Fiduciary News

Welcome to the first 2025 edition of Towerpoint Wealth’s Fiduciary Group Newsletter, Fiduciary Focus!

As fiduciaries ourselves, we understand the critical responsibility that comes with being entrusted to shield our clients’ assets. We’re here to provide you with fresh insights and practical tools to help you diligently navigate Trust Administration, Special Needs Planning, Conservatorships, and Estate Administration.

Drawing on 27 years of combined experience, our Fiduciary Group at Towerpoint Wealth offers guidance to professional private fiduciaries, third-party trustees, conservators, administrators, and family members. As an independent Registered Investment Advisory firm, we adhere to the same fiduciary standards as the professionals we serve. This dedication ensures that every recommendation aligns with the Uniform Prudent Investor Act and California State Probate Code.

With the new year underway, we remain committed to giving you the support and expertise you need to carry out your fiduciary duties effectively. Whether you’re seeking clarity on complex regulatory matters or looking to provide better service to your clients, our goal is to equip you with the knowledge and resources you need to excel.

We hope you find this newsletter both informative and empowering as you continue to uphold the highest standards of fiduciary care in 2025. We hope you enjoy this edition of Fiduciary Focus!

The 5 Things Professional Fiduciaries Should Know About the New Trust Inherited IRA Regulations

Welcome to our 2025 edition of Fiduciary Focus! In this issue, we’re going to dive into the new Inherited IRA & Required Minimum Distribution (RMD) rules under SECURE Act 2.0 and their implications for fiduciaries managing trusts. 

With the shift away from “stretch IRAs” to more restrictive timelines, it’s critical for professional fiduciaries to understand how these regulations affect tax strategies, distribution requirements, and compliance obligations. Let’s discuss how you can navigate these changes to better serve your clients.

What is the SECURE 2.0 Act?

The SECURE Act 2.0 builds on the original SECURE Act’s overhaul of inherited IRA rules, which introduced the 10-year rule for many beneficiaries. This shift effectively eliminated the “stretch IRA” strategy for most non-spouse beneficiaries, accelerating timelines for required withdrawals. 

With the latest updates, the IRS has clarified how required minimum distributions (RMDs) work under the new framework, highlighting the importance of staying informed and adjusting trust language to align with these changes.

1. The 10-Year Rule

One of the most significant changes introduced by the SECURE Act is the 10-year distribution requirement for most non-spouse beneficiaries. This rule requires that the inherited IRA funds be fully distributed within a decade of the original owner’s death, effectively limiting the “stretch IRA” strategy many beneficiaries previously enjoyed. 

While this change may simplify some aspects of distribution, it can also trigger substantial tax consequences if not managed carefully. For fiduciaries handling trusts, it’s crucial to review the trust’s terms to ensure they don’t inadvertently force premature distributions or create unintended tax burdens. Proper planning here can help you preserve a trust’s overall value.

2. Exceptions to the 10-Year Rule

While the 10-year rule governs most inherited IRAs, certain beneficiaries are exempt from these compressed timelines. 

Known as “eligible designated beneficiaries” (EDBs), this group includes surviving spouses, minor children of the decedent (under the age of 21), and individuals who are disabled or chronically ill. EDBs may still have the option to stretch out distributions over their lifetime, helping to minimize the annual tax impact. 

For fiduciaries overseeing trusts, identifying whether a beneficiary meets EDB criteria is a crucial responsibility. Using the right trust provisions can preserve a more favorable tax schedule for beneficiaries. This not only aligns with the beneficiary’s best interests, but also ensures greater long-term value of the assets.

3. Required Minimum Distributions (RMDs)

The SECURE Act 2.0 brought additional clarity on how annual RMDs interact with the 10-year rule. In some cases, beneficiaries may need to take yearly withdrawals rather than waiting until the end of the 10-year period to empty the account. 

If the original IRA owner was already subject to RMDs, the beneficiary typically must continue taking them. As a fiduciary, it’s essential to confirm whether the trust’s beneficiaries fall under these provisions. Missing an RMD deadline can trigger substantial IRS penalties, so timely guidance can save clients both stress and money.

4. The 5-Year Rule

The 5-Year Rule for Inherited IRAs applies in specific cases when the entire IRA balance must be withdrawn within five years of the original owner’s death. This rule generally applies to non-designated beneficiaries — such as when an IRA has no individual beneficiary, or it is left to an estate, charity, or non-qualifying trust — and when the original owner passed away before reaching their Required Beginning Date (RBD) for taking RMDs (now 72, 73, or 75 depending on their birth year per SECURE 2.0).

If the owner hadn’t yet started RMDs, the 5-Year Rule applies unless the beneficiary qualifies for lifetime distributions. Under this rule, no annual RMDs are required; however, the entire account must be fully distributed by December 31 of the fifth year following the owner’s death. 

Conversely, if the original owner had already begun taking RMDs, the 5-Year Rule would not apply, and distributions would instead follow the original schedule or the 10-Year rule.

For example, if an IRA owner dies at age 65, before reaching their RMD age, and names his estate as the beneficiary, the estate must withdraw the full IRA balance by December 31 of the fifth year after his death. This accelerated distribution timeline can lead to a concentrated tax impact, making it crucial for responsible fiduciaries to plan accordingly.

5. Ongoing Regulatory Changes and Compliance

The regulatory landscape surrounding Inherited IRAs continues to evolve, with the IRS regularly issuing new guidance on the practical application of SECURE Act 2.0. Even minor updates can alter timelines, distribution methods, or reporting requirements. As a fiduciary, remaining vigilant is key — subscribing to official IRS updates, attending professional webinars, and consulting with tax and estate planning experts can help you stay ahead of these shifts. 

By proactively adjusting trust documents and distribution strategies in response to emerging regulatory changes, you can more effectively serve your clients’ best interests and fulfill your fiduciary duties. Proactive compliance isn’t just about avoiding penalties, but about optimizing the financial outcomes for the clients you serve.

Staying Ahead of the Curve

Navigating the updated Inherited IRA regulations under SECURE Act 2.0 can be complex, but remaining informed and proactive is key to fulfilling your fiduciary responsibilities. By understanding the 10-year rule, potential exceptions, RMD requirements, and the need to revisit trust design, you’ll better serve your clients’ long-term interests. 

If you have questions about updating existing trusts, crafting new strategies, or staying on top of regulatory developments, feel free to contact our Fiduciary Group for personalized guidance.

Economic Market Update: Interest Rates and Consumer Impact

The recent Federal Reserve meeting sets a cautious tone for 2025. After implementing 100 basis points in rate cuts late last year, the Fed has now opted for a “wait and see” approach, pausing further rate changes while they closely monitor incoming economic data.

The latest FOMC statement reflects subtle shifts — labor market conditions are now described as stable rather than weakening, and instead of progress toward a 2% inflation target, the language simply states that inflation “remains somewhat elevated.” This change hints at a more “hawkish” outlook, even as the Fed maintains its current policy stance, prepared to adjust if economic data, such as labor trends or M2 growth, indicate the need.

For fiduciaries managing client assets, these developments highlight the importance of staying agile. The potential for higher borrowing costs and shifts in fixed-income yields could impact overall portfolio performance. 

Close monitoring of market conditions and timely adjustments in asset allocation strategies will be critical. This proactive approach can help safeguard client investments amid an evolving economic landscape, ensuring that portfolios remain resilient while navigating the uncertainties ahead.

Towerpoint Wealth’s Fiduciary Group Updates

Catch Our Newest Podcast Episode!

Check out our latest episode of “A Wealth of Knowledge“, Towerpoint Wealth’s original podcast, where we dive into the intricate world of private professional fiduciaries. In this episode, we dive into the role of a professional fiduciary and how our Fiduciary Group steps in to help fiduciaries navigate this role.

2025 PFAC Conference

We’re thrilled to announce our attendance at the 2025 PFAC (Professional Fiduciaries Association of California) Conference! We look forward to engaging sessions, networking opportunities, and updates on the ever-evolving fiduciary landscape. Mark your calendars for May 7-10, 2025!

Spring Mixer 2025: Mark Your Calendar!

After the success of our previous spring mixers at Revolution Winery + Kitchen in 2023, and The Sutter Club in 2024, we’re thrilled to continue the tradition in 2025! We’ll be announcing this year’s venue in the coming weeks, so stay tuned!

This exclusive, invitation-only event brings together top finance professionals — CPAs, attorneys, fiduciaries, and more — to expand their networks, explore collaborative opportunities, and stay on the cutting edge of industry trends. Keep an eye on your inbox for further details and your official invitation.

We look forward to welcoming you on May 15, 2025!

Welcome to the Fall edition of Towerpoint Wealth’s Fiduciary Group’s Newsletter – Fiduciary Focus! 

As fiduciaries, we recognize the importance of safeguarding our clients’ assets. Our goal is to equip you with the insights and tools you need to navigate the complexities of Trust Administration, Special Needs Planning, Conservatorships, and Estate Administrations with proper expertise and care.

The Fiduciary Group at Towerpoint Wealth leverages a combined 27 years of experience to advise professional private fiduciaries, third-party trustees, conservators, administrators, and family members through their fiduciary responsibilities.

Most importantly, as an independent Registered Investment Advisory firm, we are bound by the same fiduciary standards as the fiduciaries we work with. We are committed to providing you with guidance that helps you fulfill your duties per the binding guidelines of the Uniform Prudent Investor Act and California State Probate Code. 

Subscribe today to the Fiduciary Focus quarterly newsletter to stay informed and enhance your financial management knowledge. Our friendly and informative newsletter provides financial tips, updates on upcoming events, and recent releases. Delivered directly to your inbox, it’s a simple way to stay up to date with the latest insights and tools to support your fiduciary duties.

How Fiduciaries Can Help Clients Evaluate Rental Property Profitability

One of our key responsibilities as conscientious fiduciaries is ensuring that we are making informed decisions for our clients that align with their long-term financial goals. 

Real estate, particularly rental properties, is increasingly seen as a lucrative wealth-building strategy; however, with opportunity comes complexity, so it’s the fiduciary’s role to navigate the complexities of determining whether rental property investments are truly worthwhile on behalf of their clients.

In this newsletter, we’ll discuss how to calculate the return on investment rental property (ROI and ROE) for clients’ rental properties and provide a Rental Property Analysis Calculator that you can use to evaluate a property’s cash flow characteristics.

Understanding the Basics of Returns on Rental Properties

For fiduciaries managing rental properties on behalf of their clients, it’s crucial to go beyond just evaluating rental income. When looking at how to calculate the return on investment rental property, a true analysis of the property’s return requires looking at both Return on Investment (ROI) and Return on Equity (ROE).

ROI measures the profitability of the initial investment by evaluating how effectively the rental income and expenses translate into cash flow. This is often calculated based on the amount of money initially invested, such as the down payment and closing costs.

However, as the property appreciates over time and the mortgage is paid down, the client’s equity in the property grows. This is where Return on Equity (ROE) becomes a much more important metric to assess. While the ROI might remain stable, the ROE could diminish over time if the property’s cash flow isn’t growing at the same rate as the equity.

Fiduciaries should regularly evaluate the ROE to determine whether the client’s increased equity is being effectively leveraged, or if it may make sense to invest that equity elsewhere. 

A property with high equity but low cash flow might not provide the best long-term returns, especially compared to other investment opportunities like stocks or bonds that don’t require active management. By keeping an eye on both ROI and ROE, fiduciaries can make informed decisions about whether to continue holding the property or reinvest the equity elsewhere for better returns.

Factors that Influence Rental Property Returns

Several variables affect the returns of a rental property, and fiduciaries are well-positioned to make these decisions for their clients. These include:

• Initial Investment Costs: These consist of the property’s purchase price, closing costs, renovation expenses, and any other fees required to get the property rental-ready.
• Ongoing Expenses: Maintenance, repairs, property management fees, insurance, and property taxes are all factors that can eat into profits if not accounted for correctly.
• Income Generation: Fiduciaries need to assess rent received, occupancy rates, and the potential for rental income growth on behalf of their clients. This income must also be offset by the time costs associated with managing the property. Vacancy periods, rental market fluctuations, and tenant turnover will also impact income.
• Market Conditions: The overall real estate market and economic conditions influence the appreciation of the property and its future resale value. 
• Time Investment: The time cost associated with managing rental properties. Unlike passive investments such as stocks or bonds, which require minimal time and oversight, rental properties often come with an active management requirement. For professional fiduciaries billing hourly, this time can add up and impact the overall return for the client. 

Working through these components ensures that decisions are made based on solid data rather than optimism or market trends alone. As fiduciaries, analyzing all of these factors enables us to fulfill our duty of care and make sound, long-term investments.

Why Accurate Rental Property Analysis is Key to Long-Term Success

One of the most significant challenges in investing in real estate is avoiding the temptation to base decisions on short-term market hype or incomplete data. As fiduciaries, we have not only the ability but the responsibility to ensure that our analysis is accurate and aligned with our client’s overall financial objectives.

By performing a thorough rental property analysis, professional fiduciaries can avoid costly mistakes and make informed decisions for their clients. 

Proper analysis helps fiduciaries determine whether the property will enhance or hinder their clients’ wealth-building initiatives. Fiduciaries play a critical role in forecasting the impact of real estate investments on overall retirement, tax planning, and overall portfolio diversification goals.

Need help analyzing a property’s profitability? Check out our Rental Property Calculator! Just enter the details of the real estate, and our calculator will help you qualify your client’s property as a real estate investment.

2023-2024 Tax Season Tip

Leverage a 1031 Exchange to Defer Capital Gains Taxes

When fiduciaries are considering selling an investment property for a client, one of the most effective strategies for deferring capital gains taxes is utilizing a 1031 exchange. 

Named after Section 1031 of the Internal Revenue Code, this provision allows investors to defer paying capital gains taxes if they reinvest the proceeds from the sale of one investment property into another like-kind property.

The key benefit of a 1031 exchange is that it preserves your clients’ capital, allowing them to continue growing their real estate portfolio without an immediate tax hit. By deferring taxes, clients can potentially reinvest more capital into a higher-value property, thereby increasing their potential for future cash flow and appreciation.

It’s important to note that the IRS has strict rules regarding 1031 exchanges. 

It is important to note, however, that there is a 1031 exchange timeline that must be followed for investors to qualify. 

To qualify, the replacement property must be identified within 45 days of selling the original property, and the transaction must be completed within 180 days. Additionally, the replacement property must be of equal or greater value to fully defer capital gains taxes.

1031 Exchange Timeline

By advising clients on the benefits and requirements of a 1031 exchange, including the 1031 exchange timeline, fiduciaries can help them manage their tax liability while continuing to build long-term wealth through real estate investments.

Maximize Your Investment: Try Our Rental Property Analysis Calculator Today

Discover the true potential of your real estate investments by using our comprehensive Rental Property Analysis Calculator. By clicking here, you can easily assess the profitability of your rental property and gain valuable insights into your financial strategy. This tool helps you evaluate crucial factors such as cash flow, ROI, and other metrics to make informed decisions and maximize your investment potential. Take the guesswork out of your financial planning and unlock smarter, data-driven decisions for your rental property portfolio today.

Focus on this

Managing fiduciary responsibilities can be complex, but you don’t have to do it alone. Schedule a consultation now to learn how our fiduciary team can help you streamline your processes, stay compliant, and deliver exceptional results for your clients.

Looking for more?

Announcements & Upcoming Events

• November 7 – Thank you to those of you who attended Towerpoint Wealth’s open house event yesterday celebrating our new office space, it was a pleasure having you there!
  
• November 18-20th – Megan and Jonathan will be attending the Fox Rothschild Fiduciary Attorney Summit and hope to see you there!

 

Welcome to the second edition of Towerpoint Wealth’s Fiduciary Group’s Newsletter – Fiduciary Focus! 

As we are also held to a fiduciary standard, we understand the weight of our responsibility to safeguard your clients’ assets. We are here to provide you with the insights, strategies, and tools you need to excel in this vital role.

Our Fiduciary Group combines 27 years of experience in guiding professional private fiduciaries, third-party trustees, conservators, administrators, and family members through their fiduciary responsibilities. 

We are dedicated to providing the tools and resources to help you navigate the complexities of Trust Administration, Special Needs Planning, Conservatorships, and Estate Administrations with proper expertise and care.

As an independent Registered Investment Advisory firm, we are here to help guide you through your duties conforming with the binding guidelines of the Uniform Prudent Investor Act and California State Probate Code – bound by the same fiduciary standard as the fiduciaries we work with. 

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Your Fiduciary Duty: Considering the Effects of Inflation and Deflation

As vigilant fiduciaries, your duty to act in the best interests of your clients is governed by the principles outlined in the Uniform Prudent Investor Act (UPIA) and the California State Probate Code. Today, we’re going to be zooming in on California Probate Code 16047(c)(2). 

California Probate Code 16047(c)(2) directs fiduciaries to consider the impact of inflation and deflation when investing and managing trust assets. Understanding – and mitigating – these potent economic forces is essential to both preserving and enhancing the value of our clients’ assets.

While we all have the responsibility for ourselves or our clients to consider these factors when making investment decisions, professional fiduciaries have the legal obligation to be prudent in their decisions to exercise reasonable care, skill, and caution. 

By understanding the effects of inflation, fiduciaries can help safeguard their clients’ assets from inflation and mitigate the impact of eroding purchasing power and diminishing real value returns. 

 

 

It’s also important to consider inflation as it relates to income needs and long-term planning when making decisions in a fiduciary capacity for clients. Beneficiaries often rely on income from the trust or estate to cover their living expenses. If inflation rises, the cost of living increases – therefore, a higher income is needed to maintain the same standard of living under these increased prices.

Inflation also affects long-term planning as, when the cost of living increases, fiduciaries must ensure that income streams grow enough to maintain purchasing power over time. This may involve incorporating investments that are expected to outpace inflation or using investment options that include inflation protection.

Conversely, deflation can increase the real value of investments but decrease the asset and investment values, slowing asset growth. As far as debt is concerned, deflation increases the real value of debt, making it more expensive to repay in terms of purchasing power. 

As fiduciaries, we must remain vigilant and proactive in adjusting investment strategies to safeguard against these shifts.

1. Avoid allocating excessive cash balances in the bank or low-interest-bearing accounts for an extended period of time. Fiduciary clients with large cash holdings risk losing real value on their assets, which could otherwise be invested in options that provide growth and a better hedge against inflation. To fulfill their fiduciary duty, advisors must balance liquidity needs with growth objectives.

2. Diversify trust assets. Diversification is a fundamental strategy for managing the risks associated with both inflation and deflation. By spreading investments across a variety of asset classes, fiduciaries can balance the portfolio’s exposure to different economic conditions.

 

 

3. Regularly Review and Adjust the Investment Strategy. As economic conditions change over time, like in an inflationary or deflationary period, it’s imperative to actively monitor and adjust investment allocations. This includes conducting periodic reviews to ensure the portfolio aligns with client objectives, rebalancing the portfolio as necessary, and remaining informed on economic factors and policies that may impact the portfolio’s performance.

Working with a financial advisor held to a fiduciary standard, like our advisors at Towerpoint Wealth, can help you as a professional fiduciary manage your fiduciary responsibilities. 

Partnering with a financial advisor acting in a fiduciary capacity can help you offload some of the liability of managing your clients’ financial assets.

Adhering to the California State Probate Code 16047(c)(2) requires a diligent, informed approach to managing inflation and deflation risks. By doing so, we uphold our fiduciary duty by protecting our clients’ interests and optimizing their investment returns in changing economic environments.

 

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2023-2024 Tax Season Tip

Fight Inflation on Large Cash Balances in a Tax-Efficient Manner

When working with clients in a fiduciary capacity to mitigate the effects of inflation on their portfolios, it’s vital to also consider the tax implications of investment decisions. 

Investing large cash balances in tax-efficient alternatives such as Treasury Bills (T-Bills), Municipal Bonds, TIPS, and Floating Rate Instruments can help you balance the preservation of capital with tax efficiency.

1. Treasury Bills (T-Bills): T-Bills are a tax-efficient option for large cash balances as they are exempt from state and local taxes, providing a safe place to park cash with competitive returns while preserving capital.

2. Municipal Bonds (Muni Bonds): Muni Bonds offer tax-free interest at the federal (and sometimes state and local) levels, making them an attractive choice for high-income clients looking to shield income from taxes while still benefiting from inflation protection

3. Treasury Inflation-Protected Securities (TIPS): TIPS adjust their principal with inflation, preserving purchasing power. This makes them a direct hedge against inflation. Although their interest is taxable at the federal level, it is exempt from state and local taxes, enhancing their overall tax efficiency.

 

4. Floating Rate Instruments: Floating Rate Securities provide interest that adjusts with market rates, helping to combat inflation. They offer tax efficiency by generating interest income that can be more predictable in changing economic conditions, minimizing tax impacts compared to fixed-rate securities.

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Focus on This

 

 

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Announcement

We are thrilled to announce our relocation to a new, larger office within our current building! We’ve moved up 10 floors and are now located on the 20th floor of the BMO Building (formerly Bank of The West) at 500 Capitol Mall, Suite 2060.

This move is a result of our sustained growth and ongoing commitment to providing exceptional wealth management services, planning, and counsel to each of our clients.

We invite you to visit us soon and keep an eye out for an upcoming open house invitation later this fall!

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If you need help reviewing your clients’ portfolios for tax savings opportunities or you need assistance in implementing any of these strategies – we are here to help. Reach out to Jonathan LaTurner or Megan Miller at the Towerpoint Wealth Fiduciary Group.

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