Preparing your estate can be complicated, and if you’re a part of a blended family, estate decisions can be even more complex and nuanced. Blended families take on many forms, but typically consist of couples with children from previous relationships. Here are a few case studies to help illustrate some of the challenges.

Case Study #1: Children From Previous Marriages

Simple wills often are structured to leave all assets to the surviving spouse. If your estate strategy relies on this type of will, you could risk overlooking children from previous marriages. Also, while it’s unsettling to consider, the surviving spouse can end up changing a will without proper measures put in place.¹

When new children join a blended family, estate strategies can get even more complicated. But with a well-structured approach, you can direct how to distribute your assets.

Case Study #2: When One Partner Has Significantly More Assets

While the divorce rate has been trending lower, the number of remarriages (2nd or more marriages) has increased. One person entering into a new marriage may have more assets than their spouse, given that 40% of all new marriages are remarriages for one or both spouses. An estate strategy can help ensure that your assets pass down according to your wishes.²

Case Study #3: Traditional Trusts May Not Be Enough

In blended families, a traditional trust is a good start, but it may not go far enough. One possible solution is to create three trusts (one for each spouse, in addition to a joint trust) to help address different scenarios.³

Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional familiar with the rules and regulations.

Starting the Process

Blended families are pretty common these days. If you’re in that position, it’s important to remember that you can create an estate strategy to address your specific situation. The first step may be an estate document review.

We measure the jobs market in many ways, but the Job Opening and Labor Turnover Survey or JOLTS report seems to be of particular interest to Fed Chair Jerome Powell.

The JOLTS report tells the Fed how many job openings there are each month. It also shows how many people were hired, quit, or were laid off.

Given the above, there’s no doubt the Fed welcomed the news illustrated in the chart below.

The Fed is looking for three key things in its fight to stabilize the economy. A slowed Gross Domestic Product (GDP), inflation as measured by the Consumer Price Index to fall, and the labor market to soften. Now, GDP has already slowed, but as we all know, inflation has yet to be tamed, and the labor market is mixed at best.

This means the financial markets are in a “bad news is good news” phase. Put another way, the bad news of fewer job openings is good news to Fed officials. We understand this “bad is good” phase can be confusing, to say the least, so please reach out if you have any questions.

Lately, “inflation” seems to be the media’s favorite word. Everywhere you turn, there’s another story about the impact of inflation. For example, many news outlets have reported that confectionary prices have surged over 30% from last year’s Halloween.

If we break down some of our favorite candy, the news isn’t sweet. According to the U.S. Bureau of Labor Statistics, prices for peanut butter are nearly 9 percent higher compared to 2021. And Cocoa, chocolate’s main ingredient, has also risen by more than 9 percent since December.^1,2

However, although current inflationary pressures are nothing to joke about, some seasonal signs of hope are on the horizon.

Consumer confidence remains high despite the squeeze we’re all feeling. Goblins and ghouls will collectively spend $3.1 billion on candy alone, outpacing last year’s spending of about $3 billion. What does this suggest to us? Consumers, the driving force of our economy, are confident despite the many financial challenges they currently face.³

So come October 31, remember that whether you’re handing out the sweetest of treats or helping your little ones hunt for full-sized candy bars, our confidence in one another and our nation will carry us through these challenging times.

Have a happy (and safe) Halloween.

When looking for income-generating investments, some investors turn to dividend-yielding stocks.

When a company makes a profit, that money can be put to two uses:

1. It can be reinvested in the business.
2. It can be paid out to the company’s shareholders in the form of a dividend, a taxable disbursement typically made quarterly or monthly.

Dividend Ratios

Investors track dividend-yielding stocks by examining a pair of ratios.¹

Dividend per share measures how much cash an investor is scheduled to receive for each share of dividend-yielding stock. It is calculated by adding up the total dividends paid out over a year (not including special dividends) and dividing by the number of shares of stock that are outstanding.

Dividend yield measures how much cash an investor is scheduled to receive for each dollar invested in a dividend-yielding stock. It is calculated by dividing the dividends per share by the share price.

Other Dividend Considerations

Investing in dividend-paying stocks can create a stream of taxable income. But the fact that a company is paying dividends is only one factor to consider when choosing a stock investment.

Dividends can be stopped, increased, or decreased at any time. This is unlike interest from a corporate bond, which is normally a set amount determined and approved by a company’s board of directors. If a company is experiencing financial difficulties, its board may reduce or eliminate its dividend for a period of time. If a company is outperforming expectations, it may boost its dividend or pay shareholders a special one-time payout.

When considering a dividend-yielding stock, focus first on the company’s cash position. Companies with a strong cash position may be able to pay their scheduled dividend without interruption. Many mature, profitable companies are in a position to offer regular dividends to shareholders as a way to attract investors to the stock.

Qualified dividends are taxed at a maximum rate of 20%. Ordinary dividends are taxed at the same rate as federal income taxes, or between 10% and 37%. State income taxes also may apply.²

Be cautious when considering investments that pay a high dividend. While past history cannot predict future performance, companies with established histories of consistent dividend payment may be more likely to continue that performance in the future.

In a period of low interest rates, investors who want income may want to consider all their options. Dividend-yielding stocks can generate taxable income, but like most investments, they should be carefully reviewed before you commit any dollars.

Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.

The information in this article is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

Traditionally, I’ve been a little cautious when people say, “it’s different this time.” After all, the past few years have seen more financial “firsts” than most.

But despite that skepticism, this year saw five interest rate increases in seven months — making it the quickest tightening cycle in modern history.

And with two more rate increases expected in November and December of this year, it seems clear that Fed Chair Jerome Powell is determined to keep adjusting rates until inflation is on track to hit the Fed’s target.

The Fed knows that few financial events can be as devastating as high inflation over time – especially for those living on a fixed income. So the Fed is comfortable with some short-term economic uncertainty in pursuit of its long-term goal of price stability.

I’m optimistic the Fed has a plan to tame inflation. In the meantime, if you have any concerns or questions about the current financial landscape, let me know. I’m always happy to hear from you.

What kind of role can a financial professional play for an investor?

The answer: an important one. While the value of such a relationship is hard to quantify, the intangible benefits may be long-lasting.

There are certain investors who turn to a financial professional with one goal in mind: the “alpha” objective of beating the market. But even Wall Street’s brightest money managers can come up short.

At some point, these investors realize that their financial professional has no control over what happens in the financial markets. They come to understand the real value of the relationship, which is about strategy, coaching, and understanding.

A financial professional can provide guidance about today’s financial climate, determine objectives, and assess progress toward those goals. Alone, an investor may find it difficult to do any of these tasks. Moreover, an investor may make self-defeating decisions. Today’s steady stream of information can prompt emotional behavior and may lead to blunders.

No investor is infallible.

Investors can feel that way during a great year when every decision seems to work out well. But overconfidence may set in, and the reality that the markets have challenging years can be forgotten.

A financial professional can help an investor commit to staying on track.

Through subtle or overt coaching, the investor can learn to take short-term market volatility in stride and focus on the long term. A strategy is put in place based on the investor’s goals, risk tolerance, and time horizon.

As the investor-professional relationship unfolds, the investor begins to notice the intangible ways the professional provides value. The professional may help explain the subtleties of investment trends and how potential risk often relates to potential reward.

Perhaps most importantly, the professional helps the client get past the “noise” and “buzz” of the financial markets to see what is really important to their financial life.

The investor gains a new level of understanding, a context for all the investing and saving. The effort to build wealth and retire well is not merely focused on success but also significance.