The Bastrop Advertiser (Bastrop, Tex.), Vol. 154, No. 31, Ed. 1 Thursday, June 14, 2007 Page: 4 of 16
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Thursday, June 14,2007
Business
When good fortune comes your way
Whether expected or not,
an inheritance, divorce set-
tlement, severance package
or pension payout, proceeds
from the sale of a business,
life insurance, legal judg-
ments, or even lottery win-
nings-all can put in your
hands the equivalent of sev-
eral years of earnings. Now
you're at a crossroads-sud-
denly called upon to switch
from wealth-building mode
to wealth management.
You will, of course, face
circumstances special to
your situation. Yet, there
are some general guidelines
that apply to almost all such
transitions.
Proceed cautiously.
Financial windfalls often
come with an emotional
price tag: the loss of a loved
one, a serious injury. Or it
can mean a major change in
your life—ending a career or
selling a business.
Even for a lottery winner,
euphoria may make long-
term planning a challenge.
Fortunately, in most situa-
tions, major decisions are
not required immediately.
Cash can be set aside in the
money market, in short-term
CDs or in an interest-bear-
ing bank account. Although
rates are not very impres-
sive these days, at least you
won't lose money while you
regroup.
Similarly, retirement plan
assets can be left in place
for a reasonable period of
time. An inherited IRA, for
example, gives the benefi-
ciary until Dec. 31 of the
year following the death of
the owner to decide between
cashing in immediately, or
within a five-year period, or
over his or her life expec-
tancy.
Whatever the case, give
yourself some time to regain
your emotional bearings and
to think about what uses of
your new wealth will give
you the most Satisfaction.
Where are you headed?
Is your sudden wealth large
enough that you can retire?
If that course is attractive
to you, you should think of
your assets-new and old-
not as a lump sum but in
terms of the after-tax annual
income that they can pro-
duce over the course of your
life. Is that figure enough to
support the lifestyle that you
envision for yourself and
your family?
Or, if you will continue
in your present position, do
you simply want to clear
debts, ensure your children's
education, invest for your
eventual retirement and pro-
vide for those whom you
leave behind?
Among your goals should
be a review and update of
your estate plan, so as to
include your increased
assets. You also will want to
consider a revocable living
trust and/or a durable power
of attorney to provide for the
management of your assets
in the event of incapacity.
The issue of taxation If
your new wealth is taxable,
it will be taxable as ordi-
nary income when it comes
from lottery winnings, roy-
alties, Severance payments,
mineral rights and the like.
Legal judgments are taxable,
except to the extent that they
are compensation for physi-
cal injury.
If the money comes from
the sale of a business, it
may be subject to tax on
any capital gains realized.
Proceeds from the sale of
your home also are subject
to capital gains tax, but the
first $500,000 in gains may
be exempt for a married cou-
ple ($250,000 for a single
individual).
Retirement plan pay-
outs are taxable and may
be subject to a penalty tax
as well if you aren't age 59
1/2. However, tax may be
deferred when rolled over
into an IRA. Most inherited
assets are received with a
stepped-up basis and, thus,
are subject to little or no tax
if sold.
Taxes can be a major
complicating factor to new
wealth. The Services of an
experienced tax advisor may
help you uncover ways to
minimize their impact and
are well worth investigat-
ing.
The planning and deci-
sion-making necessary as a
result of the receipt of a
large lump sum can be over-
whelming. And very few
people have the investment
management expertise that
they will need.
Professional guidance can
help, but do your homework.
For instance, do the profes-
sionals charge a fee based on
the amount of assets under
management or rely on com-
missions from the products
that they sell? Be sure to
ask for and check referenc-
es before entering into any
agreement.
I
Gina Nesloney and salesman Felix shake hands at
The Mattress Store.
Princess and the pea;
Buyers attend free real estate expo classes
Bastrop area residents
could hear expert advice
about buying and selling
property at the first-ever
Bastrop County Real Estate
Expo on June 2 at Bastrop
Middle School.
A dozen speakers dis-
cussed the real estate pro-
cess, and 30 exhibitors pro-
vided various services rang-
ing from real estate sales to
surveying, inspections and
mortgages.
The project was Sponsored
by the Bastrop County Board
of Realtors. Board President
Tina 1 ucile of RfrMAX
Bastrop Area kicked off the
all-day event by explanaing
why the organization took
the project on.
"We believe that informed
and educated consumers
are better prepared to make
smart decisions," Fucile said.
"AS Realtors, we understand
that people who know what
they're doing make the best
clients."
Seminar topics included
home inspections, survey-
ing, appraisals, affordable
housing, VA loans, 1031
Exchanges, credit Scoring,
insurance, utility easements,
endangered species issues,
economic development, IRA
Investing and market trends.
Chairing the planning
committee for the Expo was
Cy Labat of Virgil Eaves
Estate. He said he hopes
the effort will have a last-
ing impact on Bastrop real
estate.
Serving with Labat
54th Annual
Luling Watermelon
THUMP
JUNE 21 - 24
Downtown Luling, TX
Four fun filled Days of
MELON MANIA
CONCERTS FEATURING
AARON WATSON, RANDY ROGERS,
MIKE McCLURE, KEVIN FOWLER,
JOHNNY DEE & ROCKET 88's
& WORLD CHAMPIONSHIP
SEED SPITTING
See Schedule of Events at
www.watermelonthump.coin
on the committee were
Dianna Burley, D& S Home
Inspection; Bill Nance,
United Country Bastrop
Real Estate Associates; Janie
Smith and Thressa Skidmore
of Coldwell Banker Green-
Mills; Janis Penick and
Morgann Shurtleff with RE?
MAX Bastrop Area; Susan
Nogues, Susan Nog lies Real
Estate; Rachel Mikulek,
Roscoe State Bank; and
Laina Stevens, Jimmie Ann
Vaughan Co.;
Labat thanked the Bastrop
and Smithville Chambers of
Commerce for promotional
assistance and participation
and said events such as the
expo are a service to the
community, raising aware-
ness of the real estate pro-
fession.
Friday, May 25 the doors
opened for The Mattress
Store located at 902 Hasler
across from the Comfort
Inn.
Gina Nesloney was the
first customer to purchase a
new king size bed. "I was in
the market to buy a bed but
had not planned to buy one
that day" I asked the sales-
man (Felix) if he knew the
story about the princess and
the pea." He laughed and
said the only children's story
he remembered was Goldie
Locks." The owner of the
store got in on the story as
well as another salesman
but no one knew the story.
Because I was the first cus-
tomer, I got a deal no one
could refuse! These guys are
from Rosenburg, and new
to Bastrop. They are really
great guys." If you know
the story about the princess
and the pea contact Gina at
gne vents@austin. rr. com.
918 Main St.
Bastrop
512-321-2910
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McAuley, Davis. The Bastrop Advertiser (Bastrop, Tex.), Vol. 154, No. 31, Ed. 1 Thursday, June 14, 2007, newspaper, June 14, 2007; Bastrop, Texas. (https://texashistory.unt.edu/ark:/67531/metapth252381/m1/4/: accessed July 18, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting Bastrop Public Library.