Cathy Curtis

How to Take Control of Your Spending This Year, Part 4: Budgeting and Tracking Your Spending

Budgeting and Tracking Your Spending

This article is part four of a four-part series to help you reduce your spending this year. In part three, you identified what triggers your overspending habit. This week, I’ll share tips and tricks for budgeting and tracking your spending.

Budgeting and tracking your spending can provide benefits beyond simply saving more money. It also allows you to invest more, pay off debt more quickly, and even retire earlier in some cases! Plus, it can offer a sense of control and accomplishment and reduce financial stress.

Setting a New Budget

Previously, you identified how much you spent in the last 12 months on your spending weakness. Now, it’s time to set a new budget for the next 12 months.

Of course, it’s helpful to choose your new spending goal within the context of a comprehensive cash flow and financial plan. However, to keep the task smaller and more doable, I suggest setting a budget of at least 25% less than you spent the previous year on your spending weakness.

For example, if you spent $10,000 last year, set a budget of $7,500 for the next 12 months. Reduce by a more significant percentage if you feel like your spending was way out of control last year!

Depending on your spending weakness, it may be helpful to set a monthly budget instead. For example, if clothing is your weakness and on average you spent $1000 a month last year, your new budget will be $750 a month. Setting a monthly spending limit rather than a yearly goal may help you stick your budget longer term.

Tracking Your Spending

Once you’ve decided on an amount, you need to create a system for tracking your spending.

You can accomplish this task either digitally or manually; the most important thing is that you do it on at least a monthly basis. If you wait until the end of the year, you lose the benefit of being able to modify your behavior if necessary.

One idea: Save all your receipts in a folder (online or physical). Then, at the end of each month, add them to a spreadsheet and subtract the total from your total budget. Another idea is to download an app like Mint or Goodbudget that tracks and categorizes your spending.

How to Stick to Your New Spending Plan

Budgeting and tracking your spending are indeed important steps. Yet it takes focus, patience, and perseverance to actually stick to your new spending plan.

In other words, changing your behavior is hard. To get your spending under control once and for all, you’ll need a set of tools and resources that support you in achieving your goal.

Here are a few ideas for changing your behavior and creating new, healthier habits:

  • Find a replacement activity for shopping. When you think about going to a store or hopping on the internet, read a book, call a friend, or watch a movie instead. Choose something pleasurable and stimulating that doesn’t cost money.
  • When you go to a store, be prepared. Make a list of what you want to buy and stick to it. This preparation will help you avoid impulse purchases.
  • Delay your purchase. Take a day or two to think about whether you need it.
  • Avoid peer pressure. Don’t shop with friends who encourage you to buy things you don’t want or need.
  • Don’t tempt yourself. Plan different routes when you are out and about to avoid your favorite stores and unsubscribe from email lists that entice you to spend money.
  • Find a new hobby that doesn’t involve spending a ton of money. For example, play a new sport, start a creative project, or learn to play a musical instrument or speak a new language.
  • Keep your goals front-of-mind. Add a sticky note to your laptop with your budget goal, or read books and articles or listen to podcasts or audio books about habits, conscious spending, and personal finance.
  • Practice self-awareness. When you are angry, tired, sad, or frustrated, go for a walk or meditate instead of shopping. Keep a journal about your experience and emotions while trying to change your behavior.
  • Repurpose your discretionary funds. Take some of your savings and donate to your favorite charity.
  • Hold yourself accountable. Tell your friends that you are trying to cut back on your spending and want their support, or hire a coach or financial advisor to help you reach your broader financial goals.
  • Visualize your future self. Think about what you’ll gain if you get your spending under control. Then, create a vision board depicting what you see and how you feel.

What Will Motivate You to Stop Overspending?

In addition to changing your behavior, you may need to adjust your mindset around spending altogether. Otherwise, it’s easy to slip back into bad habits.

One thing I’ve found helpful when trying to create a new habit is to identify my “why.” In other words, why is it so important to you to get your spending under control? What are you giving up by overspending? What’s the opportunity cost?

Some of you may want to retire early, but your current spending is keeping you from doing so. In effect, your spending habit may be keeping you from spending more time with your family, pursuing your lifelong dream of writing a novel, or just feeling more at ease on a daily basis.

Or maybe your why is to get out of credit card debt. Instead of putting hundreds or thousands of dollars each month towards your credit card balances, you could be contributing that amount to a retirement account, HSA, or donor-advised fund. You may also sleep better at night knowing you’re debt-free.

Take time to journal about what why you want to stop overspending and what it would feel like to get your spending under control. Then, ask yourself these questions: What would I do with the time and money I save? What could I accomplish instead? How would my attitude about myself change?

Budgeting and Tracking Your Spending for the Long Run

Lastly, people tend to be motivated by what they value. Ask yourself if your current spending aligns with your values. If not, this can be a powerful motivator when it comes to budgeting and tracking your spending.

If you aren’t sure what your values are or need some prompting, consider downloading The Happiness Spreadsheet. This free eBook is full of exercises to identify your values and align your spending with what matters most to you. It also has a list of other helpful resources to guide you in getting your spending under control.

If you’ve been following this blog series, I hope you now have a strong foundation to create healthier spending habits in 2023 and beyond. You may also find the other resources on my website helpful as you continue your personal finance journey.

Lastly, remember we’re in this together. Please feel free to connect with me, keep me posted on your progress, and ask questions.  

Good luck, and here’s to a prosperous 2023!

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How to Take Control of Your Spending This Year, Part 3: What Triggers Your Overspending Habit?

What Triggers Your Overspending Habit?

This article is part three of a four-part series to help you reduce your spending this year. In part two, I took you through a simple exercise to help you identify your spending weakness. This week, we’re going to determine what triggers your overspending habit.

People overspend for many reasons, even when they know it’s detrimental to their finances. Unfortunately, overspending can become a habit. And habits only break if you want them to.

Breaking any pattern can be challenging, but you can change your behavior with persistence and a plan. Here’s your next step for getting your spending under control in 2023.  

Figuring Out Your Triggers

Oftentimes, something else triggers our habits, such as an external stimulus, an emotion, or even another habit. If you tend to overspend, chances are something is triggering this habit.

You may or may not be aware of what triggers your overspending habit. If you don’t, take some time to reflect on and journal about when your overspending habit started, what triggered it, and what continues to activate it.

From my experience working with women clients, here are a few common scenarios:

  • They have a good income or resources but have unrealistic expectations about how much they can spend. This situation frequently happens with women who experience a “sudden-money” event, such as a large inheritance, bonus, a big raise, a new highly paid job, or a liquidity event. Once the spending starts, it’s hard to stop.
  • They use shopping to deal with negative emotions such as loneliness or anxiety— or shopping as “retail therapy” to numb themselves instead of confronting what is bothering them.
  • They’ve stopped keeping track of their spending, don’t have a budget, and have yet to learn how much they can afford to spend while still reaching their other goals.
  • Shopping, which started as a pleasurable pastime, has slowly become more like an addiction. The excitement of buying something new and better (online or in a store), and the camaraderie with friends and shop owners, all combine into a positive reinforcement loop that can get out of control.
  • A life-changing event happened, such as divorce, the death of a spouse, a new home or relocation, and they haven’t adjusted their spending to their new reality.

Taking Control of Your Overspending Habit

Contemplating and writing down your reasons for overspending can be a helpful step in getting your spending back in alignment with your financial goals. Take your time and dig in as deeply as possible to determine what triggers your overspending habit before going on to the next step.

In part four of this series, we’re going to take action by setting up a budget and a system for tracking your spending. In the meantime, I invite you to check out these free resources to help you better understand and take control of your personal finances.

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How to Take Control of Your Spending This Year, Part 2: Identifying Your Spending Weakness

Identifying Your Spending Weakness

This article is part two of a four-part series to help you reduce your spending this year. In part one, I shared a simple hack to help you create healthier spending habits. This week, I’ll take you through an exercise to help you identify your spending weakness.

It’s common wisdom that the way to complete a big task is to break it down into smaller parts and then tackle each task one at a time. Otherwise, overwhelm can set in, and nothing gets done. I’ll suggest a similar approach to tackling the “big task” of overspending.

What Is Discretionary Spending?

We all spend money on a lot of things, necessary and discretionary. For this exercise, we’ll define discretionary spending as spending on items you could survive without if you wanted to.

Examples may include an extensive collection of clothing, art, household knick-knacks, jewelry, shoes, accessories, make-up, books, or electronics. Alternatively, you may overspend on discretionary experiences such as excessive travel, entertainment, or dining out.

First, Identify Your Biggest Spending Weakness

Your first task in cutting discretionary spending is to identify your biggest spending weakness. For example, if you feel shame (or at least discomfort) about the amount of money you spend on something, it’s likely your spending weakness.

Most of you know your spending weakness, so choosing will not be difficult. However, for those who need more clarification, analyzing your past expenses can help you find your answer.

I encourage you to choose only one spending category at a time to keep things simple. (Breaking down a big task into smaller tasks helps get things done, remember?) That way, you are more likely to make progress. Of course, if you want to, you can add more categories or items and follow the next steps for each.

Next, Calculate How Much You Spent Over the Last 12 Months

After identifying your spending weakness, the next step is to write down how much you spent over the last 12 months on this item. While you can estimate this dollar amount, it’s better to look at your credit card and checking account statements to determine your actual spending. Otherwise, it’s easy to rationalize and make excuses when you’re guessing.

Got your number? Congratulations. I know that confronting money issues is hard, especially if it brings up uncomfortable feelings like regret, remorse, or shame. So let the feelings happen, but then let them go. Thank yourself instead for starting this journey to get back on track.

Continuing Your Journey

In the next article, we’ll go through an exercise to help you discover what triggers your overspending.

In the meantime, I invite you to check out these free resources to help you better understand and take control of your personal finances.

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SECURE 2.0 Act Cliff Notes (So You Don’t Have to Read the Whole Thing)

SECURE 2.0 Act Cliff Notes

On December 29, 2022, President Biden signed into law a $1.7 trillion spending package, which includes the SECURE 2.0 Act, legislation that changes the rules on saving for retirement and emergencies and withdrawals from retirement plans. The good news is that it opens up opportunities to save more and expands on tax benefits for Roth IRAs and 401(k) plans.

Many of the SECURE 2.0 Act’s provisions take effect on January 1, 2023, while others may take years to implement. Here’s a summary of key provisions in the SECURE 2.0 Act and how they may affect your retirement savings goals.

If you are a client of Curtis Financial Planning, we will discuss these changes as they pertain to your situation, ensuring that you maximize every opportunity.

Changes to Required Minimum Distributions (RMDs)

For those who need to be made aware, this is when you must take withdrawals from your retirement accounts, even if you don’t need the extra income. The IRS wants to collect the deferred tax on these funds. (Remember that Roth IRAs don’t have RMDs, but all other IRAs and retirement accounts do).

The changes:

  • Raises the RMD age to 73 for those who turn 73 between 2023 and 2032. In 2033 and beyond, the RMD age will increase to 75. (Unfortunately, if you turned 72 in 2022 or earlier, you must keep taking RMDs).
  • Reduces the IRS’s 50% penalty for failing to satisfy your RMD before the year-end deadline to 25% of the RMD amount. The liability falls to 10% if an individual corrects the discrepancy promptly.
  • Roth accounts in employer retirement plans (such as Roth 401k’s) will be exempt from RMDs beginning in 2024. Nothing changes for individual Roth IRAs that have no RMD requirement.

Increases to Catch-Up Contributions per the SECURE 2.0 Act

Catch-up contributions aim to help older people make up for not saving enough earlier in their lives in their IRAs or company retirement plans.

  • Currently, if you’re 50 or older and are allowed to contribute to a 401(k) plan at work, in 2022, you can put in up to $6,500 more than younger people. Starting in 2025, individuals between the ages of 60 and 63 can make annual catch-up contributions of up to $10,000 to a workplace plan. This amount will be indexed to inflation.
  • Beginning in 2024, the IRA catch-up contribution amount for those 50 and older will be indexed to inflation. Currently, the maximum catch-up is $1000.00 and has been stagnant.
  • If your wage income exceeds $145,000 in the previous calendar year, you’ll need to make catch-up contributions to a Roth account in after-tax dollars. Those earning less than $145,000 are exempt from this requirement. The impact of this change is that you will not get a tax deduction for the catch-up contribution as you did with an traditional IRA, but the Roth contribution will grow tax-free.

Employer Matching for Roth Retirement Accounts

Employers can now offer employees the option of receiving matching and non-elective contributions to their Roth retirement accounts. Note that profit-sharing contributions do not qualify. The employer will get a tax deduction, but the employee must pay taxes on these employer contributions.

Changes to Qualified Charitable Distributions (QCDs)

  • Currently, IRA owners can transfer up to $100,000 each year to a charity as a QCD. This $100,000 will now be indexed for inflation.
  • There is now a one-time maximum $50,000 QCD distribution to a charitable remainder trust (CRUT), charitable annuity trust (CRAT) or charitable gift annuity (CGA). However, with the $50,000 limit the administrative costs to set this up may be prohibitive.

Self-Employed Plan Changes

Sole proprietors can now open up new 401(k) plans for the prior year up until the filing deadline (NOT including extensions) instead of year-end. But as before, self-employed can make contributions up to the extended filing date.

More Flexibility for 529 Plan Balances

The IRS will allow direct transfers from 529 plans (open for at least 15 years) to Roth IRAs starting in 2024. The Roth IRA must be in the name of the beneficiary of the 529 plan. The maximum lifetime transfer is $35,000 and is subject to annual IRA contribution limits. The IRS is working out the details on how to interpret this law.

Key Provisions for Younger Retirement Savers

  • Beginning in 2025, employers offering new 401(k) and 403(b) plans must automatically enroll eligible employees at an initial contribution rate of 3%. In addition, employees with low-balance retirement accounts may also have the option to automatically transfer their balance to a new plan when they change jobs.
  • Starting in 2024, employers can add a Roth emergency savings account option to employer plans such as 401(k)s. Non-highly compensated employees can contribute up to $2,500 annually, and their first four withdrawals per calendar year will be tax-free and penalty-free.
  • Beginning in 2024, employers can “match” an employee’s student loan payments by contributing an equal amount to a retirement account on their behalf.

Help for Part-Time Workers per the SECURE 2.0 Act

Currently, if you are a part-time worker at an employer with a 401(k) plan you can only contribute once you work there for at least 500 hours a year for three years or if you work for over 1000 hours for one year. The new rules will reduce the threshold to 500 hours a year for two years starting in 2025.

Changes for S Corp Owners

Owners of S Corporation stock may take advantage of like-kind exchange non-recognition treatment for their sales to an ESOP, beginning in 2028.

The SECURE 2.0 Act: Bottom Line

This is not an exhaustive list of the provisions, but I chose to write about those that pertain to most people. Also, now that Congress has passed the act, the IRS will provide details on how they will interpret some of the provisions, as clarifications are almost always necessary with a bill as far-reaching as this one.

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How to Take Control of Your Spending This Year, Part 1: Reduce Your Spending by Creating Healthy Habits

Reduce Your Spending by Creating Healthy Habits

This article is the first in a four-part series to help you reduce your spending this year. I’ll be sharing the knowledge and experience I’ve gained over the last 20 years creating financial plans and guiding women to take control of their finances to help you develop healthier spending habits.

I know many people scoff at the idea of New Year’s resolutions. But I don’t. I believe it’s an opportunity to try and jump-start new habits.

Yes, you can start a new behavior in March or September, but something about a new year motivates me—and maybe you, too. Plus, it helps if the habit you’re trying to change causes you distress, so you’re motivated to work on it throughout the year.

For example, many people want to reduce their discretionary spending. They intuitively know that their spending is getting in the way of achieving their financial goals, but they don’t know what to do about it.

In part one of this series, I’m sharing the simple mindset shift that can help you reduce your spending once and for all.

January is an excellent month to begin a new spending plan.

You may have noticed that I’ve been using the word “habit” a lot. But what do habits have to do with spending?

Many of our behaviors become habits. Overspending or unconsciously spending is a habit, which is actually good news if you’re trying to reduce your spending.  

Many experts—for example, James Clear, who wrote the book Atomic Habits—have shared their wisdom and strategies for breaking bad habits and replacing them with new ones.  We’ll be leveraging the wealth of information available on this topic, as well as my own experience as a financial planner, to help you get control of your spending in 2023.

What does it take to develop new habits?

If you want to change your habits and reduce your spending this year, living in denial isn’t the answer. Your brain won’t like that. It will fight back too hard.

Instead, you’ll need to make thoughtful decisions about where to allocate your resources moving forward. Eventually, cutting back on spending will be something you want to do because you know it will get you to a better place.

Ready to reduce your spending? Let’s get started.

Each blog post in this series will focus on getting you to think and then take action. You will be writing, so get a pen and paper out, or boot up your laptop. By week four, you’ll have a new attitude and plan in place to help you reduce your spending and get back on track towards your financial goals.

Are you ready to get started? Great. In the next article, we’ll work on identifying your spending weaknesses.

In the meantime, I invite you to check out these free resources to help you better understand and take control of your personal finances.

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S4E6: The Unexpected Benefits of Working with a Private, Professional Fiduciary with Sara Ecklein

The Unexpected Benefits of Working with a Private, Professional Fiduciary

Why You May Want to Consider Partnering with a Private, Professional Fiduciary

In this episode, I interview Sara Ecklein, a private, professional fiduciary. In addition, Sara is the founder of Trust and Honor, a fiduciary agency. Trust and Honor serves as a partner and compassionate advocate in managing and protecting the personal affairs, property, and assets of clients in the San Francisco Bay area and beyond.

I was particularly interested in talking with Sara because I work with many single women who may not have a family member or friend who could take on this role for them when needed.

Sara’s calling to become a fiduciary and found Trust and Honor was informed by personal experience with loss and end of life care. She has been working in the fiduciary profession since 2014 and has a rich and varied background in issues facing senior and disabled populations, including end of life care, financial abuse, and navigating challenging support systems and family dynamics.

Sara holds a Bachelor of Arts degree in Political, Legal, and Economic Analysis from Mills College. She is also, in addition to being a licensed Professional Fiduciary, a Certified National Guardian and a general member of the Professional Fiduciary Association of California.

In this episode, Sara and I discuss the role of a private fiduciary and the journey that led Sara to her position as founder of Trust and Honor. We also talk about who can specifically benefit from partnering with a private, professional fiduciary and why and when someone may seek her services. 

For example, some of Sara’s fiduciary services include:

  • Being a trustee guardian and/or an estate executor
  • Daily bill paying and money management
  • Healthcare representation agent
  • Power of attorney or executor for seniors with no spouse or family
  • Conservator for those who are mentally or physically incapacitated

Meanwhile, Sara and I get into the specifics of special needs trusts, their complexities, and common mistakes that non-professionals make when administering these trusts. In addition, we talk about long-term care insurance and how it can play into end-of-life planning. And at the end we talk about Sara and some of her amazing personal accomplishments.

I really enjoyed this conversation, and I think it’s especially important for independent women to better understand what someone like Sara does and how partnering with a private fiduciary may be beneficial. With that, I hope you enjoy this episode of Financial Finesse.

Episode Highlights

  • [03:45] Sara Ecklein describes the role of a private, professional fiduciary.

  • [09:28] Sara shares why and when someone may seek her services as a private fiduciary and what her intake process looks like.

  • [25:26] How working with a private, professional fiduciary can benefit clients when it comes their healthcare.

  • [39:20] Sara Ecklein and Cathy discuss special needs trusts and why it can be helpful to have a trustee who specializes in this area.

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S4E6 Transcript: The Unexpected Benefits of Working with a Private, Professional Fiduciary

Cathy interviews Sara Ecklein, a private, professional fiduciary and founder of Trust and Honor in the San Francisco Bay Area.

[00:03:13] Cathy Curtis: Hi, Sara. Thank you so much for joining me on my podcast, Financial Finesse. This is a topic that I’m really intrigued about as I’m a financial advisor. And I believe you’ve told me that your industry is in its infancy. So, I want to learn as much as I want to share things with our listeners, so thanks.

[00:03:40] Sara Ecklein: Yeah, Cathy, it’s great to be here. Thank you for having me.

[00:03:45] Sara Ecklein describes the role of a private, professional fiduciary.

[00:03:45] Cathy Curtis: Great. So let’s get started with some basics. Can you describe what exactly is a private, professional fiduciary?

[00:03:56] Sara Ecklein: Yeah, so we’re in the state of California. So California is one of few states that has a license, but specifically for private professional fiduciaries that came about, I believe in about 2007.

[00:04:13] Sara Ecklein: Licensing became required in 2009. So that’s where this work has been done for very long. But in terms of licensing, it’s fairly new to the state and we’re one of only few that do have licensing.

[00:04:30] Cathy Curtis: Interesting. So just stepping back, so there’s a distinction here. It’s the private part, right? Because there’s always been corporate professional fiduciaries, is that.

[00:04:42] Sara Ecklein: Yes. And even the term like fiduciary, a family member, a non-professional can be acting in that role. So that’s where we really like to have that professional, the private professional piece in front of the fiduciary name, just making it clear the relationship.

[00:04:58] Cathy Curtis: Okay, that makes sense. And why is it that some states do not have this licensing?

[00:05:07] Sara Ecklein: I really can’t answer that. But California is steps ahead of most. So there’s the National Guardian Association and that I would direct people if they’re looking for a professional fiduciary and they’re not in the state of California, that would be a place to start.

[00:05:26] Cathy Curtis: Okay, great. So tell me your journey to becoming a private, professional fiduciary.

[00:05:34] Sara Ecklein: Yeah, so I came to this work fairly young. My path really started feeling very cold towards serving an end-of-life care. I was with a loved one during her last three days of life, and I just felt this overall sense of calling and leaning into supporting her through the dying process. And so I really considered, I thought I was going to be a hospice nurse. So that’s really where my kind of career began to take shape and form.

[00:06:07] Sara Ecklein: I already had a bachelor’s degree, so it was looking like I was needing to go back to school, and I went and got my nursing assistant license just to get my feet wet. And make sure before going back to school, that would be the right path. And I’m happy I did that because I quickly realized that nursing wasn’t quite the right fit.

[00:06:28] Sara Ecklein: And eventually my path led me to working in a private fiduciary’s office out in Sacramento. And really the rest is history. I fell in love with the work. It really combined a lot of my personal strengths and interests. I really described it as like a head and heart alignment of very engaging work. Every, every client is unique, and there’s absolutely always that piece of being of service and making a difference.

[00:06:56] Sara Ecklein: And of course, there’s always that thread going through every case at the end-of-life care. So even if it’s before someone passes, I work with clients in the planning phase. And so it’s really building the relationship long before they need a professional fiduciary to act. But it’s really supporting families and planning.

[00:07:19] Sara Ecklein: And then of course, I do support clients through that transition, acting as agent for healthcare, also as their trustee power of attorney, and then after they’ve passed, really being the one that’s entrusted to carry out their final wishes.

[00:07:36] Cathy Curtis: This is a major responsibility. It is fascinating to me because that’s, that is a lot of different roles that you take on for the individual.

[00:07:45] Cathy Curtis: It crosses the spectrum. And I’m wondering, so how does a client find you generally speaking?

[00:07:55] Sara Ecklein: For the most part, they’re finding me. They’re either referred to me by their attorney, their estate planning or elder law attorney, or through other professionals like yourself. Occasionally a CPA will send their clients come tax time to me. But for the most part it is through estate planning attorneys is where clients are connected to me.

[00:08:19] Cathy Curtis: Okay. So is your clientele mostly a wealthy clientele?

[00:08:26] Sara Ecklein: Not always. I would say there of course needs to be a certain amount of assets. Otherwise getting connected with the public guardian is usually where I direct people if they really don’t have many assets. But they do need support with managing affairs.

[00:08:43] Sara Ecklein: In the Bay Area, it is hard because middle classes seeming like much larger estates now. But typically, I have a minimum of about $500,000 in assets to engage my services.

[00:09:00] Cathy Curtis: Okay, that makes sense. And then it sounds like you act as a resource for those people who don’t have the asset level, and you refer them to other resources such as the public guardian.

[00:09:16] Sara Ecklein: Yes, absolutely. And a lot of times at that point it might not even be the client themselves reaching out to me. It might be a family member, even an attorney reaching out to me asking, “Who do you know or who can help?”

[00:09:28] Sara shares why and when someone may seek her services as a private fiduciary and what her intake process looks like.  

[00:09:28] Cathy Curtis: Okay. Now, in many cases, family members just take on this role, the roles that you take on, right? So is it mostly single people that contact you, or is it a family member that says, “Oh my gosh, I wouldn’t even know where to begin to do all these things. I need help.” What happens?

[00:09:54] Sara Ecklein: It’s a combination. I do have many clients that they really don’t have any family living. Maybe they never married, they never had children, and now they’re in their eighties and they’re beginning to decline and need some support.

[00:10:11] Sara Ecklein: But I also have plenty of people that have families and are married. And I’m thinking in the situation of planning, I work with a lot of couples where they’re planning in the event that one of them has passed and the other one’s incapacitated. Sometimes they have children and sometimes they don’t. If their children don’t live locally, and we’re seeing this more and more, families are living further.

[00:10:37] Sara Ecklein: That doesn’t really help when you know mom or dad need that hands-on support, setting up bill pay and care management and all of that. It can be really a full-time job.

[00:10:49] Cathy Curtis: Yes, definitely. It really can. Yeah, and, and it’s, in many cases, I’m sure children are busy with their own lives, their own children, careers, and they want the support.

[00:11:01] Sara Ecklein: So that’s, that, and then we’re also seeing divorces and then second or even third marriages and these blended families.

[00:11:09] Sara Ecklein: It can be really helpful to just have a neutral party act in the role of trustee so that no one’s feeling like they’re taking sides or playing favorites. And it can just make things much easier when it is time to administer the trust.

[00:11:27] Cathy Curtis: Okay. So in that case, you do not get involved in the affairs until the trusteeship is triggered, which means someone dies or gets very ill.

[00:11:41] Sara Ecklein: Yeah. Typically, it just depends on the documents, but for the most part it’s at the time of incapacity or death.

[00:11:50] Cathy Curtis: Okay. Depends. Let’s take, I’m gonna just give an example situation. Let’s say there’s a single woman in her eighties, lives alone, is in fairly good health, but is thinking towards the future. Family members have died, and she contacts you and says,

[00:12:11] Cathy Curtis: “I’m not quite sure what’s gonna happen with my health in the next few years. And what can you do to help me make sure my affairs are in order and I’m taken care of?” What would your response be and what’s your process?

[00:12:25] Sara Ecklein: Yeah. When I start working with clients in that phase, I do require that they’re already working with an estate planning attorney.

[00:12:33] Sara Ecklein: Most of them already have, and they are working with their attorney. Their attorney is the one that’s advising them that you really need to get someone in this place. You need to name them in your documents. If they’re not working with an attorney, that’s gonna be my first requirement and step that if they wanna work with me.

[00:12:53] Sara Ecklein: You need to find yourself an estate planning attorney. So in those roles, this scenario you laid out, it sounds like this woman is going to need help, not only with her finances and bill pay and acting if she lacks capacity and is needing support while living. And also needing potentially a trustee if she has enough assets.

[00:13:15] Sara Ecklein: But she’s also going to be needing support with healthcare decision making. So typically, I’m named in all three roles, successor, trustee, durable power of attorney and agent for healthcare in the advanced healthcare directive. So once I have a consultation with a client and we both feel like it’s the right fit, I have a pretty thorough intake process.

[00:13:41] Sara Ecklein: It does include reviewing a draft of their estate planning documents, of course, and getting copies of all signed documents once they have been executed. And then I have my own intake forms that are pretty thorough and in depth that’s not only gaining information from them about the actual trust assets.

[00:14:03] Sara Ecklein: But it’s really gathering information about them as a person. And as a fiduciary, I like to plan in the event of all the scenarios of when I’m going to get involved. And more times than not, I’m getting involved in the event of incapacity. It’s not death. Most people don’t just pass away in their sleep.

[00:14:24] Sara Ecklein: It’s a subtle, slow decline over typically many years. In that situation, I’m really working alongside the client. And supporting them.

[00:14:35] Cathy Curtis: And when you say, just specifically when you say supporting them and working alongside them. So during this phase where they’re still healthy and not incapacitated, do you set up regular meetings with them or touchpoints of some kind?

[00:14:52] Sara Ecklein: Yeah, so I have annual drumbeat that I like to have a check in phone call and just make sure nothing’s changed on their end. I also see it as a time for me to update them on myself and my business. The profession. For professional fiduciaries, we have to be named individually and document as much as I have. A business, Trust and Honor, that business can’t be named in any of those roles that we outlined before.

[00:15:20] Sara Ecklein: Successor trustee, durable power of attorney, agent for healthcare. I think it’s important to continue that relationship and keep them up to date on where am I with the business and also where are. I found that over the years we don’t have that check in. People update their phone number, they move, they even update their estate planning documents, and a lot of times the successor trustee isn’t kept up to date.

[00:15:48] Sara Ecklein: So that’s where I find that’s really crucial and important. And then I really leave it up to the client to book a consultation on an as needed basis. So sometimes, significant change going on in their life, or maybe they’re making significant changes to their estate planning documents. They can always initiate scheduling an hour consultation with me and just going through the changes they’ve made.

[00:16:16] Cathy Curtis: Okay. Now, as far as the licensing, the role you take on is a very personal role. As trustee, it basically gives you complete authority over your clients’ assets and everything. So what kind of, what happens with the licensing? A big background check, all those things. But could you talk to that a little bit?

[00:16:45] Sara Ecklein: Yeah, so we’re licensed through the Professional Fiduciary Bureau. It’s a branch of the Consumer Affairs in the state of California. So our license renews every year, which is I think is much more frequent than most professional licenses. And we have to report how much, how many assets are under management, how much we’re really controlling, and the types of cases and the number of cases.

[00:17:11] Sara Ecklein: So for my practice, I don’t specialize in conservatorships or any kind of court supervised cases. Some fiduciaries that’s really heavy in their practice. So there’s, the bureau really is asking us every year, how many conservatorships do you have? How many powers of attorney do you have? How many probated states do you have?

[00:17:36] Sara Ecklein: How many trusts do you have? And then if you’re managing any funds for those clients, the total of them.

[00:17:44] Cathy Curtis: Okay, let’s talk specifically about managing funds. So in this part I’m really curious about, and I am an investment advisor, a registered investment advisor, and some of my listeners will be other financial advisors and probably will have similar questions.

[00:18:03] Cathy Curtis: Can you actually manage assets, meaning buying and selling securities?

[00:18:10] Sara Ecklein: No, I don’t. I really, my license doesn’t allow for me to give legal advice, tax advice. I’m not a financial professional, so I’m really working alongside a team. Come tax time, I’m working with a CPA to file the trust tax return of the client’s tax return.

[00:18:32] Sara Ecklein: I also am typically working alongside an investment advisor, so they’re the ones that’s really managing the portfolio.

[00:18:41] Cathy Curtis: All right, so let’s take this. This woman, this 80ish woman who did have an estate attorney because she is the one that referred to you, okay? This woman doesn’t have an investment advisor, but she has two million at Vanguard. Let’s say in that case, what happens?

[00:19:06] Sara Ecklein: It depends if the client still has enough capacity to communicate her wishes. Sometimes clients prefer that I continue that relationship and working with the financial advisor of their choosing. If not, if there maybe A) isn’t a preference, or B) I’m fully acting and this person really is not able to communicate their wishes, then I likely will be moving the account to a financial advisor that I work with regularly.

[00:19:35] Sara Ecklein: And I do that for several reasons. One of the pieces is that there is an efficiency to this. And wearing the fiduciary hat, I’m definitely trying to preserve the trust assets. My time does equate to fees. So that’s where, if I’m working with only, if I’m working with a financial advisor and there’s a handful of cases we can go through a quarterly or semi-annual review fairly quickly versus working with 20 different financial advisors, all of my clients choosing.

[00:20:12] Cathy Curtis: So that really makes sense. Okay. In the case of A, let’s say I referred you a client. You have the option to say, “Thank you for referring me the client, Cathy, but I need to run my practice efficiently. And I have a financial advisor that I work with.”

[00:20:33] Sara Ecklein: That is true. I think what helps, the other piece is that, especially with the financial services industry as there’s different types of advisors. And so a lot of clients are working with broker dealers. I find that’s, I end up having a conflict as a private fiduciary because I know that broker dealers are held to a different standard, not to that fiduciary standard that an investment advisor.

[00:21:00] Sara Ecklein: So that’s another reason where my preference is to work with financial advisors that I’ve already vetted and screened and they understand the standard that I’m held to, which private fiduciary are held to the Uniform Prudent Investors Act. We usually just call it the UPI. And so the financial advisors that I work with are familiar with that standard and would be diversifying the portfolio with that in mind and keeping that in mind as I’m acting as trustee or power of attorney.

[00:21:36] Cathy Curtis: Okay, that, that really makes sense to me. I’m a fiduciary advisor, just for example, a CFP, member of NAPFA, which is the National Association of Personal Financial Advisors, and need to be a fiduciary as a registered investment advisor. So I would be the type of advisor that you would probably feel more comfortable working with.

[00:22:00] Cathy Curtis: Because I’m a fiduciary. Versus a broker dealer or a professional from one of the big banks, et cetera, that I’m not saying they’re not good advisors, but they are not held to that same standard.

[00:22:16] Sara Ecklein: That’s correct, yes. I recently had a consult, I believe it was last week, and this client really communicated her wish of continuing that relationship.

[00:22:27] Sara Ecklein: What’s great is we’re again working in the planning phase, and so I’m able to make note of that, that this really is her preference, and I’m also able to ask the questions. Look up this, this person’s license, and it’s very clear she is that kind of fee only fiduciary financial advisor. And so that already brings me some level of comfort just knowing that they, they’re held to that same fiduciary standard.

[00:22:53] Cathy Curtis: Yeah. So interesting. And I’m sure I’m not the only financial advisor that this happens to. Because I, like you, I have long-term relationships with my clients, and I get to know them very well. And some of them don’t have family or family they trust, and so they think that Cathy knows me really well.

[00:23:20] Cathy Curtis: She knows all my financial circumstances. She’s the obvious choice to be trustee and healthcare or financial power of attorney. And in my industry, that is a complete, not a complete, no-no. You can do it, but you have to do, you have to form a different kind of business and be willing to be audited every year and lots of regulatory hoops to go through.

[00:23:47] Cathy Curtis: So I’ve chosen not to do that. I do not want to take on that responsibility. So in my case, I many times need to find somebody for this client who wants a person to act in these roles, and it’s been a challenge for me. And so I was really glad to, I forget now how I was introduced to you.

[00:24:13] Sara Ecklein: I believe it was Ruth connected us.

[00:24:16] Cathy Curtis: Oh, okay. And then I came to find out from you the industry hasn’t been around that long, and then it made sense to me. Maybe that’s why it hasn’t been so easy to find somebody.

[00:24:29] Sara Ecklein: With professional fiduciaries, it’s, it is a pretty, there’s not a ton of us. I believe there’s less than a thousand actively licensed fiduciaries in the state.

[00:24:41] Sara Ecklein: So we’re a pretty small profession. That being said, a CPA, an attorney, their license allows for them to act in this role. So it’s not counting those professions.

[00:24:58] Cathy Curtis: Do you think most want to do that work in addition to their core?

[00:25:10] Sara Ecklein: I find more times than not, they’re not wanting to act in those roles for many different reasons. But yeah, trust administration, it is, there’s a lot of practicalities and things are always changing, so I could see more.

[00:25:26] How working with a private, professional fiduciary can benefit clients when it comes their healthcare.

[00:25:26] Cathy Curtis: Yeah. Not only the trust administration, it sounds like you get involved in healthcare. Talk about that a little bit.

[00:25:32] Sara Ecklein: Yeah. I actually think that’s really one of the benefits of working with a professional fiduciary. Our license allows for us to act in this role. From my understanding, like a corporate trustee, they cannot act in the role of agent for healthcare or even power of attorney.

[00:25:56] Sara Ecklein: If someone, this model client you’re describing, a single woman, really very little family or friend support, and she’s needing someone to act in all those roles. She could name a, like a bank. Let’s just use the example of Wells Fargo as her successor trustee. But that still doesn’t solve the problem of who’s going to act in those other roles.

[00:26:20] Cathy Curtis: So your job is very unique in that way. It really is.

[00:26:24] Sara Ecklein: Yes. And I, for me, I love the kind of blend of the work of working from the financial piece and working with the numbers and the administrative side, but also really working with people and serving people. And that healthcare piece. When you’re acting in all of those roles, I find serving clients, it becomes that much more special of a relationship. Because you really get to know your clients very well.

[00:26:52] Cathy Curtis: Can you describe a situation where you had to get involved with the healthcare situation just to illuminate what you do.

[00:27:03] Sara Ecklein: Yes. So I actually started working with a client about two, two years ago, maybe a year and a half ago. Her attorney referred her to me. She was having a medical crisis.

[00:27:19] Sara Ecklein: Going in and outta the hospital, going home, falling, going back to the hospital, getting discharged 20 days later.

[00:27:29] Cathy Curtis: And not unusual that, and this will happen probably to most of us when we get older. Right?

[00:27:34] Sara Ecklein: Yes, hopefully not, but yes. This is not unusual, unfortunately at this point in time.

[00:27:43] Sara Ecklein: And she’s a lot of kind of what you were describing with this model client or sample client. She really has no family and never married, no children, and she really needed to have someone to step in and quickly figure out what’s going on with her medically and communicate with the medical providers. Because memory loss was beginning to be a factor in in her care.

[00:28:10] Sara Ecklein: Thankfully, she had enough capacity to sign documents, name me her power of attorney for both finance and healthcare. And I really hit the ground running for a while. I was, we were meeting a minimum of once a week, if not twice a week. Because she was having a full on healthcare crisis on top of like a financial crisis because her bills were unpaid for about eight months.

[00:28:35] Sara Ecklein: And so I was figuring out what’s going on. Where are the assets? What does she have, what are the bills that she actually owes? What can I argue and bring down and remove fees? And then beginning to work with her team. At that point, she had been placed at an assisted living facility.

[00:28:58] Sara Ecklein: At least her day to day, she was now much more safe than going back home. But it required a lot, and I don’t wanna share too much about her. But I was working with a lot of specialists and going back, asking for medical records. Because she really didn’t have anything and couldn’t really remember what was being advised.

[00:29:23] Sara Ecklein: So it was a lot of working alongside her primary care physician who was wonderful and going back and figuring out and putting the pieces together and getting her a formal diagnosis, figuring out a care plan. Also beginning to work and figure out what is her budget, because at that point her income was very low, and her expenses were just very high because of the medical.

[00:29:51] Cathy Curtis: That’s incredible. Just think about how many roles you took on just in this situation.

[00:29:58] Sara Ecklein: Yes. No, it was a lot.

[00:30:01] Cathy Curtis: Yeah, it was a lot. And this person waited for a crisis. The crisis triggered hiring you, right? Is that the case a lot of the time, or do people hire you long before they get to that point?

[00:30:20] Sara Ecklein: Yeah. And really, so for me, I’m a very young private fiduciary, and I would say that really stands out for me. I’m in my mid-thirties and there’s very few professional fiduciaries in their thirties and forties. I believe the average age is actually over 60 for the profession. Don’t quote me on that.

[00:30:41] Cathy Curtis: That sounds, I wouldn’t be surprised. That’s like the financial advisor, independent financial advisor, although that’s changing. There’s a lot more younger people coming in now.

[00:30:53] Sara Ecklein: Yes. Yeah, so I work a lot with clients in the planning phase because of my age. Obviously, someone who’s a seasoned fiduciary in their sixties.

[00:31:04] Sara Ecklein: If there’s an immediate need, they can do a great job. But if someone is planning and doesn’t need a fiduciary in 10, 15, 20 years, that doesn’t really help the client. Someone nearing retirement. So that’s where for my practice, I work a lot with clients in the planning phase. I really love it because you build the relationship long before services are needed.

[00:31:32] Sara Ecklein: And so it’s a slow progression, and I find that’s a wonderful way of getting to know people, building that trust in those situations. Because typically, as much as we can do planning, crises still occur. And these situations and these scenarios, it’s hard to navigate. But it makes it so much easier if you’ve built that relationship over the years versus someone that you’re just meeting now.

[00:31:57] Sara Ecklein: And we’re still able to do it, but that, building that trust and building that relationship can take time. And if you’re losing capacity and losing memory loss and so many things can be lost and that can be hard for anyone to just accept and understand.

[00:32:23] Cathy Curtis: I think denial is a normal part of that process. I see that all the time with my older clients. Nobody wants to admit that they’re losing their memory and people clinging on to things like being able to drive and being able to go out independently and all those, they don’t wanna give it up.

[00:32:39] Sara Ecklein: Yeah, I see that a lot. So it does make it easier to have those conversations when we’ve known each other for a long time.  

[00:32:49] Cathy Curtis: Let me, let’s segue to your business, like business model. This, I’m curious about this. So it, it sounds to me like you probably have several clients that are years away from needing you full-time.

[00:33:07] Cathy Curtis: Meaning you’re the trustee. All that’s triggered. And in the meantime, you’ve onboarded them as a client. You have developed a way to touch base with them periodically, but how are you paid during that time and is that an issue for someone with a business like yours?

[00:33:27] Sara Ecklein: Hasn’t presented an issue for me yet.

[00:33:30] Sara Ecklein: For me, I really charge a one-time flat fee of a thousand dollars to go through my intake process. And that’s going over what we discussed before, reviewing a draft of their documents. Sometimes I need a few edits on my end, and so I’m communicating directly with their attorney on those changes that I would require and if they wanted me to act in the role of trustee, power of attorney agent for healthcare.

[00:33:58] Sara Ecklein: And once we get through that, and the intake forms are complete, and then I follow up with a consultation to go over any questions that I may have, or they may have. And that, so that all covers my intake process. And I’m really essentially creating a file for clients long before they need me. But ongoing, I really don’t charge a fee unless, I just leave it as you can book a consultation with me on an as needed basis.

[00:34:30] Sara Ecklein: And I would just charge my hourly rate. But that’s really, if the client has capacity and they’re doing well, I’m not, I’m not initiating. That’s really coming from them.

[00:34:42] Cathy Curtis: Okay. That makes sense. And tell me again, how long have you been doing this for?

[00:34:46] Sara Ecklein: Yeah, I’ve been doing this work, I started working in the profession in 2014, so I’m approaching about nine years. And I went off on my own about two years ago.

[00:35:02] Cathy Curtis: Congratulations. That must have been an exciting moment.

[00:35:05] Sara Ecklein: Yes, it was. It was all during the pandemic. But yes, I worked for two well established fiduciary agencies before going off on my own and really learning from just, I’ve had amazing mentors along the way. So that has definitely helped me and in my practice.

[00:35:24] Cathy Curtis: And it sounds like there’s an association too you can use for mentorship roles and things like that.

[00:35:32] Sara Ecklein: Yeah. The Professional Fiduciary Association of California, we usually just call it PFA. That’s a wonderful place also just for consumers to go if they’re looking to find a professional fiduciary.

[00:35:45] Sara Ecklein: You can search based on location, and you can also search based on what service you might need specifically.

[00:35:56] Cathy Curtis: That brings up another question. And the pandemic changed a lot of things. For example, I, most of my clients prior to the pandemic were local clients, and I would see them in person periodically through the year.

[00:36:08] Cathy Curtis: Then the pandemic hit, and of course we all switched to Zoom. And I’m doing most of my meetings over Zoom now. And I also found that clients from other states started to contact me and I was able to take on those clients because it’s so easy now to build a relationship over Zoom.

[00:36:30] Cathy Curtis: Everyone’s used to it. In your case, how does that work for you? Do you still mostly work locally, or have you expanded into a broader audience?

[00:36:42] Sara Ecklein: Yeah, for the most part. Most of my clients are in the Bay Area,. So I’m based in Silicon Valley. I do have a pretty big reach, I think, throughout the Bay Area, going all the way from Marin County, Alameda Contra, Costa County.

[00:36:58] Sara Ecklein: I do have a few clients where they do live outta state. But I will preface it, it’s not really the client who’s still living. I’m really interfacing with a beneficiary that lives out of state.

[00:37:12] Cathy Curtis: Okay, so that’s different. And do you still meet most of your clients in person in the beginning of the relationship?

[00:37:19] Sara Ecklein: No. More and more now I’m doing phone and Zoom consultations.

[00:37:24] Cathy Curtis: Okay, so similar.

[00:37:26] Sara Ecklein: Yeah, similar and definitely with clients in the planning phase. That’s, my whole intake process is it’s all virtual and if clients want me to come out and do a home visit, then that’s something that would be an additional kind of fee in charging an hourly rate for me to come out to the house.

[00:37:44] Cathy Curtis: Okay, that makes sense. And can you describe who your ideal client would be? I know we all have an ideal client, the kind of person that we like to work with, that we know we have the expertise to help. And you probably have one too, and that fits your business model and all of those things. Could you describe that person?

[00:38:07] Sara Ecklein: Yeah, so there’s, I have a few. So, you know, one ideal kind of client is really a couple and they’re working in the planning phase. So I love this because they’re already working with a, typically a team of professionals. Typically, they already are working with a financial advisor. They’re already working with an estate planning attorney, and now they’re looking for professional fiduciary.

[00:38:32] Sara Ecklein: So I’m just one more kind of professional to add to their team and supporting them with their planning. I love couples like that because I find that they’re proactive in thinking ahead, and that’s really where I love to serve. I also am building the relationship and I’m more of a, almost like a consultant in a way. Because again, it’s long before they need me. And I find that those relationships just become that much more rewarding and enriching when they’re over the years and getting to know them and oftentimes their family.

[00:39:09] Sara Ecklein: Whoever that may include. And then I also specialize in an area called special needs trust. We haven’t really touched on that much during, during this phone call or interview.

[00:39:20] Sara Ecklein and Cathy discuss special needs trusts and why it can be helpful to have a trustee who specializes in this area.

[00:39:20] Cathy Curtis: Oh yeah, let’s talk about that now. That’s an important area.

[00:39:23] Sara Ecklein: Yeah. Special needs trust. The world of private fiduciaries is already pretty niche, and then it just gets that much smaller when it comes to special needs trusts.

[00:39:36] Sara Ecklein: There’s different types, and I don’t want to go down too much of a rabbit hole into detail. But what it tells me is that this, the beneficiary of the special needs trust is most likely receiving some sort of public benefit and for whatever reason, whether it’s the family or this beneficiary is about to receive money out.

[00:40:01] Sara Ecklein: We’re needing to preserve that public benefit. Either family can establish the special needs trust. This is called a third-party special needs trust. Sometimes there’s something like a medical settlement and the special needs trust will be established with a court order. That’s typically considered a first-party special needs trust.

[00:40:23] Sara Ecklein: But anyways, that’s an area that I do specialize in.

[00:40:27] Cathy Curtis: So when you say specialize, so an attorney sets up the special needs trust, right?

[00:40:33] Sara Ecklein: Yes. And then I would be named as trustee for that trust. Yeah, so I, my background, I managed public benefits for the fiduciary agency I worked at prior. So I did that for about six years and I really was the point person interfacing with Department of Social Services, Social Security Administration, and really advocating to maximize the client’s public benefits.

[00:41:04] Cathy Curtis: That’s an excellent and important niche to be in. And would you, how big a part of your business is that?

[00:41:10] Sara Ecklein: It’s about half at the moment. For my active cases, a lot of clients will be named as the families for the revocable living trust. So Mom and Dad’s Trust and then their trust will eventually fund the special needs trust. And so I’ll also be named in that.

[00:41:33] Sara Ecklein: It’s hard for me to say, but I get a lot of referrals also for families with disabilities because they’re planning that their child will most likely always be receiving some sort of public benefit.

[00:41:47] Cathy Curtis: So you must have built up a reputation as an expert in this area.

[00:41:52] Sara Ecklein: Yes, I think so. It really, with administering a special needs trust, there’s a lot of rules and you really need to have a good understanding of public benefits and the specific public benefits that the beneficiary’s receiving. Because that’s going to directly relate to how you administer that trust.

[00:42:12] Cathy Curtis: And can you give an example of a mistake a person can make if they don’t know all the rules?

[00:42:19] Sara Ecklein: Oh yeah. A lot of times I have taken over from non-professionals, or I’ve also come in and provided like a consultant or like case management services alongside like a family member who’s acting as trustee for a special needs trust.

[00:42:37] Sara Ecklein: Typically, a big no-no is giving cash directly to that beneficiary. Because that cash would count as income, and then that could jeopardize and they could lose their public benefits. So that’s, I’ve seen that happen a lot. Typically, there’s a lot of expenses that you’re not supposed to pay for.

[00:43:00] Sara Ecklein: Again, it’s always gonna depend on the type of public benefits that person’s receiving. But generally speaking, you typically don’t wanna pay for rent and food because those things would be counted, and that’s what like a public benefit, like SSI for example. That’s the, I find the most restrictive benefit.

[00:43:22] Sara Ecklein: And Social Security would actually cut back or even cut off that SSI. And really, when you’re wearing the hat of a trustee for a special needs trust, part of your duty is to make sure that beneficiary is maximizing their public benefits.

[00:43:42] Cathy Curtis: Absolutely. And that must be tough, I’m sure, and this probably happens to you. A trustee of one of those trusts may, or a beneficiary, the beneficiary of one of those trusts may come to you and ask you for money.

[00:43:59] Sara Ecklein: Yeah, a couple times.

[00:44:01] Cathy Curtis: Yes. And that takes a certain skill to handle a situation like that.

[00:44:07] Sara Ecklein: Yes. So I worked and provided case management services as well at the former fiduciary agency. And that really is a tool that I have in my tool belt with acting in the role of trustee. Because it’s working with the client and really building that relationship.

[00:44:26] Sara Ecklein: It’s hard depending on what the disability is. A lot of times I do work with clients that have some mental illness or cognitive impairment or developmental disability. And they really aren’t able to understand ever the rules of a special needs trust. I do try my best to explain, but beginning to support them, and then sometimes working with the team so that we can all reinforce what those rules are, that’s typically what that kind of looks like in those scenarios.

[00:44:56] Cathy Curtis: Very interesting. One, a segue to long-term care insurance. Do you ever recommend that your clients buy that type of insurance.

[00:45:08] Sara Ecklein: I don’t, because I can’t give financial advice.

[00:45:13] Cathy Curtis: So you consider that financial advice, not help?

[00:45:15] Sara Ecklein: Yes, I do. Yes. I will say that working with clients with long-term care insurance, I can see when the, if that’s a need, how it can really be such a benefit.

[00:45:32] Sara Ecklein: I think what’s hard is now finding long-term care insurance that’s really going to give you the coverage you need. That’s hard. I don’t know if you have any long-term care insurance agents, but I would love referrals.

[00:45:45] Cathy Curtis: I do actually. I’ll send those to you. Yeah, I do. It is a very complicated area and changes all the time.

[00:45:53] Sara Ecklein: Yeah. And from my understanding, they’re cutting back and back more and more of what they’re covering and shortening how much the time that they’re willing to pay and the amount they’re willing to pay. And a lot of policies don’t provide or don’t cover home care, but it’s only assisted living.

[00:46:12] Cathy Curtis: Yeah, it’s just like the whole public benefits arena.

[00:46:15] Cathy Curtis: You really have to dig into the details and understand what exactly the person is buying. And it’s their situation or not.

[00:46:25] Sara Ecklein: Yes. So that’s where like typically when clients are coming to me in the planning phase, like that’s their choice of whether or not they want to do that. I find that usually if they’re working with a financial advisor, which most of them are, that person would be making the recommendations.

[00:46:41] Sara Ecklein: And then if a client is using my services, I’m working with a client now and they’re still alive. It’s too late to get long-term care insurance.

[00:46:52] Cathy Curtis: So it’s effort to get it when you’re older and a lot of people don’t qualify anymore. It’s very difficult insurance to get actually. Let me ask you one last question about what you do, and then I wanna ask you about some of these amazing personal things you do.

[00:47:09] Cathy Curtis: So are you required as a private, professional fiduciary to do continuing education? Just for example, I’m a CFP®. We have to do so many CEs per year, and I’m just wondering about that in your profession.

[00:47:24] Sara Ecklein: Yes. Oh yeah, absolutely. For our licensing, it requires, I’m also a member of PFA, the Professional Fiduciary Association of California.

[00:47:35] Sara Ecklein: That also has its requirements. So yes, we do have continuing education and that comes due just like with our license every year.

[00:47:46] Cathy Curtis: Yes. Okay. Very similar to my profession.

[00:47:49] Sara Ecklein: Yeah. And it’s 15 hours a year and it must include two hours of ethics.

[00:47:57] Cathy Curtis: Yes. Okay. We have the same. Sara, is there anything else that you would like to share with our audience about what you do that I have not touched on?

[00:48:08] Sara Ecklein: I feel like we’ve covered a good amount. I would be happy if people are interested in potentially working with me or learning more about my services, you can go directly to my website. It’s That’s dot co. There’s no M at the end. And there’s a contact us page so clients can enter their contact information and their unique situation. And I’m always, I offer a 30-minute complimentary consultation.

[00:48:42] Sara Ecklein: If they’d like to book a consult with me, I’m happy to.

[00:48:46] Cathy Curtis: And I’ll add that to the show notes as well. And then what is the name of the association you mentioned earlier in the call? That’s a good resource.

[00:48:55] Sara Ecklein: Yeah, so PFA, it’s the Professional Fiduciary Association of California. And their website is

[00:49:11] Cathy Curtis: Okay, great. Now what I wanna ask you about, this is really fun fact. You completed the John Muir Trail, 213 miles. That’s amazing. When did you do that?

[00:49:28] Sara Ecklein: I actually did it in college. I had no real backpacking experience. I trained with a few friends for a year. We did several small backpacking trips leading up to it, and it ended up being a 20 day.

[00:49:45] Sara Ecklein: And I, it was wonderful. I’m so glad I did it then because getting away completely unplugged. That’s definitely not possible for me at this point in time.

[00:49:55] Cathy Curtis: Yeah, that would be really hard. Did you do it on your own?

[00:49:57] Sara Ecklein: I did it with a group of five people. Yeah, so it was wonderful. All through the High Sierras of California.

[00:50:05] Sara Ecklein: It was beautiful.

[00:50:07] Cathy Curtis: Did you do, what half dome part of that?

[00:50:10] Sara Ecklein: Half dome wasn’t, but actually hiking up half dome, that was the day trip that I did that inspired the John Muir Trail.

[00:50:21] Cathy Curtis: Okay. Yeah, I’ve done half dome twice. I don’t think I’m gonna do that again.

[00:50:25] Sara Ecklein: Yeah, actually when you’re hiking up to half dome, there’s like a junction that says Mount Whitney and 200 some miles from there.

[00:50:33] Sara Ecklein: And so yeah, we all were joking, oh yeah, let’s do it. And then we ended up doing it the next year.

[00:50:39] Cathy Curtis: Yeah, you ended up sevening. That’s amazing. Very. Okay. And then the other fun fact is that you’re a Tango dancer.

[00:50:48] Sara Ecklein: Yes, I met my husband that way. The Bay Area actually has a very active Tango community, so it, yeah, it’s definitely a love and passion of mine and really being embodied and connected is all part of Tango.

[00:51:07] Sara Ecklein: It’s gone away a little bit. It’s coming back, but Covid really stopped our practice.

[00:51:14] Cathy Curtis: No, that’s such a shame.

[00:51:14] Sara Ecklein: Yes, but it is coming back. I’m actually, I’m expecting, so I’m very pregnant. So at the moment I’m not doing much going out and dancing.

[00:51:26] Cathy Curtis: Oh my gosh. Oh, that’s another fun fact. And what’s great is you have your own business so you can probably take some time off, but work through your pregnancy as well, right?

[00:51:40] Sara Ecklein: Yeah, it’s definitely, I’m grateful to have built the business a few years ago. And I’m in a real sweet spot of being home-based and yeah. I’m still able to work and serve with many clients, and I also have an assistant that will be filling in for me by taking a bit of a leave.

[00:52:06] Cathy Curtis: Great. Sara, this has been a really interesting conversation. Thank you so much for taking the time, and I’ll be sure and put the show notes up, so people know how to get in touch with you.

[00:52:17] Sara Ecklein: Wonderful. Cathy, thank you again for having me. It’s been a pleasure.

[00:52:21] Cathy Curtis: You’re welcome. You take care.

[00:52:23] Cathy Curtis: Same to you.

[00:52:25] Sara Ecklein: Bye now.

[00:52:25] Cathy Curtis: Bye-bye.

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Clean Energy Tax Credits: What to Know Before You Buy

Inflation Reduction Act & Clean Energy Tax Credits

The Inflation Reduction Act introduces several clean energy tax credits and rebates that may benefit environmentally conscious taxpayers.

As a California-based financial advisor who works primarily with women, I frequently have conversations with clients about socially and environmentally responsible investment strategies. But with the recent passage of the Inflation Reduction Act, many environmentally conscious investors are seeking new ways to put their values into action while potentially benefiting financially in the process.

If you’re considering making climate friendly upgrades to your home or vehicles, you may be eligible to claim thousands of dollars in potential tax credits and rebates. However, before purchasing a rooftop solar panel or electric vehicle, it’s important to understand the various clean energy incentives available—and how to use them to your advantage.

Clean Vehicle Credits

The Inflation Reduction Act extends the Clean Vehicle Credit through 2032. It also introduces new credits for purchasing used electric vehicles.

Specifically, if you buy a new electric vehicle (EV), you may be eligible for a tax credit worth up to $7,500. For a used EV, your tax credit may be worth 30% of the purchase price or $4,000, whichever is less. You may also qualify for additional incentives from state and local governments, depending on where you live.  The caveat is that the new credits don’t go into effect until 2023. So, if you’re planning to purchase a used electric vehicle, you’ll likely want to wait until after the new year to maximize your potential tax benefit. 

For new EV purchases, it’s a little more complicated. If you purchase a new EV in 2022, the Inflation Reduction Act stipulates that the final assembly of the vehicle must take place in North America. However, purchases of General Motors and Tesla car models aren’t eligible for a tax credit until 2023.

Car manufacturers must also meet two battery-related requirements for consumers to receive the full credit in 2023 and beyond. That means some EVs won’t immediately qualify for a tax break as manufacturers work to meet these rules.

Lastly, beginning in 2024, car buyers can transfer their tax credit to dealers at the point of sale. That way it directly reduces the purchase price. This can be particularly valuable for two reasons:

  • First, you won’t have to wait until you file your tax return to benefit financially.
  • In addition, transferring the credit to the dealer at the point of sale ensures you’ll receive the full benefit since the credit amount can’t exceed your tax liability. Meaning, if you owe $6,000 in taxes for the 2023 tax year and take the Clean Vehicle Credit worth $7,500, you lose the remaining $1,500.

Keep in mind there are new adjusted gross income (AGI) thresholds to be eligible for a new EV tax credit. In 2023, the AGI limit is $150,000 for single taxpayers and $300,000 for married couples filing jointly.  

Residential Clean Energy Credit

The Residential Energy Efficient Property Credit was previously set to expire at the end of 2023. Now the Residential Clean Energy Credit, the Inflation Reduction Act extends it through 2034 and increases the credit amount, with a percentage phaseout in the final two years.

The Residential Clean Energy Credit is a 30% tax credit that applies to installation of solar panels and other equipment that makes use of renewable energy through 2032. The percentage falls to 26% in 2033 and 22% in 2034.

In addition, the credit is retroactive to the beginning of 2022. That means if you install a solar panel or similar equipment this year, you can qualify for the 30% tax credit on your 2022 tax return.

Energy Efficient Home Improvement Credit

The Inflation Reduction Act also extends the Nonbusiness Energy Property Credit and renames it the Energy Efficient Home Improvement Credit.

This is a 30% tax credit on the cost of eligible home improvements, worth up to $1,200 per year (as opposed to the previous $500 lifetime limit). The annual cap jumps to $2,000 for heat pumps, heat pump water heaters, and biomass stoves and boilers. In addition, roofing will no longer qualify for a tax credit.

Specifically, the annual tax credit limits for qualifying improvements are as follows:

  • $150 for home energy audits
  • $250 for any exterior door (up to $500 total) that meet applicable Energy Star requirements
  • $600 for exterior windows and skylights that meet applicable Energy Star requirements
  • $600 for other energy property, including electric panels and certain related equipment

The enhanced credit is available for projects you complete between January 1, 2023 and December 31, 2033, with some exceptions. Any projects you finish in 2022 aren’t eligible for new incentives. However, if you incur costs in 2022 for a project that you complete in 2023, these costs can count towards your tax break.

Additional Financial Incentives for Investing in Clean Energy  

Finally, the Inflation Reduction Act creates two rebate programs to incentivize clean energy and efficiency projects. Unlike many clean energy tax credits, these rebates are offered at the point of sale. Thus, consumers can reap the financial benefit immediately.

The HOMES rebate is worth up to $8,000 for consumers who make energy efficient upgrades to their homes—for example, HVAC installations. Ultimately, the rebate amount depends on the amount of energy you save and household income.

Meanwhile, the High-Efficiency Electric Home Rebate Program offers taxpayers up to $14,000 for buying energy efficient electrical appliances. This rebate is only available to lower income households, and the rebate amount varies by appliance.

The timeline for these rebates to go into effect is less clear than the three tax credits mentioned above. Many experts believe they won’t be broadly available to taxpayers until the second half of 2023 as the Energy Department issues rules governing the programs.

How to Invest in Clean Energy Strategically

The Inflation Reduction Act creates a variety of financial incentives for taxpayers to invest in clean energy and energy-efficient projects. Those who take advantage of these clean energy tax credits and rebates can potentially save thousands on their taxes while doing their part to fight climate change.

However, to maximize these incentives, it’s important to time them correctly and use their constraints to your advantage. A trusted financial advisor like Curtis Financial Planning can help you incorporate these purchases and investments into your financial plan, so you can reap the greatest benefit. We invite you to connect with us to find out more.

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7 End-of-Year Tax Planning Tips for 2022

End of Year Tax Planning Tips for 2022

With the end of the year fast approaching, Tax Season may be the last thing on your mind. Yet in many ways, the final months of 2022 may be your last chance to reduce this year’s tax liability. To avoid overpaying Uncle Sam and preserve more of your hard-earned income, consider the following end-of-year tax planning tips for 2022.

To minimize your tax liability, consider these end-of-year tax planning tips for 2022:

Tip #1: Identify Changes to Your Tax Situation

In 2022, the standard deduction is $12,950 for single filers and $25,900 for married taxpayers filing jointly. The standard rule of thumb is if you can deduct more than the standard deduction amount in eligible expenses from your taxable income, you should itemize. Otherwise, it’s generally easier and more valuable to take the standard deduction. 

If your income and circumstances have been relatively stable since last year, you likely know already if you plan to itemize or take the standard deduction this year. However, if you’re on the fence, there are end-of-year tax planning strategies you can utilize to reduce your taxable burden.

For instance, consider pre-paying certain deductible expenses—for example, charitable donations or out-of-pocket medical expenses—this year so that itemizing makes more sense.

Let’s say you plan to donate $5,000 to charity each year for the next several years. If you have extra cash on hand this year, you may want to consider donating $10,000 or more to your charity of choice so you can itemize your deductible expenses. Then, next year, you can skip your regular donation and take the standard deduction.

The same is true for out-of-pocket medical expenses. If you know you have certain expenses looming for 2023, you can pay them this year to make the most of the associated tax benefit.

Tip #2: Harvest Capital Losses

Capital gains taxes can eat away at your investment returns over time—specifically in non-qualified investment accounts. Fortunately, the IRS allows investors to offset realized capital gains with realized losses from other investments.

That means you can realize profits on your top-performing investments while selling poor performers to reduce this year’s tax bill. If you have substantial losses, you may be able to completely offset your gains and potentially reduce your taxable income. And in years like 2022 when markets have struggled, you may have more losses than you think.

Keep in mind if you work with a financial advisor, you may not need to initiate this strategy on your own. Most fiduciary financial planners proactively take advantage of tax-loss harvesting to help clients with end-of-year tax planning.

Tip #3: Review Your Charitable Giving Plan

Currently, taxpayers who itemize deductions can give up to 60% of their Adjusted Gross Income (AGI) to public charities, including donor-advised funds, and deduct the amount donated on this year’s tax return.

You can also deduct up to 30% of your AGI for donations of non-cash assets. In addition, you can carry over charitable contributions that exceed these limits in up to five subsequent tax years.

When it comes to end-of-year tax planning, donor-advised funds (DAFs) can provide opportunities to meaningfully reduce your tax liability relative to other giving strategies. For example, if you plan to donate $10,000 each year to your favorite charitable organization, it may be more beneficial to take the standard deduction when you file your taxes.

On the other hand, you can front-load a donation of $50,000 to a donor-advised fund and request that the DAF distribute funds to your chosen charity each year for five years. In year one, you can receive a more favorable tax break by itemizing on your tax return. Meanwhile, you’ll still be meeting your charitable goals each year via the DAF. This strategy can be particularly beneficial in above-average income years.

And better yet, you can donate non-cash assets like highly appreciated stock to a DAF and avoid paying the capital gains tax. This strategy can also help you diversify your investment portfolio without triggering an unpleasant tax bill. Plus, you can take an immediate deduction for the full value of the donation (subject to IRS limits).

Tip #4: Look for Opportunities to Reduce Income

Maxing out your qualified investment account contributions is indeed important for meeting your future financial goals like retirement. However, this can also be a valuable end-of-year tax planning strategy.  

First, be sure to check the contribution limits on your employer-sponsored or self-employed retirement plans for 2022. You can also contribute up to $6,000 to an individual retirement account in 2022 (or $7,000 if you’re age 50 or over).  

In addition, individuals with qualifying high deductible health plans are eligible to contribute to a health savings account (HSA). An HSA can be a great way to save and grow your money on a tax-advantaged basis.

In fact, these accounts offer triple tax savings. Contributions, capital gains, and withdrawals are all tax-free if you use your funds for eligible healthcare expenses. And like qualified retirement accounts, you can deduct your contributions from your taxable income in most cases to reduce your overall tax liability.

Meanwhile, depending on your compensation plan, you may want to consider deferring part of your income to reduce your taxable income in 2022.

Employees with deferred compensation agreements typically pay taxes on the money when they receive it—not as they earn it. That means if your employer pays you a lump sum per your distribution agreement, you could potentially get hit with a hefty tax bill.

There are different ways to structure income from a deferred compensation plan. Your options typically depend on your agreement with your employer. The distribution schedule can usually be found in your plan documents. So, if you haven’t reviewed your plan details recently, you may want to revisit them during end-of-year tax planning to avoid any surprises.

Tip #5: Take Advantage of Lower Income Years and/or Down Markets with a Roth Conversion

The IRS allows individuals to convert a traditional IRA to a Roth IRA via a Roth conversion. A Roth IRA conversion shifts your tax liability to the present. As a result, you avoid paying taxes on withdrawals in the future. In addition, Roth IRAs don’t require minimum distributions.

With a Roth conversion, you pay taxes on the amount you convert at your current ordinary income tax rate. That’s why it can be a particularly powerful end-of-year tax planning strategy in tax years when your income is below average.

At the same time, a down market can be an opportune time to take advantage of a Roth conversion. Since account values typically decline in a negative market environment, so does the amount on which you pay taxes when converting to a Roth. Meanwhile, there’s greater potential for future appreciation and withdrawals that tax-free.

After you convert your traditional IRA to a Roth, any withdrawals you make in retirement will be tax-free. However, you must be over age 59 ½ and satisfy the five-year rule. And since Roth IRAs don’t have RMDs, you can leave your funds to grow tax-free until you need them.

While Roth conversions can be beneficial for many, they don’t make sense for everyone. Be sure to consult with a trusted financial advisor or tax expert before leveraging this strategy.

Tip #6: Strategically Transfer Wealth

If you expect to leave significant wealth to your heirs, proper estate planning is key. Fortunately, there are end-of-year tax planning strategies you can leverage to help minimize your estate’s potential tax burden.  

In many cases, gifting is one of the simplest ways to efficiently transfer wealth while reducing your estate. Each year, the annual gift-tax exclusion allows you to gift a certain amount (up to $16,000 in 2022) to as many people as you like without incurring the federal gift tax. Moreover, spouses can combine the annual exclusion to double the amount they can gift tax-free.  

Indeed, cash gifts are most common. However, you can also use the annual exclusion to transfer personal property or contribute to a 529 college savings plan. Alternatively, the IRS allows you to pay educational and medical expenses on behalf of someone else without incurring federal taxes. However, you must pay the institution directly.   

Trusts can also help you transfer wealth strategically while reducing your family’s taxable burden. However, trusts are varied and complex. It’s important to consult your financial planner or estate planning attorney to determine if a trust may be an appropriate end-of-year tax planning strategy.

Tip #7: Donate Your Required Minimum Distribution (RMD)

To keep people from using retirement accounts to avoid paying taxes, the IRS requires individuals to begin taking minimum distributions from certain qualified accounts once they reach a certain age. As of 2020, required minimum distributions (RMDs) kick in at age 72.

You can withdraw more than your RMD amount in any given year—but be prepared for the potential tax consequences. On the other hand, the IRS imposes a penalty of up to 50% if you fail to take your full RMD before the deadline.

Both scenarios can be costly. Fortunately, careful end-of-year tax planning can help you manage your RMDs to avoid high taxes and other penalties.

For example, if you don’t need the extra income, you can donate your RMD to charity. This is a tax planning strategy called a qualified charitable distribution (QCD). A QCD allows IRA owners to transfer up to $100,000 directly to charity each year.

QCDs can satisfy all or part of your RMD each year, depending on your income needs. You can also donate more than your RMD amount up to the $100,000 limit. And since QCDs are non-taxable, they don’t increase your taxable income like RMDs do.

It’s important to note that the IRS considers the first dollars out of an IRA to be your RMD until you meet your requirement. If you take advantage of this tax planning strategy, be sure to make the QCD before making any other withdrawals from your account.

For More End-of-Year Tax Planning Tips, Consult a Trusted Financial Advisor

This isn’t an exhaustive list of end-of-year tax planning strategies. However, these tips can help you determine if there are opportunities to reduce your taxable burden in 2022.  At the same time, a trusted financial advisor or tax expert can help you identify which strategies are right for you within the context of your overall financial plan.

To learn more about how Curtis Financial Planning helps our clients take control of their finances, please explore our services and client onboarding process.

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S4E5: The Insurance Lady Ruth Stroup Answers Your Biggest Questions About Insurance

The Insurance Lady Answers Your Biggest Questions About Insurance

Your Biggest Questions About Insurance Answered

My guest on today’s episode is Ruth Stroup. Ruth, AKA “The Insurance Lady,” is a Farmer’s agent in Oakland, California. Voted Best of Oakland seven times, The Ruth Stroup Insurance Agency is a community-oriented agency offering customized insurance solutions to businesses and families.

In this episode, Ruth and I discuss all things insurance, from what it covers and doesn’t cover to choosing the right policies and the obstacles that can get in the way of that. Specifically, we talk about wildfire risk in Northern California and how it may cause you to lose your homeowner’s insurance or your premiums to skyrocket. We also discuss what Ruth can and can’t do as an agent to help her clients navigate claims.

Later in the episode, Ruth provides a helpful overview of umbrella insurance, including common misconceptions about what it covers and how to determine if you need additional coverage. She also shares a little-known strategy she uses with her high-earning clients to protect their personal assets.

And be sure to listen to the end, when we talk briefly about earthquake insurance, another potential risk factor for California residents, and many of the common misconceptions surrounding it. Ruth also shares her tips for how she believes people should approach earthquake insurance and how to decide if it’s worth the high premiums.

And lastly, Ruth offers her response to people who believe insurance is just a racket. I learned so much during this conversation and Ruth shared so many great gems that I believe will benefit a lot of you listeners. I hope you enjoy the episode as much as I did.

Episode Highlights

  • [04:02] Ruth Stroup explains what homeowner’s insurance covers and doesn’t cover if someone burglarizes your home.

  • [07:03] How to insure different types of jewelry, whether it’s costume, gems and metals, or fine jewelry.

  • [12:31] What people can do to mitigate the damage if they get burgled or their home is destroyed by fire.

  • [16:22] What to do if your policy goes into non-renewal because you live in a high-risk zone for wildfires.

  • [19:51] How reinsurance companies impact the insurance industry.

  • [22:29] Ruth Stroup shares the reasons besides wildfire danger that a policy may be non-renewed.

  • [26:45] What Ruth can and can’t do as an agent when helping her clients navigate claims.

  • [33:11] Cathy asks Ruth Stroup to give a mini tutorial on liability and umbrella insurance.

  • [38:54] Ruth Stroup shares what she believes is the best kept secret in the insurance business.

  • [42:02] Cathy and Ruth talk earthquake coverage.

Links Relevant to this Episode

Ruth Stroup Insurance Agency’s website

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