Sep 21, 2015 | Life Insurance, Retirement, Social Security
The Supreme Court ruling legalizing marriage in all states for same-sex couples is a landmark decision in the equal rights arena. However, the ruling also has important financial and tax implications — implications that same-sex clients now need to be advised upon in order to avoid any planning surprises down the road. While the ruling eliminates the patchwork of state-specific rules that could confuse even the most competent financial advisor, it is critical that advisors in all states familiarize themselves with the important planning issues that same-sex couples now need to consider — whether or not they have chosen to marry. Some of the issues are fairly simple and well-settled, but the subtleties and complexities of the rules need to be considered in order for same-sex married couples to make informed planning decisions going forward. Estate and gift tax issues While same-sex spouses now have the same rights as opposite-sex spouses to inherit from one another even in the absence of a will, federal estate tax rules have evolved in recent years to make it easier for married couples to avoid transfer taxes when passing wealth after death. Same-sex clients are now able to take advantage of these special rules. For example, the $5.43 million (in 2015) exemption is portable between spouses if an election is made on a properly-filed estate tax return — meaning that same-sex couples can now count on shielding a combined $10.86 million from estate taxes without worrying about which spouse technically owns the assets. Same-sex married couples should be advised to review their estate planning documents to take into account the fact that these taxpayers are now entitled...
Sep 7, 2015 | Life Insurance
Where will you be when money is on the move? Will you be positioned properly with a significant number of clients when they experience a life-changing event? Are you staying in touch so that you are their go-to person when those life-changing events take place as they surely will? According to a 2008 study by the Bureau of Labor and Statistics, half of people age 55 to 64 had an average tenure of less than 9.9 years. They may have retired or just changed jobs. Either way, over half of those surveyed could have moved money from their qualified plans from age 55 to 64. There are 108 million Americans above the age of 50 according to the latest data at the U.S. Census Bureau. Establishing a relationship with the client at any level with any product positions the producer so that when the money moves, that producer will have an excellent chance of doing further business with that client. What will establish the relationship? Any amount of assets under management is one answer. It is very dangerous to take the exception for rules and make them a rule. We hear of advisors who only take larger quantities of assets or they don’t want the client. What is not discussed is how they are able to do that. For those of us who are not in a strong enough position to command such rules, we have to fight our way up the ladder to millions under management. In the meantime, how can we make money? Insurance is a great answer. Establishing a relationship with an insurance product and making...
Aug 24, 2015 | Life Insurance, Retirement
Life insurance truly is a multipurpose solution. Savvy financial professionals are leveraging the power of innovative life insurance strategies to counteract some key tax planning and estate transfer needs for affluent and super-affluent consumers alike. Definitions of wealth categories vary, but for the purposes of this article, affluent consumers are defined as having $1 million to $5 million in investible assets (excluding their home) and super-affluent clients as having $5+ million. First, let’s explore a particular wealth transfer issue that, in my experience, tends to impact affluent as well as super-affluent consumers. Then, we’ll review some other challenges that may impact clients in the two wealth categories. 1. Explore the IRA wealth transfer issue Many people who have been successful in saving for retirement have established a sufficient nest egg to be able to create a legacy for their children, grandchildren and favorite charities, leaving them to wonder how best to leverage their qualified or tax advantaged retirement plans. A common question is whether individual retirement account (IRA) owners should take larger withdrawals and pay income taxes now, or take out as little as possible during their lifetime, leaving a likely income tax burden for their heirs and beneficiaries. If an IRA owner seeks to protect loved ones and maximize wealth transfer, he or she can utilize life insurance to minimize the tax burden that inheriting an IRA may impose on a beneficiary. Two solutions described here — a “tax offset” strategy and a “tax elimination” strategy — can help the client maximize the after-tax value of the IRA or eliminate taxes paid on the IRA inheritance. Keep in mind, however,...
Jul 27, 2015 | Life Insurance
By James A. Mallon October 31, 2014 — As 2015 approaches, I’m struck by the persistency of three glaring needs and the resounding calls to action they pose for producers. The new year will usher in new opportunities to help Americans with: • Providing death benefit protection for their families. • Facilitating sufficient income during retirement. • Providing safe harbor from the financial destruction that chronic illness and other contingencies can wreak. The challenge is clear: Recognize opportunity before it becomes common knowledge, and respond with modern, multi-purpose solutions to differentiate yourself and be worth more to clients than the commissions you are paid. Before the market fluctuations of 2008, the chatter in the pre-retirement corridor seemed to focus primarily on the potential for massive wealth transfer. Today, the conversation seems to center on three contingencies staring Americans in the face: dying too soon, outliving retirement income or grappling with chronic illness along the way. Research continues to point to the need for protection against such contingencies. In fact, according to the Insured Retirement Institute, nearly two thirds of recently surveyed Americans age 55 and older said they feared outliving their assets more than they feared dying. Nearly half of Americans ages 45-70 reported having no financial plans to protect them from outliving their assets and the escalating cost of health care should they live longer than anticipated. No matter what resources people have, they care about making sure their families are financially protected if they die prematurely, about having sufficient income to preserve their quality of life if they outlive their life expectancy, and about being able to...
