Category Archives: Investments

How To Change Ownership on Stocks

By Jon Stevenson

Transferring ownership on stocks will require the following steps:

  1. Screen Shot 2014-02-24 at 9.42.53 AMObtain all the information relevant to your stock.

  2. Contact the transfer agent that holds your stock. If they have a form for the transfer, request they send you one. If not, draft a letter including number of shares, current holder, account number, certificate number and any other relevant information.

  3. Take the form or letter to your local bank or credit union and obtain a Medallion Signature Guarantee.

  4. Send in the transfer request form or letter (along with your stock certificate if you have one) to your transfer agent.

So that's pretty easy right? Okay good, but let me for warn you about some potential speed bumps.

First, make sure the information you have on your stock is the most recent information. If you have stock in a company that has merged with another company your stock may exist under a different name or you may have a different number or type of stock. A good rule of thumb would be information no older than a year.

Another thing to look for is that you have the right account for the transfer agent. Your stock might be in an account with a broker, in which case it might have a broker's account number as well as a transfer agent's account number. You want to be sure you are filling out the form with the transfer agent's account number.

You will also want make sure you're getting the Medallion Signature Guarantee from an institution able to cover the entire value of your stock. This stamp is a way of reducing the liability for transfer agent and protecting shareholders from unauthorized transfers and possible losses. It is not the same as a Notary Public stamp.

Lastly, I would like to emphasize the importance of attention to detail in completing a transfer of stock ownership. Stocks are an asset vulnerable to fraud so the companies that handle these assets are especially vigilant about their requirements. If the letter or form is not completed to their standards you will be asked to fill out a new form and to obtain a new Medallion Signature Guarantee. It is possible for this process, which should take only 4-8 weeks, to be stretched out over a year or longer.

To avoid such a delay, my best advice would be to ask someone who is familiar with completing such transfers to look over your transfer request. While the above includes some good tips, there is no replacement for the experience of an elder law attorney to advise your through the process.

 

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

Don’t let Retirement Benefits go down the drain!

By Robin Crouch

Screen Shot 2014-01-28 at 8.44.10 AMIf there is no beneficiary named on your retirement account, who inherits and how is the the required distribution calculated?

Unfortunately, there are cases where Dad died, Mom was the named beneficiary, but she predeceased him. OR, Mom inherited the IRA and died before naming her own beneficiary.

Each IRA has it's own rules and each IRA custodian has their own agreement with language that will indicate who inherits the IRA when there are no named beneficiaries. Most agreements default to the estate of the deceased IRA owner.

A designated beneficiary is a living, breathing person who can stretch distributions over their own life expectancy and pay the income tax accordingly. Traditional IRAs are typically funded with pretax dollars. Distributions out of the account after age 59½ are taxed as ordinary income at each individual's tax rate.

“The Estate of” does not have a life expectancy and has a limited ability to stretch distributions. If the IRA owner died before April 1 of the year after he turned 70½, the IRA must be emptied in five years. If he died after the required beginning date, you may have the option to stretch distributions over his remaining life expectancy.

Most IRA custodians will only make payments to the estate and not to the beneficiaries of the estate so stretching the distribution may not be an option. Instead, the custodian will pay the entire IRA balance to the estate. Not only is this is a taxable distribution and cannot be undone, the probate attorney and the executor's fees are based on the assets of the estate.

So, don't let your retirement funds go down the drain. It is very important that you seek professional advice to understand how your tax-qualified account works after you pass away and that your beneficiaries are named correctly to avoid the pitfalls of paying unnecessary taxes and probate fees.

Contact Us Today For A Free Consultation

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.
The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

We Live in a 401(k) World

By Julian Guilfoyle

“We now live in a 401(k) world – a world of defined contributions, not defined benefits.”

-Thomas L. Friedman Op-Ed columnist for the NY Times and author of The World is Flat

In “It’s a 401(k) World”, author Thomas Friedman summarizes the great possibilities and degraded safety net now faced by Americans. He states, “If you are self-motivated, wow, this world is tailored for you. The boundaries are all gone. But if you’re not self-motivated, this world will be a challenge because the walls, ceilings and floors that protected people are also disappearing. That is what I mean when I say, “it is a 401(k) world.” He continues, “Government will do less for you. Companies will do less for you. Unions can do less for you. There will be fewer limits, but also fewer guarantees. Your specific contribution will define your specific benefits much more. Just showing up will not cut it.”

Screen Shot 2013-05-29 at 10.36.25 AMThe theme of Friedman’s article reminded me of the changes faced by many, especially in the Midwest. I’m from Northeast Ohio, a region once dominated, for good and bad, by the steel industry. Many of my friends were born into families of steel workers. Whereas their mothers and fathers were able to walk into the factory a day after graduating high school, these opportunities were not available to my generation. No longer can we rely on assured employment and use hard work to advance through the ranks. In short, individualism has now shaped our lives. For example, “Shark Tank”, a popular TV show, allows entrepreneurs to showcase their start-up companies to investors, who in turn can invest in the companies they feel worthy. Kickstarter.com allows start-ups to reach the masses in the hopes of obtaining an infusion of cash to turn their dreams into reality. From this, we enjoy greater independence and creativity, but at the cost of stability.

This independence has spread to far more than employment. We live in a DIY(do it yourself) world. Web sites have sprung up offering a template for the average citizen to complete their own legal work. Many workers and retirees now manage their own investment accounts through the various financial websites available. Just as with employment, this can be both beneficial and disastrous. From a positive standpoint, people are now taking more ownership for their own lives and their legal and financial security. On the flip side, without the proper knowledge or education, this can lead to disastrous results. When Friedman stated that “everyone needs to pass the bar exam”, he meant that the world is so complex at this point that people must develop specific skills to survive. And these skills will be measured with increasing accuracy, whether by an employer as Friedman asserts, or by life itself.

The point is, that unless you are willing to self-educate in all aspects of life, you may want to consider leaning on advisors for topics that seemingly may not interest you. For example, if you asked people whether or not they wanted to leave a mess for their spouse or children, I would bet that most would answer emphatically, “No!” However, if you asked those same people whether or not they wanted to take the time to learn about potential hazards that can cause this mess, such as probate, or the steps that you can take to avoid them, see your eyes are already glossing over. I think people want to spend their retirement traveling, spending time with their families, and reinventing themselves. If you reinvent yourself as an attorney or financial advisor, more power to you. But if you would rather learn about the hazards that directly befall you and how to avoid them, you may find it better to subcontract to trusted advisors who work for you.

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DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person’s situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.

The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement.
If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 

A Bird in the Hand is Worth Two In the Bush

By Julian Guilfoyle

Screen Shot 2013-04-24 at 9.49.34 AMThe belief that it is better to have a lesser certain benefit than the possibility of a greater one that may come to nothing is a decision increasing contemplated by today’s retiree. George Yacik outlines this decision that can have severe repercussions in the February issue of Financial Planning. In an article titled “Weighing a Pension Buyout”, Mr. Yacik discusses the complex decisions these retirees face when deciding between a lump sum disbursement versus a promised income stream for life.

Retirement in 1985 was a simpler endeavor than it is today. Yacik writes that back then, “some 89 of the Fortune 100 companies offered a traditional defined benefit (pension) to newly hired salaried employees.” Towers Watson, a human resources consulting firm, has found that these figures have “completely flipped. In the Fortune 100 of today, 89 companies now offer only account-based retirement plans (for example, a 401(k)) to new salaried hires.” The purpose of this shift was to save money as these companies and their defined benefit plans began to feel the strain of the baby boomers reaching retirement age. The shift in retirement benefits affects not only workers entering employment, it has expanded to current retirees already receiving their pension benefits. Yacik cites a recent study completed by Aon Hewitt. They found that some “35% of the more than 500 large American companies said they were likely or somewhat likely to offer a lump-sum payout to their retirees and employees in order to put a cap on their pension liabilities.” Even if one is already in retirement, they may be forced to revisit this crucial decision.

While it has made retirement a more treacherous undertaking, there are some benefits to the worker. First, the retiree doesn’t lose a substantial amount of money should they pass away before their life expectancy. For example, lets take a 65 year-old male with $250,000 in retirement benefits. If a pension option based solely on his life expectancy is elected, the retiree should receive around $1400 per month for the rest of their life. Should the retiree pass away at 70, he would lose $166,000 plus the interest this money could have generated during that period. If the retiree had elected a lump sum option of $250,000 (and withdrew $1400 per month), the $166,000 plus accrued interest would pass to the spouse as an IRA or to the children. This obviously works the other way as well. If the retiree lived past his life expectancy or if the lump sum saw a decline due to market losses, the retiree may outlive the lump sum disbursement.

The second benefit to retirees is that they control their own destinies. If the lump sum is rolled into an IRA the retiree has unlimited investment opportunities. The IRA can be transferred into whatever type of investments they desire. Depending on the size of the IRA and the investor’s goals, the IRA can also be split. A portion could be set aside to generate an income stream, another to provide for long-term care insurance, and the remainder to achieve long-term market growth. If the pension option is elected, the retiree is restricted to the pension fund manager’s investment ability. It is also subject to revisions made to retirement benefits by their previous employer, collective bargaining agreements, or bankruptcy proceedings.

Though the lump-sum option is becoming increasingly attractive to retirees, it is imperative that the transfer to an IRA is handled appropriately. If the retirement is not transferred correctly, the entire lump sum could be taxed as income, all in one year. This is one of the many reasons you should be working with both legal and financial advisors to guarantee a smooth transition from employment to retirement. If you are approaching retirement or if your former employer is considering modifying your existing pension, please feel free to call our office at 800-798-5297 to schedule a free consultation and discuss the options that are available to you.

http://www.financial-planning.com/fp_issues/43_2/Weighing-a-Pension-Payout-2682991-1.html?pg=3

 
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Contact us for a free consultation.

DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person’s situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.

The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement.
If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 

Another Reason to Have a Trust

By Attorney Dan Vu

There are many benefits to having a trust. There are plenty of blogs on this website that tout the major benefits which, depending on what type of trust you have, can run from avoiding probate or achieving tax savings to protecting assets from the cost of long term care. However, there are some relatively unknown benefits that trusts also have. These benefits, in the right situation, can be a major help.

For example, did you know that your bank accounts can be FDIC insured to a higher maximum amount if they are owned by a trust? Normally, the FDIC will insure an owner up to $250,000. Consider this: If you have $300,000 in a bank account titled to you alone, $50,000 will not be insured in the event your bank cannot honor your deposits (that is, if they go under). On the other hand, if your trust is the owner of your bank account, FDIC insurance is based on the number of beneficiaries you named in the trust. So, with our example of a $300,000 bank account, FDIC insurance is calculated by multiply $250,000 by the number of beneficiaries you named. For example, if you are single individual, and your trust has named your three children as the death beneficiaries, the FDIC will cover your bank account up to $750,000 (3 X $250,000). So even though your death beneficiaries have zero ownership over the trust during your life, the FDIC will insure you in consideration for their future interest.

As a warning, the rules get complex if you start changing the type of ownership and the amount of beneficiaries. The easiest way to determine your FDIC insured amount is to use their calculator.

They call it the EDIE Estimator. Use this calculator to determine your FDIC insurance. You can find the link here: https://www.fdic.gov/edie/calculator.html

DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you. No attorney-client relationship is created by this site. The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 

Is my Bank Secure?

 

By Kathy Cooper
 
Do you have a reason to worry about the security of your money in your bank?  Let's look at the facts:

In a recent posting, Fivecentnickle.com projected that about 10-20 banks will fail 2013. Geographically, you are more likely to see a failed bank if your bank was in Illinois, California or Florida as you can see in this map. Tennessee, Montana and a few other states had no bank failures since 2008. This map shows the distribution across the US from 2008 – 2011.

 

So, in reality, your chances of having to worry about a failed bank are 10 or 20 in 7,053 of the FDIC-insured institutions in the US. Even if you did invest in a failed bank, you only have to worry if your account was more than the FDIC limit in any one bank. Here are some FAQs about FDIC insurance:

 

What is covered by FDIC? Savings, money market deposit accounts and certificates of deposit (CDs)

How much is covered? Up to 100% of the insured amount, including principal and interest

How can I tell if my bank is covered by FDIC? You can call the FDIC at 877-275-3342 or search for your bank at http://www.fdic.gov/deposit/

How much of my deposit is insured? Up to $250,000 per depositor, per insured bank. You may find it easier to go to the FDIC estimator, EDIE, which you can find on-line at EDIE that calculates approximately how much is protected based on how your assets are titled.

What if my money is in a Credit Union? Credit Unions are insured by the NCUSIF, a federal fund similar to the FDIC.

What do you need to do to protect yourself if you are a senior (or you are taking care of the finances for a senior)? Here are a few tips from Attorney Thom Cooper, the found of Cooper, Adel and Associates:

  • Spread them across different types of investments and institutions. How much should you invest in each? That depends on your overall estate plan goals, your health and your family situation.

  • Consider insurance or annuities. Insurance companies have insurance in each state similar to FDIC and NCUSIF for annuities and insurance policies. For more information, see NOHLGA which is the nation information site for these funds.

  • Remember that stock, bonds and mutual funds do not have these types of guarantees. If holding on to your assets is your main concern, these may not be the best investments for you. Seek professional advice.

  • Be careful about the way in which you title your assets. How your assets are titled can make a difference in how much is protected from probate or from a catastrophic healthcare event that requires long term care.

  • Be careful about the way you set up your beneficiaries for your assets. Most of us do not want to pay more estate (death) taxes that we must. Your beneficiary designations can make a big difference.

Whatever you do, make a plan and make that plan with a trusted team of professionals. At Cooper, Adel & Associates, we believe that the best way set up your plan is to work with an elder law attorney as the lead on your team of professionals. As Thom always says, “If you don't have a plan, Uncle Sam has a plan for you and it will probably not be a plan you want!”

 

 

DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person’s situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.

The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement.
If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 

Municipal Pension Systems Are Crumbling in Rhode Island

 

By Julian Guilfoyle, Cooper & Adel Financial

The afternoon knows what the morning never suspected.”  -Robert Frost
 

Even as the overall economy continues to improve, municipal and state pension systems continue to be egregiously underfunded. Josh Barro of Bloomberg News wrote last week in an article titled “Why Municipal Pension Systems Are a Terrible Idea” the pension plan for the police department in Scituate, Rhode Island (population 10,329) is underfunded to the tune of $8.4 million. He states, “That doesn’t sound like a big shortfall until you realize that Scituate’s pension plan has only 33 participants, meaning it is short by more than a quarter million dollars per employee.”

Unfortunately for residents of the state, Scituate is not alone. Barro writes, “Rhode Island, with just 41 cities and towns, has 36 separate pension systems, and their unfunded liabilities total more than $2.3 billion.” With the amount of money on the line, you would expect these pensions would be in the hands of capable professionals working on behalf of the public employees. That doesn’t appear to be the case. Barro notes, “In the case of Scituate, the board that was supposed to oversee the police pension plan met only once between 1999 and 2011.” Further evidence of the board’s irresponsibility lies in the fact that up until 2007 they were using an investment return projection of 9 percent annually. The problem is of course, that like most of us, 1999-2007 did not yield annual returns of 9 percent for the municipal pension fund. This is the fundamental reason why the pension fund liability quadrupled between 1999 and 2013.

With all the overlapping bureaucracy and redundant and ineffective boards, Rhode Island lawmakers have proposed what Barro cites as the “more promising long-term fix.” Their idea is to consolidate these municipal funds into one large state pension fund. Proponents of the idea highlight a 2011 reform of one of the state’s largest pension systems that improved the funding ratio from 48 percent to 61 percent. The improvement was accomplished largely by a restructuring of the pension plan, meaning the pension system paid out reduced benefits and increased employee contributions. However, as nbcnews.com reported last year, there are only 16 states that have pension systems funded above eighty percent (considered healthy). Rhode Island’s state pensions were funded at a rate of 49% of benefits promised. The pot is calling the kettle black.

The real question here is what is going to happen when these pensions fail. I believe that it is a matter of when, not if. As baby boomers age, the stress on the system will become greater and greater with more retirements threatened. It has been, and in my opinion will continue to be, politically unpalatable to slash benefits, especially at the level necessary to make these pension systems solvent. So municipalities will defer their liabilities to the states, states eventually to the federal government, and sooner than later we will be talking about the pension bailout. Or, like Pritchard, Alabama, they’ll just stop sending the checks.

BLOOMBERG

http://www.bloomberg.com/news/2013-02-08/why-municipal-pension-systems-are-a-terrible-idea.html

NBC NEWS

http://www.nbcnews.com/business/economywatch/funding-gap-state-retirement-benefits-rises-1-4-trillion-834473

Pritchard, Alabama Cooper and Adel Blog

http://cooperelderlaw.com/planning/no-bailout-how-retirees-losing-their-pensions-all-across-country/

DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person’s situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.

The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement.
If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 

Beware the IRA Beneficiary Pitfalls

 

By Attorney Ted Brown

A Tax-qualified retirement account, such as a traditional IRA, 401(K), 403(b) or other tax-deferred account can pose a unique challenge when planning for your estate. This is because any withdrawals from the account are taxed as ordinary income.

Of course, this tax-deferred treatment is the great benefit of these accounts. While the account-owner is working, money saved for retirement and the gains on such investments grow tax-free. After retirement, presumably when the owner is in a lower tax bracket, withdrawals are taxed at a lower rate.

However, when the account owner-passes away, the burden to pay income tax on the account passes on the the beneficiaries of the account. Since income tax was never paid on the balance of the account during the owners life, withdrawals taken by the beneficiaries will be taxed as ordinary income for each beneficiary.

This can create a problem for the financially imprudent beneficiary who elects to withdraw their inheritance as a lump sum. For even a modest account, this can kick the beneficiary into a higher tax bracket in the year of the withdrawal and result in far more value being lost to taxes than if the account was distributed annually over the beneficiary's lifetime.

What is worse, if the account owner chooses to leave a portion of the account to a charity, organization or simple trust, it can result in all of the beneficiaries being forced to take distributions over a shorter time period and paying more in taxes.

Therefore, it is very important that you seek professional advice to understand how your tax-qualified account works after you pass away and that your beneficiaries are named correctly to avoid the tax pitfalls.  

DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person’s situation is different and requires an attorney to review the situation personally with you.
No attorney-client relationship is created by this site.

The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement.
If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 

Turning a Negative into a Positive – Limiting Life Insurance Losses

 

By Julian Guilfoyle, Cooper& Adel Financial

Universal life insurance policies can be an excellent tool to accomplish a wide variety of objectives. Some people are intrigued by the large death benefit that generally accompanies these policies. They may purchase the life insurance to transfer wealth down to their children or replace income lost at first death for the surviving spouse. Others like the flexibility of being able to use the cash value of the policy to pay premiums if they are unable. Most, however, inevitably run into a very difficult conundrum, pay astronomical premiums, or have their policies lapse and lose the death benefit.

The possibility of universal life policies lapsing increases as people age. It occurs because insurance companies credit interest and deduct expenses. From an interest-crediting standpoint, interest can be added to the cash value of a policy through a fixed, indexed, or variable rate.

A fixed rate is determined by the insurance company and generally will have some minimum rate that is always credited to the cash value of the policy.

An indexed crediting option is based upon an index (for example the S&P 500) and its’ returns. These policies can get very complicated because policies differ on how they credit interest to the cash value. For instance, a popular choice is to have the policy compare the S&P 500 to the previous year. If the index has gained in value, interest credited to the cash value will reflect the gain (beware there are often “caps”, or maximums, on the amount the insurer will credit). If the index has reduced in value, generally the insurer will credit no interest to the cash value, however the “loss” in the index will not reduce the cash value.

A variable crediting method will track subaccounts (stocks and/or bonds) that the investor chooses. This method carries a higher risk than fixed or indexed methods because the investor can lose principal due to market losses.

The second half of this equation is determined by how the insurer deducts expenses. Each policy and company treats these costs different, so anyone contemplating the purchase of a universal life policy should consult with a licensed professional. However, as a general rule, the investor should expect a cost of insurance charge (which rises as you age), and other charges (such as maintenance) and fees.

One can start to see the problem that can arise. If the combined charges, expenses, or cost of insurance exceed the interest credited, the investor sees a loss in cash value. Should this cash value ever reach zero, the policy lapses and the client loses their death benefit. This usually occurs when people have aged considerably (as compared to when they began the policy) and to make matters worse, they may, at that time, be considered uninsurable and unable to purchase another policy.

I believe the best way to view a universal life policy is term insurance with a cash value that the investor can access. That way, should a policy lapse, the investor is not dependent upon their death benefit to solve major problems (i.e. a substantial loss in income at first death). The only available alternatives are either paying increasing premiums or surrendering the policy for the cash value. However, as Ellen E. Schultz recently wrote in a Wall Street Journal titled “Insurance Can Cut Your Taxes”, investors have a fourth option. Should the investor decide to complete a no-tax transfer (1035 exchange) into an annuity, all of the growth up to the original premium will be tax-free. For example, I invest $50,000 into a universal life policy with a death benefit of $250,000. After ten years, the cash value of the policy is only $25,000 and I realize most likely this policy will lapse during my lifetime or I have a change in financial goals (maybe my kids are no longer in college or the mortgage is satisfied). Should I transfer this life insurance policy into an annuity, the first $25,000 in growth can be withdrawn or will pay to my beneficiaries income-tax-free. This is because investors can write off the losses in an annuity, however the same tax treatment does not apply for life insurance.

While this strategy can certainly be beneficial to investors, it is imperative that the investor’s entire legal and financial plans are reviewed and taken into account when making any recommendations. If you have any questions or concerns regarding an existing life insurance or annuity policy, or would like to discuss the recent law changes in Ohio or the federal government, please contact our office for a free consultation.

To see the full article, click the link below.

http://online.wsj.com/article/SB10001424127887324784404578145362537922992.html

 

DISCLAIMER – Every case is different because every case is different. This blog does not give legal advice. This blog does not create an attorney client relationship. You are not permitted to rely on anything in this blog for any reason. This blog is an entirely personal endeavor. Every person's situation is different and requires an attorney to review the situation personally with you. No attorney-client relationship is created by this site. The use of the Internet, this blog or email for communication with this firm or any individual member of this firm does not establish an attorney-client relationship. Before we represent any client, the client and the attorney will sign a written retainer agreement. If you do not have a written, signed retainer agreement with us, we are not representing you and will not be taking any action on your behalf.

 

Seven Retirement Mistakes to Avoid

 

By Melissa Reynard

According to Time.com, there are seven large mistakes you can make when planning for your retirement. These can be as simple as not planning correctly or as complicated as navigating your IRA's and other financial plans. And those seven are:

1. Assuming you have control over when you quit

You can't guarantee the age you're going to retire. There could be job loss, illness and other anomalies that make your retirement age sooner than what you thought.

2. Ignoring the Tax Impact of Distributions

You can have several types of retirement accounts. And with these accounts you should avoid taking early distributions. Cashing out when you switch jobs is rarely a good idea either.

3. Not Saving Enough for Medical Costs

It's hard to say what is going to happen in the future. From medications to doctor's bills, you may not be planning for many health issues. Having insurance will help, as will planning for a few unexpected emergencies.

4. Failing to Lock Up Lifetime Income

Sometimes pensions go away. Make sure you have a reliable income stream so that you can cover your fixed expenses for life.

5. Retiring Too Soon

Staying on the job just a few more years can help increase your retirement income. In fact, delaying Social Security benefits can increase your income about 8% for every year you wait.

6. Underestimating Longevity

You may live longer than you think. While most people would like to live a long healthy life, the usual thought is that they won't live as long as their grandparents. This isn't always true, make sure you plan for living far longer than you though, you could make it to a 100 and beyond!

7. Drawing Down Retirement Savings Too Rapidly

You don't want to live longer than your money lasts. Try to draw down no more than 4% of your assets a year. You have to make it last as long as you do.

Source:http://moneyland.time.com/2012/04/17/the-7-biggest-retirement-planning-mistakes/



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