General Financial Planning

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Year End Planning: Schedule a Family Meeting

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 It’s hard to believe that in just a few short weeks, the holiday season will be upon us.  Family gatherings during the holidays are rare occasions when parents and siblings are in the same place at the same time.  While these gatherings are wonderful opportunities for casual conversations and reminiscing, why not use this time to have a productive family meeting?

It is important for families, no matter the ages of the family members, to have serious conversations about the legal and financial planning in place; or the planning that is not in place that needs to be.  Important points for discussion may be:

  • Legal Documents – Do all family members over the age of 18 have their own Durable Powers of Attorney (POAs for Health Care and General Financial are needed)?  Do those assigned as POAs understand their potential responsibilities in their roles?  Are wills or trusts in place or needed?
  • Financial Savings – Particularly for elder family members, are there financial resources and structures in place to fund potential long-term care needs in the future?  For younger family members, is there an opportunity to use year-end gifting to help fund education or retirement savings (i.e. ROTH IRAs)?
  • Elder Care Planning – For family members who are aging, this meeting may be an opportunity to start conversations about future care.   Discussions regarding future housing and care needs, as well as a review of the older relative’s future challenges, alternatives and resources are important.  In particular, beginning to lay out future roles of family members is critical to the future success of this kind of planning.  For a list of questions that might be helpful in starting these conversations, click here.

As you look forward to the holiday season, plan for good food and family stories.  But also plan for important conversations that can affect your family’s legal and financial success.  By planning ahead for these conversations, family members can be prepared to contribute to the planning in a meaningful way.  For additional tips on holding these all-important family meetings, talk to your financial planner.

Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Timely Tips to Help Protect Against Identity Theft and Cyber Fraud

 Besides being the gateway to the Thanksgiving season, October is National Cyber Security Awareness Month.  At home and at work our growing dependence on technology requires greater awareness and action plans to protect against online risks.

I distinctly remember the sinking feeling in my stomach when I was recently discovered a thief had obtained personal information and made purchases on my credit card.  I was routinely reviewing the statement and I did not expect to see anything out of the ordinary and then boom – there it was.  Several unidentifiable transactions right in front of my eyes.  

Identity theft can occur anywhere and anytime.  

Here are some practical suggestions to help you keep cyber security top of mind:

  • Review your credit report periodically to be on the lookout for fraudulent activity.  Free credit reports from each of the three major bureaus (staggered quarterly for year-round monitoring) are available annually at www.annualcreditreport.com
  • Fee-based services are available for a cost to provide convenience for those who don’t want to personally monitor their information. 
  • Monitor bank and credit card accounts at least weekly.
  • Be vigilant about keeping sensitive information from prying eyes in public places.
  • If you file taxes electronically – review the security policy with your tax preparer.
  • Stop hackers by using strong passwords. 

Here are some additional resources to help protect you against identity theft:

Spending a little time to protect your information can help you avoid all of the hassle of being a victim. If you’d like more help, feel free to contact your Center Planner. 

Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.  Links are being provided for information purposes only.  Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors.  Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.

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A GIFT FOR A LIFETIME: Grandparent Giving for Education

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 We all know grandparents and grandchildren have a special bond. If you are a grandparent of college age children, or those attending private schools in some cases, you have to be alarmed about the amount of debt students are racking up. Economists are estimating students will be paying loans for as long as 20 years, affecting their ability to get homes and cars.*

Grandparents have a special tax saving measure that will be a wonderful gift to their favorite student.  They can make direct payments of tuition to a school free of gift tax.  So what does that mean to the grandparent?  It means that even if you have contributed to 529 plans or given to your student directly, you can exceed the $13,000 annual gift tax exclusion by writing the check directly to the educational institution for tuition payments.  The grandparent is giving now and also reducing their future taxable estate.

What does it mean to your grandchild?  It could mean less debt and the ability to start their professional career on a more solid financial basis.   With the giving season right around the corner, this may be a strategy you want to consider. To learn more, contact your financial planner at the Center.

Source: Huffington Report, 7/20/2012

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.  You should discuss any tax or legal matters with the appropriate professional.

Open Enrollment: Other Benefit Selections

 Various benefits offered by employers might not fit the mold when it comes to choices you have to make during Open Enrollment.  Some benefits are more obscure.  For example legal services, long-term care insurance and even professional development tracks could be perceived as benefits today.  

Professional Development:

Professional development encompasses all types of facilitated learning opportunities, ranging from college degrees to formal coursework, conferences and informal learning opportunities. There are a variety of approaches to professional development, including coaching, consultation, mentoring, technical assistance, and even reflective supervision.  If your employer has an annual budget for such activities, you know they are serious.  I suggest reading your employee handbook to see what resources are available to enhance your career and personal development.

At the Center for Financial planning our firm maintains professional development tracks. We have a professional development budget and provide at least one formal meeting each year with each employee discussing their career and personal development. There are other meetings and discussions throughout the year, like check-ins and group discussions that can help provide insight to employees as well.

Group Long-Term Care Insurance:

Here’s a startling fact: Over 40% of people receiving long-term care services are under the age of 65. These days, some forward-thinking companies are offering long-term care insurance. As an employee, you may want to consider this as part of your benefits package, because it’s a way to help:

✔ Protect your savings and assets

✔ Protect your family and friends from the burden of caregiving

✔ Protect your ability to choose where care is received

Employer-sponsored group coverage for LTCi brings up some thorny issues. While some group plans can be helpful for folks with certain, otherwise-disqualifying health conditions, in some cases LTCi coverage is best customized and purchased through an independent broker. That’s because many group plans entice younger, healthier people to enroll by offering them lower rates, but these rates may still be higher than an individual policy. Group plans typically have fewer selections in benefit choices and less amount of home care.

Pre-Paid Legal Services

Another rather new and uncommon employee benefit is pre-paid legal service.  This is an individual or group low-cost provider for specific, limited legal services. The services are usually pretty basic, but can sometimes be specialized and can cost considerably less than hiring an attorney on your own. These services can be helpful to participants with anything from automotive-related issues and ticket violations to various basic legal issues like purchasing a home without a realtor.

Pre-paid legal services may be provided on an "open" basis, with a subscriber selecting specialists relatively freely from a pool of participating providers. They may also be offered in a "closed" system, in which most or all services are provided to a subscriber by one central law firm. Pre-paid legal services have existed since the early 1900s, and have increased in popularity since the 1970s.

These might not all be benefits that you have to select during open enrollment. In some cases, they may be yours for the taking. But you can’t take advantage, if you don’t know what’s available. So find out about your own company policies and make the most of them. This is just one in our 8-part blog series dedicated to answering the tough questions during the open enrollment season.

Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.  You should discuss any tax or legal matters with the appropriate professional.

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Open Enrollment: Disability Insurance

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 Too often disability insurance is overlooked or underutilized.  It is natural to assume good health enjoyed today will continue uninterrupted until retirement.  Because this is not always the case, paying for disability insurance today when it is not needed is like dotting the “i’s” and crossing the “t’s” in a comprehensive financial plan for the future.  In the event a health crisis occurs, disability insurance is designed to replace a portion of your income lost during the period of disability. 

Employers that include disability insurance on the menu of choices generally offer two types:

    ✔ Short term disability – provides benefits for a limited period of time – usually six months or less.

    ✔ Long term disability – provides extended benefits after an employee has been disabled for a period of time.

Short Term Disability Insurance:

    ✔ Bridges the gap between sick pay and long term disability coverage. 

    ✔ Coverage typically lasts between 10 to 26 weeks.

Long Term Disability:

    ✔ Benefits employees who are disabled as a result of sickness or accident and unable to work for a lengthy period of time (usually more than six months).

    ✔ Long term disability insurance does not provide insurance for work-related accidents or injuries that are covered by workers compensation insurance.

What else do you need to know?

    ✔ The cost of group coverage is often less expensive than the cost of individual coverage

    ✔ Group policies often have fewer underwriting restrictions than individual policies.  A physical exam is not typically required.

    ✔ “You can’t take it with you” is a phrase that normally applies to group disability insurance.  When you leave your job most often the coverage does not convert to an individual policy.

    ✔ If you know you are leaving your job, consider applying for individual coverage before you quit. Assuming you are insurable this strategy eliminates lapses in coverage.

    ✔ Consult a Certified Financial Planner™ to determine how disability insurance fits into your long-term financial picture.

We want to make sure you don’t miss your opportunity to take advantage of employer provided benefits during open enrollment period.  That’s why we are focusing an 8-blog series on your options when it comes to open enrollment. Typically, open enrollment is offered toward the end of each calendar year and provides a window of time to make new elections or change current benefit coverage.  It’s easy to confirm this period of time by checking with your human resource department or benefits coordinator.

The information contained in this report does not purport to be a complete description of the securities, markets or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.  You should discuss any tax or legal matters with the appropriate professional.

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Open Enrollment: Health Insurance and Medicare Enrollment

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 Reviewing health care insurance options is as important as getting a physical or flossing (and about as much fun).  For employees age 65 and older, this decision becomes more complicated due to Medicare eligibility.  Major questions arise for this group of employees: 

  • What, if any, health insurance coverage will my employer provide when I turn 65?
  • Should I apply for Medicare at age 65?
  • If I apply for Medicare, what parts should I apply for (A, B, D)? 

Legally, employers can drop employees from their group health plans once they turn 65.  But Medicare secondary payer rules prevent employers from reducing health benefits to current employees due to their eligibility for Medicare (except for very small employers).  So, the employer must offer equal health benefits to all employees; coordinating health benefits with Medicare is allowed as part of this offering.  

Employers with more than 20 employees typically offer group health coverage to 65+ employees, with Medicare acting as the secondary payer.  In this case, eligible employees should enroll in Medicare Part A, hospital coverage, which is free.  These employees should also get a deferral from Medicare so that they are not subject to penalties for enrolling in Parts B and D in the future.  

Employers with less than 20 employees offer group coverage that is the secondary to Medicare.  In this case, eligible employees should enroll in Medicare Parts A and B (Part B covers medical services, including doctor visits).  Failing to enroll in both parts of Medicare could leave them responsible for paying out-of-pocket for anything that Medicare would have covered.  

Here are some tips and considerations for employees age 65+ in making health insurance and Medicare enrollment decisions:

    ✔ Coordinate with your spouse. If you are both still working at age 65, you can compare employer health plans and how they work with Medicare.  If spousal/family coverage is available, choose the optimal plan. 

    ✔ Get in writing the details of your employer-provided coverage to help you decide how to handle Medicare choices. 

    ✔ Plan to enroll in Medicare Part A (it’s free!) up to 3 months prior to your 65th birthday.  You can sign up online or at your local Social Security office. 

    ✔ If you are planning to enroll in Medicare Part B or Part D (prescription drug coverage), you can enroll up to 3 months prior to age 65 or within 8 months of retirement or loss of group health coverage (if you miss the 8 month Special Enrollment Period, you will need to wait until the next General Enrollment Period for that coverage).

    ✔ Consult with a CERTIFIED FINANCIAL PLANNER™ to help you choose the benefits that are most appropriate for your financial situation. 

    ✔ Most importantly, do your research and plan ahead; Medicare has strict enrollment periods and rules that come with financially penalties. 

This is the third blog in our 8-part open enrollment series. Check back in the upcoming days for more important tips to help you make the best choices for the upcoming year.

Sandra D. Adams, CFP® is a Lead Financial Planner at the Center for Financial Planning, Inc. In 2012, she was named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered blogs, she is a regularly quoted in national media publications such as the Wall Street Journal, Research Magazine and the Journal of Financial Planning.  Sandy is a frequent speaker on the topic of Elder Care Financial Planning.

Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning and not necessarily those of RJFS or Raymond James.

Open Enrollment: Health Insurance

 At this time of year, many of you might have an opportunity to select a medical plan as part of your employer’s open enrollment period.  Selecting the appropriate medical plan is one of the most important decisions each year.  We all have heard stories, unfortunate stories, of hard working folks that have significant financial issues due to extreme medical expenses.  This blog post isn’t written to convince anyone that they need adequate health insurance – rather it is meant to provide some thoughts and tips on how to make the best choice for you and your family. 

Employers that offer multiple medical plan options generally offer three types: 

  • Traditional
  • Preferred Provider Organization (PPO)
  • Health Maintenance Organization (HMO).  

Traditional:  This option usually provides the greatest flexibility in accessing doctors and hospitals. And, as you might expect, usually carries the highest monthly premium, deductible, and copay on services.

PPO:  This option provides for lower premiums and copays as compared to the traditional plans if you visit doctors and hospitals within the PPO network.  There is some flexibility in that you can seek services out of the network if desired, albeit at a higher cost in terms of deductible and/or copayment.

HMO: The HMO option generally features the lowest cost in terms of monthly premiums, deductibles and copayments in exchange for less flexibility.  Each person must select a primary care physician whom is responsible for directing your overall care.

Here are some more tips and considerations in selecting medical insurance during open enrollment period:

    ✔ Coordinate with your spouse:  It may make sense to both be covered by one employer’s plan depending upon your premium sharing requirements. 

    ✔ New children: Sometimes the plan that was appropriate for a couple is no longer the best plan with kids. If your family is growing, consider a plan with a lower doctor visit copayment.

    ✔ High(er) deductible plan:  These can be great options as they reduce your monthly premiums in return for potentially higher deductibles.  Be sure that you have adequate cash reserves.

This is the second blog in our 8-part open enrollment series. Check back in the upcoming days for more important tips to help you make the best choices for the upcoming year.

Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning and not necessarily those of RJFS or Raymond James.

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Pre-Paid Funeral Plans

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 Historically, end-of-life issues, especially death and funerals, were the last topics people wanted to discuss.  With more information and resources available, it seems that Americans are more at ease having these conversations.  And they are willing to plan for these events in advance!

Recently, I had a client ask me about pre-paid funeral/cremation plans and whether these were something she should consider.  In doing some research on the topic, I found that there can be pros and cons to these types of plans:

Pros:

  • Prepaying for your funeral can ease the burden on already grieving family members when the time comes, and you are able to choose the options you want.
  • Using a prepaid plan can provide peace of mind.  If you choose the right method and plan, you can feel confident that there are funds available to pay your final expenses. 
  • A prepaid funeral plan is a non-countable asset if you need government assistance for long-term care expenses down the line (Medicaid or VA Aid & Attendance Benefits).

Cons:

  • Purchasing a pre-paid funeral plan directly with a funeral home can be risky.  If the funeral home goes out of business or misappropriates the funds, you could be out the money invested.
  • You must carefully read any contract to ensure that there will not be added costs later on (i.e. the casket that was chosen is no longer available and the replacement model is much more costly).
  • If you purchase a plan with a specific funeral home, you may not have the flexibility you want/need later on if you need to relocate and wish to change funeral plans.

There are pre-paid funeral insurance plans sold by insurance companies that provide the flexibility of using any funeral home in any state.  The policies ensure that the premium you pay will cover the costs you plan for when the time comes.  Again, it is important to read the fine print and consider the costs for any type of pre-paid funeral plan.  Additional information and FAQs can be found in the Federal Trade Commission’s publication “Funerals:  A Consumer Guide”.

There are many ways outside of the pre-paid funeral plans to ensure that your plans are in place and that the funds are available.  Discuss these and other important issues with your financial planner.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does don constitute a recommendation.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Need help making good financial decisions?

 You are not alone. There are few people who should even attempt charting their financial course without consulting someone else. Even experts ask others for advice! So, I offer 7 key components to helping you find the right person to help you make the best decisions possible for you:

  1. Experience: Reflecting back on my career, I am always amazed at how green we are in the first 10 years of our careers.  I would recommend that you seek an advisor with a minimum of 10 years of on-the-job work experience before handing over the keys to your largest financial decisions. Make sure that the work experience is hands-on and specific to your needs. Ask them about their experimental practice history.   What was their greatest mistake or great new awareness surrounding the people they help?
  2. Qualifications: Make sure the financial professional is a CFP® practitioner, a Certified Public Accountant-Personal Financial Specialist (CPA-PFS), or a Chartered Financial Consultant (ChFC).
  3. Services: Ideally, the first meeting is free so you can see if the relationship is a good fit.  At the first meeting, spend time trying to understand if your values are aligned and if the financial planning professional really cares about you and your goals.  Ask for a list of services the financial planner offers or the scope of the engagement options. This should define the scope of work and the costs.  Ask the planner to provide you with a written agreement that details the services that will be provided. Keep this document in your files for future reference.
  4. How their firm works: The financial planner may work with you or have others in the office assist. You may want to meet everyone who will be working with you. If the planner works with professionals outside his/her own practice (such as attorneys, insurance agents or tax specialists) to develop or carry out financial planning recommendations, get a list of their names to check on them all out.
  5. Compensation: As part of your financial planning agreement, the financial planner should clearly tell you in writing how he/she will be paid for the services to be provided. Planners can be paid in several ways (i.e. Commissions, fees, or a combination).
  6. Other costs: While the amount you pay the planner will depend on your particular needs, the financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs should include the planner’s hourly rates or fees or the percentage he would receive as commission on products you may purchase as part of the financial planning recommendations.
  7. Complaint history: Ask what organizations the planner is regulated by and contact these groups to conduct a background check. All financial planners who have registered as investment advisers with the Securities and Exchange Commission or state securities agencies. Or, if they are associated with a company that is registered as an investment adviser, they must be able to provide you with a disclosure form called Form ADV Part II or the state equivalent of that form.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

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The Perfect Recipe for a Balanced Life for the Sandwich Generation

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 I think I’m like many Americans that struggle to find personal time amongst the chaos of working full time, raising two children, balancing family relationships, and other obligations (school, church, volunteer work, etc.).  And I am not even one of the many Americans between the ages of 40 and 60 who are raising children AND assisting aging parents.  If I have trouble finding time to balance my life with only one family to raise, how can these members of the “Sandwich Generation” do it?

I had a client of mine explain it this way, “You have to run your family like a business, that’s the bottom line.”  While there are certainly feelings and emotions that complicate the dynamics of these family situations, there has to be a way to get things done without sacrificing all of your time, your relationships, or your sanity. 

Here are 3 ways to managing your multi-tiered family like a business:

  1. Plan Strategically – The key here is to have a plan; to be proactive rather than reactive.  Know what has to be done, when it needs to be done, and how it will be paid for.   This includes creating master calendars for who needs to be where and arranging transportation).
  2. Manage Resources – Make sure you have the tools in place to make things happen (legal documents, financial resources, and human resources).  If you don’t have the pieces in place to make things happen when the time comes, you end up in crisis mode.  This involves making sure legal documents like durable powers of attorney are in place and arranging for help that is either paid or volunteer for things like care assistance, bill paying, etc.
  3. Departmentalize – You are the manager of the family business, which means you oversee but do not need to perform every task.  Make sure that the right people are handling the right tasks, and that everyone is doing their part.  This means involving all family members to do their share (including adult siblings) and hiring the right professionals to handle the duties that are outside your area of expertise (Geriatric Care Managers, Elder Law Attorneys, Financial Planners, etc.).

Before trying to handle every duty that comes managing a multi-tiered family, consider viewing your family like a business.  Doing so will ensure that everyone is served best, and will provide you time to maintain a balanced and quality life.

Please feel free to contact me for additional tips on establishing and managing your family business.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

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