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A Monthly Newsletter Source of Financial Sources • 16 Strategies for Saving Estate Taxes -- #1 -- Credit Shelter Trusts • 401k Toolbox’s “On Track” Retirement Planner Delivers Accurate Retirement Savings Projections to Employees, One-on-One. New Book: “The Sleep Well At Night Investor” by Tim Decker • A Short Course on ETFs for Your Asset Mix New Book: “We Need to Talk: Money & Kids After Divorce” by Linda Leitz • Joint Insurance Policies for Domestic Partners Improve Risk Management for Unmarried Couples • Cong. Barney Frank Headlines Pride Planners Sept. 27-29 Conference: Chair of House Financial Services Committee is keynote speaker • Customized Marketing Materials About Health Care Costs Lead to Increased Product Sales
16 Strategies for Saving Estate Taxes -- #1 -- Credit Shelter Trusts A simple Credit Shelter Trust (CST) has become a significant estate tax saving strategy for couples who do not want to lose the ability of protecting $2 million, depending on the year, of their estate from estate (death) taxes that would have to be paid by their children and heirs. These trusts are crucial in order to take advantage of strategies to lower estate taxes. A Massachusetts couple, for instance, who has no credit shelter trust will lose a credit of $1 million when the first spouse dies, and the second $1 million when the second spouse dies. That's a total $2 million that will be taxed and it could have been avoided. Implementaton is quite simple. A trust is created using half of the couple's assets, by the husband making his spouse beneficiary, but not owner of the trust. She does likewise, creating a CST for her half of the couple's assets. He can "shelter" up to $2 million in his trust so that no estate tax will be imposed on that amount. When the wife dies, she is beneficiary of trust, but does not own it and it is not considered part of her estate. The taxman will look only at her separate assets for tax purposes. Her husband's trust goes to his children and the part that was sheltered by the $2 million lifetime exemption passes to his heirs tax free. The wife dies, her CST functions in the same way, sheltering her half of the estate up to $2 million By putting assets into a CST and naming each other, the couple has no loss of control or beneficial interest in the assets as they are not giving the assets away. If the couple's assets are lop sided with the bulk residing in the husband's IRA, the couple might put all of their equal amount real estate holdings into her trust so that the exemption can shelter a great part of the real estate value Pearson Financial Services, Dennis, MA, is the author of "The Two Million Dollar Gift: Dynasty Trusts. Why Leave Your Assets Any Other Way", written for his clients, his clients' families, and his own family. He offers a fully integrated wealth management process, incorporating investment, retirement, financial and estate planning specialists under one roof, serving clients as their family's office, designing and implementing strategies to protect and distribute their wealth and highly appreciated property. Seth Pearson, CFP, 800-385-7925, seth.pearson@verizon.net. 401k Toolbox’s “On Track” Retirement Planner Delivers Accurate Retirement Savings Projections to Employees, One-on-One. R401k Toolbox, leading provider of advice to plan participants, announces its “On Track” retirement planner, delivered to employees by qualified financial representatives, in one-on-one, brief meetings, using a proprietary web-based “On Track” retirement planner software. “One-on-one” retirement counseling has proven to be the most critical difference in guiding employees to the decisions vital to get them “On Track” for a successful retirement,” says Tim McCabe, National Sales Manager, 401k Toolbox. “Studies show conclusively that consumers have refused to use financial calculators to manage their 401(k) plan investments themselves,” he says. “Now the professional advice they have needed for so long is available.” A short analysis is done during an in-person meeting that shows employees what their future retirement income will look like based on their current savings, their current deferral, and time left to retirement. When the employee is not on track, the advisor can offer the employee one or several ways to improve the retirement savings outcome, including: • Change the fund investments, that is, the asset allocation of the portfolios, accepting some risk, perhaps, to allow the portfolio to earn more; The “On Track” Retirement Planner measures the success of a participant’s savings in the only way that matters – whether he or she is on track for a secure retirement. This service is meaningful to both participants and their plan sponsors, as well as to the advisor who will provide the advice. The “On Track” report is an accurate evaluation of whether an employee is likely to be prepared for the financial issues of retirement, and completely overshadows the meaningless group statistics (participation rates) employers use to evaluate their plans, but statistics that fail to recognize whether an employee can enter retirement with the assets they need to ensure a secure retirement. “It is the most effective advice program ever brought to market,” says McCabe. “The ability of an advice provider to deliver effective one-on-one advice to participants has changed the way plan participants save for retirement. “This service will become the prime differentiator for plan sponsors choosing a plan provider, and rightfully so,” says Scott Randolph, Vice President, 401k Toolbox. Tim McCabe is national sales manager of 401k Toolbox -- Direct: 706-583-5208 - Cell-706 254-4481 – tim.mccabe@401ktoolbox.com, Wall Street Seducers: Convincing Investors to Gamble by Feeding Egos, Egging on Vices, and Promising to Make a Killing A new book “The Sleep Well At Night Investor” by Tim Decker, a Pennsylvania financial advisor, takes a look at the painful realities of the dynamics between the investor and the “Wall Street” investment professionals. He says that “believing the fairy tale” is the focus of Wall Street. The fairy tale is that Wall Street does its best to get investors to believe that investing is a competition between investors and the markets. Decker says that Wall Street wants investors to believe that armed with certain research, statistical data and special “proprietary” methods, that the investor can consistently achieve returns that are above the returns of the market itself. As a result, many investors run from one investment to the next, one adviser to another, and never get the investment results they seek. It is common to refer to the bundle of services and sales people who “plug in” the investor to the markets as “Wall Street”. In this book, “Wall Street” refers to the array of financial institutions and professionals who want you to believe that investing amounts to gambling with the lure of making it big. He uses a short story:
Those who want investors to gamble with their assets Decker calls the Wall Street seducers. They replace investing over the long haul with short-term speculation, and by necessity, rely on forecasts and predictions because t heir stated goal is always to outsmart the markets. There is no end to painful stories of investors losing more than they ever thought they could lose. Decker’s book provides excellent insight into alternative strategies – sleep well at night strategies – that the average investor can understand and implement. Tim Decker, President, ISI Financial Group, Lancaster, PA, is a fee-only financial advisor providing comprehensive financial advice and retirement planning. He is the author of the soon to be released book “The Sleep At Night Investor”. He can be reached at 800-342-5474. His radio show “Financial Freedom” can be heard every Saturday at 2:00 pm on WHP 580 AM providing financial guidance and answering questions from callers. Media review copies ot “The Sleep Well At Night Investor” are available by e-mailing beth_chapman@inkair.com with Sleep in the subject line. Provide a mailing address. Your copy will be mailed as soon as it is available from the publisher. A Short Course on ETFs for Your Asset Mix As consumers, you don't often ask your financial advisor about Exchange Traded Funds (ETFs). If they bring it up, they report receiving glazed looks back. Then launches the discussion of what ETFs are, how they work, and in what circumstances ETFs would be a suitable investment. ETFs can be a relatively low cost and tax efficient way to achieve exposure to one or more indexes. The explosion of ETFs gives investors and advisors access to investment strategies previously reserved for institutional managers and hedge fund managers. But this democratization of investing and investor access to ETFs gives investors a lot of rope with which they can hang themselves. Some investors and advisors are using ETFs as vehicles to time market entries and exits. Using ETFs for timing strategies is preferable to using mutual funds since rapid buying and selling of ETFs does not disrupt other shareholders of ETFs as it disrupts shareholders in a mutual fund. These strategies obviously counteract the low cost and tax efficiency appeal since rapid turnover of ETFs generates higher trading costs and can generate higher short-term gains. One danger in using ETFs is that advisors and investors may not be fully aware of what kind of ETFs they are purchasing. The iShares Xinhua China ETF (ticker FXI) only contains 25 stocks with the top 5 holdings making up about 40% of the portfolio. By comparison, the Matthews China Fund has 59 holdings with only about 19% invested in the top 5 holdings. The more concentrated ETF will be subject to greater volatility and more extreme periods of over and under performance. That fact is neither good nor bad, but an unsuspecting investor may not be prepared for the volatility inherent in such an ETF. Some ETFs sound safe such as the Powershares High Yield Dividend Achievers ETF (ticker PEY), but the ETF is too new to have even a three-year alpha or beta. The ETF consists almost entirely of stocks from the financial services sector and the utilities sector. The ETF has predictably suffered strong losses during the recent market turbulence. Many investors, instead, might suspect such an ETF to be fairly conservative. Donald L. McCoy, J.D., CMFC -- Planners Financial Services, Inc., 952-835-9000. Minneapolis, Minnesota. Registered investment adviser and subsidiary company Montgomery Investment Management, specialize in the management of no-load mutual fund portfolios for individuals and retirement plans designed to protect capital by reducing risk. pfs@usinternet.com. Who is in Charge of Your Money After Your Divorce? Financial despair punctuates most women's lives immediately after divorce as they adjust to being single, usually with custodial responsibility for the kids, and often are facing the need to find work. A soon to be published book "We Need to Talk –Money & Kids After Divorce” by author LInda Leitz, CFP, is aimed at single moms and how they can improve their financial well being after divorce and teach their children about money in the process. Leitz recognizes that money as a part of the divorce process is an emotionally charged, highly sensitive issue. Leitz says there are a few simple ways to lessen the stress about money and create a prosperous mind set and then, with work, a prosperous life. The key is to claim responsibility for your own financial affairs, says Leitz. Even if you did not handle the money in your marriage, you can certainly learn how to handle it now, she says. She calls this the "Only I Control Me" point of view that allows the newly divorced to take full responsibility for their finances. Divorce is a transition, and generally single women with kids are doing it with less money than was available to a two-parent family. To continue to spend at previous levels will mean, in many cases, that the household will run out of money. Not having enough money to meet basic needs is more difficult emotionally for parents and kids than making necessary adjustments in routine and spending that will allow a sustainable lifestyle. For both parties, it requires communication and the need to talk. Linda Leitz, CFP and EA, is an author and financial planner working with divorced and divorcing couples in Colorado Springs, CO. She is the author of the soon to be published “We Need to Talk – Money & Kids After Divorce”. Her earlier book "The Ultimate Parenting Map to Money Smart Kids," published in 2006, was the first in a series of books planned by Leitz. She can be reached at Linda@brightleitz.com or 719-260-9800. Media review copies of "We Need to Talk – Money & Kids After Divorce" by Linda Leitz, CFP, will be available to the media shortly. Please send an e-mail to beth_chapman@inkair.com with the word Divorce in the subject line and provide a mailing address. Your copy will be mailed as soon as it is available from the publisher Joint Insurance Policies for Domestic Partners Improve Risk Management for Unmarried Couples Whether same sex or heterosexual, unmarried couples often face excessive costs when trying to put proper risk management policies in place. In the past, to ensure adequate protection financial professionals would recommend that couples living together buy separate policies for home, auto and umbrella coverage. This could cost up to double that of legally married couples, according to Joshua T. Hatfield Smith, CFP®, CHFC, CLU, CLTC of SPC Financial, Rockville, Md., a financial planner with a large client base of gay and lesbian clients. The excessive cost created a hesitation to buy appropriate policies with often unexpected consequences. Couples would buy one auto policy for the car owner, for instance, and put the other partner on as a "driver." This did not insure the "driver" and left that partner "bare" when using a rental auto where generally, an insurance policy covers only the policy owner. Likewise, the couple could not take advantage of multi-car discounts available to legally married couples. "That's changing," says Tim Schaefer, Schaefer Insurance Services, LC, Germantown, MD. who provides for the insurance needs of many of Hatfield Smith's financial planning clients. "Activist, gay financial professionals are working diligently to make vendor companies aware of the needs of unmarried couples and the demographics of this market.” Schaefer particularly commends Erie Insurance (Erie PA, www.erieinsurance.com.) for offering joint home, auto and umbrella policies for domestic partners in eleven states and the District of Columbia. Some others have followed suit because the market is too large to ignore. "Meanwhile, unmarried couples should consult the Gay Yellow Pages available in most metropolitan areas or www.gay.com to find financial professionals and insurance agents who care about and are committed to serving this market and have up to date information on products that solve the financial needs of this community," says Hatfield Smith. Joshua T. Hatfield Smith, CFP®, CHFC, CLU, CLTC, is a financial advisor with SPC Financial Services, Inc., Rockville, MD -- jhatfieldsmith@spcfinancial.com -- 800-987-1901. JT is co-chair of the Fourth Bi-Annual Pride Planners Conference upcoming in Washington, D.C., September 27-29, a unique educational opportunity for financial professionals with interest in the LGBT, same sex and unmarried couple market segment. Cong. Barney Frank Headlines Pride Planners Sept. 27-29 Conference: Chair of House Financial Services Committee is keynote speaker This is the only financial conference that focuses on the financial and estate planning issues of the LGBT community. Conference sessions are designed to help financial professionals understand the changing law for serving the complex needs of this market segment, including: updates on marriage, civil unions and domestic partnerships - state-by-state, estate planning and trusts for beloved pets, estate planning to benefit crucial causes (Human Rights Campaign Foundation), common pitfalls in real estate ownership for LGBT couples, and much more. For a full listing of speakers, session topics, and registration information, go to http://www.prideplanners.org. Customized Marketing Materials About Health Care Costs Advisors are always looking for new material and topics to discuss with their clients, and long term health care issues certainly must be addressed by advisors and their clients. HealthView takes a four-prong approach to solving health care financial issues for clients and advisors. 1. HealthView provides advisors and their clients with the actual projected health care costs they will face during their retirement based on life expectancy given their personal health issues and family history. Most Americans aren't thinking or planning for their retiree health care costs. Many do not realize they are responsible for health care premiums - they assume their employers will continue to pay their premiums during retirement. Eighty percent of Americans think, incorrectly, that Medicare will cover all their long-term care and health care expenses. It does not. Medicare only covers 51% of the average retiree's total health care needs. 2. HealthView offers individual and very specific investment strategies to effectively fund retirees' future long-term health care expenses. 3. HealthView provides access to information on health care facts it is crucially important for all advisors to know. 4. HealthView offers educational and marketing materials that can be customized to help educate clients on the importance of planning for health care costs during retirement. Advisors can customize prospecting letters, marketing slicks, and seminars that focus on planning for health care costs. Educated advisors are in an ideal position to help their clients understand the magnitude of their future health care expenses by hosting seminars, sharing valuable information, and recommending financial products to fund prospects health care expenses. Providing key health care cost information to clients and prospects promotes a willingness to investigate financial solutions necessary to acquire the future dollars they will need for their long term health care costs. Ron Mastrogiovanni is the president of WorldCare North America, a provider of medical advisory services including Web-delivered health assessmen programs that offer personalized health risk tools and analyses. The company also offers independent medical consultation services through some of the nation's leading research institutions, including Brigham and Women's Hospital, Dana-Farber Cancer Care, Duke University Health System, Massachusetts General Hospital, and UCLA School of Medicine. WCNA's platform of services is provided to consumers through financial institutions, affinity programs and employers. To reach Ron Mastrogiovanni, call Joanna Flynn, WorldCare North America – 617-250-5167. |