Thanksgiving is not normally the time to talk taxes. Yet, here we are. With single party rule coming to Washington, expect to see real tax policy changes ahead. With these changes, you should consider a few steps before the new year begins.

Let’s review the possible – I’d say, very probable – tax law changes for households.

First, expect to see fewer tax brackets. The current 10% and 15% brackets will collapse into a single, new 12% tax bracket. And, in place of the current 25% and 28% brackets, expect a new, wider 25% tax bracket. You are right if you feel these changes appear inconsequential.

The more interesting changes will be for taxpayers in the current 33%, 35% and 39.6% tax brackets. If you fall into this slice of households, you should expect only the lower 33% bracket to survive, among other tax cuts.

Next, instead of keeping track of your various deductible expenses – a practice called, itemizing – you will no longer need to account for things quite so closely. Most people will fall into the camp that uses the “standard” deduction as it is slated to double in size.

If you stay in the camp of taxpayers who will still itemize, it’ll only be because you have a very large mortgage or you donate a lot of money. All other deductible expenses – property taxes, state income taxes, medical expenses and professional fees – will be a concern of the past.

This will make things much simpler, but not necessarily more lucrative to most households – here’s why.

The current plans also call for you to lose all of your personal exemptions. This will work to hike your taxable income. For most, the doubling of your standard deduction will only work to offset this hike. For most households, the final result of these changes will be a wash.

As Shakespeare once said, for most people, these changes will feel like “much ado about nothing. “ The substantial changes will be for high earners.

With the lower tax rate on higher income, a far lower, special tax rate on self-employment and small business income, the elimination of the extra tax on investment income, the possibility of higher earners now getting to claim the larger standard deduction and with a possible elimination of the estate tax, the proposed changes beginning in 2017 are, indeed, consequential for high earners.

As with any changes in tax law, proactive moves can help to lower your tax bill before the start of next year. For many households who will no longer be able to itemize, these moves may include paying your winter property taxes early and making planned charitable donations now. Pausing now to anticipate these possible changes before year-end could very well put money in your pocket.

For more tips on year-end financial planning and beyond, join Jason P. Tank, CFA and local attorney, Greg Luyt, on Wednesday, December 14 at 6:30pm for their joint presentation for the Front Street Foundation’s Money Series held in the McGuire Room at the Traverse Area District Library. Visit FrontStreetFoundation.org or call (231) 714-6459 to register.

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As the holidays approach, it’s a natural time to reflect on the meaning of generosity. While today’s needs should rightfully capture our immediate attention, it is inevitable that tomorrow’s needs will make an equally compelling case. Like most things in life, there is a place for striking a balance between these competing interests. In the world of philanthropy, this balance is achieved through the use of legacy giving.

What is legacy giving? How does it work? Can anyone do it? These are a few of the questions I considered as I thought about the upcoming Money Series presentation by Phil Ellis, Executive Director of the Grand Traverse Regional Community Foundation on how people can create a plan that supports the causes that have shaped their lives or those of their loved ones.

Legacy giving is about extending into perpetuity your passions and causes in ways that can benefit those who will inexorably follow in your footsteps. When legacy giving is done well, it’s a wonderful thing to see.

Compelling stories of legacy giving jumped off of our community foundation’s website as I perused the long list of local charitable funds. In a world of unfiltered cynicism, it was frankly a refreshing exercise to undertake.

For example, Andrew Shotwell, attorney with Smith & Johnson, recounts his experience from the planning through the giving stage of the Ernest B. Isaacsen Scholarship Endowment. Mr. Isaacsen was awarded our local Chamber of Commerce’s distinguished citizen award 67 years ago. His story certainly shows the power of legacy giving. So much so that Mr. Shotwell’s musings about how those charged today with choosing scholarship recipients often say, “What would Ernie think of this application?”

Other stories include those of Cleo Purdy of Central Lake, who had a passion for providing enriching experiences for young children and their families. Following her death, her planned giving now supports playgroups, preschool and the literacy of young children in our region. In another example, following the passing of Karolina Holtrey in 2000, her legacy giving still provides ongoing support for Frankfort’s library, senior care, and various other educational opportunities in her former community. Finally, Traverse City’s own Dr. Ken Taylor believed in the need for excellent and available health care for everyone. Since his passing, his daughters have worked to ensure that his guiding vision extends well beyond his lifetime.

To learn about legacy giving, join Phil Ellis on Wednesday, November 16 at 6:30pm for his presentation for the Front Street Foundation’s Money Series held in the McGuire Room at the Traverse Area District Library. Front Street Foundation is a nonprofit with a commitment to provide open-access to financial education, for all. Visit FrontStreetFoundation.org.

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The problem of financial fraud and exploitation of seniors continues to grow day by day. With many billions of dollars stolen from retirees each year, more must be done to help minimize the damage inflicted by financial scammers.

This effort will take a combination of public awareness through education and a concerted effort to protect the most financially vulnerable among us.

In my career, I have personally witnessed two financial frauds involving my own clients. In both cases, the perpetrator used popular scams, known as the IRS scam and the Grandparent scam.

Most financial frauds have a common thread. The crook probes for a targeted victim’s emotional vulnerabilities – from outright memory loss to a general limitation in understanding financial concepts – and then expertly exploits it.

Studies have shown that a person’s ability to grasp semi-complex financial situations “on the fly” – known as fluid intelligence – tends to steadily diminish with age.

Interestingly, as people grow older, their fluid intelligence can begin to diverge markedly from their overall mental skills and knowledge built-up in other important areas of their life. This divergence helps to explain why otherwise intelligent people fall for seemingly obvious scams. It also explains why many victims keep the crimes a secret due to their embarrassment and shame.

Through increased public awareness – not only for the elderly but also for their loved ones and caregivers – I believe we can help to combat scammers and to arm future victims and their families before a crime is committed.

To begin raising that awareness, here are some tell-tale signs a potential scam is underway.

The first sign is the con artist will pressure the victim to either act quickly or they will downright scare the victim, such as the threat of imminent arrest or even the revocation of their driver’s license.

In addition, the scammer may impersonate someone in a position of authority, pretend to be a loved one in need of financial help or will fake romantic interest in order to gain the victim’s trust.

Certainly, the challenge of prevention is complicated given advances in technology that allow criminals to easily mask their true identities and to avoid prosecution. Given this, developing proactive strategies and practices is our best line of defense to help protect the most vulnerable among us.

To learn more about how to better protect yourself or your loved ones against financial fraud, join Jason P. Tank, CFA, on Wednesday, October 19th at 6:30pm for his presentation for the Front Street Foundation’s Money Series held in the McGuire Room at the Traverse Area District Library. Front Street Foundation is a nonprofit with a commitment to provide open-access to financial education, for all. Visit MoneySeries.org.

With summer now in the rear-view mirror, the process of closing down the family cottage in Northern Michigan is underway. This inevitably sparks thoughts of next year’s plans and family travel schedules. But, for some, it also sparks lingering thoughts about the need to develop a plan to ensure your cottage will remain in the family for decades to come.

The decision to embark on estate planning for your cherished cottage is often less about financial maneuvering than it is about emotional considerations. After all, the memories made on the lake or on the banks of the river are no doubt deeply engrained in your family’s culture.

The importance of this was summed up nicely by Dan Penning, a local attorney with expertise in succession planning for family cottages, ”One client showed me a large oak tree in the side yard of his family’s cottage, which had a peculiar pronounced branch protruding about halfway up the trunk. A tire swing on a chain hung from the branch.”

”Through the years, the chain became embedded into the branch and my client told me that the swing had been there when he was a child and that he had played on it just as his children, grandchildren and now great-grandchildren were playing there 75 years later!”

Mr. Penning continued, “Stories like these are not at all uncommon over my career in assisting families in their planning for the protection and continued use and enjoyment of their family cottages by themselves and future generations.”

The unique factors involved in a successful cottage plan often requires honest, self reflection. For example, not all families are great candidates for cottage succession planning. It may simply be that the kids don’t share the same affinity you have for your cottage. In addition, the financial means necessary to maintain a robust cottage succession plan may not exist. If this is the case, there is no point in trying to fit a square peg into a round hole.

However, when your family’s structure points to both the desire and the means to ensure continued enjoyment of the family cottage for generations to come, the legal planning to create a lasting success naturally takes on the flavor of business planning.

Beyond the final legal structure chosen to transfer the ownership of your family cottage, the nuts and bolts of business operations must also be explicitly defined. These operational considerations take the form of shared financial responsibilities, cooperation on usage for each family member and their guests as well as the legal protection of the asset against future creditors or divorce, and many more.

To learn more about planning for your family cottage, join Dan A. Penning, founding member of The Penning Group on Wednesday, October 12th at 6:30pm for his presentation for the Front Street Foundation’s Money Series held in the McGuire Room at the Traverse Area District Library. Front Street Foundation is a nonprofit with a commitment to provide open-access to financial education, for all. Visit FrontStreetFoundation.org.

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Today’s annuities are so complex, it’s safe to say most people who’ve been sold one have little understanding of how they work. To help, let’s cover some general and specific features of both indexed and variable annuities, the types sold about 80% of the time.

During the accumulation phase, before you start to draw out money, variable annuities basically allow you to invest in mutual funds that rise and fall with the markets.

With an indexed annuity, your return is very loosely linked to a chosen stock market index. When stocks rise, you often receive just a small portion of the gain. In exchange, when the market drops, you don’t lose.

In essence, indexed annuities equip investors with training wheels along with knee, elbow, wrist pads and a helmet. All that protection can leave little to be desired. Often, indexed annuities give you only a small return, even in a good year for the market. While you might not lose, there simply isn’t much upside offered.

Becoming an educated investor in indexed and variable annuities requires you to decipher terms like, participation rate, cap, spread, crediting rate method, step-up feature, premium bonus, roll-up period, accumulation value, protected benefit base, living benefits, contingent deferred sales charge and guaranteed minimum rate, among many others. It’s like learning a whole new language.

Within many annuities, insurance companies also offer add-on insurance features that provide protections, at a cost, sometimes significant. These riders are designed to sweeten the annuity for the income phase, but they do require you to keep the product for a set number of years.

The most popular riders available for variable and indexed annuities are generally referred to as, living benefits. They often go by names that include the word, guaranteed. Put simply, among your normal annuity account balance, living benefit riders present you with a steadier “phantom” account balance that you cannot tap into unless you are willing to accept installment payments. These riders frankly make you feel a bit schizophrenic as you must follow multiple alternative account balances – both real and phantom – at the same moment.

Despite the sheer complexity of today’s annuities – whether you already own one or you don’t – gaining a working knowledge is a wise move. Based on the fact that about $250 billion of these annuities were sold last year, there are a lot of sales pitches to handle.

To learn more about annuities, join Jason P. Tank, CFA on Wednesday, September 14th at 6:30pm for his presentation for the Front Street Foundation’s Money Series held in the McGuire Room at the Traverse Area District Library. Front Street Foundation is a nonprofit with a commitment to provide open-access to financial education, for all. Visit FrontStreetFoundation.org.