As you read this quarter’s newsletter, you will notice many exciting changes going on at Heartland Trust. After 31 years leading the operations, compliance, and HR departments at Heartland, Sheryl Bernier has retired/significantly reduced her work hours and duties.
Sheryl’s departure brings changes in the form of promotions and new hires. Our team is growing, and we are bringing on experienced and knowledgeable people who share the qualities and values that we hold up as important. And while not seeing Sheryl every day will be a hard change, we are grateful. Grateful for her three decades of leadership. Grateful that our other team members are growing with their careers. Grateful that we can bring in other experienced professionals who want to grow with Heartland.
If you’re considering a job change, salary is one important factor. But it’s also vital to look past the salary and study the total benefits package. Benefits offered by employers can vary greatly so take a look at the full picture. Here is a shortlist of the most common types of compensation.
Wages are the most straightforward portion of your compensation package (unless you work in sales, but those pay structures are beyond the scope of this article). The primary consideration beyond the actual dollar figure is whether you live in an area with a higher cost of living and/or higher taxes. It’s no secret to many of our clients that living in Minnesota versus North Dakota will jump your tax rate significantly, even if you’re on the lower end of the income spectrum.
When Does an Estate Go Through Probate?
Whether you have a last will and testament or not, your estate may have to go through the probate process. Probate is the legal process to administer and settle the estate of an individual who has passed away. When a person dies, their estate consists of assets, both real and personal property, they own on their date of death. It also includes the decedent’s debts, final expenses, and unpaid taxes. Somebody needs to be in charge of an estate to settle the affairs on behalf of the decedent.
HTC Team News and Honors
Sheryl Bernier retired after 31 years at Heartland Trust Company. Sheryl was employee #2 at Heartland and with Steve Halverson created North Dakota’s first independent trust company. We will miss seeing her every day and wish her well on her new journey!
Meet Kari Skauge
Kari Skauge is the new kid on the block at Heartland Trust. She came onboard this quarter as our compliance officer. We are very glad to have her.
Tell us about yourself
I grew up in Hawley, Minnesota, and then attended the University of North Dakota where I earned a degree in business management. I started my career in the financial industry in 2013 and found my niche with compliance. Through our journey, my husband and I ended up building a home on the same farm where I grew up. I can honestly say, there is no place like home!
What do you like to do in your spare time?
I like to spend time with family playing pinochle and cribbage, traveling, ice fishing, snowmobiling, and skiing. My favorite chore is mowing the lawn – there is nothing more relaxing!
Understanding Gift and Estate Taxes
Adapted from Broadridge Investor Communication Services
If you give away money or property during your life, those transfers may be subject to federal gift and estate tax and perhaps state gift tax. The money and property you own when you die (i.e., your estate) may also be subject to federal gift and estate tax and some form of the state death tax. These property transfers may also be subject to generation-skipping transfer taxes. You should understand all of these taxes, especially since the passage of the Economic Growth and Tax Relief Reconciliation Act of 2001 (the 2001 Tax Act), the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 Tax Act), the American Taxpayer Relief Act of 2012 (the 2012 Tax Act), and the Tax Cuts and Jobs Act. The recent Tax Acts contain several changes that make estate planning much easier.
Background on federal gift and estate tax
Under pre-2001 Tax Act law, no federal gift and estate tax was imposed on the first $675,000 of combined transfers (those made during life and those made at death). The tax rate tables were unified into one — that is, the same rates applied to gifts made and property owned by persons who died in 2001. Like income tax rates, gift and estate tax rates were graduated. Under this unified system, the recipient of a lifetime gift received a carryover basis in the property received, while the recipient of a bequest, or gift made at death, got a step-up in basis (usually fair market value on the date of death of the person who made the bequest or gift).
The 2001 Tax Act, the 2010 Tax Act, the 2012 Tax Act, and the Tax Cuts and Jobs Act substantially changed this tax regime.
Spring is a wonderful time of year.
Snow melts, flowers bloom, docks, and boats are placed in the water. This is the time of year when we see the cold bareness of winter transition into the long warm days of summer. With the season come key moments that signal the end of winter: tax season, golf course openings, trees budding.
For all of us, spring confirms that winter doesn’t last forever. As dreary March stretches into light-filled May, we find new hope, new growth. We receive this confirmation when we have to buy our kids new soccer shoes, or suffer aches and pains from hitting golf balls, or see farmers in the fields.
After the year we’ve been through, it is comforting to recognize the growth process is alive and well. No matter how cold the winter is, spring comes. This time of year, that’s confirmation of new opportunities and growth for us all.
Planning for Physicians: Managing Contributions Between a 401(k), 457(b)
As many of our readers likely know, the Federal government provides strong incentives for saving for retirement and other financial goals. You can break these down into three broad categories: tax deductibility (on contributions), tax-free distributions (i.e. withdrawals), and tax deferral (on growth). Many physicians can increase their tax deductions and benefit from tax deferral by contributing to both a 401(k) plan and a 457(b) plan.
401(k) and 457(b) plans are both employer-sponsored retirement plans. The main difference is 457(b) plans can only be sponsored by certain entities, namely state and local governments, along with nonprofits such as hospitals, charities, and unions.
Retirement Plan Restatement
Every six years the Internal Revenue Service (IRS) requires certain qualified retirement plans to be fully amended and restated to comply with law changes. The Cycle 3 Defined Contribution (DC) Plan Restatement period began on August 1, 2020, and plan sponsors of defined contributions plans (401(k), profit-sharing, and money purchase pension plans) will have until July 31, 2022, to comply. Plans that do not restate their plan document by this date will be subject to IRS-imposed penalties, which, in extreme cases, could jeopardize the plan’s tax-qualified status.
So why is this important? Plan documents are the framework that an individual retirement plan must follow. They are drafted based on laws and regulations set forth by three federal regulators: Congress, the Treasury Department (IRS), and the Department of Labor (DOL). The IRS is the main overseer, and it has the ability to “pre-approve” plan documents.
Meet Naomi Schempp
Naomi is a native of Garrison, North Dakota, and she has called Fargo home since 2002. She works on the trust side of HTC and has been a welcome addition to our team.
Tell us about yourself.
I received both an associate of science and an associate of arts degree from Williston State College. I continued my education and received a bachelor of arts degree in communications from North Dakota State University. Go Bison!