Estate Planning

Today represents a favorable tax climate, but future sunset provisions of 2025 could change that. Comprehensive planning is needed so your heirs are not being forced to liquidate assets at an inopportune time to address estate taxes nine months after death.

Consider advantages of working with a financial advisor who is well versed in life insurance trusts, the various types and arrangements, in-depth knowledge of gift and estate taxes provisions, exclusions, single life or survivorship considerations, and strategies for heirs with and without business interests, while coordinating efforts with your CPA, tax, estate, will and trust attorneys.

Retirement Planning

From the time we begin our careers we are programmed to put money away for the future and take advantage of the tax deductions available. All of the emphasis is to utilize tax-deferred vehicles (IRAs, 401(k)s, etc.) for retirement. Following this traditional model, your assets will be waiting to be taxed in retirement. The average rate of return is all that matters during your income earning years, but once you retire and start to draw down your money, the sequence of returns is what becomes crucial. You will find that your needs will shift from accumulating assets to a need for a predictable income stream in retirement. The opportunities created from fluctuations and market volatility during earning years have no place in retirement.

Having a strategy that allows you to draw from various taxed, tax-deferred and tax-free sources is optimal for planning. With options in place, you may be able to weather market downturns without needing to touch investments altogether during volatile years. Discuss your current plan or create a new one with a financial advisor with the team and expertise to build a retirement that can equally prepare you for the challenges and opportunities of your future.

Business Planning

Imagine trying to run your business after the death of your partner. Their unique expertise or relationships could have been at the core of your revenue. This tragic event becomes multiplied when you don’t have the money to buy out their surviving spouse. Now you find yourself with a new partner that is entitled to half of the profits but knows nothing about the business. The same thing can occur when you have a key employee that drives your revenue.

Having a buy-sell agreement and funding it properly, or key person protection in place can make all the difference. What if you want to retain the best talent? Designing an executive bonus plan may be your answer. Have you given thought to an exit strategy? Business succession planning needs to occur long before debating when to retire. A trusted financial advisor can support you to design and maintain your plans to predictably overcome the unexpected.

Tax-Favored Planning

From 1936 through 1980 the lowest Federal Marginal Income Tax rate was 70% and the highest was 94%. We are currently at historic lows at 37%. At the present there is a bill in Congress to increase the marginal tax rate to 70%. Given our national debt is breaching new highs daily, you can draw your own conclusions.

There are dozens of categories of tax deductions that can be taken for business, expenses, mortgage interest, health care, etc… When it comes to protected, tax-free growth and distributions as it relates to investments, there are only a few options that the law allows: ROTH IRAs, ROTH 401(k), Municipal Bonds, HSAs, 529 Plans; all with their own requirements or limitations. Another option is well designed permanent life insurance. It can provide for tax-free growth and distributions when designed correctly and responsibly. Having tax-free monies to compliment tax deferred monies is a necessity. Only a financial advisor who specializes in these strategies can show you sound options by precisely navigating the IRS rules to avoid or trigger future taxes and ensure that your design is built to last a lifetime.

Legacy Planning

Your identity is often tied to a sense of family. That family may be considered loved ones, strong professional ties or both. Traditional legacy planning can venture into personal, professional and charitable endeavors, each with its own priorities. This very personal and selfless planning allows you to pass on traditions and insights to live on for generations.

In this equation, life insurance can play a major role in replacing lost income to your heirs, provide immediate liquidity to pay debts, mortgages and other expenses, provide cash to meet estate tax liabilities, equalize inheritances among heirs and preserve a business by helping fund a buyout of the interests of a widowed spouse. It can even be placed on the lives of your children or grandchildren, not just to protect their future insurability, but provide them with cash for college, a wedding, a down payment on home and help them start a future legacy of their own. This is where a financial advisor that sees beyond the scope of an immediate need can support you by designing a plan to meet today and tomorrows objectives.

Charitable Giving

Within many of us there is a desire to serve a bigger cause than ourselves in our communities, our country or even around the globe. Reflecting on how you can best utilize ideas, creativity and influence to turn your philanthropy into a charitable legacy is key.

Apart from your altruistic inclination to leave financial support to the meaningful causes in your life, a knowledgeable financial advisor can show you how your giving can create windfalls all around. Your bequests can be larger by leveraging a smaller contribution that immediately becomes more utilizing life insurance, transferring ownership and beneficiary designation can garner a tax-deduction and if you structure a charitable gift annuity, charitable remainder unitrust or annuity trust for life income gift, it can become a gift that pays you an income during your lifetime. All these options can be explored with professional guidance to ensure your best interests are met.

Income Protection

Your most valuable asset is not your home, investments or retirement accounts, it is your ability to earn an income. Having an accident or injury that prevents you from working for even a short duration can be challenging, let alone an extended period of time.

As an employee, you are entitled to CA State Disability which will generally be 60% of earnings, unless you are highly compensated and exceed the cap or receive a portion of your income in the form of commissions, bonuses or profits. An astute financial advisor can help you build a plan that directly coordinate with CA State Disability to keep your financial life whole. As an employer, it is likely you have little or no protection at all. In this instance, a well designed a plan cannot only protect your livelihood, but the livelihood of your employees and potentially operational expenses to keep the business going, even if you cannot.

Long-Term Care

There is no denying that healthcare, advancements in medicine and attention to better, healthier lifestyles are extending lifespans. It is hard to imagine now, but chance are later in life you will need long-term care. Often the first thought for most is that your spouse or children will care for you. The physical demands required and the realization of the lost of personal dignity makes this scenario unlikely. Home healthcare options can be half the cost as compared to skilled nursing facility care but even then can cost $50-60K per year. Medical insurance and even Medicare generally only cover a small portion and only up to the first 100 days.

The younger and healthier you are when you decide to consult with a financial advisor to discuss your options, the more options you will have and more importantly, the lower the cost will be. Earlier planning will allow you to have alternatives to liquidating assets, depleting home equity, retirement accounts or savings to pay for long-term care. Having plans in place will allow you to spare your family from the undo mental, emotional, physical and financial stress. There are options today that allow you use life insurance to pay for long-term care. There are even options to designate funds and if you are fortunate enough to never need care, that it can represent cash or savings to be used however you decide later. Get professional advice to look into your options now so you can decide, before costs and considerations would be decided for you.

Whole Life vs Universal Life

Whole life is built with guarantees for death benefit, life long coverage, set premiums and most of all, cash value that grows at a guaranteed rate. A portion of the policy is pure insurance like a term policy with the rest invested, but not in the stock market but more conservative investing that produces dividends and interest to keep the guarantees. The risk of the growth in the cash value falls on the insurer to meet the guarantees and make responsible choices when it comes to performance. The downside is that it’s the more expensive of permanent policies..

Universal, Variable Universal or Index Universal Life is again based on a component of pure insurance and an invested portion; in this case, based on the stock market: stocks, bonds, mutual funds. The upside is the cost is lower than whole life with considerable flexibility. Flexibility in premiums, duration of the policy and even the death benefit. All that flexibility does come with some unknowns. The risk of growth in the cash value falls on you. How you choose to invest and whether or not that choice takes losses over the life of the policy are a factor. Also, premiums may be lower during periods of higher interest rates and higher in low interest rate environments. It can be life long coverage as long as the policy has kept up. There is a minimum and maximum cost of insurance, so as you get older, your minimum premium will increase significantly if the performance didn’t live up to projections.

In the end, both permanent options can be used strategically for long-term planning. If everything plays out as it should, Universal life can accomplish the task for a lower cost with higher cash value. At the same time, all things being equal, whole life may cost you more but the policy may be able to pay for itself considerably sooner, have cash you can access along the way without jeopardizing the policy and be more cash rich in the long run. It becomes a consideration of cost and purpose.