Navigating the Documents in Estate Planning

Financial Planning Dentist

Estate planning is a crucial process that involves organizing your affairs and specifying your wishes for the management and distribution of your assets in the event of your disability or death. To begin estate planning, you’ll need several important documents and considerations. Here’s a list of essential documents and steps to get you started:

1. Last Will and Testament:
– A will outlines your instructions for distributing your assets, appoint an executor to manage your estate, and may name guardians for minor children.
– It allows you to specify how you want your property and possessions distributed among beneficiaries.

2. Revocable Living Trust (optional but recommended):
– A living trust can help avoid probate, provide for the management of assets in the event of your incapacity, and ensure a smoother transition of your assets to beneficiaries after your death.
– You’ll need a trust document, a list of trust assets, and a trustee to manage the trust.

3. Financial Power of Attorney:
– This document designates an agent or attorney-in-fact to make financial decisions and manage your finances on your behalf if you become incapacitated.
– It can be broad or limited in scope, depending on your preferences.

4. Healthcare Power of Attorney (or Medical Power of Attorney):
– Similar to the financial power of attorney, this document designates an agent to make medical decisions for you if you cannot make them yourself.
– It may also include your healthcare preferences and end-of-life care instructions.

5. Advance Healthcare Directive (Living Will):
– This document specifies your medical treatment preferences, including decisions about life support and organ donation.
– It can be combined with the healthcare power of attorney or kept separate.

6. Beneficiary Designations:
– Ensure that your retirement accounts (e.g., 401(k), IRA), life insurance policies, and any other accounts with designated beneficiaries are up to date.
– The beneficiaries you designate on these accounts generally supersede the instructions in your will or trust.

7. Guardianship Designations:
– If you have minor children, you can use your will to designate guardians who will care for them in the event of your death.
– Discuss this decision with the chosen guardians beforehand.

8. Letter of Intent:
– This non-legal document provides guidance to your executor, trustee, or family members about your wishes, including the location of important documents, digital assets, and other relevant information.

9. List of Assets and Liabilities:
– Compile a detailed list of all your assets, including bank accounts, investments, real estate, vehicles, and personal property.
– Include information about your debts, mortgages, loans, and other financial obligations.

10. Digital Asset Inventory:
– Create a list of your online accounts, usernames, passwords, and instructions for accessing digital assets such as emails, social media, and financial accounts.

11. Funeral and Burial Instructions:
– Specify your preferences for your funeral, burial, or cremation arrangements.
– Include any specific wishes you have regarding memorial services.

12. Estate Planning Attorney:
– Consult with an experienced estate planning attorney to ensure that your documents comply with local laws and address your unique circumstances.

Keep in mind that estate planning is not a one-time task; it requires periodic review and updates as your life circumstances change. Regularly revisiting and adjusting your estate plan ensures that it remains current and aligned with your wishes and financial situation.

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tax planning
Kevin Taylor

Year-End Tax Planning Under the Biden Administration

A lack of political clarity means not knowing whether Democrats can push their legislative agenda faster. If Democrats gain control of the US Senate, Republicans won’t have the control to force legislation gridlock. Therefore, without this crucial information year end planning just got much more difficult as the decision to who has control of the Senate is likely not coming until January 5th, 2021. Currently, Republicans are likely to keep control of the Senate; however, if Democrats seize the two seats in Georgia, then a 50/50 split would mean VP Kamala Harris gets the deciding vote which means Democrats control the Senate.  The question is to act now before years end and push a lot of income to 2020 or hold off and risk having to pay almost twice as much in taxes if the tax code legislation gets passed. Under the Biden administration, the current proposal has ordinary income tax rates for those making $400,000 a year or more increasing substantially and long term capital gains tax rate equal to ordinary income tax rates when in excess of 1 million. For those earners earning just over $400,000 the tax hit will be a tough pill to swallow. The tax on long term capital gains would be at ordinary income tax rates to the extent gains are in excess of >$1mm of income (including non-capital gain income).   One strategy is doing a Roth Conversion (or a Back Door Roth). In short, taking money out of your IRA and converting it to your Roth so you pay taxes now for the long term play of those assets growing tax free). Unfortunately, since the Republicans passed the Tax Cuts and Jobs Act this decision is now irrevocable. Previously, you used to be able to do a conversion, wait to see if tax law changed, and if it did where it wasn’t beneficial to have done the conversion then you could recharacterize it and pretend you never did it. Now that conversion becomes irrevocable making the decision a more calculated one.  In 2020, the highest capital gains tax rate is 20%. In 2021, the Biden administration has proposed an increase to 39.6%. This increase has a huge impact on whether or not you take gains now and harvest some of your profits as you could potentially decrease your rate by almost half depending on your tax rate. Now these changes will probably not go into effect until 2022, understanding future tax implications will be key as you head into possibly the last year in the next 4 of low tax rates.  Furthermore, as if the situation isn’t already complicated, the Biden administration proposed eliminating the step-up in basis of capital assets at death. For those looking to pass highly appreciated assets to loved ones so they can capitalize on the step up in cost basis which used to be a great strategy, would now force their beneficiaries to pay all taxes on appreciated assets at death which could push them into the highest bracket. A potential increase in taxes in 2021 means accelerating income and deferring deductions when they’re more valuable in 2021. However, if you’re already itemizing deductions then you may benefit from claiming your deductions this year as the new Biden administration proposal would cap itemized deductions benefit at 28%. It may be beneficial to defer for all income earners any deduction that won’t be counted in 2020 into 2021 if there is a chance the rules change. So for example, if you had a $100 of income at the 37% rate then you’d only get a 28% deduction moving forward.  The Qualified Business Income (QBI) under the Biden Proposal could potentially vanish as well. So for small to midsize businesses that aren’t specified service trade companies this will have a substantial impact on their tax liability. The current QBI is a 20% deduction on income <$400,000 and without that decrease income business owners could face a large jump in their tax rate. This now increases the potential benefit to accelerate business income into 2020.  Another change could come from SALT legislation. What will happen to the $10,000 SALT next year? This year, 2020, most likely nothing is going to change. But next year, if you’ve already reached your 10k limit on SALT then paying them today has zero benefit; however, pushing your estimated tax payments or deferring your property tax till Jan 1, 2021 at least gives you a chance to benefit.  Looking ahead, there could potentially be a large shift in how we use retirement vehicles. The current plans clearly benefit high income earners by making large contributions to IRAs/401ks and reducing their income tax liability dollar for dollar while lower income earners benefit from contributing to Roth IRAs at currently low tax rates and letting that money grow tax-free. However, with the proposal now, the lower your income the more it makes sense to use a Traditional IRA, and the higher the income, the Roth is more likely to give you a better tax break.  The higher your marginal rate is over ~26% the more it makes sense to use a Roth as the new legislation is a flat tax credit for everyone. So if you’re in the 37% tax bracket, there is a negative delta of 11%, so using a Roth is more beneficial. If let’s say you’re in the 10% tax bracket, you’re getting a credit of 26% giving you a positive delta of 16% which then could be used to do a conversion (Roth Conversion) of $16,000 as the credit would pay for your tax bill.  Other changes include: Expanded Child Tax Credit $3,600 for children <6 $3,000 for children 6-16 Expanded Child and Dependent Care credit $8,000 for a single child $16,000 for two or more children First Time Homebuyer Credit $15,000 Advanceable and refundable New Caregiver Credit $5,000 No 1031 exchanges for taxpayers with income > $400,000 (inclusive or exclusive of capital gain income is unknown). For those fortunate enough to have

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Kevin Taylor

The Future Semiconductor Requirements for AI Chips: Unlocking the Next Chapter of Innovation

Artificial Intelligence (AI) has become an indispensable part of our lives, driving advancements in various fields such as healthcare, finance, and transportation. At the heart of this technological revolution lie AI chips, which are the engines powering AI systems. As AI continues to evolve, the demand for more powerful and efficient AI chips is rapidly increasing. In this blog post, we will explore the current leaders in the AI chip space, examine the limitations of existing semiconductor technologies, and discuss where innovation needs to come from for the next chapter of AI chip development. Current Leaders in the AI Chip Space: Several companies have emerged as leaders in the AI chip space, each offering unique solutions to meet the growing demands of AI applications. Here are some notable examples: NVIDIA: NVIDIA has been at the forefront of AI chip development with their Graphics Processing Units (GPUs). GPUs excel at parallel processing, making them well-suited for AI workloads. NVIDIA’s GPUs, such as the Tesla V100 and A100, have become the industry standard for training deep neural networks. Intel: Intel has made significant strides in AI chip development with its Intel Xeon processors and Field Programmable Gate Arrays (FPGAs). Their processors combine high-performance computing capabilities with AI acceleration features, while FPGAs offer flexible and customizable solutions for AI tasks. Google DeepMind: Google has developed its own AI-specific chip called the Tensor Processing Unit (TPU). TPUs are designed to accelerate both training and inference tasks and have been deployed in Google data centers to power various AI applications, including natural language processing and image recognition. Limitations of Current Semiconductor Technologies: While the current leaders have made remarkable advancements, there are several limitations associated with existing semiconductor technologies that hinder further progress in AI chip development: Power Consumption: AI workloads demand substantial computational power, which often leads to increased power consumption. The energy requirements of AI chips can limit their deployment in resource-constrained environments or mobile devices, where power efficiency is crucial. Memory Bandwidth: AI algorithms heavily rely on large amounts of data, necessitating high memory bandwidth. Current memory technologies face challenges in providing sufficient bandwidth to keep up with the processing requirements of advanced AI models. Latency and Real-Time Processing: Certain AI applications, such as autonomous vehicles and robotics, require real-time processing capabilities. The latency introduced by data movement between memory and processing units can impede the performance and responsiveness of such systems. The Next Chapter of Innovation: To overcome the limitations of current semiconductor technologies and unlock the next chapter of AI chip development, innovation needs to come from multiple fronts: Material Science and Chip Design: Advancements in material science can lead to the development of new materials that offer improved performance, power efficiency, and thermal management. Additionally, innovative chip designs that are optimized for AI workloads, such as neuromorphic architectures or specialized accelerators, can further enhance AI chip capabilities. Memory Technologies: Innovations in memory technologies, such as high-bandwidth memory (HBM) and non-volatile memory, can address the memory bandwidth challenge. These technologies have the potential to offer faster access to data and enable more efficient AI computations. Quantum Computing: Quantum computing holds promise for solving complex AI problems by leveraging quantum algorithms and principles. While still in its early stages, advancements in quantum computing could potentially revolutionize AI chip architectures and significantly enhance their processing capabilities. Neuromorphic Computing: Inspired by the human brain, neuromorphic computing aims to create chips that can process information in a manner similar to how the brain works. This approach can lead to energy-efficient and highly parallel AI chips that mimic the brain’s neural networks. The future of AI chip development lies in overcoming the limitations of current semiconductor technologies. By focusing on material science, chip design, memory technologies, quantum computing, and neuromorphic computing, researchers and engineers can usher in the next chapter of AI chip innovation. The convergence of these advancements will pave the way for more powerful, efficient, and versatile AI chips, enabling new possibilities and applications across various industries.

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Kevin Taylor

Cash Flow: 6 Successes For Your Dental Practice (2/2)

Continued from Cash Flow: 6 Successes For Your Dental Practice (1/2) A cornerstone of any business is having a mastery over your revenue and cash flow. Lucky for our dentist clients, they have a fantastic capacity for inflow, but disproportionately high outflows from expenses and taxes. Analyzing your accounts receivable and operating activities is an intrinsic part of our income analysis process. The best leading indicator for the success of your practice and of your financial plan. Bring forward revenue There are several lending and credit schemes that will allow dentists to bring forward revenue instead of waiting for insurance and clients to pay. These can be a fantastic value add for your clients by helping them flatten out the payments and keep on your treatment plan. These lending and payment systems keep you from being the bank and put the money into your practice faster with little interruption or time on your part.  We don’t recommend any single group for offering these services, but find that dentists that enable their clients to have access to a trusted partner are able to keep their patients on track and stabilize inflow to their practice.  Diversify your inflows Even by having all of the above and doing everything you can to normalize the revenue of your practice, hiccups can still occur that are outside of your control. Changes to insurance coverages, business partners, and economics have always caused displacement of cash flow for dentists. Clients that have a good understanding of both their practice and non-practice cash flow are capable of weathering these changes.  Clients who have worked through the P.E.A.K Process® know exactly what their cash flow health looks like for both the practice and their personal assets and how much risk is associated with getting income from a single source. Most people don’t have the luxury of determining their own income like dentists we work with. So knowing exactly the source and vitality of profit from several diversified sources becomes helpful for practices that may be working through tight cash flow from expansion, contraction or transition.  Work with a dental financial advisor to analyze and provide action items to improve your cash flow  You have to be preemptive when it comes to monitoring your cash flow. Dentists often prefer to delegate cash management to one of the employees at their practice so they can have more time to care for their patients. This may however not be an effective way to manage or maintain a steady cash flow. Having a good understanding of your cash flow, its relationship to your practices financial health, and how dependent you are personally on the steadiness of that flow will make a measurable difference in the trajectory of your financial plan. Clients that use the P.E.A.K Process® CFP®’s at InSight understand your cash flow habits and provide a better understanding of the in’s and out’s of your practice. Dental financial advisors analyze, estimate, and help you predict your income over time. We find ways to better maximize your efforts, and discuss ways to better utilize that knowledge in your financial plan. This intimacy will help you plan on how to preempt any shortfall. Or, to broaden your current capacity to generate revenue into long term and diversified vehicles for cash flow generation.  Our CFP’s analyze your cash management habits but suggest ways to improve your cash flow and also find tax reduction strategies. We find opportunities you may not know about.  Invest in yourself and your practice, and we will help guide you through what you don’t know you should know to get you closer to financial freedom.

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