Personal Financial Goals -The Time for Action is Now

We all know the story of the shoemaker whose children went without shoes and the roofer who never got around to fixing his leaky roof. Except for the details, their stories may not be too different from our own. Despite knowing that we need to be doing something about planning for our personal financial goals – whether it is saving for retirement; doing a better job of managing our debt, or setting money aside for our children’s college education– most of us put off doing anything about it for one or both of two reasons: we aren’t sure where to begin, or we don’t think we have sufficient assets to make it worthwhile.

The truth is, there is no single place to begin when it comes to taking steps to improve your financial future; and there is no level of income or assets one needs in order to make the process worthwhile. You can take action regardless of where you are in life, and regardless of how much money you have (or don’t have).

The first step is probably the easiest: identify your current and future financial goals, goals that usually include; making sure your family is protected financially at your death; managing current expenses while paying down debt; accumulating sufficient assets for retirement; and in time, leaving something to family beneficiaries. If you’re willing to develop and put into action a carefully thought-out financial strategy, those goals can be within your reach. Steps to take now can include increasing contributions to your qualified retirement plan, which decreases your income tax liability; maximizing other employer-sponsored plans, such as disability and medical plans; and a focus on saving, investing and debt elimination. This is also a good time to review your life insurance to see if it is sufficient to meet your growing family’s needs. Life Insurance pays an income tax free death benefit your family can use to replace lost income in the event of your premature death.

But you’re not done yet. There are still steps you can take that consider how your financial goals will take into account items like taxes and potential penalties. For starters, make sure you’re putting any excess cash you can into accumulation vehicles that provide either a tax deduction or which grow income tax-deferred. You may also be eligible take advantage of the tax rules which allow individuals over age 50 to set additional sums of money aside into qualified plans on a pre-tax basis.

 The steps you take today can help towards building assets that will last for your lifetime, and still be able to pass assets on to your family beneficiaries in a manner of your own choosing. Now is also the time to consult with financial and tax advisors to review your will, durable power of attorney and perhaps establish a trust that can help maximize your estate and distribute your assets according to your wishes.

Working towards your financial goals is not something you accomplish just once…it’s something you keep accomplishing over the course of your lifetime – as you move through the various stages of life. But regardless of which stage you’re in when you start, the time to start is now.

This information is not intended as tax or legal advice.  Please seek the advice of a professional advisor prior to making any decisions regarding your own situation.

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A Fresh Look at Today’s Whole Life Insurance

A Fresh Look at Today’s Whole Life Insurance

The possibilities might surprise you

As children, most of us were read stories designed to teach us about life. Among the most popular of those stories was the one about the race between the tortoise and the hare.  As the story goes, the slow and predictable tortoise had agreed to a race against the fast yet unpredictable hare – a race he was not expected to win. Come race day, however, the predictable tortoise – in unpredictable fashion - lumbered across the finish line first, leaving the hare far behind in the dust. The life lessons to be learned: “never judge a book by its cover” and “slow and steady wins the race.”    

Now let’s consider another story, this one about a race between people trying to build a secure financial future and some fairly intimidating opponents: time, discipline, and consistency. Can we look for a lesson here from the tortoise and the hare? We can. If we liken today’s whole life insurance policies to the tortoise, with steady, if predictable qualities, we might be surprised to discover just how often that age old story repeats itself. We might also discover how many of us are still ‘judging the book by its cover’ when it comes to choosing life insurance to pursue our financial goals. 

Today’s whole life insurance contracts provide much more than just a death benefit and predictable cash value accumulation. Indeed, they have become fairly versatile financial tools designed to meet a number of needs and objectives. Let’s consider just a few:

Protection of assets

Of course, the primary feature of whole life insurance is its income tax-free death benefit. In the event of an early or unexpected death, life insurance proceeds can be used to self-complete a retirement savings program, pay for a child’s college education, buy out a deceased partner’s share of a business, pay off a mortgage, provide ongoing income to a spouse or family member, and generally help to ensure the financial stability of loved ones – especially if the “race” to financial security is cut short by premature death. Minus the relief that life insurance brings, thousands of homes, businesses, and retirements would be lost each and every year.

Asset Accumulation and Retirement Income Options

Secondary to the death benefit, but for many people equally as important, is the accumulation of cash values permanent life insurance provides. Slow, steady, and predictable at first – tortoise-like one might even say - over the course of ten, twenty or thirty years, life insurance cash values, especially given their tax-deferred accumulation, can grow substantially. What’s more, most whole life policies offer guaranteed cash values[1] which can be borrowed from the policy at retirement to supplement other sources of income.[2] Of course, they can also be borrowed to help children pay for college, to meet unexpected emergencies, or to take advantage of opportunities.

Business continuity

According to a recent study, less than 35% of family-owned businesses survive to the second generation.[3] Why is this? Because while many business owners have taken the time to spell out how their business will be transferred, they have neglected to plan for how the transfer will be funded. When a business owner dies, the other owners generally get the first option to buy his or her shares. And even though business interests are often willed to surviving family members, many buy-sell agreements include the stipulation that surviving family members, if not previously involved in the day-to-day business operations, must sell their interest to surviving owners. The cash received for this interest generally helps the family of the deceased meet its financial obligations while leaving the business in the hands of people best qualified to run it.

There are basically three methods for funding a buy-sell agreement: self-funding, borrowing, and life insurance. In a self-funded buy-sell agreement, the surviving owners can either pay for the business interest outright or through an installment plan. In reality, however, many surviving owners don’t have the ready cash. Borrowing can be equally risky, especially if interest rates are high or, if upon learning that one of the principals has died, lenders become hesitant to loan. Life insurance, on the other hand, can be an efficient (and possibly tax-deductible) method of providing the money when it is needed.

Estate preservation

Today’s estate taxes can consume a considerable percentage of a deceased person’s total assets. And while estate taxes don’t kick in until the value of an estate reaches $5.25 million (at 2013 rate), when you factor in the value of a large home or business, a significant number of estates do exceed this amount[4]. An alternative to liquidating a business or selling off estate assets in order to pay those taxes is often the purchase of life insurance in the amount of the estimated tax liability calculated by your tax professional. There are a number of strategies which can be used to keep the proceeds from the policy out of the deceased’s estate, while simultaneously reducing the size of the estate for tax purposes. (A qualified estate planning attorney can review these strategies with you.)

If you’re among those who are concerned about their future financial security, it may be time to give today’s whole life insurance policies a second look. They offer protection of assets, a potentially ready source of cash at retirement², and protection for loved ones should your “race” be cut short. So don’t judge the book by its cover - find out how today’s whole life insurance can help you succeed in the pursuit of financial security.

This information is not intended as tax or legal advice. Please consult with your Attorney or Accountant prior to acting upon any of the information contained in this correspondence.

The views and information contained herein have been prepared independently of the presenting Representative and are presented for informational purposes only.

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[1] Guarantees are dependent on the claims paying ability of the insurer.

[2] Loans and withdrawals will reduce the policy’s cash value and death benefit. If the policy lapses with an outstanding loan, taxes may be owed on that portion of the loan that exceeds the amount of premiums paid in.

[3] Kennesaw State University, Coles College of Business, Family Business Review, 2013

[4] Estate tax rates are subject to change at any time. The 2013 federal estate tax exemption is $5.25million; estates with taxable values in excess of $5.25 are subject to a top estate tax rate of 40%.  An estate’s “taxable value” is its total value minus the exemption and all other applicable deductions.

Charitable Giving Using Life Insurance

Many of us have charitable objectives.  We would like to repay society for the blessings we've received and, at the same time, fulfill a desire to “give back” to those who have given us so much.  But many of us may feel somewhat frustrated—having the desire to make substantial gifts and yet feeling that our resources will not permit it.  The common perception is that any meaningful charitable giving must be left to the wealthy. This is not necessarily so.

There is a method of giving that provides the opportunity to do far more for a charitable organization than you might think possible, even if your financial resources are limited.  The method is charitable giving using life insurance, and it is effective, simple to accomplish and beneficial to you as well as your designated charity.

To begin the process, you need only apply for the insurance policy and pay the premiums.  It is not necessary to set up a trust fund with its associated expenses, unless you want to do so.  The gift does not require constant attention as other types of investments may.  There are a variety of ways to set-up a charitable gift using life insurance:

·       You may give a gift that becomes self-completing.  Life insurance can provide for a self-completing gift in the event of your death or disability.

·       You may give a bequest at death.  The proceeds of the policy will be paid to your charity free of any federal estate tax.  This will be true whether you own the policy or the charity owns the policy.

·       You may continue to own the policy, and name your favorite organization as beneficiary.  If you are concerned that your family’s circumstances may change in the future, you may name the charity as “revocable” or “contingent” beneficiary and still retain flexibility and control.  The policy’s proceeds will be passed free of both gift and estate taxes.

·       You may give an existing policy.  You may have several insurance policies, each purchased at different times in your life to satisfy a specific need at that time.  Some of those needs may no longer exist (e.g., home mortgage or children’s education).  Your gift of that policy to charity allows you to take an income tax deduction for the amount of the policy’s fair market value (approximately the policy’s cash value) in the year you transfer the policy.  Any future premiums paid are also income tax deductible.

·       You may give policy dividends.  Life insurance policy dividends received in cash can be donated to charity.  This is an easy, economical way to make charitable gifts and generate income tax savings.

Charitable giving using life insurance is both beneficial and a favored means of making charitable contributions for a number of reasons:

·       The death benefit going to your favorite charity is guaranteed as long as premiums are paid.  This means that the charity will receive an amount which is fixed in value. (Guarantees are dependent upon the claims-paying ability of the insurance company

·       Life insurance provides an amplified gift that can be purchased on the installment plan.  Through a relatively small annual cost (premium), a large benefit can be provided for your charity.  A large gift can be made without impairing or diluting the control of your family business interest or other investments.  Assets earmarked for your family can thus be kept intact.

·       Life insurance is a self-completing gift.  If you become disabled, the policy can remain in full force through the waiver of premium rider.  Even if death occurs after only one premium payment, the charity is assured of its full gift. Additionally, the death proceeds can be received by your designated charity free of federal income and estate taxes, probate and administrative costs and delays, brokerage fees, or other transfer costs.

·       Because of the contractual nature of a life insurance contract, a large gift to charity is not subject to attack by disgruntled heirs.  Life insurance proceeds also do not run afoul of the so-called mortmain statutes which prohibit or limit gifts made within a short time prior to death.

·       A substantial gift may be made with no attending publicity.  Since the life insurance proceeds paid to charity can be arranged so that they will not be part of your probate estate, the proceeds can be paid confidentially.  Of course, publicity may be given if desired.

If you've ever wondered how you might "give something back", or felt drawn to support a particular charity, one of the most affordable and beneficial ways, is through the use of life insurance.

Be my guest for lunch or dinner in August for Money 101!

August Wine, Women & Wealth Dates

Wine, Women & Wealth

August 20 - NOTE NEW DATE

Rancho Bernardo

Bernardo Winery 13330 Paseo Del Verano Norte San Diego, CA 92128 Register here: http://goo.gl/BIjRkd

6pm to 8pm

August Money 101 Dates

Event	Date	City	Location	Time
Money 101	August 26	La Mesa	Sammy's Woodfired Pizza 8555 Fletcher Pkwy La Mesa, CA 91942 Register here: http://goo.gl/9Pu4Yh	6:30pm
Money 101	August 27	San Marcos	The Broken Yolk 101 South Las Posas Rd. San Marcos, CA 92078 Register here: http://goo.gl/f7mjSK	Lunch Express 12pm to 1pm
Money 101	August 27	San Marcos	Old Spaghetti Factory 111 N. Twin Oaks Valley Rd San Marcos, CA 92069 Register here: http://goo.gl/Syp9oq	6:30pm

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The secret sadness of retired men | LifeHealthPro

The secret sadness of retired men | LifeHealthPro

Aug Wine Women and Wealth Dates, be my guest!

August Wine, Women & Wealth Dates

Wine, Women & Wealth	August 4	Carlsbad	Hera Hub Carlsbad 5205 Avenida Encinas Carlsbad, CA  92008 Register here: http://goo.gl/BlqICC	6pm to 8pm
Wine, Women & Wealth	August 5	San Juan Capistrano	Rancho Capistrano Winery 26755 Verdugo St Suite 100 San Juan Capistrano, CA 92675 Register here: http://goo.gl/jn8UiQ	6pm to 8pm
Wine, Women & Wealth	August 6	La Mesa	San Pasqual Winery 8364 La Mesa Blvd. La Mesa, CA 91941 Register here: http://goo.gl/uhwH7h	6pm to 8pm
Wine, Women & Wealth	August 27	Rancho Bernardo	Bernardo Winery 13330 Paseo Del Verano Norte San Diego, CA 92128 Register here: http://goo.gl/BIjRkd	6pm to 8pm