Cassandra Financial GroupJohn Cassandra, AAMS, CRPSBranch Manager8198 Jog RoadSuite 200Boynton Beach, FL 33472561-369-8400 x106561-351-7640John.Cassandra@RaymondJames.comhttp://cassandrafinancial.com/

November 2016Will vs. Trust: Is One Better Than the Other?

Are You Ending 2016 Healthy, Wealthy, andWise?

Pretax, Roth, or After-Tax Contributions:Which Should You Choose?

What is the most important component ofGDP in the United States?

Cassandra Financial GroupMonthly NewsletterWill vs. Trust: Is One Better Than the Other?

See disclaimer on final page

When it comes to planningyour estate, you might bewondering whether youshould use a will or a trust(or both). Understanding thesimilarities and thedifferences between thesetwo important documents

may help you decide which strategy is better foryou.

What is a will?A will is a legal document that lets you directhow your property will be dispersed (amongother things) when you die. It becomes effectiveonly after your death. It also allows you to namean estate executor as the legal representativewho will carry out your wishes.

In many states, your will is the only legal wayyou can name a guardian for your minorchildren. Without a will, your property will bedistributed according to the intestacy laws ofyour state. Keep in mind that wills and trustsare legal documents generally governed bystate law, which may differ from one state to thenext.

What is a trust?A trust document establishes a legalrelationship in which you, the grantor or trustor,set up the trust, which holds property managedby a trustee for the benefit of another, thebeneficiary. A revocable living trust is the typeof trust most often used as part of a basicestate plan. "Revocable" means that you canmake changes to the trust or even end (revoke)it at any time. For example, you may want toremove certain property from the trust orchange the beneficiaries. Or you may decidenot to use the trust anymore because it nolonger meets your needs.

A living trust is created while you're living andtakes effect immediately. You may transfer titleor "ownership" of assets, such as a house,boat, automobile, jewelry, or investments, to thetrust. You can add assets to the trust andremove assets thereafter.

How do they compare?While both a will and a revocable living trust

enable you to direct the distribution of yourassets and property to your beneficiaries atyour death, there are several differencesbetween these documents. Here are a fewimportant ones.

• A will generally requires probate, which is apublic process that may be time-consumingand expensive. A trust may avoid the probateprocess.

• In order to exclude assets from probate, youmust transfer them to your revocable trustwhile you're living, which may be a costly,complicated, and tedious process.

• Unlike a will, a trust may be used to manageyour financial affairs if you becomeincapacitated.

• If you own real estate or hold property inmore than one state, your will would have tobe filed for probate in each state where youown property or assets. Generally, this is notnecessary with a revocable living trust.

• A trust can be used to manage andadminister assets you leave to minor childrenor dependents after your death.

• In a will, you can name a guardian for minorchildren or dependents, which you cannot dowith a trust.

Which is appropriate for you?The decision isn't necessarily an "either/or"situation. Even if you decide to use a livingtrust, you should also create a will to name anexecutor, name guardians for minor children,and provide for the distribution of any propertythat doesn't end up in your trust. There arecosts and expenses associated with thecreation and ongoing maintenance of theselegal instruments.

Whether you incorporate a trust as part of yourestate plan depends on a number of factors.Does your state offer an informal probate,which may be an expedited, less expensiveprocess available for smaller estates?Generally, if you want your estate to passprivately, with little delay or oversight from aprobate court, including a revocable living trustas part of your estate plan may be the answer.

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Are You Ending 2016 Healthy, Wealthy, and Wise?Although the year is drawing to a close, you stillhave time to review your finances. Pausing toreflect on the financial progress you made in2016 and identifying adjustments for 2017 canhelp you start the new year stronger than ever.

How healthy are your finances?Think of a year-end review as an annualphysical for your money. Here are somequestions to ask that will help assess yourfinancial fitness.

• Do you know how you spent your money in2016? Did you make any progress towardyour financial goals? Look for spending habits(such as eating out too much) that needtweaking, and make necessary adjustmentsto your budget.

• Are you comfortable with the amount of debtthat you have? Any end-of-year mortgage,credit card, and loan statements will spell outthe amount of debt you still owe and howmuch you've been able to pay off this year.

• How is your credit? Having a positive credithistory may help you get better interest rateswhen you apply for credit, potentially savingyou money over the long term. Check yourcredit report at least once a year byrequesting your free annual copy through thefederally authorized websiteannualcreditreport.com.

• Do you have an emergency savings account?Generally, you should aim to set aside atleast three to six months' worth of livingexpenses. Having this money can help youavoid piling up more credit-card debt orshortchanging your retirement or collegesavings because of an unexpected eventsuch as job loss or illness.

• Do you have an adequate amount ofinsurance? Your insurance needs maychange over time, so it's a good idea toreview your coverage at least once a year tomake sure it still meets your needs.

How wealthy are you really?It's easy to put your retirement savings onautopilot, especially if you're making automaticcontributions to a retirement account. Butmarket swings this year may have affected yourretirement account balances, so review anystatements you've received. How have yourinvestments performed in comparison togeneral market conditions, against industrybenchmarks, and in relation to yourexpectations and needs? Do you need to makeany adjustments based on your owncircumstances, your tolerance for risk, orbecause of market conditions*?

Finally, look for ways to save more. Forexample, if you receive a pay increase thisyear, don't overlook the opportunity to increaseyour employer-sponsored retirement plancontributions. Ask your employer to set aside ahigher percentage of your salary.

How wise are you about financialmatters?What you don't know can hurt you, so it's timeto honestly assess your financial picture.Taking into account your income, savings andinvestments, and debt load, did your financesimprove this year? If not, what can you dodifferently in 2017?

What are your greatest financial concerns? Doyou have certain life events coming up that youneed to prepare for, such as marriage, buying ahome, or sending your child off to college? Youcan't know everything, so don't put off askingfor assistance. It's a wise move that can helpyou prepare for next year's financial challenges.

*All investing involves risk,including the possible lossof principal, and there is noguarantee that anyinvestment strategy will besuccessful.

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Pretax, Roth, or After-Tax Contributions: Which Should You Choose?If your employer-sponsored retirement savingsplan allows pretax, after-tax, and/or Rothcontributions, which should you choose?

Pretax: Tax benefits nowWith pretax contributions, the money isdeducted from your paycheck before taxes,which helps reduce your taxable income andthe amount of taxes you pay now. Consider thefollowing example, which is hypothetical andhas been simplified for illustrative purposes.

Example(s): Mark earns $2,000 every twoweeks before taxes. If he contributes nothing tohis retirement plan on a pretax basis, theamount of his pay that will be subject to incometaxes would be the full $2,000. If he was in the25% federal tax bracket, he would pay $500 infederal income taxes, reducing his take-homepay to $1,500. On the other hand, if hecontributes 10% of his income to the plan on apretax basis--or $200--he would reduce theamount of his taxable pay to $1,800. Thatwould reduce the amount of taxes due to $450.After accounting for both federal taxes and hisplan contribution, Mark's take-home pay wouldbe $1,350. The bottom line? Mark would beable to invest $200 toward his future but reducehis take-home pay by just $150. That's thebenefit of pretax contributions.

In addition, any earnings made on pretaxcontributions grow on a tax-deferred basis. Thatmeans you don't have to pay taxes on anygains each year, as you would in a taxableinvestment account. However, those taxbenefits won't go on forever. Any moneywithdrawn from a tax-deferred account issubject to ordinary income taxes, and if thewithdrawal takes place prior to age 59½ (or insome cases, 55 or 50, depending on yourplan's rules), you may be subject to anadditional 10% penalty on the total amount ofthe distribution.

Roth: Tax benefits down the roadOn the other hand, contributing to anemployer-sponsored Roth account offersdifferent benefits. Roth contributions areconsidered "after-tax," so you won't reduce theamount of current income subject to taxes. Butqualified distributions down the road will be tax-free.

A qualified Roth distribution is one that occurs:

• After a five-year holding period and• Upon death, disability, or reaching age 59½

Nonqualified distributions are subject to regularincome taxes and a possible 10% penalty tax.However, because Roth contributions are madewith after-tax dollars, a distinction is made

between the portion of the distribution thatrepresents contributions versus earnings onthose contributions. If at some point you needto take a nonqualified withdrawal from a Roth401(k)--due to an unexpected emergency, forexample--only the proportion of the totalamount representing earnings will be taxable.

Example(s): In order to meet an unexpectedfinancial need of $8,000, Tina decides to take anonqualified hardship distribution from her Roth401(k) account. Of the $20,000 total value ofthe account, $18,400 represents after-tax Rothcontributions and $1,600 is attributed toinvestment earnings. Because earningsrepresent 8% of the total account value ($1,600÷ $20,000 = 0.08), this same proportion ofTina's $8,000 distribution--or $640 ($8,000 x.08)--will be considered earnings subject toboth income taxes and a 10% penalty tax.

However, keep in mind that tapping youraccount before retirement defeats its purpose.If you need money in a pinch, try to exhaust allother possibilities before taking a distribution.Always bear in mind that the most importantbenefit of a Roth account is the opportunity tobuild a nest egg of tax-free income forretirement.

After-tax: For those who are able toexceed the limitsSome plans allow participants to makeadditional after-tax contributions. This planfeature helps those who want to makecontributions exceeding the annual total limit onpretax and Roth accounts (in 2016, the limit is$18,000; $24,000 for those age 50 or older). Aswith a traditional pretax account, earnings onafter-tax contributions grow on a tax-deferredbasis.

If this option is offered (check your plandocuments), keep in mind that total employeeand employer contributions cannot exceed$53,000, or $59,000 for those 50 and older(2016 limits).

Another benefit of making after-taxcontributions is that when you leave your job orretire, they can be rolled over tax-free to a RothIRA, which also allows for potential tax-freegrowth from that point forward. Somehigher-income individuals may welcome thispotential benefit if their income affects theirability to directly fund a Roth IRA.1

1 In addition to rolling the proceeds to a RothIRA, participants may also (1) leave the assetsin the original plan, (2) transfer assets to a newemployer's plan, or (3) withdraw the funds(which in some cases could trigger a taxableevent).

When choosing betweenpretax and Rothcontributions, the generalrule is to consider whetheryou think you will benefitmore from the tax breaktoday than you would froma tax break in retirement.Specifically, if you thinkyou'll be in a higher taxbracket in retirement, Rothcontributions may be morebeneficial in the long run.

Generally, non-Roth after-taxcontributions should beconsidered after reachingthe maximum contributionamount for pretax and Rothoptions.

Keep in mind thatdistributions of earnings onnon-Roth after-taxcontributions will be subjectto regular income taxes andpossibly penalty taxes if notrolled over to a traditionalIRA. IRS Notice 2014-54clarifies the rules regardingrollovers of non-Rothafter-tax plan contributionsto a Roth IRA.

For more informationspecific to your situation,consult a qualified taxprofessional. (Working witha tax or financialprofessional cannotguarantee financialsuccess.)

Page 3 of 4, see disclaimer on final page

Cassandra Financial GroupJohn Cassandra, AAMS, CRPSBranch Manager8198 Jog RoadSuite 200Boynton Beach, FL 33472561-369-8400 x106561-351-7640John.Cassandra@RaymondJames.comhttp://cassandrafinancial.com/

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016

This information, developed by anindependent third party, has been obtainedfrom sources considered to be reliable, butRaymond James Financial Services, Inc.does not guarantee that the foregoingmaterial is accurate or complete. Thisinformation is not a complete summary orstatement of all available data necessary formaking an investment decision and does notconstitute a recommendation. Theinformation contained in this report does notpurport to be a complete description of thesecurities, markets, or developments referredto in this material. This information is notintended as a solicitation or an offer to buy orsell any security referred to herein.Investments mentioned may not be suitablefor all investors. The material is general innature. Past performance may not beindicative of future results. Raymond JamesFinancial Services, Inc. does not provideadvice on tax, legal or mortgage issues.These matters should be discussed with theappropriate professional.

Securities offered through Raymond JamesFinancial Services, Inc., memberFINRA/SIPC, an independent broker/dealer,and are not insured by FDIC, NCUA or anyother government agency, are not deposits orobligations of the financial institution, are notguaranteed by the financial institution, andare subject to risks, including the possibleloss of principal.

Can I make charitable contributions from my IRA in2016?Yes, if you qualify. The lawauthorizing qualified charitabledistributions, or QCDs, hasrecently been made

permanent by the Protecting Americans fromTax Hikes (PATH) Act of 2015.

You simply instruct your IRA trustee to make adistribution directly from your IRA (other than aSEP or SIMPLE) to a qualified charity. Youmust be 70½ or older, and the distribution mustbe one that would otherwise be taxable to you.You can exclude up to $100,000 of QCDs fromyour gross income in 2016. And if you file ajoint return, your spouse (if 70½ or older) canexclude an additional $100,000 of QCDs. Butyou can't also deduct these QCDs as acharitable contribution on your federal incometax return--that would be double dipping.

QCDs count toward satisfying any requiredminimum distributions (RMDs) that you wouldotherwise have to take from your IRA in 2016,just as if you had received an actual distributionfrom the plan. However, distributions (includingRMDs) that you actually receive from your IRAand subsequently transfer to a charity cannotqualify as QCDs.

For example, assume that your RMD for 2016is $25,000. In June 2016, you make a $15,000QCD to Qualified Charity A. You exclude the$15,000 QCD from your 2016 gross income.Your $15,000 QCD satisfies $15,000 of your$25,000 RMD. You'll need to withdraw another$10,000 (or make an additional QCD) byDecember 31, 2016, to avoid a penalty.

You could instead take a distribution from yourIRA and then donate the proceeds to a charityyourself, but this would be a bit morecumbersome and possibly more expensive.You'd include the distribution in gross incomeand then take a corresponding income taxdeduction for the charitable contribution. Butthe additional tax from the distribution may bemore than the charitable deduction due to IRSlimits. QCDs avoid all this by providing anexclusion from income for the amount paiddirectly from your IRA to the charity--you don'treport the IRA distribution in your gross income,and you don't take a deduction for the QCD.The exclusion from gross income for QCDsalso provides a tax-effective way for taxpayerswho don't itemize deductions to makecharitable contributions.

What is the most important component of GDP in theUnited States?We often hear in the mediathat consumer spending iscrucial to the overall health ofthe U.S. economy, but exactly

how important is it? Representingapproximately two-thirds of overall GDP,consumption--the almighty consumer--is thelargest driver of economic growth in the UnitedStates. Of the nearly $18 trillion in U.S. GDP(2015), American shoppers are responsible fora piece of the pie worth about $12 trillion.

Consumption is tracked by the Bureau ofEconomic Analysis, and is reported as PersonalConsumption Expenditures (PCE) in its monthly"Personal Income and Outlays" news release.Since the late 1960s, PCE as a percentage ofoverall GDP has crept up from a low ofapproximately 58% to nearly 70% today.

PCE is divided into goods and services. Theservices category typically represents thelargest part of PCE, accounting for more than65% over the past two years. Examples ofservices include health care, utilities,recreation, and financial services.

Goods are broken down further into durableand nondurable goods. Durable goods arethose that have an average life of at least threeyears. Examples include cars, appliances andfurniture. Nondurable goods are those with anaverage life span of less than three years andinclude such items as clothing, food, andgasoline.

Durable goods represent approximately 10% oftotal PCE, while nondurable goods make upabout 20%.

So the next time you're out shopping, foranything from a bottle of ketchup to a new car,consider that you're doing your part to fuel ournation's growth.

Sources: World Bank.org, accessed June 2016;Federal Reserve Bank of St. Louis, 2016;Bureau of Economic Analysis, 2016

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