America’s Most Biblically-Hostile U. S. President

Wednesday, July 18th, 2012

David Barton – 02/29/2012

When one observes President Obama’s unwillingness to accommodate America’s four-century long religious conscience protection through his attempts to require Catholics to go against their own doctrines and beliefs, one is tempted to say that he is anti-Catholic. But that characterization would not be correct. Although he has recently singled out Catholics, he has equally targeted traditional Protestant beliefs over the past four years. So since he has attacked Catholics and Protestants, one is tempted to say that he is anti-Christian. But that, too, would be inaccurate. He has been equally disrespectful in his appalling treatment of religious Jews in general and Israel in particular. So perhaps the most accurate description of his antipathy toward Catholics, Protestants, religious Jews, and the Jewish nation would be to characterize him as anti-Biblical. And then when his hostility toward Biblical people of faith is contrasted with his preferential treatment of Muslims and Muslim nations, it further strengthens the accuracy of the anti-Biblical descriptor. In fact, there have been numerous clearly documented times when his pro-Islam positions have been the cause of his anti-Biblical actions. READ THE ENTIRE ARTICLE

What is a stretch or a multi-generational IRA?

Friday, June 29th, 2012

Q: What is a stretch or a multi-generational IRA?

A: Basically just to sum this up, this allows a non-spouse beneficiary to take a payout based on their life expectancy. But folks, you don’t get to just do this, you have to be proactive. When the law changed back in 2002, the government said you could – they didn’t make an institution or custodian do it, so it’s up to you to take advantage of this valuable planning technique. Now let me give you a case study. This is our third case study we’ve talked about on the show today so far. Let’s say we have a husband and wife. He’s 65 and she’s 68. They’ve never had a traditional pension plan. That’s going to apply to a lot of people in the future. They paid for three of their kids to go to college and they’re ready to retire now. Both the college and mortgage payments are gone so they’re saving, but they have different philosophies toward money. I’m sure that doesn’t apply to anybody listening in the audience. But in case it does, you better just listen closely. Now this never happens… let’s say the husband is aggressive and the wife is conservative. He has $375,000 and he figures he can manage the account himself, he’s a do it yourselfer. And he’ll take out distributions of 4% a year and he wants to pick his own assets. So his income is $24,000 from social security, $15,000 from his assets. So federal income is $39,000. He figures he’ll pass away first and she’ll get the social security since hers is a smaller amount. Now she has $400,000 and no desire for anything but safety. Ah yes, we prudent women. She found a longevity annuity that pays her $20,000 a year with an income rider so her total income is $38,000.

Remember, there are all different types of annuities out there. Just like there are all types of shoes out there.

Both of these people saw the solution for their own desires. He wants more risk. She wants something safe. Now her survivorship income looks like this, and this is what we can show you through the Retire Now software. She takes over his social security because it’s the bigger of the two, and that’s the way that will work. She has her annuity income and then she inherits his IRA. Now we’re assuming that he took distributions like he was supposed to and his assets went down to $250,000, which she receives at a 4% hypothetical return. By the way, we can show you more than just hypothetical. Her survivorship income is $54,000. And as I mentioned earlier, about 1/3 of our clients actually have parents still living and they generally fall into two categories. We run into this quite frequently where one of them is supplementing mom or dad’s healthcare. This is becoming commonplace. So mom or dad needs some assistance, anywhere from a few hundred to several thousand dollars a month. Sometimes there are a bunch of kids coming together to pay for it. Or the other case, mom or dad’s independently set and so the kids will actually receive an inheritance. But they fall into one of two camps: the haves and the have nots, so to speak. We have clients who have children or grandchildren that have some special needs, and sometimes a trust is set up for that. In fact, we talked about that earlier today. You definitely want to consult an attorney. We use specialized law firms that deal with elder issues, estate planning… they specialize in that.

We have different attorneys in different states. So it’s very important to consult with an attorney in this area because someone is going to have to be there to manage that money and make sure that it gets paid out in a timely fashion to meet the needs of the person it’s servicing.

Let’s talk about how you might use your requirement minimum distribution. Remember we talked about that’s what you have to start taking out when you’re 70 ½. How to create tax free money, not taxable money like normally it is. Let’s say a wife has $100,000 IRA. We many times see husbands having IRA and spouse has an IRA. Let’s say the wife has a $100,000 IRA. She puts it into a longevity annuity. Remember I said there are all different types of annuities. This will pay her $6,000 a year. She has $100,000 IRA, she puts it into a longevity annuity, pays her $6,000 a year. Her husband is age 72. Say he’s in average health. She uses $5,000 of that $6,000 to buy a life insurance policy on his life for say $150,000. When he passes, she’ll get her $6,000 that’s coming in, but she’ll also receive $150,000 in income tax free insurance proceeds that could easily produce another $6,000 a year in additional income. Now why did I say this produces $6,000 if she is only paying $5,000? We held about $1,000 for taxes. This is an efficient use of your money.

Now let’s talk about another concept of a Roth conversion. There’s been a lot of buzz about that. One of the main reasons you will do a Roth conversion is so you can take this required minimum distribution chart that the IRS puts out – remember we discussed that publication 590 – and throw it in the trash, because you’ll never have to take a distribution in your lifetime. Which is pretty sweet, right? So if I’m married and I die, and my spouse can take over my Roth IRA and he doesn’t have to take a distribution for the rest of his life, that sounds pretty good. If it’s so good, though, why don’t we all do it? Well, there’s a little drawback that I would have to pay the taxes now. So you are paying your taxes in advance. What would the taxes be? Well, it’s taxed as ordinary income in the year that I get the distribution. One of the other things is it allows you to change your mind. Because some people have decided to do this and then they’ve wanted to get back out of it. It’s the only time I’ve known of that the IRS to let you have your tax money back providing you do the following. There are three important things you have to do. 1. You must notify the custodian in writing. 2. You must satisfy the October 15 deadline the year after the conversion. 3. File an amended tax return. Now we’ll go into detail at the workshop why it is you might want to change your mind about that. Maybe a year like 2008, that might be one reason, where you went back from where you thought you were going to be and you think I’m not going to do this now. The other thing is beneficiary forms. This is huge. There are people that are out there listening to this that they don’t know who their beneficiaries are. I mean, literally, they have no idea. You know who you might be if you think I don’t really know. They might very well be outdated. Or sometimes the custodian loses them, believe it or not.

You know, this is a true story. Someone came in about a couple years ago, had been married. He was on his second marriage and we asked: who’s the beneficiary of your 401(k) plan? And he said his wife. And we asked: your ex-wife or your current wife? And he says, you know, I don’t know. That’s not a good thing for his current wife to hear. He said the company would know. But shouldn’t he know? That’s not a real good situation. And we looked at who the custodian was and I said I don’t know if they would know either. A lot of times these things get lost. So we called them up and do you know that they said they didn’t know but could find out so we’ll send a letter in about 5 days. And we said we don’t have 5 days to wait for this, we need to know in 5 minutes. I’ll tell you what, let’s just get a new beneficiary form. This is very, very important. Many of you are not aware that there was an historic precedent setting case, the William Kennedy case, which went all the way to the Supreme Court in January 2009. A gentleman by the name of William Kennedy died. He had a large qualified plan. He went through a divorce. Obviously he wasn’t talking to his ex-wife. He wanted to leave all his money to his daughter because he loved his daughter. In his will and in his trust it said the daughter gets the money. There was just one problem. The beneficiary form on his qualified plan said ex-wife. He dies. The ex-wife shows up and she wants the money. The daughter shows up and wants the money. They end up in court. It gets kicked all the way to the Supreme Court of the United States. Now do you think the Supreme Court wants to waste time on a beneficiary argument? No, but why will they? Because there are 78 million baby boomers, and they might run across the problem a couple million more times. So they hear it and they rule unanimously 9-0 in favor of who? The ex-wife or the daughter? How many people think it was the ex-wife? How many think it was the daughter? Well, it turns out it was in favor of the ex-wife. Are you shocked? Now, what they said is that the beneficiary form trumps all. So whatever you had as the beneficiary designation – this could be old life insurance policies, old or new annuities, bank IRA’s, group life through employers. And if you don’t check on them, who is going to get them? The worst thing that could happen is it could go to someone whose is in another state with the highest tax brackets you could have.

How does my financial plan differ if I’m married?

Friday, June 29th, 2012

How Marriage impacts your Financial Plan

Q: How does my financial plan differ if I’m married?

A If you’re married, age 65 or older, there’s a 53% chance that one of you could live to age 91. Isn’t that incredible? So just take a look at your partner and determine who that will be. What if there was a 53% chance that you’re going to live to 91? So, we’re in an era today where you could actually spend more time in retirement than you actually did working. Isn’t that amazing? I mean, we have clients retiring in their late 40s, early 50s. What if they live to 90 or 100? So if this could be the case, the one thing that might be helpful is to map out a retirement income strategy. This is fundamentally important. So you don’t have to worry about running out of money during your lifetime. It’s pretty easy to do this if you know what to look for and you know what questions to ask, and that’s essentially what we do for you through the retirement roadmap that we’ve talked many times about before. So here’s the wife’s solution to losing $54,000 a year. She took the annuity income she was using while her husband was alive to pay the insurance premiums on his life insurance policy. Now that he’s gone there’s no longer that premium to pay, so the money comes in to her and she has that $400,000 a year policy, which the proceeds come out to about $16,000 a year. So now her survivor income is $91,000. That’s pretty good. That’s not bad. So the solution is here. It’s a method to map out your retirement income but – more importantly – is says, ok, what if he goes first? What if he passes today? 5 years from now? 10 years from now? 15 or 20 years from now. What’s going to happen? What is the survivorship income going to look like for her? What if she goes first? What is his income going to look like? And when we map it out for you, you’ll be able to see in black and white where you have potential holes. And you have the chance to fix them.

And that’s one thing is that with the retirement software that we have. When you come in we can kill one or the other one off. Just pick the date and time and we can show you if you have enough money. We can make sure you have a very predictable income that’s guaranteed. Not maybe. Guaranteed to last your entire lifetime. That’s why this educational program is so very, very important. So, you can see we’ve created a simple process. We’ll provide you with our data form. We collect some information. And really what we do is map out your social security benefits, statement pages. We look at any pension information for those who happen to be fortunate enough to have that, any pensions you’re entitled to. Then we look at 401(k)’s, IRA’s, 403(b)’s, tax shelters, plans, and all that stuff. And then any non-IRA accounts that you have. And with that information we create an income for life spreadsheet. And when you come to see us, we have a large flat screen tv and a white board. We can show you exactly what you’re income is going to be each year for the rest of your life. Now wouldn’t that be great?!

I have to tell you that the people who’ve been through it think it’s very revealing. It’s nothing like saying a picture’s worth a thousand words. Many people have said to us that this is the first time they’ve ever seen it laid out quite like this. It makes it so clear and simple. It’s one page. Where their income is likely to come from during their retirement. So let’s give another case study.  A husband and wife – both age 65 – these are the classic do it yourselfers. They’re very sophisticated. They have a large amount of money and they’ve been managing the money themselves.

And they’ve recently gone through a long term care situation with the father of one of this couple – her father – and they have no desire to repeat what they’ve seen with their parents in their lives. So let’s look at their financial situation. Income from assets was $120,000. Husband’s social security is $27,500. Wife’s social security is $20,000. That’s total income of $167,000. By the way, it doesn’t matter if that’s not your income. The numbers are really not relevant, it’s the concepts. Now they realize they have enough income provided they don’t have to spend their assets down like their parents did if they – God forbid – need long term care. They would also like to leave some of their IRA money to their kids. That’s one of their goals. So here was the solution for them. Apply for a $500,000 life with a long term care plan that covers for up to $10,000 tax free benefit. We’ll talk more about this in a minute. Whatever portion of the plan they don’t use for long term care is paid out as tax free death benefit to their main beneficiaries. Now we knew in their state that they essentially had enough. So they didn’t have to spend their assets down. The other thing is the premiums are fixed and can never go up, unlike traditional long term care insurance. And one last thing I want to mention about this is is that this all covers home health care, which is where most people want to get their care anyway. And there’s no waiting period. So with a lot of the traditional long term care plans we have to wait 30-60-90-120 days perhaps. This can actually give you coverage from day 1. Those things really might not seem like a big deal but because we’re in this business and we deal with it every day, it is a pretty big deal. It adds up to large sums of money.

We’re also going to talk at this retirement educational program is we’re going to talk about stretch IRA or multi-generational. We like to call it legacy planning IRA because the name of our company is Legacy Financial Strategies. We’re going to talk about how many people you know with a stretch IRA. Most people don’t even know what that means. A stretch IRA basically works like this: If you look at a traditional IRA, something happens when I turn 70 ½. That’s your RBD, your requirement beginning day. What is that something at 70 ½? It’s a distribution. It’s called requirement minimum distribution. I know you can wait until April 1 of the following year but we’ll keep it basically simple. I have to take the money out. If I don’t take the money, the first mistake is there is a 50% penalty. It’s 50% penalty plus I have to pay the federal tax plus the state tax if you’re in Ohio, Pennsylvania you don’t. And I may end up paying 80 or 83% with that mistake. So I’m going to take the distributions. Well, the IRS has a chart called the Uniform Life Table. That’s in publication 590 and it’s on page 106. It is figured out all the way up to 115. A stretch IRA basically allows you to stretch out your distribution to a non-spousal beneficiary.

Contact our Office for more information on this topic.

Social Security: What you need to know and were afraid to ask!

Friday, June 29th, 2012

How to understand Social Security

Q: What about Social Security?

A: When it first started in 1935, with Franklin Delano Roosevelt and his fire chat. It says you’re entitled to receive full benefits by age 65. But do you know that your life expectancy in 1935 was 64 ½. Can you believe that? So what did they think would happen? That we would maybe pass before we got it. We used to have 40 workers for every 1 retiring. Now there are about 2 ½. And now today people are living much longer, so if the anticipated life expectancy was 64.5 and people are living a lot longer, and we already know social security has a few problems – a lot of problems – that could be a future problem.

So why are so many people concerned about running out of money? Well, these are the things that we’ve heard over the years. As I said, we’ve been doing this collectively, together about 57 years. We hear “I don’t have a plan. I don’t know what I can do. I don’t have any knowledge as to what I should do.”  I mean, after all, don’t you have to know the right questions to ask to get the right answers? And some people are frankly just professional procrastinators. I’m sure that doesn’t apply to any of our listening audience, but it could perhaps be one or two people. People – in their tendency and their fabric – they don’t want to face the problem. They’re hoping somebody else will do it for them. But you know, those days are over of the employers and the government taking care of us. And as you know, it still surprises us when people come in and they’ve worked for a company for 30 or 40 years (which is becoming less frequent) and they say, well, I’m getting ready to go to my retirement workshop. My thoughts are “when?”  They say, a couple days from now. Really? Is that the time to have the retirement workshop?  Shouldn’t it be a couple of years or perhaps 5+ years before you retire?

D: Sherri, if folks want to attend our upcoming educational dinner program… we’re going to be having that at the Avalon Golf and Country Club at the  Terra Restaurant, that’s July 12 and July 17. It’s 6pm to 7pm and dinner will be served right afterward. It’s complimentary. There’s no charge. So, learning how to avoid unnecessary mistakes might be the best investment you can make. And what we’re going to talk about – we gave you a little flavor of it and we’re going to talk a little bit more. But the topics will include:  the simple solution to retirement; how to avoid losing up to 70% of your IRA; federal, state and inheritance taxes or if you’re in Ohio state estate taxes; how to avoid paying taxes on your social security (that’s a real biggie); how to avoid unintentionally disinheriting your family; how you can legally eliminate taking required minimum distributions and the importance of distribution planning and understanding the rules that may allow you to reduce your risk. So if you want more information and you’d like to register, call Legacy Financial Strategies toll free at 800-264-4963.

Q: What are we going to talk about at the upcoming educational program?

A:  Accumulation vs. Distribution. We’ve talked in the past that you go through several phases. When you’re working you go through the accumulation phase. When you near retirement we talk about the preservation stage. And once you’re in retirement you’re in the distribution phase. Then toward the end of your life, we talk about passing it on to your heirs. So in the first half of the game of life: working and accumulating or saving money or making systematic contributions or some type of savings vehicle. Because we’re what: Working, saving. And of course in the second half of the game – some of you may be there right now – we’re in distribution phase. Money is coming out instead of going into a plan, and hopefully reducing or eliminating risk.

So what we do is we in our firm focus on the distribution of assets, which is fundamentally different than the accumulation of assets. What we do is show you how you can create an income stream from your money. And we show you actuarially how long your money will last at very conservative rates. I mean, these aren’t crazy rates of return. You can even design retirement plans now that have a built in cost of living adjustment. So these are very, very flexible. And we can show you how to do rollovers and create 100% survivor benefit for both you and your spouse. Because a lot of you don’t realize, that when one of you is gone what that is drastically going to do to your income stream. And when you see this it’s remarkable. We can show one or the other spouse passing on at different ages and how that is going to look for your income stream coming in. Some people have never given much thought to this.

We’ve talked in the past about the retirement roadmap. Let me give you a case study. Let’s say for example there’s a husband and wife, let’s say he has a pension of $80,000. It’s possible – two schoolteachers. He has social security of $20,000 and his wife has a pension of $5,000. And let’s say she has social security of $14,000. Now she didn’t get in one of those great pension plans but she was able to save $200,000 and protect her IRA from market loss with a guaranteed stream of income. And what she did was find an annuity that produces $10,000 a year without annuitizing. A guaranteed predictable $10,000 a year without annuitizing. What that means is she doesn’t have to give away the money. Again: old days vs. new days. That’s what we started with. In the old days, to get an income stream, a lot of times we had to separate ourselves from the money. Many of you may have a pension that when you die you lose it or your spouse gets half. This doesn’t work that way. In the old days we had to give up our money to XYZ Insurance Company. In turn, they would pay us. Now you can set up an account where you don’t have to do that, by using a fixed indexed annuity with an income benefit rider. So let’s say she purchases an annuity that produces $10,000 a year. Now what does she take from the income? The annuity buys a $400,000 life insurance policy for her husband.

How is Yesterday different than Today?

Friday, June 29th, 2012

Q: How is yesterday different than today?

A: We’re going to talk a little bit about how yesterday is different from today, for example. Some of these things may seem obvious but they’re not to everyone. Yesterday we worked for an employer for 30 or more years, and a lot of times it was the same employer. In fact, it wasn’t uncommon to see someone who worked for the same employer for 30 years. And you really don’t see that anymore. We used to earn a pension and through their contribution to the plan we earned social security. We saved some of the additional money to round out our retirement savings. And now today is completely different. We’ll work for a lot of different employers. In fact, the experts say that recent college graduates could have nine different employers and could actually have four to six different careers before they retire! Can you imagine? I know personally I’ve had a couple already. That’s a lot of changes. Today people are entitled to very little or no pension. They earn social security (maybe, if we’re lucky). They have to save their own money through 401(k)’s or 403(b)’s or 457’s. Sometimes the employer matches that and sometimes they don’t. And then they have to save more of their own after tax money if they can’t save enough money in their retirement plan. So it’s very different.

Also, it used to be that 1/3 of your retirement income came from personal savings and 2/3 came from your employer and the federal government. Today, boy it’s a lot different. If you notice here, over 29% is coming from you – your earnings. What does earnings mean? That means people are still working in retirement. That is not my definition of retirement. When I quit, I’d like to quit and stay quit, but there are some people who can’t stay quit because they really, really need the money. Is that you?

So, ask yourself what does your pension look like? Do you even have a pension and how long will it last? Can it go down in value? Are you concerned about running out of money? Do you have survivor benefits? These are all questions everyone needs to ask themselves. When people come in to see us we walk them through a program that will visit these issues so you’re fully informed where you are right now. Is it protected if we have a health event? Can we create a pension with your IRA? What can we do to give you a little more control?

Economy 101: A Discussion about a Global Recession

Friday, June 29th, 2012

Global Recession: Are you Prepared?

Q:  Can you talk a little bit about Dr. Mark Farber and his statement about a chance of global recession?

A: Yes, I talked a little bit about this in a previous post, but you’ll want to read up. This is why you want to attend our upcoming educational program that we’re going to be having at The Avalon Restaurant July 12 and July 17 at 6pm to 7pm. So if you’d like to reserve your place now, call 800-264-4963. But Dr. Farber says that there’s 100% chance of global recession by the end of this quarter 2012 or first quarter of 2013. He just recently talked on CNBC about that, and he has a newsletter – Dr. Mark Farber, who’s an economist – and the newsletter is called Boom, Gloom, and Doom. And you’ve heard about the euro and the crisis going on with that, but he’s talking about slowing down of China and India. You know, we have about a 7 billion population, approximately, and India and China are approximately 2 billion and they were slowing down. So, get ready. You want to be able to attend this workshop because we have strategies in place. One of them is the retirement roadmap. You’re going to hear more about that when you attend the workshop.

Q: So what else do we have about the economy?

A: There was an interesting article in the Wall Street Journal. It was called Counting on an Inheritance? Count Again. And this is pretty interesting because this is something we don’t think about too much. It says Bad News. Many baby boomers are likely to get less money from mom and dad than they thought. The worst news is they may have to help their parents financially instead. And it went into details. It said that for a growing number of boomers things aren’t going according to their plans. I mean, they already took a hit in 2008. The post-war generation, their parents (my grandparents) are living a lot longer than their savings might last them. So as a result, this group won’t be getting as much inheritance as they hoped for. Many of these people hoped to make up the shortfall because of 2008 and perhaps not saving as much, putting kids through college, things like that. Through these bequests that they thought were going to come upon them. And the long and the short of it is it talks about the reason why this is happening is we’ve had a lot of medical gains. For example, the Wall Street Journal mentions a 65-year-old man has a 60% chance of living to age 80, and a 40% chance of reaching 85. For women, the odds are 71% and 53%. So this has made the 85 and up age cohort the fastest growing segment of the population. So what do we do about all this? These can be uncomfortable conversations between parents and adult children. Well one of the things the Wall Street Journal mentioned was that there are a number of things you can do to help your parents out. Basically, here are some measures that they suggested taking. First of all, sit and talk to your parents about it even though it can be a difficult conversation. Have your parents recalibrate their budgets, take a look at their budgets. Downsize to a smaller residence. Buy an annuity or longevity insurance to lock in a lifelong income, or take out a reverse mortgage. So there are a number of strategies you can have. This is going to affect both the baby boomers and the post-war generation, and obviously it’s going to have a trickledown effect on everyone.

Lloyd’s of London is preparing for a collapse of the euro.

Friday, June 29th, 2012

Collapse of the Euro

Q: What can you tell us about what Lloyd’s of London is preparing for?

A: Lloyd’s of London – the famous insurance company – has stated publicly that the company is preparing for a collapse of the euro. A recent article in TheTelegraph, the chief executive of the multi-billion pound Lloyd’s of London has publicly admitted that the world’s leading insurance market is prepared for a collapse in the single currency and has reduced its exposure as much as possible to the crisis-ridden continent. Richard Ward said the London market had put in place a contingency plan to switch euro underwriting to multi-currency settlement if Greece abandoned the euro, which many people feel is inevitable at some point. That they’re going to go back to their currency that they had and it will immediately become worthless. That’s what many experts are saying.

Put Your Money Where Your Heart Is. Including Faith and Values in Your Financial and Estate planning.

Monday, June 25th, 2012

Put Your Money Where Your Heart Is

In this segment, I’m very excited about it. I just got my manuscript and I have to review it in case there are any errors. I have a book coming out at the end of July. The title of the book is: Put Your Money Where Your Heart Is. Including Faith and Values in Your Financial and Estate planning.

Many of you are not aware of it, most people come in to talk to our firm about money, but we also have a 3 prong approach. We’re interested in your health and we’re interested in where you’re going to spend eternity. So when I collaborated with some other authors, attorneys, and some other certified financial planners (I’m a certified estate planner and my daughter is a certified estate planner), we wanted something that we had some things in common. So this is a book that really matches up with our values. Let me give you some of the table of contents. If you call ahead of time, the book will probably come out at the end of July or the first part of August, so we’ll take reservations ahead of time. We’ll tell you how you can get this book later on at no cost to you. It’s going to be chock full of stuff. Here is an example of some of the chapters.

  • Connection between faith, values, and money.
  • What is financial planning and who needs it?
  • What if I don’t plan?
  • General investing principles.
  • Risk analysis and portfolio diversification.
  • Faith and values based investment choices.

We’ve had shows in the past talking about more responsible investing.

  • Retirement planning.
  • It’s all about estate planning
  • What is estate planning and who needs it?
  • What if I don’t plan?
  • Preparing for estate planning.

Chapter 8 is broken down into 4 parts, faith and values.

  • Big choices about your helpers. Guardians for minor children. Healthcare decisions during incapacity. We’ve talked about power of attorney in the past. Property managers during incapacitation. Trustees after death. Section 4 has to do with foundation planning techniques, power of attorney for health, power of attorney for property, wills, and probate. We’ve had several shows in the past on that.

There are over 22 chapters… 27 chapters in this book. I didn’t write every chapter but I’ve written certain chapters of this book. So if you’d like to get a copy of this. It will be out the end of July or beginning of August. Just call in and say you’d like to have more information and have it autographed. It’s called Put Your Money Where Your Heart Is. It’s including faith and values in your financial and estate planning. One of the topics in the book has to do with irrevocable funeral trusts, which we’ve been talking about. So there’s a table of contents. Let me give you some information. There’s an appendix, Appendix A, and some of the topics in it. One of them the question asked “is leaving behind an inheritance biblical?” Well our website is Leave a Legacy. We didn’t come up with that name by chance. In fact, it cost a lot of money to get that domain, especially that “A” in leavealegacy, but is leaving behind an inheritance biblical?

Leaving an inheritance is a biblical concept. Generally, the history behind it is that it was given to adult children while the parents were still living. It was considered good estate planning. According to Jewish tradition, a father would begin to pass along his inheritance to his oldest son when he reached his mid 30s. Now you might wonder why was that. I tend to think it was so he could monitor his son in managing his wealth while he was still living. Proverbs 13:22 states that a good man leaves an inheritance to his children’s children. Ecclesiastes 7:11-12 says “wisdom along with an inheritance is good and an advantage to those who see the sun.”

Here’s another question in Appendix A. How should my faith impact my financial decision making? You know, on past shows we talked about yellow money, gray money, and red money. Yellow money is your emergency money, that’s checking account, savings account, money markets, credit union. And we say you should have anywhere from 3 months to 12 months. Red money is money at risk, that’s mutual funds, stocks, bonds, ETFs, commodities, anything that can go up and down. Green money is money that has these characteristics: Your principal is protected. Your interest gain is locked in every year. That would be a CD, a savings bond, an indexed annuity, a fixed annuity. And we talked about being good stewards. We are instructed to pursue wisdom. So when I’m talking about the economy I’m trying to instruct wisdom and understanding. Proverbs 23:22. In Psalms 15:22 it says “without consultation, plans are frustrated but with many counselors they succeed. We are called to be good stewards of money that God’s given you.” And also Proverbs 16:13 states that if we commit our work to the Lord your plans will be established. And 1 Timothy 5:8 states that if anyone does not provide for his own and especially for those of his household, he is denied the faith  an unbeliever or infidel. So it’s very important. That’s what we talk about in this retirement roadmap. Something that’s guaranteed. Something that is predictable.

In the Appendix it talks about, Is retirement biblical? There’s only one scripture reference to retirement in the Bible. Isn’t that something? It’s in Numbers 8:25, and it was only for the Levite priests who would retire, and basically they stepped aside at age 50 and that’s it. There’s no other mention specifically of retirement in the scripture. In fact, God created us to work to be producers, to stay active, to influence lives, to impact our world in a positive way. Biblically it appears that retirement should simply be a transaction to a different location or a different focus in our use of time, not a lapse into laziness or non-productivity. Don’t you find that interesting?

Right. So again, if you’d like to get this book we’re talking about the book that I helped author, by the way, is Put Your Money Where Your Heart Is. Including Faith and Values in Financial and Estate Planning. Even if you’re not a believer, you should get the book because it talks about being good stewards of your money. And we’re talking about estate planning, financial planning, power of attorney, wills, trusts, all kinds of good information in there. Let’s talk about another one in this Appendix A. How much is enough? This is a very commonly asked question. Warren Buffet and Bill Gates are traveling the world to enlist billionaires to join the club of billionaires, who have pledged to give away at least 50% of their wealth to charities. Certainly they believe they have more than enough. Scripture gives guidance in answering this question. Ecclesiastes 5:13 states “There is a grievous evil which I have seen  under the sun. Riches being hoarded by their owners to his herd.”  And Proverbs 15:16 says “Better a little with a fear of the Lord than great treasures in turmoil with it.” And I go on and on. Is it worth it to try to squeeze an extra 1 or 2%, to be too greedy? Or is it better to have a more predictable. You have to ask the question. What is God calling me to do? We also talk about the moral fabric of responsible investing. Does your money where it’s invested match up with your values? We’ve talked about on past shows we have software called The Evaluator and Investigator which can tell you if your investments are matching up with your moral values.

Now you know, interestingly, we see people who don’t want to know. Some people once their shown they’re really… What do I do now? Now I have to change my behavior. But we just had a couple in last week and they were shocked that some of these companies that are almost made in America type companies they were shocked to find out some of the things they invest in. So that’s really something that if you’re a Christian you should really want to know where it is you’re putting your money.

So if you’d like to get a copy of this book (it’s not out yet but it will be out the end of July or early August), it’s not going to cost you anything for this book, but you have to call our office and we’ll tell you how you can get it. What you will have to do is come in. You don’t have to spend much time. I want to shake your hand. If you want to sit down and talk, that’s fine. But there’s no cost for this book. If you’d like to get a copy of it, call Legacy Financial Strategies. When it first comes out we’ll give you a call and tell you how you can get it at absolutely no charge. The name of the book is Put Your Money Where Your Heart Is. Including Faith and Values in Your Financial and Estate Planning. I’m one of the authors. There are several other authors. There are some attorneys and some other certified financial planners. Thanks for tuning in and we’ll talk to you next week.

Irrevocable funeral trust: What it is and do I need one?

Monday, June 25th, 2012

So what is an irrevocable funeral trust?

Well, basically it’s a legal method to preserve up to $15,000 of your assets and that’s for a husband and wife or if you’re single, yourself, to pay for your final expenses. That’s $15,000 each that can be put in?

Now who we’re talking about protecting it from is the Medicaid spend down rules that can happen because of this thing we call catastrophic illness. Meaning you need some type of long term care. Because that is on the table for spend down. But with an irrevocable funeral trust, it’s exempt from the Medicaid spend down rules. Normally if you have a life insurance policy you have to cash that in because you cannot have cash value life insurance over about $2,000 in Pennsylvania.

So we’re saying that if I have I think it’s $1,500 face amount thousand dollars cash value that if you transfer that block of money into this or if you have money in the bank and you can transfer it and I go into the nursing home a week later, are you saying up to $15,000 for myself and $15,000 for my spouse could be exempt from the nursing home?

And that money is always going to be there to pay for your final expenses.

What if I never heard of these things? Does anybody own these? I’ve never heard of these before.

Well, they’ve been around a long time. I think because of the rules changing with Medicaid they’re becoming a more popular discussion. For example, many people don’t realize there was the deficit reduction act was passed recently and it changes some rules. Can you tell us a little bit about that, Dad? How that affected this and why it’s come up in the conversation more.

Yes, the deficit reduction act of 2005 came into effect February 8, 2006. Any assets gifted away are subject to being countable assets in determining Medicaid eligibility if made less than 5 years ago. The look back rule has been extended from 36 months (3 years) to 60 months (or 5 years). And they go by the date of the application not the date of gift. And any paid up life insurance policy must be redeemed and used to pay for expenses before you can qualify. So if you have more than $1,500 face amount or $1,000 cash value and you’re using that for part of your care you may have to spend that money unless it’s part of your total exemption that you have for a married couple. So one of the best legal ways to preserve assets, Sherri, is to pay for final expenses is by placing up to $15,000 in an irrevocable funeral trust. I know a lot of people ask me, “Well, what if the funeral only costs $8,000?”  Well, you can use $8,000 for the funeral home and then the rest of it would go to your heirs. That’s subject to going through a small short affidavit, but up to $15,000 could be exempt from Medicaid. And interesting about that, if you have life insurance, it could take 2 or 3 or 4 weeks to apply and get your claim. All they need to pay this one is a copy of the funeral bill and they can pay within 24 to 48 hours. But if you go into a nursing home you may not have any money anyway to pay for it. This protects up to $15,000 for a husband and up to $15,000 for a spouse. So the total is $30,000 at the very minimum. That’s kind of the basic we do on Medicaid planning. So how does an IFT or as we like to call them, an irrevocable funeral trust, protect your assets? Tell me how that works, Sherri.

Well, typically it’s a single pay. So, for example, if someone already had a life insurance policy they could do something called a 1035 exchange, meaning they could exchange that policy whether it’s paid up or not.

What does that mean then? If they had say $10,000 of cash value they could take it from one insurance company – say XYZ Insurance Company – and transfer it over to this funeral trust.

Exactly, with no penalty and no tax consequences. That’s what section 1035 refers to is the IRS code. It’s called a 1035 exchange, no tax consequences. But it’s usually a single pay although there are some that allow an ongoing pay but typically…

Where else would this money go besides life insurance? Could they take it out of a money market? Checking account?

Sure, they could take it out of things like that. Definitely could do that. But many people have life insurance policies in existence and they’re not really doing anything for them so I’ve often seen people do that and have had people do that.

What if someone says well, I’m thinking about going to a funeral home and prepaying it ahead of time? What about that?

Well, that is an option and some of the funeral homes have these commercial carriers that we’re talking about but it’s kind of like the fox and the chicken coop. I mean, you don’t know if that funeral home is going to be around 10, 20, 30 years from now, for example.

Or what if they sell it to someone else?

Or they sell it or maybe you’re going to move. So it gives you a little more control if you actually have control of this, which you would. You don’t have to make those decisions. It can be made at the time.

So in other words let’s say they have kids in other states and they happen to move and they die in another state so then wouldn’t have to be flown back to this state, they can do it anywhere.

Exactly. And sometimes these prepaid plans that people do, sometimes they have some gotchas in them. You have to read the fine print. You really have to be buyer beware of what you’re getting involved in. So, we just find it’s better for people to maintain control and have an outside entity and not have the two colluding together, just to keep things neat.

So tell me again how this irrevocable funeral trust works?

Well, it’s 100% protected from Medicaid spend down. The funds are totally safe and secure, just like they would be with any other. The funeral home is paid first. The balance of the money is returned to the estate, and it has inflation protection, usually it’s simple interest. It gives you peace of mind.

If you’d like more information on these irrevocable funeral trusts, call Legacy Financial Strategies toll free at 800-264-4963. So, listen to this very important message I’ve prepared for you.

What we’ve been talking about is irrevocable funeral trusts. For those that are just tuning in, you might say what in the heck is an irrevocable funeral trust? So, Sherri, before we give the definition of an irrevocable funeral trust, explain why most people get one of those.

Well, it’s very simple. They want peace of mind. So basically I think if folks want peace of mind, they should look into it. If they don’t, then don’t pursue it.

So if you want more information about how they work, you want to call our toll free number 800-264-4963.

So what is an irrevocable funeral trust? Just as a refresher. Basically it’s a legal method to preserve up to $15,000 per person in a couple unit, so husband and wife, or if you’re a single person, $15,000 of your assets to pay for your final expenses. It’s protected from spend down that can occur because of going into a nursing home and creditors of any kind. So it’s 100% exempt from the Medicaid spend down that can happen.

That’s important. You may be forced if you have a life insurance policy to cash it in. Because you’re allowed to keep $1,500 face amount and $1,000 cash value. If it has more than that, it’s part of the process of spending down your assets. I don’t make these rules. These are the rules the government has. So, if you’d like to be able to protect that funeral home, one of the things is to set up an irrevocable funeral trust.

I’d like to mention too that by default, we talk about rules, if you don’t have any planning in place with regards to this issue, these are the rules that you’re under. Everyone is under these rules. These are the rules that our elected officials have made for us. So all we can do is live within them and do the best we can inside the rules that are allowed. And one of the things that is allowed that nearly everyone should take advantage of is an irrevocable funeral trust. And let’s talk a little bit about why. Dad, can you tell us how is an irrevocable funeral trust better or different than say for example a traditional whole life or pre-need funeral that you can do, or a savings CD or savings bonds or traditional annuities even. Can you address some of that?

Well, an irrevocable funeral trust, let’s talk about from law suits, is it protected from law suits? And the answer is that in an irrevocable funeral trust it is. How about savings and CD’s, are they protected from a law suit? Absolutely not. You might have car insurance but if you get sued for more than the car insurance they’re going to come after it. Whole life insurance, yes, limitations on that. Now let’s talk about protection from creditors. Is an irrevocable funeral trust protected from creditors? Yes. Savings bonds? Yes. Savings in a bank or CD? No it’s not. Let’s talk about protection from current taxes. Is an irrevocable funeral trust protected from current taxes? Yes. Savings bonds? Yes. You get a 1099 where you take the interest out or what interest they’re paying you or maybe you have to pay them, but anyway…

Or if you don’t take the interest out.

You have to pay taxes on that money regardless and of course traditional annuities, they’re protected from that. But savings on CD’s are not. How about for spend down? We covered that already. Irrevocable funeral trusts are exempt. Savings bonds are not. Savings or CD’s are definitely not. Traditional annuities are not. Whole life insurance unless it’s irrevocable is not. Pre-need funeral home bank trusts. They are, of course. All right, Sherri, how about some other… what about protection from probate?  Are irrevocable funeral trusts protected from probate?

Yes, they are. As long as the total amount is going for final expenses. There may be… Someone might say well, it’s not going to cost me $15,000 for a funeral. Who knows what it’s going to be in the future. But let’s say it’s not. Say it’s $8,000 or $9,000. There may be a small amount if it doesn’t all go to final expenses that would actually go through probate. A very short process. The risk to the spend down to the life insurance policy would be more significant. Savings bonds? Yes, they’re protected from probate. CD’s? No. Traditional annuities? Yes, because they have a named beneficiary. Traditional whole life insurance? Yes. Pre-need funeral home bank trusts? Yes.

If you’d like to get more information about irrevocable funeral trusts, call Legacy Financial Strategies toll free at 800-264-4963. We’ll give you some information about irrevocable funeral trusts and how they compare to other types of savings vehicles out there.

We mentioned this briefly in the other segment that we did, but let’s talk about why an irrevocable funeral trust might be a better choice than a prepaid funeral expense plan with a funeral home.

Well, as I mentioned, the main reason people get an irrevocable funeral trust is peace of mind. Let me give you some examples. Number 1 is safety and security. You can be 100% certain that all the money is placed in your irrevocable funeral trust. We like to call them IFT’s. It will be available when you need to pay for your final expenses. And for those who are just tuning in, all they need is a copy of the funeral bill. They don’t even need the death certificate. And they can be paid within 24 to 48 hours. I don’t know of any regular insurance policy that can do that. Portability is huge. Many of you like to travel, and you can’t count on where you’re going to die.

And I have plenty of clients – and I’m sure you do, too – that spend part of the year here and part of the year in Florida. They don’t know where they’re going to pass away.

So in this particular plan – an irrevocable funeral trust – you’re not obligated to use a specific funeral home to provide for your final ceremonies. You have flexibility. You can use that funeral home but you don’t have to. It’s a lot more portable. Number 3 is flexibility. You’re not obligated to spend the entire preset amount for your final expenses. Any excess will go back to your estate. This money also can be used for luncheons and dinners, and whatever else you want to have. And it’s there available. Have you ever been to a funeral home and they’re worrying about they haven’t got the money. Who’s going to pay for it? It becomes very awkward. This is paid within 24 to 48 hours. All they need is the funeral bill. They don’t even need to have the death certificate. And also, number 4, instant availability in the event that your assets are tied up in non-liquid assets, moneys will be available for your final expenses. We’ve already covered that. But you may say I already have insurance, why do I need a funeral trust.

That’s a good question and I get that question a lot. I think you cannot afford not to have this type of insurance. For example, suppose you do have insurance. Let that insurance be for the surviving spouse, your spouse or other family members to keep up with ongoing household and medical expenses. Let this be ear marked for final expenses. In my opinion, this makes the irrevocable funeral trust that much more valuable for the life insurance policy. In other words, that’s ear marked for the spouse to continue on. This is ear marked for final expenses. And really they work together.

All right, so they want one of these irrevocable funeral trusts, where can they get it?

They can give us a call here, 1-800-264-4963. And what we do is we give a complimentary consultation. Or you can call for the information. But it’s best if you come in. We don’t charge you for that. We can explain this in detail. Right here at Legacy Financial Strategies we do offer these irrevocable funeral trusts. And we don’t represent any specific carrier. We’re independent here. That’s important. So we shop the marketplace to see what’s the best out there at the current time. And it does change periodically. So it’s important that you’re dealing with somebody independent like ourselves, because we don’t have a shingle with any specific company outside of our office.

Explain some of the expenses that these irrevocable funeral trusts cover. There are so many here.

Oh, it’s just on and on. Basic services of the funeral, director and staff, other professional services, embalming, care of the deceased, dressing, cosmetology, casketing.

Let me stop you there, Sherri. When I graduated from Youngstown State University in Psychology, although I had more hours in Business than psych, but my degree is in psychology, my senior year I took a course on the study of death and dying. I did a whole report on cremation. It’s quite enlightening. Back in 1976 when I graduated, when I was interviewing different funeral homes and so forth, they wanted to know why I wanted to know all this information. I told them it was for a research paper I was doing. So we do know quite a bit about this information. So go on and explain what the other services are.

So, funeral home facilities and/or staff services, memorial services, a permanent monument in the cemetery, clergy, death certificates, musicians for the funeral, temporary marker, care of the deceased, stationery package, obituary notice, flowers, clothing, viewing and visitation, funeral services, cremation, outer burial container, transportation equipment and driver, transfer of the deceased, funeral vehicle, hearse/car/limousine, utility service vehicle, cemetery charges, a re-pass once the services are completed, graveside service, and caskets.

One thing I didn’t see in there was a wake. I suppose if someone wanted a wake that could be counted also.

State of the Economy: Are you ready for a Recession?

Monday, June 25th, 2012

Economy: Is a Recession coming?

What we’re talking about in the first part is the economy. Now let me read something very, very shocking to you. And then you want to stay tuned because I have a book that I helped author that will be coming out in July, and I’ll tell you how you can get an advanced copy at absolutely no charge. We’ll talk about that toward the end of our last segment. So you definitely want to tune into that.

So let’s talk about the economy. Now I hate to bring you doom and gloom all the time, but this particular individual’s name is Mark Faber. Mark Faber is a Swiss money manager and he prepares a newsletter that comes out every month called The Gloom but also Boom if there is a boom and Doom, and his editor is Mark Faber. Here’s what he said, “Global investors remain focused on Greece, where a messy exit from the Euro zone could rattle the world economy.” And he’s saying the chance that the global economy falls into recession stands at 100%, not 99%, not 98%. In his opinion, it is 100%. Now what is the definition of a recession? That’s when the GDP (gross domestic product) declines or stays the same for two consecutive quarters. So if we do that, technically we’re in a recession. Now many people think we’re in a recession right now. But by definition it’s when the GDP either stays the same or declines for two consecutive quarters. That’s the definition of a recession. Now here’s what he also has to say, “There are bigger threats lurking on the horizon on which the world is turning a blind eye. As an observer of markets, whenever everyone focuses on one thing like Greece and Europe, maybe they miss issues that are far more important, such as meaningful slowdown in India and China.” That’s right. How many times have you heard that? He spoke on CNBC recently about the slowdown in India and China. He says factory output in China has been weakening. How many people are aware of that?

The HSBC flash purchasing managers’ index for China fell to 48.7 in May from 49.3 in April. The seventh straight month of the indexes come to below 50. A level indicating of a contracting economy. He said to expect a broader reaction in the stock market as time goes on. Let me read some more information what he has to say. Mark Faber. He said he also expects a broader reaction in the stock market as time goes on. Well I don’t know how many people saw him on CNBC, so what I’m telling you is the same thing he told on CNBC. He said there are more and more stocks that are breaking down economic _______________ stocks and companies that cater to the high end. He also said “that suggests to me that the economy is likely to weaken, and the huge asset run is likely to come to an end with significant asset inflation.” Here’s where his best guess is when this is going to happen. There is a 100% chance that the economy is going to go into recession. He thinks toward the last quarter of 2012 or earlier 2013. Then when asked what the odds are, he says 100%.

So, here’s my question to you, what the heck does this mean to you? Here’s what this means to you, folks. If you have too much money (red money- And red money is money at risk.) that could be stocks, bonds, mutual funds, anything that can go up or down. Now you can take a chance and say I’ll wait till the last quarter, or stick your head in the sand. But maybe you have too much money in the market. My question to you is; how much more can you afford to lose? Whatever that amount is, leave it in the market in case he’s wrong. On the other hand, wouldn’t it be better to have something more predictable that has guarantees? And we’ve been talking on our past shows about the retirement roadmap. That’s not based on hypothetical’s. It’s like a personal pension program, without some of the negatives. What do I mean about some of the negatives? My dad worked at for 32 years and when he retired he got $750 a month. When he died, you know what happened to that pension? It went away. This doesn’t work that way. Second of all, if he wanted more income than the $750 a month, he couldn’t get it. With this strategy you can. It might lower the payment stream down, but this is a better way. Not a hypothetical but based on guarantees. So if you’d like to know more about how this retirement roadmap works, we have a DVD or a CD for you if you call Legacy Financial Strategies toll free we’ll tell you how this retirement roadmap works. Or if you’d like a book on inflation or deflation, that covers either strategy, you can get that book also if you call our toll free number. We’ll tell you how you can get it at absolutely no charge. Again, our toll free number is 800-264-4963.

I don’t know if we’ll get through all this or not, but lest folks think this is just one man speaking doom and gloom in the darkness, this is another report that came out from David Stockman from the commodities and futures report. He is a former congressman and the director of the office of management and budget. He had some pretty powerful things that he had to say on the topic of quantitative easing. He said, “We’re in the last innings of a very bad ball game. We are coping with the crash of a 30 year long debt super cycle in the aftermath of an unstable bubble.” He said, “Our policies such as quantitative easing are making it worse by facilitating more public sector borrowing and preventing debt liquidation in the private sector,” both erroneous steps in his view. The federal government is not getting its financial house in order. We are on the edge of a crisis in the bond markets. It’s already happened in Europe and it will be coming to our neighborhood soon. On the topic of the Federal Reserve, he says “The proper role of the federal reserve should be to get out of the way and not act like it’s the central monetary plan. It cannot and should not be done.” He says, “The fed is destroying the capital market by pegging and manipulating the price of money in debt capital. Interest rates signal nothing anymore because they are zero.  The curve signals nothing anymore because it’s totally manipulated by the fed. The very idea of operation twist is an abomination. He goes on to say how savers are being crushed when we desperately need savings. Basically, Wall Street is arbitraging the fed’s monetary policy by borrowing overnight money at 10 basis points and investing it in 10 year treasuries is at a yield of 200 basis points, capturing the profit and laughing all the way to the bank. And he says, “I think the likely catalyst is going to be a breakdown of the U.S. government bond market is the heart of the fixed income market and therefore the world’s financial market.” What he’s basically saying is when that happens; you can just kiss what’s happening in the United States goodbye. That’s going to be our downfall.

In fact, if you’d like to have this report, we have what’s called a market and economic update, May 25. It’s several pages long but it has a lot of different people talking in this report. You want to get this report. And if you call Legacy Financial Strategies toll free at 800-264-4963 we’ll give you that report. The number again is 800-264-4963. You’ll want to listen to this very important message. And after this message we’re going to talk about what is an irrevocable funeral trust.