savings bond to be purchased using your tax refund for as little as $50. Savings bonds earn interest for a maximum of 30 years.
  • Invest in your current home.  Use your refund to invest in home improvements that will pay you back in the long run by increasing the value of your home.  This can include small, cost-effective upgrades like energy-efficient appliances that will pay off in both the short and long term – and with tax credits (as long as Congress continues to renew the program).
  • Donate to charity.  The benefit is two-fold: Giving to charity will make a difference in your community, and you can also claim the tax deduction, if you itemize.

Resource information provided by the American Bankers Association.

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