DSI Wealth Management
Senior Wealth Management Advisor
Chad Beck is a Wealth Management Advisor at DSI Wealth Management, a firm dedicated to performing services for their clients, their clients' families, employees and the community. Their strategy begins with a thorough understanding of each client’s values, goals and current financial condition. Chad and his team know the key to a strategic plan is in the implementation and constant updating.
Having started his career in the financial services industry in 2007 at a large Variable Annuity Company, Chad learned a great deal about both the retail, as well as the wholesaling side of the securities business. During his time there, Chad soon realized he wanted to be on the retail side, working face to face with clients and building strong relationships while helping clients to plan for their futures. In 2009 Chad was instrumental in opening a satellite office for the largest regional firm on the West Coast in Santa Barbara, California as the Operations Manager. Before long, he transitioned into a sales role and it was there that he found his niche.
Chad joined DSI Wealth Management in 2011 holding his FINRA series 6, 63, 65 and 7 securities registrations, as well as a Life Insurance License. He is a personal Financial Advisor working with individuals and families to help them realize their long and short term financial goals. Chad completed his college education at the University of Colorado, Boulder, while majoring in Economics with a Business emphasis. He enjoys sitting with clients and learning their greatest fears and financial goals, and then implementing a plan that will help them know he has done the very best to help protect them, while helping them strive towards achieving those goals.
First and foremost, I'm sorry for your loss! As long as the mutual fund was not held inside of a retirement account for your father such as an IRA or 401(k), the inheritance is not taxable to you at all. In fact, you should receive a step up in cost basis, so that if you should decide to sell the position, you will only owe taxes on the amount over and above the value on the date of your fathers passing. If he invested $10K, and on the day he passed it was worth $30K, and you sold a month later for $31K, you would have long term capital gains tax on $1,000 only.
The only caveat to this would be if your fathers estate was over $5+ million. If it is.... you'll need a much more in depth look at what your options are.
It's great that you're thinking about this at a relatively young age. In an ideal world, the best way for you to begin investing would be in all of the above. If your company offers a match on any contributions to the 40(k), then it's best to try to contribute up to the maximum they'll match. Take advantage of the "free money." However, it's important that you understand that this money should be off limits to you until you pull the trigger on retirement (or at least until after age 59.5), which points to why it's good to have various "buckets" you're saving to.
Roth IRA's are particularly attractive for your age group because we will likely only see tax rates rise during your lifetime. It makes sense for you to pay taxes on your earnings now, at what may potentially be the lowest tax bracket you'll ever see again, and use your Roth IRA dollars tax free in retirement. There is no tax benefit to you, today, for making a contribution to a Roth account, but there will be huge benefits to you down the road. Again, this is money you should expect to not touch until retirement.
I would also encourage you to put some money away outside of qualified retirement accounts so that if/when you decide to make a major purchase like a home, you have some money that you can access without any penalties or excessive taxes. The other savings vehicles mentioned have restrictions on them that sometimes make it prohibitive to take withdrawals from.
As for mutual funds, this may be an investment vehicle you would use inside of a 401(k) or Roth IRA. I would suggest working with a financial advisor to determine what investment vehicles are best to suit your needs. We typically advise our clients that having some combination of Mutual Funds, ETF's and in some case, owning individual stocks, is the best route to go. ETF's offer a less expensive way to get exposure to some of the same investments mutual funds may expose you to. I'm over simplifying, but I emphasize again the importance of working with someone you trust to help you navigate the investment landscape.
Best of luck to you!
This is a very good question. As you're aware, most clients that advisors work with are looking to retire and want to know if/when they can, and how much they can comfortably live off of. Every so often, we do "goal based" planning. This might include anything from buying a vacation home to paying for an annual European trip for the whole family. While planning for retirement is obviously a very smart thing to do, some folks just want to hit certain milestones in their lives. If you don't approach an advisor with some goals you would like to obtain, regardless of what they are, then there really wouldn't be a reason for you to pay to have a financial plan prepared. The pitfall is that, if you don't enter a desired retirement age or date, then a financial plan assumes that you will work (and continue to make the same income you are currently reporting, maybe adjusted for inflation or other assumptions you'd like to add) until your death. Depending on how you make your living, this may or may not be a very safe assumption to make. Furthermore, the big variable is obviously not knowing exactly WHEN you'll pass on.
The point is, financial plans are very flexible and can be used to solve for any number of scenarios. You might ask "How much do I need to save each month to buy my dream business in 10 years?" Or you might be asking yourself, "How much do I need to have in life insurance in case I die at my desk?" Sorry for the morbidity, but these are real life things that many people are asking themselves. Decide why you would want a financial plan in the first place, and then find an advisor you like that you would trust to get you through to the end of your plan!
If the family company has a written shareholders agreement, that should outline how the company should ultimately be valued at any given time, as well as the method by which an existing shareholder can sell his or her shares back to the company. If no such language exists, or language that speaks to whether the board or directors of the company have the power to rule on these matters, the majority shareholders should try to come up with a methodology for how to value the company that the seller of shares agrees with. If an agreement can not be reached as to how to value the company, then there are a number of third party organizations that can come in and give you a fair market value after reviewing your books. The downside to this is that these companies are often pricey.
If the distribution is being paid out to the trust, then yes, the entire amount is taxable. The amount of money has no bearing on the taxation when it comes to IRA's because they do not fall within the estate tax limit. Depending on how the IRA is funded, you may have an option to take a 5 year payout so that the tax liability can be spread over 5 years versus taking it all in one lump sum during one calendar year.