Investment Strategy (2) Resources

Having been in the life and health insurance industry since 1984, I have become skeptical when insurance companies include language in the fine print such as: “may be,” “ordinarily excluded,” “check with your tax advisor,” or “the rider is not long-term care insurance and is not intended to replace long-term care insurance.”

Why are those disclosures included within hybrid life insurance and long-term care policy contracts? Do we have to find out at claim time exactly how they apply? The purpose of this article is to address some of these issues.

It’s well established that finances and money-related matters can be a prime source of disharmony within a marriage or relationship.

Understandably so. Between rent or mortgage payments, property taxes, car and health insurance, utilities and entertainment costs, retirement and/or college savings, and the daily necessary living expenses associated with home ownership, transportation, and/or children, it can add up.

And these are just a brief rundown of some of the known expenses; unaccounted for are those unexpected costs that inevitably arise throughout the course of life.

Besides the infamous April 15th tax return deadline looming this year, there is also the infamous April 1st date.

Why is this date also infamous?

It is the “Required Beginning Date” (RBD) for Required Minimum Distribution (RMD) withdrawals from traditional IRAs following the year the IRA owner turns 70 ½. This is only the beginning. Every year thereafter, withdrawals must be taken. The result is more taxable income and income taxes. Ouch! With more and more boomers turning 70, this date will live on in infamy until the IRS changes the rules.

(Co-authored by 4Thought Financial Group Operations Associate Michael C. Duvally)

The time is now for CPAs to step up to the plate and learn how their clients’ financial advisors are being compensated.  

The financial services industry has not been up front or transparent about this historically. Now that the Fiduciary Rule by the U.S. Department of Labor (DOL) is in tatters, all compensation options are once again on the table. A recent client meeting proved onerous fees are still being charged and incentives are still misaligned in many cases. 

(Co-authored by 4Thought Financial Group CEO Brian Mackey)

The estate probate process can be a long, expensive, frustrating process, often lasting nine months to two years while moving through the courts system, potentially costing thousands of dollars in fees, and leaving beneficiaries in a state of confusion without access to assets during a time in which they are grieving over a family loss.

For these reasons, most individuals with substantial wealth prefer to plan in advance of their own death to avoid and minimize the probate process to the extent possible.

How can one avoid the probate process? While there are several potential answers to this question (and the appropriate ones depend on the specifics of the situation), one possible solution is the Revocable Living Trust (RLT).

Business succession is one of the most complicated subjects that all privately held business owners are eventually faced with.

Business owners do not want to give up control. I recently heard a great comment from a former business owner, who finally at age 85 decided to sell to an unrelated third party: “I should have sold 15 years earlier!” In this business owner’s family, no one was interested in going into the business. But it is much more complicated when family is involved versus not. Either way, there are many reasons to wait. There are also many reasons to act expeditiously.

Below are some issues and approaches to consider when dealing with business succession. Your accountant or tax advisor and lawyer should be consulted before any strategies are implemented.

There are a variety of ways for high earners to reduce their current income tax liabilities, but they’re not all as obvious as taking your available deductions and maxing out your 401k contributions. After your 401k contribution has been maxed out for the year, one possible solution to further reduce current taxation is the Non-Qualified Deferred Compensation plan (NQDC).

This is a common topic that never seems to go away. From parents to grandparents, each year the questions arise: "How much am I allowed to give to my kids and grandkids? Should I set up a 529 plan? What are the limits on how much to give?"

An appropriate answer to this question may depend on several factors, including the specific objectives of the investor, the amount of investable assets, the expected direction of interest rate changes, and many others. But in the absence of such specifics, there are traits of different available bond investment vehicles with which all bond investors should be familiar, regardless of what market environment may be forthcoming.

While this list is not exhaustive, the following three potential investment vehicles may be used as the basic building blocks of the bond portfolio:

There are very few concepts in financial planning that hold as much raw power to transform one’s life as systematic investing. But harnessing the potential extreme force behind this concept often proves tricky when it comes to actual implementation.