Posts filed under 'Estate Planning'
July 16th, 2008
Jody J. Jungerberg, MBA, CFS, ChFC, CFP®
The author Tracy Gary in her book “Inspired Philanthropy” defines Inspired Legacy Planning as “financial planning that goes beyond mere prudence to be responsive to what is highest and best in us.”
This type of Estate Planning includes a prudent financial plan but then moves on to taking into account family values, virtues, vision, and what we want to for others.
First of all, you will want to make sure that a true practical financial plan has been completed so that you have “enough” - whatever that term means to you. Enough to retire, enough to leave to your kids, enough to take care of your health care long term, etc.
With that in place, where do you go from there? First of all, discuss some of your thoughts and ideas with other family members. This can accomplish two goals: 1) The beginning of a discussion regarding family values and how they might be passed on through other generations. 2) Help focus in on those causes that really mean something to you and your family.
This is not as easy as it sounds. Different generations may have conflicting visions of how to make the world a better place. For instance, Grandma and Grandpa may want to continue supporting their church and the arts. Younger people may want to “save the rain forest.” So this process may take several “family meetings” but you will find the exercise enlightening. A trusted advisor can be very helpful in participating with you in this process. And they can help you do the “due-diligence” regarding the myriad of charitable organizations out there to help you fulfill your mission.
Finding an advisor who can “vision” with you will be extremely worthwhile. They know you well, they know your family, passions, assets, and goals. And even more than that, they will know the right “tools” to utilize to fulfill these goals. From a family foundation to charitable remainder trust to donor advised funds there are many ways to “give” besides writing a check. Some of these vehicles are complex, but your advisor can simplify the process so you can concentrate on how you want to make your mark on the world.
June 30th, 2008
Theresa A. Harezlak, CFP®
My sister Lynette was diagnosed with breast cancer three weeks after discovering she was pregnant. I remember the uncertainty of the time and the sheer panic within my entire family at having to confront cancer and mortality with someone so young. My sister was 34 years old.
She was given a very slim chance at long-term survival by 6 of the 8 medical opinions she sought. Those 6 physicians told her she’d be lucky if she survived three years.
But my sister kept searching because her instincts told her to seek out a place that truly believed in and practiced integrative health care–one where the entire person–physical, mental and spiritual—is treated under one roof. She found that place and concentrated on creating the optimal environment to regain her health through cancer treatment, diet, exercise and many other lifestyle changes.
This year, 2008, is one where our family is celebrating her 10th year of survival and her son’s 10th birthday. We believe that the integrative approach that she found has been the key to her survival.
I tell you this story because the integrative approach works. It also works when talking about your financial wealth. It’s called Integrative Wealth Management (IWM).
This philosophy recognizes that your total “wealth” extends beyond financial issues and is also made up of human, intellectual, and social factors. IWM is comprehensive in nature and incorporates your financial plan, estate plan, life plan, vision, and investment strategy.
Integrative Wealth Management (IWM) emphasizes the importance of addressing both your personal and financial needs. There are four main components of IWM all working in concert.
PLANNING: Includes financial planning, estate planning, cash flow planning, philanthropic planning, retirement planning, educational planning, risk management (insurance), and tax planning.
INVESTMENTS: Creating an ideal portfolio based on an individual or family’s asset allocation. Integrating the proper blend of stocks (domestic and international), bonds, REITs, and commodities.
TAX MANAGEMENT: Arranging your investment planning strategies as to minimize the present value of the future tax liability over your life or in some cases multiple generations.
PERSONAL CFO: Coordinating and managing your team of advisors so your strategies are implemented effectively, simply, and efficiently. Your team of advisors often includes: bankers, accountants, attorneys, insurance providers, investment advisors, and other professionals.
Integrative healthcare and Integrative Wealth Management are not too terribly different in their philosophies. Both are customer-centered. Both understand that the customer brings to every situation a unique set of circumstances that must be addressed through individualized planning and both focus on agreed upon goals, dreams and desires of the client.
When seeking care or advice in any arena, I would encourage anyone to partner with the team that is going to consider the whole person, not just that person’s investments or in the case of my sister, her breast only.
Congratulations Lynn on 10 years!
March 17th, 2008
Thomas J. Ptacin, MBA, CFP®
Each year in late January, the Beloit International Film Festival is held just a few miles up the Rock River. The BIFF showcases over 100 films at multiple venues and includes a variety of silent films, documentaries and full length feature films. It is definitely a good way spend a cold January weekend.
One of the films featured this year was titled “The Ultimate Gift.” It is a movie about an extremely wealthy Texas oilman, Red Stephens. Played by James Garner, Red was an extremely successful businessman and active philanthropist. Unfortunately, he failed miserably at teaching his family the important lessons about responsibility, values, handling money, and being productive members of society. Terminally ill and sensing one last chance with his grandson, he designs a series of tasks referred to as “gifts”, which are meant to teach the young man many of these important life lessons. Once this series of gifts are completed, his grandson will be eligible for the large inheritance.
While most of us will never be encumbered by the amount of wealth portrayed in this movie, the messages of the film can still be applied to more real life situations. No matter how much money is involved, gifts or inheritance falling into the wrong hands at the wrong times can do significant harm to those the benefactor is trying to help.
For most people, some of these problems can be addressed with proper estate planning and legal documents. This type of planning is a must. However, an even more powerful way to start is by teaching kids about money and having discussions about the values for which you feel strongly. Once these lessons are engrained, your legacy has the opportunity to grow long after you are gone.
March 5th, 2008
Amy L. Barrett, MBA, CFA, CFP®, CDFA™
Once your investment goals are set, then you can select the stock-to-bond allocation. Your selection of the percentage of stock in your portfolio is your most important investment decision. The higher percentage of stocks produces a higher level of return and risk. How can you know that a stock-to-bond ratio is too high or too low for you? What is your investment risk tolerance?
Although the process requires serious consideration, we have a tool to help. Keep in mind that the Risk Tolerance Quiz that follows is only an estimate of your risk tolerance. A skilled financial advisor can provide more guidance. Read the questions below and circle the best answer that best represents your situation. The column with the most circles is your likely risk tolerance. Keep in mind that some people have legal, moral, location, or tax issues that affect their risk tolerance.
After taking the Risk Tolerance Questionnaire, find the column with the most circles. If most of the circles are in column (1), your portfolio should be conservative with a stock-to-bond ratio of 40% stocks and 60% bonds or 50% stocks and 50% bonds. If you chose column (2), the optimal ratio could be 60% stocks and 40% bonds or 70% stocks and 30% bonds. Column (3) would lead to an 80% stocks and 20% bonds or 90% stocks and 10% bonds portfolio. If you select the furthermost right column (4), you should be comfortable with a stock-to-bond ratio of 100% stocks and 0% bonds. Risk Tolerance Questionnaire - Find Your Investing Comfort Level
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Answer the questions below by circling the number to the right.
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Least Like Your Situation |
Somewhat Close to Your Situation |
Close to Your Situation |
Closest to Your Situation |
| You are comfortable with your understanding of investments. |
1 |
2 |
3 |
4 |
| You are healthy. |
1 |
2 |
3 |
4 |
| Your family has longevity. |
1 |
2 |
3 |
4 |
| Your dependents do not have health issues. |
1 |
2 |
3 |
4 |
| You have few dependents. |
1 |
2 |
3 |
4 |
| Your current employment and investment income provide a steady and sufficient income. |
1 |
2 |
3 |
4 |
| You have other sources of income; future or current (i.e., pension) |
1 |
2 |
3 |
4 |
| You expect a sizable inheritance. |
1 |
2 |
3 |
4 |
| Your net worth is sizable. |
1 |
2 |
3 |
4 |
| Your expenses are less than your income. |
1 |
2 |
3 |
4 |
| You do not expect to have big expenses in the future (e.g. 2nd home.) |
1 |
2 |
3 |
4 |
| You are not drawing assets from your portfolio to fund your retirement. |
1 |
2 |
3 |
4 |
| Your life insurance will cover your family if necessary. |
1 |
2 |
3 |
4 |
| You need your money to grow. |
1 |
2 |
3 |
4 |
| You wish for a higher lifestyle. |
1 |
2 |
3 |
4 |
| You do not lose sleep at night if your investments drop significantly. |
1 |
2 |
3 |
4 |
| Total of Circled Numbers in Each Column |
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| Your risk tolerance is the column (1, 2 3 or 4) with the highest count. |
(1)Lower level of Stock |
(2)Mid-level of Stocks |
(3)Mid-to-High Level of Stocks |
(4)Higher Level of Stocks |
Amy L. Barrett MBA, CFA, CFP®, CDFA™ is a financial advisor, specializing in investment and divorce planning issues, with Savant Capital Management, Inc., Rockford, IL 815-227-0300
December 7th, 2007
Richard A. Bennett, CFSC, CFP®, AIF®
Having spent 22 plus years in the financial services industry, one of my greatest challenges has been to get clients to complete their estate plan. The development of an estate plan usually involves an attorney drafting a will or living trust to direct the disposition of individual’s assets upon death. I don’t know if it is the cost of having a plan drafted (usually between $500 -$1,000 for a will or $2,000-$5,000 for a living trust) or that it forces us to consider our own final demise but most people are reluctant to get the plan done.
The problem is that if we die without a will, the State of Illinois will make one for us. Often the State’s version does not direct the inherited assets to the people or places that we might have wished. An example would be for a married couple with two children where one of the spouses dies. Any assets that were held in the deceased spouses name alone will be divided one half to the surviving spouse and one half being split among the couple’s children. Most attorney-drafted estate plans pass all the assets to the surviving spouse directly or to the spouse using a trust. Then the kids would receive the assets at the second spouse’s death. This structure helps insure the financial security of the surviving spouse.
You spend a lifetime accumulating your personal wealth. It is extremely important to make sure you have a plan in place that will carry out your final wishes. Make getting your estate plan done your new year’s resolution.
December 3rd, 2007
Thomas A. Muldowney, MSFS, ChFC, CLU, CFP®, CRC, CMP®, AIF®
There’s much ballyhoo about retirement and accumulation planning. For most of us, the best way to acquire wealth is hard work, perhaps, very hard work. It’s even better if the hard work was done by your ancestors. For those of us that were not born into the lucky genetics club, the hard work is upon our shoulders.
I recently read an article by Bob LeClair (Leimberg Information Services) who suggests that retirement is not automatic. In fact, he suggests that for a large segment of the population, their retirement plans will be postponed “…until income or assets become reconciled with a shorter life expectancy.” This is a poetic description of working longer – probably well into normal retirement years.
This does not have to be the case. The tools for retirement planning have not changed in 5,000 years and even more importantly, they have not been kept secret.
Only three tools are available to build up your nest egg: Time; Rate of Return and Money. Simply put, if you have a lot of all three of these tools, you have a pretty good shot at a comfortable retirement.
For some of you, this is your first exposé to accumulation planning and it is very simple. I call it FAME…Financial Accumulation Made Easy;
1. Save some money every single paycheck - this is the money part;
2. Start this program as soon as you get your first job (If you can’t go back to your first job…start right now.) - This is the time part;
3. Make your money work for you. - Investing provides the rate of return. In each case, “more” is better!
There is a huge difference between ‘man at work’ and ‘money at work.’ Money at work turns your dollars into a tireless miracle worker. Invested money works 24/7, your investment wealth will work for you long after you have become too tired to toil.
To gain your own FAME…start now, save a lot, and invest wisely.
Jody J. Jungerberg, MBA, CFS, ChFC, CFP® 
