NEWS Archives - Page 4 of 8 - Centura Wealth Advisory

Business team meeting to conference, collaboration discussing working analyzing with financial data and marketing business strategy project, presentation and brainstorming to making profit of company

FINANCIAL PLANNING, INSIGHTS, INVESTING, NEWS, PORTFOLIO CONSTRUCTION

Insider Tips From High-Level Financial Advisors

With rising interest rates and inflation reaching a 40-year high, investors, planners and affluent individuals are searching for solutions to create financial strategies to meet their goals.

In this article, we’ll discuss several investment and planning strategies to address some of the most common financial issues faced by affluent individuals: high interest rates, inflation, and high income taxes.

Tips to Navigate a Rising Interest Rate Environment

The primary risks of a rising interest rate environment include the potential for a loss in principal value as well as a loss of buying power. Let’s take a look at some strategies that address and mitigate these risks.

Consider Investing in Private Credit

Investors may enter private credit investments because of their floating rate loans, which will limit the interest rate risk associated with other forms of investment, such as traditional fixed-income investments.

Additionally, private credit transactions are direct negotiations between the lender and the borrower. This allows investors to access a wide range of private transactions and negotiate terms that best work for their situation.

Collateralized Loan Obligations (CLOs)

A collateralized loan obligation (CLO) is “single security backed by a pool of debt….Collateralized loan obligations (CLO) are often backed by corporate loans with low credit ratings or loans taken out by private equity firms to conduct leveraged buyouts.”

With collateralized loan obligations, an investor receives scheduled debt payments from the underlying loans. The investor is offered greater diversity and the potential for higher-than-average returns in exchange for taking on the default risk.

Learn more about using private credit as a hedge against rising interest rates.

Look into Life Insurance

Life insurance can be a powerful vehicle for alternative investments. It provides downside protection, high liquidity, and an attractive upside potential relative to investments with a similar risk profile.

Check out episode 31 of our podcast, Live Life Liberated, to learn more about how life insurance solutions can be used as an alternative to fixed-income investments.

Structured Notes

Structured notes, written by high credited banks, are customizable and well-suited for a rising interest rate environment and can help investors maintain returns.

Tips to Invest Against the Effects of Inflation

Multifamily real estate can provide opportunities for investors to protect themselves against their declining purchasing power.

Consider Multifamily Real Estate as a Hedge Against Inflation

Investors often view multifamily real estate as “inflation resistant.” Why? This form of investment doesn’t typically drop in value as much as other assets during challenging market times. Additionally, multifamily real estate tends to recover faster than other investments.

Further, multifamily real estate is an attractive investment during a market with rising inflation because it:

Has intrinsic value
Provides owners with the ability to adjust rent to combat the effects of inflation
Maintains a rising demand with a stagnant supply

Learn more about why investors are opting for multifamily real estate as a hedge against inflation.

Let’s Talk Short-Term Bonds

Short-term bonds are less sensitive to inflation and the increased rates of a high-interest rate environment than longer-maturity bonds. Longer-maturity bonds may lock in rising rates for longer-time periods whereas shorter-term bonds require a shorter commitment to the high rates and will allow investors to move on to better opportunities.

How to Get Started With These Insider Tips

At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.

We invest heavily into technology and systems to provide our clients fully transparent reporting, and tools to make informed decisions around their wealth plan.

Read on to learn more about our 5-Step Liberated Wealth Process and how Centura can help you liberate your wealth.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

October 8, 2022

Asia stock trader agent or Sale tax loan broker advice brief and point hand to graph report talk to client at office desk show budget chart data or legal result on claim form. Trust will in work plan.

CHARITABLE GIVING, ESTATE PLANNING, NEWS, TAX PLANNING

Sophisticated Charitable Giving Strategies for Affluent Individuals

Affluent individuals and families may choose to implement charitable giving strategies for the wealth of benefits these strategies provide.

These benefits allow a family to connect with a personal cause or preserve their legacy while contributing to an efficient wealth strategy.

Charitable giving strategies can help affluent families and individuals to realize financial benefits as well as reduce current and estate taxes. These charitable giving strategies can include:

Charitable lead annuity trusts (CLATs)
Grantor-charitable annuity trusts, and
Qualified charitable distributions

Let’s discuss each of these strategies and their benefits in detail.

Make a Qualified Charitable Distribution (QCD)

According to Investopedia, a qualified charitable distribution “allows owners of a traditional IRA to exclude RMDs from their adjusted gross income (AGI) if they give the money to approved charities, also known as qualified charitable organizations.”

In simpler terms, the QCD guideline allows individuals to deduct the amount they donate from their IRA. The QCD counts as part of their annual RMD amount, and they must pay the distribution directly from their IRA to the qualified charity.

*Distributions must be made directly to an approved charity and are capped at $100,000 annually per person. Please enlist the assistance of a qualified financial or tax advisor to best navigate the process of making a qualified charitable distribution and earn the associated tax benefits.

Benefits of Making a Qualified Charitable Distribution

This charitable giving strategy can effectively reduce an affluent individual’s adjusted gross income while satisfying their required minimum distribution set by the IRS. Further, this strategy can help offset other taxes, such as social security.

Utilize Charitable Lead Annuity Trusts (CLATs)

A charitable lead annuity trust (CLAT) is a charitable trust in which a charity, donor-advised fund, or a foundation that the grantor selects, receives annual payments. These payments may be set for a term of years or the grantor’s lifetime.

At the end of this period, the remaining CLAT assets are distributed amongst the trust’s non-charitable beneficiaries. These beneficiaries are typically the grantor’s descendants or trusts for the descendants’ benefit.

Benefits of Charitable Lead Annuity Trusts (CLATs)

Charitable lead annuity trusts provide a gift tax efficient way for individuals to transfer wealth to heirs while benefiting charities.

However, CLATs are not exempt from income tax. If the grantor wants to claim the immediate income tax charitable deduction, the CLAT must be set up as a grantor trust, or G-CLAT.

Grantor Charitable Lead Annuity Trusts

In a grantor charitable lead annuity trust (G-CLAT), the trust corpus remaining at the end of the term is given back to the donor instead of the donor’s descendants.

G-CLATs provide a host of advantages, which will improve income tax planning, wealth transfer planning, and charitable planning. Let’s take a look at the benefits of this sophisticated charitable giving strategy.

Income Tax Planning

Individuals participating in the G-CLAT will experience the benefits of both immediate and long-term tax benefits once they’ve successfully implemented this charitable giving strategy.

This will result in an immediate income tax dedication for the individual, which is:

Subject to 20 to 30% of adjusted gross income (AGI) limitation
Able to be utilized over six tax years
Ideally consumed at the highest marginal income tax rates

Wealth Transfer Planning

In addition to the immediate benefits of G-CLATs, these trusts also include wealth transfer tax savings. Through these savings, the taxpayer can experience the benefits of a G-CLAT for years.

Charitable Planning

While the taxpayer does not need to have donative intent, charitable planning benefits G-CLATs if the taxpayer decides to participate.

For instance, as a future benefit, G-CLATs provide satisfying charitable annuity payments with appreciated assets, avoiding recognition of gain on these distributions to 501(c)3s.

How to Get Started With These Charitable Giving Strategies

At Centura Wealth Advisory, we know how to optimize charitable giving strategies to best benefit your long-term financial goals. Our team has successfully implemented over 280 CLAT transactions alone.

Read on to learn more about our 5-Step Liberated Wealth Process and how Centura can help you liberate your wealth.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

October 2, 2022

Business Consulting meeting working and brainstorming new business project finance investment concept.

FINANCIAL PLANNING, INVESTING, NEWS, PORTFOLIO CONSTRUCTION

Five Reasons Why Holistic Planning Is Important

Wealth management combines various financial services to consult and address the needs of affluent individuals.

A holistic approach to financial planning means not aiming for one goal—such as purchasing a property, for example—but addressing a collection of other needs and objectives.

In simple terms, holistic financial planning considers the big picture of an individual’s finances while including both short and long-term goals.

In this article, we will discuss why a holistic approach is important in financial management.

What is Holistic Financial Planning?

Or rather, what isn’t holistic financial planning?

To understand holistic financial planning, it can be helpful to understand what it isn’t. Holistic financial planning does not:

Focus only on investments
Disregard larger tax planning strategy
Sell insurance or annuities without understanding the full scope of a client’s needs
Consider a financial plan limited to only one perspective

Now that we have discussed what a holistic financial plan is not, let’s take a closer look at what it is.

What Does a Holistic Financial Plan Include?

A holistic approach looks at an individual’s lifestyle, goals, values, and priorities to create a financial plan that works for them. Financial planners can coordinate these needs and the lifestyle of their clients in order to create a strategy.

A holistic financial plan may include:

Investments (portfolio, brokerage accounts, ETFs, mutual funds, etc.)
Retirement planning (finances and lifestyle)
Estate planning
College planning
Budgeting and saving
Retirement accounts (401k, 403b, IRA)
Insurance needs (home, auto, life, long-term care, liability, etc.)
Tax planning
Tax preparation

How Does Holistic Financial Planning Differ from Traditional Planning and Investing?

Many individuals tackle financial planning by focusing only on numbers. For instance, target rates of return, insurance premiums, the cost of a renovation on a home, and a nest egg for retirement.

While these numbers are important, they can be limiting to an individual who is developing a financial plan.

Benefits of Holistic Financial Planning

1. Holistic Planning Provides Flexibility

A holistic financial plan offers clients the flexibility to change course as their lives and goals evolve. These plans should be continuously evaluated and updated based on these changes.

2. A Holistic Financial Plan Can Align With the Client’s Values

While traditional financial planning considers the best outcomes for a client’s portfolio, holistic financial planning can consider other aspects which may be important to clients, such as values.

A financial plan that aligns with a client’s values may take the form of investing in companies with similar missions and values while still aiming for their financial goals.

3. Holistic Planning Can Help Clients Prepare for Unexpected Life Events

A holistic financial planning approach not only helps individuals prepare for expected life events but also unexpected ones.

Some examples of major life events where advisors can help include:

Sudden job loss
Unexpected inheritance
Divorce
Critical illness, and/or
Loss of a family member or loved one

4. Holistic Planning Prioritizes Tax Efficiency

Taxes should be an important consideration when developing any efficient financial plan. A holistic approach to financial planning can optimize tax efficiency by considering short and long-term goals.

This is especially important in retirement and estate planning. For instance, this can include strategies such as:

Tax-loss harvesting at year-end to offset capital gains, managing distributions from your taxable retirement accounts
Transferring assets to a trust
Making financial gifts to younger generations or a charity
Life insurance may also be used for estate planning purposes

5. Holistic Financial Planning Considers Retirement

Retirement planning is one of the most significant goals that clients will come to financial planners with. Holistic financial planning can help clients build a comprehensive plan for retirement that considers the entirety of the client’s financial situation.

For instance, a holistic financial plan can help to develop a portfolio that allows a client to maintain their lifestyle without actively earning income. Additionally, a holistic plan can include passive income sources that will be a fit for the client during their retirement.

How to Get Started With Holistic Financial Planning

At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.

We invest heavily into technology and systems to provide our clients with fully transparent reporting, and tools to make informed decisions around their wealth plan.

Read on to learn more about our 5-Step Liberated Wealth Process and how Centura can help you liberate your wealth.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

September 29, 2022

3d rendering of corporate buildings with sunlight

FINANCIAL PLANNING, INVESTING, NEWS, PORTFOLIO CONSTRUCTION

Why American Investors Should Invest in India’s Economy

With rapid growth across the economy and innovations in manufacturing, digital and information technology, India is proving to be an exciting investment for American investors. Additionally, India is home to a rapidly growing economy, the largest youth population in the world, and rising global competitiveness.

Read on to learn why American investors should invest in India’s economy and how they can get involved.

India Has a Fast Growing Economy

India has one of the fastest-growing economies in the world and shows no signs of slowing. According to the United Nations Conference on Trade and Development (UNCTAD) Trade and Development Report 2021, India’s economy is projected to grow at 6.7% in 2022 – the fastest in the world during the year.

Additionally, according to research provided by the Ministry of Finance, “India’s real GDP is projected to grow at 9% in both 2021-22 and 2022-23 and at 7.1% in 2023-24. This projects India as the fastest growing major economy in the world in all these three years.”

India Has the Largest Youth Population in the World

According to the United Nations Population Fund, India has its largest ever adolescent and youth population. The country will continue to have one of the youngest populations in the world until 2030.

Young people can transform the social and economic future of the country when supported with investments in their education, development, and leadership. Further, the current youth population is highly educated and will carry these skills into the workforce.

The National Infrastructure Pipeline

The National Infrastructure Pipeline (NIP) is a first-of-its-kind, whole-of-government exercise to provide world-class infrastructure across India and improve the quality of life for all citizens. Launched in August of 2020, NIP aims to attract investments to India and help the country reach its goal of becoming a $5tn economy by 2025.

Rising Global Competitiveness

India has exceptional information technology and business process outsourcing. The farm output and nominal factory output industries have pushed the country to be ranked third in the world based on purchasing power parity (PPP).

According to World Bank’s Ease of Doing Business Ranking 2020, India jumped 79 positions from 2014 to 2019. Within these years, the country moved from 142nd to 63rd.

India Carries a Widely Skilled Workforce

India has been an attractive option for investors because of the country’s low wages and highly skilled workforce. In fact, India has the third-largest group of scientists and technicians in the world. This has led to a series of innovations in tech as well as created a successful startup ecosystem.

What Are the Benefits of Investing in India’s Economy?

Due to its longstanding parliamentary democracy and liberal economic policies, India is a safer place than many other rising markets and put the country in investors’ minds for the past few years. Other benefits include:

Positive demographics
Strong economic growth
Stable government

How Can Investors Get Involved? Let’s Talk about Private Equity

Private equity (PE) is a source of investment capital that comes from firms or high-net-worth individuals that directly invest in private companies. These investments may take the form of:

Purchasing stakes in private companies
Acquiring control of public companies with plans to take them private and delist them from stock exchanges

Tune in to Our Podcast to Learn More

In Episode 48 of the Live Life Liberated podcast, we discuss how to diversify your portfolio by investing outside of the U.S. markets by taking a look at private equity investment opportunities in one of the biggest emerging markets — India.

In this episode, Derek Myron is joined by Manu Rikhye, partner at GrowX Venture Management. They talk about the emerging sectors in India and how you can invest in early-stage businesses during the different rounds of venture capital funding.

Manu talks about:

Why more companies are opting for private equity instead of an IPO
Factors that make India an attractive market to invest in today
The investment life cycle of a company from idea stage to a large enterprise
Mortality rates for early-stage businesses and expected returns if they succeed.
And more

Learn more about Private Equity Investment Opportunities in India in our podcast, Live Life Liberated.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

September 15, 2022

Man using calculator Accounting Calculating Cost Economic bills with money stack step growing growth saving money in home , finance concept

FINANCIAL PLANNING, INVESTING, NEWS

Using Private Credit to Hedge Against Rising Interest Rates

September 6, 2022

Exterior view of multifamily residential building; Santa Clara, San Francisco bay area, California

FINANCIAL PLANNING, INVESTING, NEWS, PORTFOLIO CONSTRUCTION

Why Investors Use Multifamily Real Estate as a Hedge Against Inflation

With inflation reaching 40-year highs, investors are eager to find investments to hedge against the decreasing value of their money. Multifamily real estate can provide opportunities for investors to protect themselves against their declining purchasing power.

Before we dive into how investors can turn to multifamily real estate to navigate these changes, let’s begin with why inflation and rising interest rates are occurring in the first place.

The Fed’s Shift from Quantitative Easing to Quantitative Tightening

In 2020, the Federal Reserve began quantitative easing (QE) to encourage investment and spur economic activity. In this process, the Fed expanded its balance sheet.

These expansions included committing to purchasing:

$80 billion a month in treasuries, and
$40 billion in mortgage-backed securities

In June 2022, however, roughly two years after the quantitative easing plan was announced, the Federal Reserve began quantitative tightening (QT) to counteract inflation.

The quantitative tightening process includes allowing its purchased bonds to reach maturity and run off its balance sheet, which results in rising interest rates. Inflation is still heavily prevalent in the American economy. In fact, in Q2 2022, inflation sat at its highest point since 1982.

Why does this matter? Inflation can erode the value of an investor’s assets and negatively impacts the ability to purchase goods.

This considered, investors are looking for opportunities to shelter from inflation. Enter multifamily real estate.

Using Multifamily Real Estate as a Hedge Against Inflation

Multifamily real estate can serve as a hedge against inflation and be an attractive option for investors for several reasons, including that multifamily real estate:

Has Intrinsic Value
Recovers Quickly
And more

Let’s discuss more below.

Multifamily Real Estate Has Intrinsic Value

Multifamily real estate is a necessity-based asset. To put it simply, residents need a place to live. Further, residents experience friction, such as time, cost, and effort if they are to move.

These factors suggest that multifamily real estate holds an intrinsic value and can lead investors to stable or potentially increased cash flow, despite inflation.

Demand for Multifamily Real Estate is Rising

Multifamily homes are becoming increasingly popular. Why? According to research, Millennials are moving into homes later than the Baby Boomer generation prior. Moreover, Millennials are still experiencing the effects of the recent2 020 financial crisis.

Additionally, Generation Z is entering the workforce with record low savings rates. This suggests most Gen Z will not be putting a down payment on a single-family home anytime soon, and will be more likely to choose multifamily housing.

Multifamily Real Estate Supply is Stagnant

Inflation typically results in price increases for construction. As a result, many development projects are postponed or delayed. These delays can decrease new supply, make new homes more expensive, and lead to a rise in demand.

Rent Rate Raising Due to Inflation

Rent rates across the nation have continued to trend upwards, climbing year over year. The average rental rate for a one-bedroom apartment is up 26.5% and two-bedroom apartments are up a similar 25.7%.

Rent raises allow investors to combat the effects of inflation.

Multifamily Leases: Short Enough Hedge Against Inflation

Multifamily leases typically last no more than 12 months.

This allows landlords to increase rents to coordinate with the annual rate of inflation. These increases can help real estate investors stabilize or potentially increase cash flow. Additionally, their multifamily investment appreciates in value.

Multifamily Real Estate Recovers Quickly

Investors often view multifamily real estate as “inflation resistant.” Why? This form of investment doesn’t typically drop in value as much as other assets during challenging market times. Additionally, multifamily real estate tends to recover faster than other investments.

For example, during the COVID-19 pandemic, the demand for other assets, such as office and retail buildings, dipped. However, the demand for multifamily real estate remained high. Short leases allow investors to utilize this demand and adjust rent raises.

Tune Into Our Podcast to Learn More

In Episode 57, Chris Osmond speaks with Paul Kaseburg, Chief Investment Officer of MG Properties, about investment opportunities in the multifamily real estate market and how they help you cope with rising inflation rates.

The discuss:

How real estate, in general, responds to inflationary pressures
The advantages of multifamily over other types of real estate investments
Latest trends in cap rates and cost of debt that real estate investors should know about
How inflation is impacting the affordability gap between single-family homes and apartment renting
And more

Give it a listen!

How Else Can Investors Navigate Inflation?

At Centura Wealth Advisory, we are dedicated to our role as stewards in leading our clients to purposeful financial planning and investing strategies to ensure their success.

One of our goals is to help our clients navigate and understand challenging economic changes, such as the current rising interest rate environment and inflation.

Review our article “How to Plan and Invest in a Rising Interest Rate Environment” for more information.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

September 2, 2022

Business financial, Business accountant and discussing with partner are meeting to audit finance planning sales to meet targets set in next year. budget plan concept.

CHARITABLE GIVING, FINANCIAL PLANNING, NEWS, RETIREMENT FUNDING

What is a Charitable Lead Annuity Trust (CLAT)?

Taxpayers, especially high-net-worth individuals, commonly experience the issues of high-income taxes and wealth transfer taxes in their financial planning.

Charitable lead annuity trusts, or CLATs, help taxpayers tackle these issues through advantages including tax deductions and wealth transfer planning.

Below, we’ll discuss:

How charitable lead annuity trusts (CLATs) work, and
How taxpayers can implement a grantor charitable lead annuity trust (G-CLAT) to experience both long and short-term tax benefits

What is a Charitable Lead Annuity Trust?

A charitable lead annuity trust (CLAT) is a charitable trust in which a charity, donor-advised fund, or a foundation that the grantor selects, receives annual payments. These payments may be set for a term of years or for the grantor’s lifetime.

At the end of this period, the remaining CLAT assets are distributed amongst the trust’s non-charitable beneficiaries. These beneficiaries are typically the grantor’s descendants or trusts for the descendants’ benefit.

What is a Grantor Charitable Lead Annuity Trust?

In a grantor charitable lead annuity trust (G-CLAT), the trust corpus remaining at the end of the term is given back to the donor instead of the donor’s descendants.

Does a Taxpayer Need Donative Intent to Implement a G-CLAT?

A taxpayer does not need donative intent to implement a G-CLAT.

In fact, taxpayers can utilize these trusts for a variety of purposes. Let’s review how G-CLATs work and their advantages.

How Does a G-CLAT Work?

Let’s take a look at G-CLAT mechanics. We like to break it down like this:

1. Grantors fund CLAT with a one-time deposit

2. The taxpayer implements a pre-determined annual charitable payment schedule

3. Grantor(s) receive income tax dedication to be used up to six years – likely at 99% or more of the deposit

4. All taxable events flow back to the grantor(s)

5. Invest in Limited Partners real estate

6. If structured properly, the remainder interest transfers to the remainder beneficiary, free of estate tax

What Are the Benefits of G-CLATs?

The advantages of implementing a grantor charitable lead annuity trust include, but are not limited to:

Income tax planning
Wealth transfer planning
Charitable planning

Let’s speak about each of these in a bit more detail.

Income Tax Planning

Taxpayers will experience the benefits of both immediate and long-term tax benefits once they’ve successfully implemented a G-CLAT. The trust, for example, will result in an immediate income tax dedication for the taxpayer, which is a present value benefit.

This immediate income tax reduction is:

Subject to 20 to 30% of adjusted gross income (AGI) limitation
Able to be utilized over six tax years
Ideally consumed at the highest marginal income tax rates

Wealth Transfer Planning

In addition to the immediate benefits of G-CLATs, these trusts also include wealth transfer tax savings. Through these savings, the taxpayer can experience the benefits of a G-CLAT for years.

Charitable Planning

While the taxpayer does not need to have donative intent, charitable planning benefits G-CLATs if the taxpayer decides to participate.

For instance, as a future benefit, G-CLATs provide satisfying charitable annuity payments with appreciated assets, avoiding recognition of gain on these distributions to 501(c)3s.

How to Get Started

At Centura Wealth Advisory, we know the minute details of how to optimize a grantor charitable lead annuity trust or a charitable lead annuity trust. In fact, our team has successfully implemented over 280 CLAT transactions.

Read on to learn more about our 5-Step Liberated Wealth Process and how Centura can help you liberate your wealth.

Disclosures

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

August 28, 2022

FINANCIAL PLANNING, INVESTING, NEWS, TAX PLANNING

How to Plan and Invest in a Rising Interest Rate Environment

At Centura, we are dedicated to our role as stewards in leading our clients to purposeful financial planning and investing strategies to ensure their success. One of our goals is to help our clients navigate and understand challenging economic changes, such as the current rising interest rate environment.

Listen to our podcast, Live Life Liberated, for a detailed discussion from Sean Clark and David Cariani as they outline financial planning and investment strategies to help you cope with rising interest rates.

What is a Rising Interest Rate Environment?

In 1981, interest rates peaked at about 16%. For the next forty years, interest rates trended downward steadily and reached a low during the COVID-19 pandemic at about .05%. Rates currently stand at a little over 2.5%.

The rising interest rates cause the borrowing costs for both individuals and businesses to increase. This rise will result in a slowdown in economic activity because businesses will be less inclined to borrow money unless they are certain they will be able to earn more money than they paid to borrow.

This rise in interest rates will lead to what Sean and David call a “dampening in economic activity, both on a micro and macro level as the cost of capital increases.”

Who Does a Rising Interest Rate Environment Affect?

From a planning perspective, a rising interest rate environment affects anyone who is considering estate planning for estates that are at, near or above the estate tax exemption threshold or those who earn a high income.

From an investing perspective, the rising interest rates affect investors who own assets and/or traditional fixed-income investments like bonds.

How Does the Rising Interest Rate Environment Affect Planning?

In financial planning, interest rates are used to determine the economics of different strategies. Rising interest rates will have implications on a wide range of strategies and will cause the hurdle rates on those strategies to increase.

As a result, financial planners may need to pivot to new solutions that will be better suited for a high-interest rate environment.

How Does the Rising Interest Rate Environment Affect Investments?

The primary risks of a rising interest rate environment include the potential for a loss in principal value as well as a loss of buying power.

For example, in the current inflationary environment, if an investor’s earnings are 2.5% and prices are increasing significantly–approximately 6-7%–the investor will have 4.5% less buying power at the end of the year than they did at the beginning.

Additionally, short-term bonds are less sensitive to the increased rates of a high-interest rate environment than longer-maturity bonds. Longer-maturity bonds may lock in rising rates for longer-time periods whereas shorter-term bonds require a shorter commitment to the high rates and will allow investors to move on to better opportunities.

Alternative Investments to Consider Over Traditional Fixed Income

Private Credit

Investors may enter private credit investments because of their floating rate loans, which will limit the interest rate risk associated with other forms of investment, such as traditional fixed-income investments.

Life Insurance

Life insurance can be a powerful vehicle for alternative investments. It provides downside protection, high liquidity, and an attractive upside potential relative to investments with a similar risk profile.

Check out episode 31 of our podcast, Live Life Liberated, to learn more about how life insurance solutions can be used as an alternative to fixed-income investments.

Structured Notes

Structured notes, written by high credited banks, are customizable and well-suited for a rising interest rate environment and can help investors maintain returns. For more detail, listen in to Episode 35 of Live Life Liberated, “Structured Notes Simplified with Robert Sowinski.”

Real Estate

Real estate can appreciate with inflation on a long-term basis and prove to be a tax-efficient investment. According to Forbes, “real estate investments have the characteristic of performing well in a rising rate environment. In particular, income-generating real property and multifamily have historically…shown a greater ability to grow net income during expansionary periods than securities and other assets.”

Listen in to learn more about the rising interest rate environment and how it affects financial planning and investing, or check out our blog for more information, such as how Centura can help you liberate your wealth.

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

June 12, 2022

ESTATE PLANNING, FINANCIAL PLANNING, INSIGHTS, INVESTING, NEWS

The Importance of Systems and Processes in Financial Management

Financial management is a process by which an individual or an organization organizes and enhances its financial situation through strategies such as:

Investment management
Retirement planning
Tax planning
Estate planning
And more

Managing your financial portfolio alone can feel overwhelming. At Centura, we act as a financial partner to our clients, as we steward them toward the strategies that will work best for their unique situations. With that being said, we often use systems and processes to assist in the financial management process.

What are Financial Management Systems?

A Financial Management System (FMS) is the software and processes an organization uses to manage income, assets, and expenses. The FMS utilizes several functions to simplify financial management, such as maintaining complete audit trails as well as coordinating income statements, expense statements and balance sheets.

Further, a Personal Management System (PFM) performs similar functions to enhance the financial management of an individual or family, such as reducing accounting errors, maintaining audit trails, balancing checks, and automatically paying bills.

Why are Financial Management Systems Important?

Financial management systems and personal management systems are important because they secure long-term financial organization and efficiency. This organization will allow you to make fully informed decisions about your finances without being hindered by disorganized paperwork, accounting errors, or incomplete or inaccurate records.

What are Financial Management Processes?

Financial management processes are, in their simplest terms, plans and procedures which will help an individual, family or institution reach their financial goals. These processes can include a series of steps, such as:

Identifying financial goals
Gathering financial and personal information
Analyzing financial information
Developing a customized financial plan to achieve these goals

Read on to learn How Centura Supports Goals-Based Investing.

Why Are Financial Management Processes Important?

You Gain a Better Understanding of Your Portfolio

Processes can build an accurate and complete account of your existing financial situation through the meticulous collection of detailed financial information, identification of existing strategies, as well as the development of an understanding of your financial goals, values and desired outcomes.

You are in a Better Position to Plan for the Future

Going through a financial plan can unlock your “what-if” scenarios. Consider how your financial plan will change if:

You have to take care of your parents or family members
You or a member of your family are injured in an accident
You decide to become more philanthropic
The value of your stock drops
Your interest rates increase significantly
You decide to move
The college tuition for your child(ren) increases

Financial Management Processes Set You Up for Future Success

Regularly creating a financial plan can help you analyze your baseline, goals, existing strategies, and what-if scenarios. Through this analysis, you find what plan would best fit your needs.

At Centura, our advisors aim to understand not only your financial needs but also life events that may impact your finances. We work to create a relationship with you in order to guide you toward the best financial decisions.

It Helps You Keep a Pulse on Your Financial Performance

Implementing financial systems and processes that work for you is an essential aspect of analyzing your financial performance. Performing these processes on a regular basis allows you to make adjustments when necessary and gain a better understanding of your overall performance.

These regular adjustments ensure your plan is efficient, evolving with market conditions, and continues to align with your financial goals.

Interested in using financial processes to enhance your financial management but not sure where to start?

We want to help! Learn more about our 5-Step Liberated Wealth Process and how Centura can help you liberate your wealth.

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

May 29, 2022

team working together through finance spreadsheets

FINANCIAL PLANNING, INSIGHTS, INVESTING, NEWS

Strategies For Managing a Concentrated Stock Position

At Centura, we are dedicated to providing superior risk-adjusted returns and employing passive, active, and alternative investment strategies in our portfolio designs for our clients. As per our investment philosophy, our goals are to:

Build diversified, cost-efficient portfolios
Integrate alternative investments
Implement tax mitigation strategies

We believe that to achieve these goals, our role is to act as stewards for our clients through:

Helping them fully understand their investments and portfolios
Outlining their options
Providing purposeful strategies to ensure their success.

One of the tools we use to connect to our clients is our podcast, Live Life Liberated. It provides and breaks down relevant financial information in a detailed discussion geared towards our clients.

Listen to “What To Do When Your Wealth Is Tied up in a Concentrated Stock Position?” for an informative discussion from Sean Clark and David Cariani on what concentrated stock is and how an investor can mitigate risk in a concentrated stock position.

Understanding Concentrated Stock and the Risks

Concentrated stock can be defined as “the holding of a single stock that represents 10% or more of your overall portfolio.”

Those who may find themselves in a position of high concentrated stock include:

Founders of companies
Long-term executives
Long-term investors
Pre-IPO employees

Concentrated stock can “cut both ways” by bringing great fortune by increasing the total value of a portfolio as well as posing several prominent issues. These issues include but are not limited to:

A lack of diversification
Tax issues
Downside risk exposure

For example, Yahoo’s stocks peaked in 2000, benefiting investors with a concentrated position, before severely dropping a few years later and tanking the portfolios of investors.

Mitigating Risk with Downside Protection

While a concentrated stock position can prove to be a high-risk investment, there are strategies investors can employ to minimize this risk.

Options

Options can be used to mitigate downside risk exposure through hedging strategies that increase in value when the investments you are protecting drop.

Sean and David simplify this practice as “buying insurance to the downside of your position or giving up the upside of this position and [earning] income for doing that.”

Options can include:

Listed Options
Publicly Traded Options
Over-The-Counter Derivative Contracts

Equity Collars

The equity collar method includes “buying an out-of-the-money put option while simultaneously writing an out-of-the-money call option.” This combination provides downside protection for the owner because the put option gives them the right to sell their stock position at a given price in the future while the sale of the call option provides the investor with the income they can use to pay for the purchase of the put option.

Sean and David describe this flexible strategy as “giving up part of the upside to buy insurance for the downside.”

Exchange Funds

Owners can also choose to enter their stock in a non-taxable event, or exchange fund. An exchange fund is an arrangement or partnership between shareholders of different companies in which owners pool their large holdings of a single stock for exposure to a broader index.

Exchange funds allow the owners to:

Diversify their holdings while maintaining their concentrated position if they wish to hold onto their stock
Avoid taxes from capital gains

Use Gifting Strategies to Reduce Capital Gains Tax

Gifting to a Charity

An owner that has a highly appreciated stock with unrealized gains may benefit from a charitable gifting strategy. The owner collects credit for the charitable gift while the receiving organization gets the full value of the gift at the time it was given.

David and Sean break down this strategy in the following scenario:

If an owner has 30% basis and 70% gains and chooses to give away $100,000 of that to a charity, the owner can earn a $100,000 worth of deductions for their contribution without having to realize the $70,000 of gains. The charity can sell this gift in a non-taxable transaction and earn the full $100,000 of value.

Gifting to Family Members

An owner may also choose to give to a family member of a lower tax bracket in order to shift to a lower tax environment. While the family member will not be able to sell the gift tax-free, such as a charity can, they can potentially pay a significantly lower rate in taxes.

Listen in to learn more about what to do if your wealth is tied up in concentrated stock or check out our blog for more information, such as how Centura can help you liberate your wealth.

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

May 26, 2022