Planning for a Hobby that Costs Almost as Much as Children
There is an estimated 2 million horse owners in America, and millions more are affiliated in the equestrian industry as employees, volunteers, and service providers. These clients have a special set of financial needs. The hobby may be expensive, but any horse lover will tell you that it is worth it and there is no going back.
How to build a plan for a horse enthusiast without scrimping on the client’s own long-term care, retirement, family and other needs? One must consider the expenses of riding lessons, purchasing a horse, boarding, vet bills, farrier bills, dentist bills and show costs, among many others. Clients can spend between $6,000 and $25,000 per year, per horse depending on depending on circumstances. “Horses can live 30 years, and depending on the kind of owner, they could be making a longer financial commitment than to a child,” says California-based advisor Brooke Salvini of Salvini Financial, who is also an equestrian.
Like children, horse take a considerable amount of time and expense. They require regular dental check-up, medical appointments, and re-shoeing for developing hooves – the horses, not the children. “Some [clients] can easily afford the activities, while others need to prioritize and plan to be able to meet their retirement goals,” says California-based Wells Fargo advisor Sandra McPeak.
Avid horse owners also need to be aware of changes in the tax code that could effect their expenses year-to-year as well as the transfer of their precious animals at the end of their life. For the first time ever, an owner’s qualified business income from a pass-through is allowed a 20% deduction. Additionally, the modified estate tax will reduce the number of family businesses that are susceptible to it.
See Amanda Schiavo, Planning for a Hobby that Costs Almost as Much as Children, Financial Planning, September 11, 2018.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.