Solutions for you and your family
When it comes to financial matters, it's easy to see a vision of where you want to go. It's harder to figure out how to get there. Whether you're saving for retirement, investing for the future, funding a college education or reaching for any of a hundred other financial goals, we can help.
Solutions for your business
For your business to reach its full potential, you need to understand the financial tools at your disposal. We can apply our expertise to help your business succeed.
Financial Planning
A dynamic approach to helping you and your family reach your financial goals
We use financial planning tools and resources to help you and your family reach your financial goals. We provide expertise in the six areas with the biggest impact on your personal financial situation, and develop plans and strategies to help you succeed.
We help you identify where you want to go, and show you how to get there, turning financial planning into a powerful force for you.
- Current Financial Position: The first step involves getting a snapshot of where things are today, including assets, liabilities, net worth and cash flow.
- Protection Planning: Financially protecting yourself and your family from death, disability, accident and illness
- Investment Planning: Strategies to help you retain assets and minimize payment of unnecessary taxes.
- Tax Planning: Strategies to help you retain assets and minimize payment of unnecessary taxes.
- Retirement Planning: Creating accumulation and income strategies that help you achieve a financially secure retirement.
- Estate Planning: Strategies for preserving and distributing assets to heirs in a way that fits your goals and desires, while minimizing estate taxes, probate expenses and estate administrative costs.
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Current Financial Position
Understanding your current financial situation is one of the most important aspects of doing financial planning. Your current assets, liabilities, liquidity and cash flow will affect almost every other short or long-term goal that you have.
Many people don’t realize the long-term impact of the financial decisions they make on a day-to-day basis. Your financial needs in the event of a death or disability will be closely related to your current situation, and areas such as income tax liability, asset allocation, estate tax liability, ownership status of assets, and control of assets are all inter-related.
If you already have a good understanding of your current financial situation, congratulations! If you could benefit from a greater understanding of where you stand today, there are numerous ways that you can begin.
Use worksheets to calculate your net worth and track your cash flow. Personal finance programs such as Quicken™ or MS Money™ are also helpful in gaining a better understanding of where you stand today.
For help in identifying strengths and weaknesses in your current financial picture, or for help in developing a comprehensive financial plan, select the "Contact Us" option located in the main site menu at the top of the page. Our Financial Advisors are just a click away!
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Protection Planning
Protecting your family from major financial risks is one of the cornerstones of any sound financial program. Life insurance, disability insurance, health coverage and long-term care insurance should all be evaluated to help minimize your exposure to financial risk.
By working with a knowledgeable Financial Advisor, you can develop a comprehensive approach to assessing your need for additional coverage. To help you get started, click on the Financial Calculators link located in the main site menu at the top of the page.
While there are more complicated systems for calculating your insurance needs, this provides you with an indicator of whether you should consider increasing your life insurance coverage.
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Investment Planning
Managing risk in your investments
Successful investing is based on managing risk — understanding what risk means and using it to your advantage.
Risk refers to the chance that an investment's value or return will be lower than expected. Investments with potential for greater loss are viewed as riskier than those with a lesser chance of loss.
However, the risks associated with investments differ in the long-term compared to the short-term. In the long-term, so-called "risky" investments may offer a greater chance of reaching a financial objective.
Risk Levels
For example, a government bond that guarantees a return of principal and $100 interest after 30 days is risk-free in the short term, since the return will always be $100 regardless of events in the financial markets, if held to maturity. In contrast, common stock may have the potential of earning as much as $200 and as little as $0 and offer no protection of principal.
In the long-term, the picture changes. Based on historical stock performance, risk faced by stocks declines over the long-term. The risk faced by government bonds increases, however, since their long-term returns they offer are frequently outperformed by other types of investments and may not always keep up with inflation and taxes.
The risk and return of any one investment should be viewed in relation to your total investment portfolio — the combination of investments you’re making. If you hold just one or two accounts, you are more exposed to risk than if your money is more widely diversified. Diversification means investing in instruments which behave differently during a given economic situation or time period.
A Financial Advisor can help you determine an appropriate level of risk and diversification for your financial goals, profile and time horizon. Talk to an advisor or representative today about developing a customized investment strategy.
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Tax planning
As Ben Franklin aptly pointed out over two centuries ago, taxes are one of the certainties of life. Our challenge is to use the provisions of the tax code to our advantage wherever possible.
For example, income can be from earned (employment) or unearned (investment) sources, and can be taxed today, taxed later (deferred) or not taxed at all (exempt). How we decide to hold our assets and receive our income will have the greatest impact on our income taxes.
Everyone knows that the U. S. tax code is extremely complex. Many types of assets (tax-exempt bonds, IRAs, annuities, and cash-value life insurance to name several) offer significant tax advantages. Working with a financial advisor who understands the tax implications of your financial decisions will help assure that you are making those decisions with all the pertinent information, often resulting in significant tax savings. For help in identifying strategies to reduce your taxes, or for help in developing a comprehensive financial plan, contact one of our knowledgeable Financial Advisors today.
This information is a general discussion of the relevant federal tax laws. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances.
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Retirement planning
Plans help address the changing concept of retirement
The concept of retirement is changing. And so are the ways that people prepare for it. For some, retirement means lots of leisure time to pursue hobbies and interests. For others it means a change to part time work, and still others will spend their new found free time with family members or as a volunteer in the community.
Whatever your plans for retirement may be, you have a valuable tool at your fingertips to help you prepare financially for what could be the most rewarding part of your life. This tool is your retirement plan. Many retirement programs offer investment options to choose from, and contributions can come from your employer, you or both to provide the accumulation you need to save for the future.
Three retirement savers
Sid Saver, 25, has a long way to go before his golden years. With an income of $25,000 in the early stages of his career, Sid's working with an eye to the future. If Sid defers just 4.7 percent of his annual income to his 401(k), he could retire with 80 percent of his annual salary*, adjusted for inflation. And, Sid's tolerance for risk is high, given his long time horizon. He'll allocate his money into an aggressive portfolio made up of equity investments.
Debra Due Diligence, 35, hasn't started contributing to her pension plan, opting instead to save $25,000 in an IRA plan, and that may help offset possible foregone earnings. She'll have to put more than 12.1 percent away in order to enjoy 80 percent* of her $35,000 income at retirement. Deb will put her money into a moderately aggressive portfolio with 20 percent in fixed income and 80 percent in equity.
Pete Procrastinator has waited even longer. At age 48, he's earning $50,000 per year as an editor for a small publishing company. But he has only saved $5,000 in an IRA. Pete would have to save more than 30 percent of his before-tax income in order to retire with just 80 percent* of his current income. That's more than the law allows, so Pete would have to use another savings vehicle, as well. Pete's not too worried, though. He plans to continue working part time after age 65, and will invest 12 percent into a moderate portfolio, with 40 percent of funds going to a fixed income group and 60 percent going to an equity group.
No matter where you are in your career, a retirement program offers a wide range of investment options.
The most important thing you need to do is use it. Here's a review of the three hypothetical retirement examples:
*Assumes a 3.5 percent inflation rate, investment growth of eight percent before and six percent after retirement, no employer-contribution pension plan and standard calculated Social Security income. These are hypothetical examples for illustrative purposes only and are not indicative of any particular investment.
Developing a strategy for a financially secure retirement is no simple task. That's why an experienced professional's knowledge and objectivity can make this important challenge more manageable.
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Estate planning
Helping you protect your legacy
No matter how large your estate is, a sound estate plan remains the best assurance that your assets will be distributed to the heirs you select in the way you choose. It can also help protect your financial security if you become incapacitated.
While reducing taxes can be an important goal, it’s not the only reason to develop an estate plan. Regardless of what happens with tax legislation, an estate plan can be an essential financial planning tool.
As you put together your own estate plan, consider these elements:
Estate planning can protect your family's interests and ensure that your wishes are carried out.
What if I don't have a will?
If you die without a will or other testamentary document, the probate court distributes your estate according to state laws. About a third of the states have adopted all or part of the Uniform Probate Code, which provides for the following structure for distributing property if you die without developing an estate plan (intestate):
- If there is a surviving spouse and no surviving children or surviving parent of decedent, all property passes to the spouse.
- If there is no surviving children but decedent is survived by a parent or parents, the first $50,000, plus one-half the balance of the estate passes to the surviving spouse. The remainder passes to the decedent's parents.
- If there is a surviving spouse and surviving children of both, the first $50,000 plus one-half the balance of the estate passes to the surviving spouse. The remainder passes to the surviving children equally.
- If there is no spouse and no children, the property is divided evenly between your parents. If no parents are living, it is evenly divided among the descendants of your parents, namely your siblings.
- If there is no living relative, the property reverts to the state.
In addition, the probate process is time consuming and expensive. Consult one of our financial professionals to learn how to protect your estate.
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Business Solutions
To run a successful business, you need to understand the financial choices available to business owners. At our firm, we apply our expertise, resources and tools to find long-term solutions that can help your business grow and succeed.
Business Continuation
Benefits for key executives
Planning for changes in ownership
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Planning for changes in ownership
You can prepare for the problems that can come with a change in ownership by using these techniques:
Buy-Sell agreements This is the most common business continuation planning tool. Life insurance funds the agreement, which establishes the value of your business and assures a ready market for your share in the business after you're gone.
Key Employee Life Insurance
Provides you with the funds you need to keep your business running smoothly when you lose a key employee.
Personal estate planning
Carefully incorporating your business needs into a total estate plan can help you meet estate tax and liquidity needs to preserve the full value of your business for your family and associates.
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Business Planning
Develop a strategy to preserve your business and your net worth
Effective business continuation is both an "art" and a science. First and foremost, it is an art. Because the best business plan always considers your unique financial goals and objectives, creativity and customization is required to select and tailor those strategies best suited to meet your specific business continuation and benefit needs.
However, business continuation and benefit planning is also a science. The best business plan should take into account the tax and legal ramifications of the various financial strategies adopted. A Financial Advisor or Registered Representative will incorporate both the art and science of business planning in a program recommended to you.
Using business dollars for personal expenses
These valuable concepts can help:
Split-dollar life insurance
Your corporation can help you pay for your own life insurance by "advancing" your money to pay the annual premium. This low-cost benefit can also be available for key employees.
Disability insurance
Your business can provide you with personal disability insurance — which continues a portion of your salary when you're unable to work — and the premiums (in most cases) are tax deductible.
Section 303 stock redemption
Your business may be able to help you pay estate taxes and settlement costs if your stock is worth more than 35 percent of your adjusted gross estate. Under a Section 303 stock redemption, the business redeems some stock from your estate to produce cash to meet your estate's obligations.
How to use employee benefits to increase income and improve retention of key employees
These concepts can help you get the most out of your benefit dollars:
Disability salary continuation planning
A salary continuation plan can help protect you, your key employees and your business from the financial consequences of a disability. If the plan is funded with disability insurance policies, premium payments are considered tax deductible as a necessary business expense.
Qualified pension and profit-sharing plans
Employee-sponsored retirement programs help employees prepare for retirement and allow them to take advantage of special tax breaks. Any contributions you make to the plan are tax deductible.
Life Rewards
Highly compensated executives are limited in the amounts they can save for retirement in qualified plans. Nonqualified plans are available through Life Rewards and allow associates to enhance their retirement benefits.
Split-Dollar insurance
Life insurance can be provided to select executives at a reduced cost through split-dollar insurance plans.
Golden Executive Bonus Arrangement(GEBA)
GEBA and other executive bonus strategies provide life insurance to employees and give your company a current income tax deduction.
Personal financial analysis
This service helps employees manage their money more effectively and achieve their personal financial goals.
Group insurance
Your business can provide a variety of programs, and the tax deductions generated by the premiums you pay make the cost of these benefits even lower. Medical, disability and life insurance are the three most sought-after programs.
The Art and Science of Business Planning can help ensure the ongoing success of your business.
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Key Person Insurance:
Protect your business against the loss of one of your most vital assets: key employees
Key people are vital to the success of your business. A Key Person Life Insurance Plan can provide the funds you need to keep your business running smoothly after you've lost a key employee through death or employee turnover.
How Key Person Life Insurance works:
The employer pays premiums for a life insurance policy on the key employee's life. The employer is the owner and beneficiary.
The employer can arrange an Exchange of Insurance Agreement to reduce losses if a key employee leaves prior to retirement. This allows the employer to transfer coverage to a successor.
If a key employee dies, the employer receives the policy's income tax-free death benefit* and can apply it towards business expenses or losses caused by the employee's death.
If you employ anyone whose sudden, unexpected absence would significantly impact your business, consult with your life insurance agent and financial professionals about Key Person Life Insurance.
* Subject to the corporate alternative minimum tax for C corporations.
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Life Rewards:
Select nonqualified retirement benefits for your key executives
The benefit program your company offers is critical to attracting and retaining top employees. Qualified benefit programs — pension and 401(k) plans — limit participation by highly compensated executives. A nonqualified plan is a unique benefit designed to attract and reward top executives. Life Rewards, a customized nonqualified benefit program, can strengthen the tie between your company and its top executives.
You can provide Life Rewards for your key executives to:
Three Life Rewards strategies are available:
Executive Deferral Plan
Allows the executive to defer a portion of base salary, bonus or commissions, which lowers currently taxable income.
Deferred Bonus Plan
Restricted solely to discretionary employer contributions and rewards the executive subject to a vesting schedule you select.
Executive Salary Continuation Plan
Protects against inflation to help your valued executives achieve a comfortable retirement. Funded entirely with company dollars.
Life Rewards offer valuable benefits to key executives:
Who can sponsor a nonqualified Life Rewards plan?
Any company can establish a nonqualified Life Rewards plan. C corporations best complement the tax advantages of a nonqualified plan; however, nonshareholders of an S corporation also benefit. Other entities such as a limited liability company, limited liability partnership, sole proprietorship or partnership may also sponsor a nonqualified plan for select nonowner executives.
Life insurance?
Life insurance is the most commonly used informal funding vehicle for nonqualified benefits because of the death benefit it provides and its tax-advantaged status. Your company will be the owner and beneficiary of the life insurance policy, which insures the executive participant in the plan.
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Golden Executive Bonus Arrangement (GEBA):
A compensation tool designed to reward select executives with cash value life insurance
Attracting, motivating and retaining key executives takes a competitive compensation package that includes more than a salary and a bonus. Until recently, government regulations made it almost impossible to single out and reward those employees you value most.
The Golden Executive Bonus Arrangement (GEBA) can be a solution for rewarding and retaining your most valued executives. This tool gives your company a current income tax deduction through the purchase of cash value life insurance, while maintaining control to encourage an executive to stay with your company.
Other advantages of life insurance funded GEBA include:
If you're looking for an executive compensation tool that helps you retain one or more key executives, consider using life insurance in a GEBA.
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Business estate planning:
How to preserve your life's work
You've spent a lifetime building your business. Take a moment to make sure that your hard work will survive the death of you or one of your partners.
As the owner of a closely-held business, much of your wealth is probably tied up in the business. While returning earned income back into the business helps finance growth, it can cause severe liquidity problems for your estate when you die. After paying probate and estate taxes, your estate and surviving family members also may encounter liabilities that become payable upon your death. They may also face the potential of decreased business earnings, due to your absence.
There are ways to overcome these liquidity problems. Business-oriented planning tools can help reduce estate taxes and make the best use of the cash available. The most common business estate-planning tools are buy-sell agreements, Section 303 stock redemptions, Section 6166 estate tax deferrals and the qualified family-owned business exclusion. Business-owned life insurance can be used to fund each of these planning methods.
Buy-Sell Agreements
Buy-sell agreements can establish the value of your business for estate-tax purposes and improve your estate's liquidity by assuring a ready market for your business upon your death. These agreements also protect business partners from sharing ownership with a deceased stockholder's family.
There are two main forms of buy-sell agreements: cross-purchase and stock redemption. In an insurance-funded cross-purchase arrangement, each business owner buys an insurance policy on the other, naming themselves as beneficiary. At the death of one of the owners, the surviving owner receives tax-free insurance proceeds to use in purchasing the deceased owner's stock from his or her estate.
In an insurance-funded stock-redemption arrangement, the corporation purchases the stock of a deceased shareholder. Here the business is the owner and beneficiary of life insurance policies on each shareholder. A partnership looking for a business continuation plan may use a similar arrangement called an entity purchase.
A buy-sell agreement that is funded with life insurance will benefit:
Your Family:
Your Business:
Section 303 Redemptions
Section 303 of the Internal Revenue Code gives your estate a one-time opportunity to remove cash or other property from your business, at little or no tax cost, through a partial redemption of your stock. This can provide the liquidity your survivors need to pay funeral costs, estate and administrative expenses, and state and federal death taxes.
To be eligible for a Section 303 redemption, the stock value must exceed 35 percent of your estate. The maximum amount that can be paid under such a plan equals the total amount of the federal estate tax, state death taxes, funeral and administrative expenses. Corporate-owned life insurance can be used to fund the redemption. Under this arrangement, your business purchases an insurance policy on your life and at your death uses the tax-free proceeds to buy enough stock from your estate to cover death expenses and taxes.
Section 6166
An estate tax burden can force the liquidation of a closely-held business. Internal Revenue Code Section 6166 was designed to prevent this liquidation. If the business interest constitutes more than 35 percent of your adjusted gross estate, under Section 6166 the executor may elect to pay the estate tax attributable to the value of the business in 10 annual installments, beginning no later than five years after the date of your death.
There are a number of requirements you'd have to meet to be eligible for the Section 6166 extension. If your estate qualifies, life insurance offers an economical way to pay these installments.
Qualified Family-Owned Business Exclusion
If your business qualifies as "family owned," you may be able to exclude part of it from estate taxation. The amount you can exclude is $675,000 if the death of the estate owner occurs in 1998. That qualifying amount gradually decreases over time to $300,000 if the death occurs in the year 2006 or later. Your business qualifies as family owned if the business comprises more than 50% of your total estate and you pass the estate on to a "qualified heir." A qualified heir is generally defined as a spouse, child, grandchild or other descendent. Your heirs, however, should realize that they have to hang onto the business for at least 10 years following such an estate transfer. If they don't, they may have to pay the full estate taxes that were avoided. Life insurance can provide your heirs with the cash necessary to pay estate taxes whether or not you qualify for this exclusion.
Business Valuation for Estate Planning
No matter what technique you select for your company, determining the value of the business is a key step in the estate planning process. Why? First, in the case of a buy-sell agreement, you need to know the value of the business to determine the price and fund the agreement. Second, because the business is part of your estate, the valuation is needed to estimate the estate taxes; this helps you calculate the cash or liquidity needed to administer the estate. Finally, the value of the business must be reported on the estate tax return when the owner dies.
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Business continuation planning:
Prepare for the continued success of your business after you're gone.
Business continuation planning tools can help you avoid the problems that can occur when a business owner dies. A life insurance funded business continuation plan provides a wide variety of benefits for your family and the business.
For your family:
For the business:
