- Hopeful Ever After
- Posts
- Hopeful Ever After #001
Hopeful Ever After #001
September 2024
Carolyn Howard, CFP®
September 25, 2024 • Estimated Reading Time: 4 minutes
Happy Fall!
I’m thrilled you’ve decided to join us.
Every month, I’ll be dropping some simple financial wisdom into your inbox, along with a personal tidbit or two to help you on your journey to hope.
And because I LOVE to cook, I’ll always sneak in a tasty recipe you can try for yourself 😉
Ever hopeful,
Carolyn
❝
We don’t develop courage by being happy everyday. We develop it by surviving difficult times and challenging adversity.
Barbara DeAngelis
This Month’s Financial Tip
The amount of risk you can (or want to) take often changes significantly when you become single again.
Make sure you complete a risk profile to determine your best asset allocation (stocks, bonds, and all the other investments you can have) after the death of your person.
If you haven’t done a risk profile recently, I have a simple 10-question one that you can complete online. Please get in touch with me directly and we’ll set it up.
A Lesson from Susan
A client of ours, Susan, was never told she should have her house appraised after her person’s death until she met with me (I advised her to get one immediately).
She had paid just $58,500 for the home in the 1970s, and the new date of death appraisal she received was $1.1 million!
Because she lives in California (a community property state), she now has over $1 million of tax-free profits she can take out of her home if she ever chooses to sell (plus another $250K with her standard capital gains exemption).
If she had not had the new appraisal done, she’d owe tax on any sale price over $308,500. Now she won’t owe any on the first $1.35 million!
Takeaway
❝
Even if you think you’ll stay in your home after your person dies, it’s very important that you have a date of death valuation (appraisal) done within 6 months of their death in case you ever want to sell in the future.
Financial Jargon Made Easy
Cost basis
The amount you paid for an asset plus any additional money you invested over time.
Let’s say you purchased a vacation home for $300K and later added a pool for $70K and a new kitchen for $40K. Your new cost basis would be $300K + $70K + $40K = $410K.
When you go to sell your home, instead of owing tax on any sale price over $300K, you’ll now get the first $410K tax-free.
Other assets like stocks work the same way (except we’re dealing with reinvested dividends instead of a new pool).
At the end of the day, your cost basis determines how much tax you’ll pay when you sell an asset.
Gif by bombaysoftwares on Giphy
If you find any of this overwhelming (or just want someone to help you evaluate your financial situation), I’m available to chat.
An Article Worth Reading
This article from the National Institute of Health is a few years old, but it’s absolutely worth taking some time to read.
Before you run off to the kitchen to try this month’s delicious recipe, take a moment and share this newsletter with a friend or loved one who needs some encouragement.
Gif by livingsingle on Giphy