6 Pointers to Help Seniors Live at Home Longer

The vast majority of older Americans want to remain in their homes as they grow older, also known as aging in place. More than 90 percent of the baby boomer population prefer to age in place, according to a recent Georgetown University survey.

“America’s 50 and older population is expected to increase by 20 percent in the next 15 years,” said American Bankers Association President and CEO Frank Keating. “It’s important that older adults and their families plan ahead to ensure they have the housing they need for a safe, comfortable and independent life.”

Here are some tips for older Americans considering aging in place:

Take a hard look at your finances. Arrange a meeting with a trusted family member or friend and a banker. It’s critical to understand your financial resources, how long they’ll last and what housing options are the most cost effective for you. Be sure to consider all costs associated with aging in place, including:

  • Home modifications
  • Transportation to medical appointments, shopping and other errands
  • In home caregiver for house upkeep and medical purposes
  • Property taxes and home insurance

Assess your home and determine what modifications are necessary. While staying in your home is preferable for many, there are often design changes that must be made to ensure it’s also safe and comfortable.

  • Make sure there is at least one step-free entrance to your home.
  • Update lighting inside and outside of the house so that all walkways and stairs are well lit. Clear pathways throughout house and firmly secure all carpets to the floor to prevent tripping
  • If a bedroom and bathroom does not or cannot exist on the first floor, consider installing an elevator or chairlift. At a minimum, make sure you have handrails on both sides of your stairs.
  • Install grab bars in the bathtub, shower, or near the toilet.

Make security a priority. Older Americans are often targets for scams and other criminal behavior. Be cautious about who you allow in your home and disclose sensitive information to.

  • Install up to date and easy to use locks. Make sure your front door has a peep hole or a security monitor so you can see who is outside.
  • Consult someone you trust when hiring a contractor, financial advisor, etc.

Look into community resources. If mobility is limited, look in to services offered in your area. Many communities have established non-profit programs that offer transportation and food delivery to assist older Americans at a reasonable cost.

Be prepared for possible emergencies.

  • Keep a list of all emergency contacts on your refrigerator or by a phone.
  • Consider a Personal Emergency Response System. Transmitters can be worn as a bracelet or around your neck and require the simple push of a button to send a signal to a call center.
  • Have your address number visible from the street so emergency responders can easily identify your home.

Reevaluate every six months to make sure all needs are being met. As you age, your needs inevitably change. Take time twice a year, or as needed, to sit down with your trusted family or friend and make sure your current living situation is still the right one.

Resource Information Provided by the American Bankers Association. 

7 Tips to Prevent Tax ID Fraud

As Americans begin the process of filing tax returns, identity thieves are scheming to get their hands on that money. Tax identity theft has been the most common form of identity theft reported to the Federal Trade Commission for the past five years.

Tax identity fraud takes place when a criminal files a false tax return using a stolen Social Security number in order to fraudulently claim the refund. Identity thieves generally file false claims early in the year and victims are unaware until they file a return and learn one has already been filed in their name.

Follow these tips to help prevent tax ID fraud:

  • File early. File your tax return as soon as you’re able, giving criminals less time to use your information to file a false return.
  • File on a protected wi-fi network. If you’re using an online service to file your return, be sure you’re connected to a password-protected personal network. Avoid using public networks like a wi-fi hotspot at a coffee shop.
  • Use a secure mailbox. If you’re filing by mail, drop your tax return at the post office or an official postal box instead of your mailbox at home. Some criminals look for completed tax return forms in home mailboxes during tax season.
  • Find a tax preparer you trust. If you’re planning to hire someone to do your taxes, get recommendations and research a tax preparer thoroughly before handing over all of your financial information.
  • Shred what you don’t need. Once you’ve completed your tax return, shred the sensitive documents that you no longer need and safely file away the ones you do.
  • Beware of phishing scams by email, text or phone. Scammers may try to solicit sensitive information by impersonating the IRS. Know that the IRS will not contact you by email, text or social media. If the IRS needs information, they will contact you by mail first.
  • Keep an eye out for missing mail. Fraudsters look for W-2s, tax refunds or other mail containing your financial information. If you don’t receive your W-2s, and your employer indicates they’ve been mailed, or it looks like it has been previously opened upon delivery, contact the IRS immediately.

If you believe you’re a victim of tax identity theft or if the IRS denies your tax return because one has previously been filed under your name, alert the IRS Identity Protection Specialized Unit at 1-800-908-4490. In addition, you should:

  • Respond immediately to any IRS notice and complete IRS Form 14039, Identity Theft Affidavit.
  • Contact your bank immediately, and close any accounts opened without your permission or tampered with. Visit our website for contact information.
  • Contact the three major credit bureaus to place a ‘fraud alert’ on your credit records:
  • Continue to pay your taxes and file your tax return, even if you must do so by paper.

More information about tax identity theft is available from the FTC at ftc.gov/taxidtheft and the IRS at irs.gov/identitytheft.

Resource Information: American Banker’s Association

Business Succession Planning

Business Succession Planning: Don’t Be Caught Unprepared

Most small business owners spend the vast majority of their time focusing on the day to day management needs of their company in order to be successful.  Unfortunately, these obligations often preclude these same business owners from planning for their company’s future successes and the eventual transition of ownership.  Let Stock Yards Bank & Trust Company help you design a business succession plan to ensure today’s successes continue on tomorrow.

Vital Questions for Success:

  1. Do you know the true market value of your business?
  2. What do you want to happen to your business if you become incapacitated, pass away, or on a more positive note, retire?
  3. Do you want your business to remain in your family? Have you chosen the family member(s) and are they interested in taking on this responsibility?
  4. Do you want your company to be purchased by a partner or key employee? If so, does the buyer have the funds necessary for the  purchase?
  5. Is your plan in writing and do you have appropriate legal documents in place?

Business Valuation

An important step in succession planning is securing an accurate value of your business.  Most likely, the small business is your largest asset so it is important to know its value.  There are many business valuation firms capable of performing formal valuations, but the associated costs can vary widely, ranging from $3,000 to $40,000.  Depending on your situation, a formal valuation may not be necessary.

SYBT’s Wealth Management Group can perform a free basic valuation for your business by working with our valued partners.  The importance of this service cannot be overstated, especially since there can be significant discrepancies between the book value of a business, a figure used for accounting purposes, and its actual market value.  Therefore, having an accurate valuation can be invaluable during negotiations for the sale of your business or in accurately transferring an ownership interest to other family members or partners. It is wise to have your valuation reviewed at least every two years as values often change with market conditions,

Planning for the Unexpected – Two Important Documents

Power of Attorney

If a small business owner experiences an accident or a medical complication and is left in an incapacitated state, there will need to be someone chosen to act and make decisions on his/her behalf.  Unless the individual has a Power of Attorney, then a court appointed guardian will be selected before any decisions are made or accounts are accessed.  A guardianship proceeding in Kentucky involves a jury trial, and unless an emergency guardian is appointed (which is extremely difficult to achieve), the process can take up to three months to complete.

Last Will and Testament

Most people are unaware that should a Kentucky resident die without a Last Will and Testament and leave a surviving spouse and children, that the estate will be divided – half to the surviving spouse and half to the surviving children – an outcome that is rarely, if ever, desired.  Therefore, it is vital that Kentucky residents execute a Last Will and Testament and consider using a revocable trust in order to control how assets are distributed and received upon death.  A business owner must know who will own his or her business upon death and should feel confident the owner(s) are capable of taking on this responsibility.

Establishing and Funding a Buy-Sell agreement

While there are many types of buy-sell agreements, the common purpose behind them is to enable business owners to establish a plan for the smooth transition of ownership, generally occurring at one’s death or upon retirement.  In order for a buy-sell agreement to be enforceable, however, there must be adequate funding to complete the purchase or transfer called for in the agreement.  The most common method for ensuring that the necessary funds are available is with life insurance.

SYBT’s Wealth Management Group can assist you with selecting the appropriate insurance policy to guarantee your goals are satisfied.  This is true regardless of whether the insurance proceeds will allow for an efficient sale to a partner, key employee or family member, or permit a spouse or family member(s) to exit the business without complication.  If you currently have a buy-sell agreement in place, it is recommended that it be reviewed for possible updates at least every two years. SYBT’s Wealth Management Group can help ensure your best laid plans don’t go awry.

While most within the wealth management industry are running away from complicated financial planning, SYBT recognizes the importance of being a leader within every aspect of the wealth management industry.  We would appreciate the opportunity to tell you more about our investment, next generation, special needs, business succession and financial planning services.  Leverage our expertise in wealth management so that you can focus on your business, your passions and your success!

Buying vs. Renting

Buying a home is one of the biggest financial decisions you ever have to make.  You will be required to ask yourself questions about the kind of floor plan you like, the neighborhood or area of town where you would like to live, the price range you can afford, and your preferences regarding having a yard which will require regular work and maintenance vs. a maintenance free lawn provided through a condominium or patio home.  However, the most important question (the question you should ask yourself first) is should I rent a home or should I buy?

There are definitely advantages and disadvantages to both and it is important to consider the pros and cons before making the leap into homeownership.

Advantages to Buying a Home Include:

Equity or Savings

If you are renting, the money you spend each month pays for your place to live, but it does not provide any kind of long-term benefit or savings to you.  If you purchase a home and are paying your mortgage payment each month, you are building equity in your home.  The more you pay, the more equity or savings you have.  Homes typically increase in value, which also increases the equity or savings you have in your home.

Income Tax Deductions

You can deduct the amount of interest you pay through your mortgage payments as well as the amount you pay in annual property taxes.  Uncle Sam does not allow this deduction for rent payments.

Creative Freedom

You can paint every room a different color and decide on any carpet or floor covering you want if you own your home.  However, if you rent, your landlord most likely will have restrictions on painting and other creative ideas you have to make your home fit your personality.

Stable Housing Costs

With a fixed rate mortgage, your monthly housing costs will be more stable than rent which can increase from year to year.

Home ownership can also develop a sense of self-pride, which provides strong ties to the community in which you live.

Advantages to Renting Include:

Less Responsibility

Repairs to a home can be costly.  As a renter, the landlord will be responsible for any repair costs.

Flexibility

Since leases tend to be short term (a year or less), it is easier to move around if you rent.

Insurance Costs

Insurance as a renter is much less expensive than insurance as a homeowner.  You are only responsible for insuring your personal contents and not the home itself.

Purchasing a home or choosing to rent is a personal decision that you as an individual must make.  Owning a home is a financial responsibility that requires planning and commitment.  Home ownership is not for everyone.  Renting can be easier if you want to pursue job opportunities that may require frequent relocation.  However, home ownership makes sense if you plan to settle into an area or community and want to pay toward something you can eventually pay off and own outright.

Should you buy or should you rent?  It can be a tough decision to make.  We have qualified mortgage professionals that will be happy to assist you in this process. We have many programs, including down payment assistance, that can be tailored to meet your needs. Visit our website at www.syb.com for more information.

Some Thoughts on Stock Market Volatility

AMark

Market volatility has increased dramatically in the early days of 2016.  Most of the gains of the fourth quarter of last year have been erased in the first two weeks of the New Year.  Emotional selling has driven the stock market down 6.0% in the past seven days alone. What is causing the market to decline?  Markets hate uncertainty and there are a number of question marks impacting the financial markets at this time.

The first uncertainty relates to slowing economic growth and declining stock prices in China.  Economists fear that slowing growth in China will eventually spill over into the developed world at a time when central banks are limited as to the policy responses available to combat weak economic activity.  The decline in Chinese stock prices are less a reflection of economic conditions and more a reflection of the inefficiency of a market that has only recently been open to foreign capital inflows.  The lack of foreign investment and strict state control measures limit liquidity in the Chinese capital markets and contribute to wide swings in stock prices.

Commodity price declines also have investors worried.  Declining demand from China, a stronger U. S. dollar, and an increase in supplies have contributed to deteriorating prices.  Investors have interpreted this to be an early warning sign of reduced manufacturing activity which will eventually lead to a decline in global growth.  Declining global growth could negatively impact corporate profits and stock prices.

Stock market valuations are at above average levels at the same time that corporate earnings expectations are contracting, further contributing to volatility.  For several years, companies have generally been reporting weaker than anticipated sales, but have met net earnings numbers through accounting changes, share buy-backs, tax deferrals, or expense control measures.  The one time nature of these methods has caused analysts to reduce earnings expectations for 2016.  The recent stock market decline is partially due to these reduced earnings expectations.

While the recent volatility has been painful, we always encourage clients to take a longer term view of the markets and the domestic economy.  At this time, we believe that the U. S. economy will continue to grow at a slow but sustainable pace this year.  This should produce positive corporate profit growth that, when coupled with the very low level of interest rates, will support stock market valuations and prices.  In addition, our investment process focuses on high quality and conservatively financed companies.  These types of companies are favored by investors during periods of uncertainty.  We want to encourage clients to maintain commitments to equities.  Decisions to sell or dramatically alter asset allocations during emotional times rarely produce positive outcomes.  We will continue to monitor ongoing developments and keep you apprised of any changes in our position.

Please contact your wealth advisor for further insight regarding our economic and market outlook.


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.

Global Market Update

An Update on Recent Events in the Global Market

Global stock markets are continuing to decline with the S&P 500 down .74% yesterday morning , -3.33% year-to-date (YTD), and the MSCI World Index ex USA down 1.11% and -3.86% YTD.  Volatility measures for financial assets are also rising significantly.  There are several causes for the decline:

Oil Prices:  Oil prices continue to decline, which negatively impacts energy stocks.  The decline in commodity prices is also an early warning sign of decreased manufacturing activity.  Energy and commodity price weakness can impact a number of business sectors from steel to heavy equipment and all sectors are feeling the negative impact of lower prices and demand.

Geopolitics:  The North Korean nuclear test, ISIS, the dispute between Saudi Arabia and Iran, and the European immigration problem are all negatively impacting stock prices.  In addition, cyber terrorism continues to become a real threat.

Slowing Global Economic Growth:  The recession in Japan and continued slow growth in the Eurozone are instilling fears that global growth will fall and spillover into the US economy.

China:  China devalued the Yuan for a second time this week as growth slows as a result of its transition from a manufacturing to a consumer-driven economy.  The Chinese stock market declined 7% yesterday before the government implemented a trading suspension for the day and the Shanghai Composite is down roughly 15% from its December high.

Uncertainty:  Markets hate uncertainty, and there is a lot of it right now.  How much, how long, and when will the Federal Reserve increase interest rates again?  What will happen with US elections this year?  Will the United States experience another recession? Markets move on uncertainty in the short-term, but they focus on fundamentals in the long-term.

Fortunately, however, there are some positives!

US Economy:  We do not believe the United States will fall into a recession in 2016.  Recent economic activity continues to be positive on the services and employment front.  This is fueling an increase in consumer spending which is up 3.2% year over year.  Consumer goods and services represent the majority of our economy and are a good indicator of future economic growth.

Capital:  Capital continues to flow into the United States because of the stability of our economy and political system.  This should provide support for stock prices.  The low level of global interest rates makes the United States markets one of the more attractive investment alternatives.

Stock Prices:  Stock prices, while expensive, are still trading within a normal valuation range.  The forward PE ratio on the S&P 500 is at 23 times earnings as of Dec. 31st and the norm is something close to 17.5 times earnings.  The higher multiple can, at least partially, be justified by our very low interest rates.

Portfolio Diversification:  Diversification provides a safety net to portfolios during periods of uncertainty and increased stock market volatility.  Nearly all of our clients’ accounts are committed to fixed income in order to provide a cushion to portfolios during these periods of stock market volatility.

Security Selection: Our security selection process continues to concentrate on high quality, dividend-paying stocks, with conservative financials.  These companies provide protection in volatile stock markets because of their consistently strong sales and earnings and stable dividend yield.

If you have any questions or would like additional insight on any of the above points or would like more information about the Wealth Management Group at Stock Yards Bank & Trust Company, please call us at (502) 625-1605.