November e-News

Warm your neighbors!

Washington Trust will be celebrating the season with hat and mitten trees in every branch this holiday season. Employees and customers are encouraged to donate an “item of warmth” and place it on one of our trees. We will donate all the items to local shelters to help our neighbors in need. We hope you will enjoy this month's eNews and welcome your comments and suggestions.

Click Here:  Free Local Coupons!
Think Local this holiday season with Washington Trust's coupon book of discounts from local businesses.

Washington Trust is giving our customers a special gift this holiday season: Our “Think Local” Community Coupon Book featuring thousands of dollars in discounts from hundreds of local business customers!

Fifteen thousand coupon books will be available at our branches just after Thanksgiving.

As an added bonus, e-News subscribers will receive coupons in our newsletter each month! Click here for your December coupons!

“As a local community bank, we are committed to doing what we can to help strengthen the local economy,” said John C. Warren, chairman and CEO of Washington Trust. “The coupon book is one way we can encourage our customers to support local businesses.” Washington Trust also promotes local businesses through “Business Spotlight” in branch displays and through in-branch digital advertising, on the Bank's website, and through eNewsletters.

The book contains more than 200 coupons, with offers from businesses from Pawtucket, Rhode Island to Pawcatuck, Connecticut. Each month features a variety of coupons, with offers such as discounts on oil service, clothing, dining and more. Coupons are valid for one month each through the end of 2010.

Tech Tip: Buying Wireless This Holiday Season

Barbara Perino, Senior Vice President, Operations & Technology

As the holidays approach, more people are shopping for home computers, laptops and wireless devices to connect to the Internet. Wireless devices have made it easy to share your Internet connection among your home computers, printers, iPhones, book readers like the KindleTM and gaming consoles without the clutter of wires and cables in your home. This is great technology, but keep in mind that it's important to set up these devices securely to ensure that your personal information is safe from unauthorized users. Below are some tips for securing your new purchases.

Virus Software
Viruses and malware can expose your passwords, slow down your new computer or be used to attack Internet sites without your knowledge. Make sure you are running the latest version of reputable virus software. These days, most internet service providers (Cox Communications, Comcast and Verizon Fios) provide this software to you free of charge. Contact your provider and ensure that you are protected.

Wireless Networks
Securing your wireless home network is important for two reasons; It prevents unauthorized users from using your Internet bandwidth and keeps unauthorized users out of your computer. Here are some simple tips for securing your wireless network.

• Change the default username and password on your wireless router. Most equipment comes with a default administrator name and password. This information is easy to obtain. Change this username and password to make it harder to gain access to your network.
• Reduce your signal range. Most people place their wireless router near an outside wall in their home. Move the router closer to the center of your home or apartment. The router's signal will become weaker as it expands outside your home.
• Encrypt your signal using WPA. Information that passes between your computer and your wireless device is more secure if it is encrypted. Newer wireless routers can be encrypted using either WPA or WPA2 encryption.
• Turn off your wireless network. If you are going to be away from your home for a period of time, turn off your wireless router and modem. This is an easy way to prevent access to your network. Don't worry about your e-mail. It will still be there when you power everything back up!

Year-End Tax Planning Tips

By Kent W. Gladding, Vice President & Investment Officer, Washington Trust Investors, and William LeFavor, Senior Financial Associate, MSFP, Weston Financial

Year-end is approaching quickly, and taxpayers are well advised to stop and think about how they can benefit from provisions of the tax code that are likely to change or expire in the next two years.

Congress just expanded two key tax breaks for first-time home buyers and current homeowners who have owned a home for five consecutive years. The first-time home buyer's credit is extended through April 30, 2010. For homes purchased after November 6, 2009 married couples can claim the full $8,000 tax credit if their adjusted gross income is $225,000 or less. The phase-out for single taxpayers starts at $125,000 and ends at $145,000. Purchasers who owned a home for five of the last eight consecutive years also qualify for a tax credit of up to $6,500 if they purchase another home between November 6, 2009 and May 1, 2010. The house must be the buyer's principal residence. Individuals who are interested in taking advantage of this credit should contact their tax advisor to assure they meet all of the specific eligibility requirements. Generally speaking, with the exception of high income earners, most buyers will qualify for the credit.

Car buyers can deduct the sales tax paid on new vehicles purchased before January 1, 2010. If you don't itemize, the sales tax paid can be added to the standard deduction. If you do itemize, you can deduct the sales tax paid in addition to your other itemized deductions. Naturally, the deduction is phased out for high income earners. Taxpayers subject to the Alternative Minimum Tax (AMT) can still benefit from buying a vehicle in 2009 because this special sales tax deduction is not added back to your income for purposes of calculating the AMT. However the deduction will be phased out for single taxpayers with Adjusted Gross Income (AGI) over $125,000, and couples with AGI over $250,000.

Investors should be diligent about reviewing their securities portfolios in the context of anticipated tax reform. The U.S. budget deficit is approaching epic proportions which will most likely lead to higher tax rates. President Obama has publicly advocated raising the long-term capital gains rate from 15% to 20%. Congress will most likely embrace this change. It therefore may make sense to accelerate the sale of capital assets to avoid a higher capital gains rate in the future. Given the market swoon last year, many investors still have unrealized losses that can be used to offset gains and therefore avoid a tax impact on the sale.

Buying mutual funds near year-end could create undue tax burdens if you purchase the fund in a non-retirement account before the dividend distribution date. You will pay a tax on the amount distributed regardless of the fact the gain was created before you invested in the fund. It therefore makes sense to avoid buying a mutual fund until after the distribution date.

On a positive note for taxpayers, a federal appeals court has affirmed a lower courts pro-taxpayer decision imputing a cost basis to shares of insurance firms that demutualized. Investors owning these shares should seek guidance from a professional tax advisor on the latest IRS policy regarding the calculation of gains from the sale of these positions.

Regardless of what changes occur, if any, to the current tax regulations, we've identified several important planning strategies that warrant consideration. These items may not apply to everyone, but each provides an important planning opportunity.

Other year-end considerations:
Roth IRA Conversion
In 2010, income limits for Roth IRA conversions have been suspended. This provides taxpayers of any earnings range the ability to convert assets currently held in Traditional IRA's to Roth IRA's.

• For those who qualify under 2009 income limits (MAGI less than $100,000) a partial conversion in 2009 could help to lower the tax burden should the top tax bracket rates be increased in the future, as previously discussed.
• Taxpayers who implement Roth conversions in 2010 may elect to pay taxes on the conversion in 2010 or over a two year period (2011 and 2012).
• Funding deductible or non-deductible Traditional IRA contributions in 2009 in preparation for the 2010 Roth conversion opportunity may be warranted.

Required Minimum Distributions (RMD)

• RMD's have been suspended for 2009. If you have any year-end distributions scheduled to occur and you do not require the distribution for cash flow purposes, consider deferring the distribution until 2010. Doing so will defer taxation for a year.

Year-End Gifting (Charitable and/or Personal)

• To date, equity markets have experienced robust growth since market lows in March 2009. Accordingly, if you plan to make year-end charitable donations, consider gifting highly appreciated, long-term capital gain assets, rather than cash. Doing so allows you to avoid paying capital gains taxes on those appreciated assets.
• For individuals with abnormally high income in 2009 (and expect the income level to drop in the future), it may make sense to fund current and future charitable gifts by funding a gift fund account.
• Year-end is also a good time to consider using some of your annual $13,000 gift tax exemption to transfer assets to children or other beneficiaries.

Funding of 529 Plans

• In order to maximize the eligible contribution to a child or other beneficiary's 529 plan account, make a contribution up to your annual gift exclusion in 2009 ($13,000 per person / $26,000 per couple), and follow that with an accelerated gift in 2010. 529 Plan rules allow for individuals to accelerate five years worth of gifts to an eligible plan. This would allow contributions in 2010 of $65,000 per person / $130,000 per couple. The overall affect is six years worth of contributions in a two to three month time frame.
• Check the rules for your state of residence, as several states, such as CT and RI offer state income tax deductions for 529 Plan contributions to that state's 529 Plan.

Year-End Tax Planning

• Be sure to discuss any safe harbor income tax requirements you may have for 2009 with your tax planner.
• If you have realized capital gains from sales of assets during the year, you may be able to harvest unrealized losses in your portfolios to offset the realized gains. In conjunction with current realized gains and losses, be sure to account for any capital loss carry forwards from prior years.
• Review your portfolio allocation. In conjunction with tax loss harvesting, take this opportunity to rebalance your portfolio.

Refundable AMT Credit

• If you have any long term AMT credit (must be at least three years old) you are eligible to claim a refund on that credit. The credit can be claimed 50% in the current year, and 50% in the following year.
• The credit will first be used to reduce your current Federal regular and AMT tax liability, anything left over will be refunded to you in cash.

It is important to review each of these strategies with your financial advisor to find out how you can maximize your financial benefits during these ever-changing times.

The opinions expressed in this newsletter are those of the author and may not reflect those of Washington Trust or Weston Financial. The information in this report has been obtained from sources believed to be reliable, but its accuracy and completeness are not guaranteed. Any opinions expressed herein are subject to change at any time without notice. Any person relying upon this information shall be solely responsible for the consequences of such reliance. Please seek tax advice from a tax professional.

New Warwick Branch Opens!

The Governor Francis Branch ribbon cutting was held on Tuesday, November 3rd with more than 80 business and community members in attendance. Pictured left to right: John Warren, Washington Trust CEO, Scott Avedisian, Mayor of Warwick; Vanessa Zampini, Washington Trust Branch Manager and Joseph MarcAurele, Washington Trust President.

Washington Trust recently celebrated the opening of its 18th branch office, located at 1473 Warwick Avenue in Warwick, with a ceremony for local officials, businesses, customers, and neighbors. Washington Trust Chairman and Chief Executive Officer, John C. Warren, and Bank President and Chief Operating Officer, Joseph J. MarcAurele welcomed guests to the facility that, in addition to offering state-of-the-art technology, security, and customer conveniences, features an interior décor that reflects the local community. Adorning the entrance to the branch is a mural of “Pawtuxet Cove” by the late Rhode Island artist Maxwell Mays. Other local scenes are depicted in Mays artwork and custom photography throughout the branch.

“We've had tremendous success at our Centerville Road branch in Warwick, so we're thrilled to open our second branch in the City here in the Governor Francis section,” said John C. Warren, chairman and CEO of Washington Trust. “As Rhode Island's largest independent bank, we are dedicated to the people, businesses, and places that make our community special. This branch represents our commitment to serving the needs of the Warwick area.”

“It is a pleasure to welcome Washington Trust's second branch to our City,” said Warwick Mayor Scott Avedisian. “Just as Washington Trust is known for its stellar customer service, it is also known for its deep involvement in Rhode Island. Washington Trust's support of local organizations is a testament to their investment in our communities.”

Washington Trust President and Chief Operating Officer Joseph J. MarcAurele presented a check for $1,000 to Eileen Barber, Executive Director of the Kent County YMCA.

The 4,270 square-foot branch includes five teller stations, including one with ADA accessibility; three drive-up banking lanes, a drive-up ATM, a night depository, safe deposit boxes and a walk-up ATM located in the entrance vestibule.

Use your Washington Trust debit card for hassle-free holiday shopping.

Your Washington Trust ATM Plus Debit MasterCard is two cards in one: an ATM card you can use at ATMs and a MasterCard you can use to shop at millions of locations worldwide! Even though the card has the MasterCard® logo on it, the ATM Plus card is not a credit card. Whether you use your ATM Plus card to get cash at the ATM, to shop at the supermarket, or to pay for dinner at your favorite restaurant, the amount of your purchase is automatically deducted from your Washington Trust checking account, so there are no post-holiday bills! It's fast and easy to use, safer than carrying cash and makes shopping a breeze!