Steven L White

“My money only needs to keep up with inflation”

 

False,  your money will need to catch up with much more than inflation.

Other wealth eroding factors to protect against are income taxes, capital gains taxes, estate taxes,  the real cost of living, wear and tear, planned Obsolescence, and unexpected life events. We are living much longer than we used to and the money you save and invest will need to go further. One might think that in order to realize greater amounts of money, greater risks must be taken. Not exactly. Current market conditions prove that taking greater risks does not necessarily mean greater returns. It amazes me to hear from friends, family and associates that their retired relatives well into their 60’s and 70’s take great risks with their money by remaining in risky asset allocation models that lose significant amounts of principal in today’s volatile market swings. These people may not have enough of a time horizon to recover.

 

Lesson learned-Be prudent in “diversifying” your diversification. Many of our clients are turning to increased savings and money market accounts, ROTHs, participating Whole Life insurance and adding annuities to their overall strategy and tactics. They have learned that a single strategy of putting it “all in” to 401(k) plans, IRAs and other retirement plans can be Risky and not always efficient. If you are a high income earner and do not qualify for a ROTH due to income limits you may find that a “participating” Whole Life insurance policy is a viable option. The bottom line is that Savings in aggregate need to out-run all cost-of-living pressures, which include far more than just inflation.

 

 Steven L. White, Jr.

 

Wealth Strategies Group

Neither Guardian, nor its subsidiaries, agents or employees provide tax or legal advice. You should consult your tax or legal advisor regarding your individual situation.”

This is not a real Will. It merely suggests what could happen if a business owner does not have a
properly structured and funded succession plan for his or her company. All names referenced are
fictitious and any similarity to any real party or business is merely coincidental.

I , John Smith, presently residing in the State of New York, and part owner of Acme Widget Company, being of sound mind and memory, do hereby declare the following:
1. I hereby leave my interest in my company to my family to be divided among them as they see fit even though my spouse or children have no experience in operating and running a widget company. I have the utmost confidence that after my death, everyone will get along with each other, and that Jack Jones, my partner who owns a portion of the company, will have no problems working with my spouse or children.
2. I hereby leave the responsibility of operating the company to my surviving partner, Jack, whom I am sure, will not mind working twice as hard and sharing all of the profits of the business with my family.
3. In the event my family wants to sell my company to Jack, I hereby leave it up to them to work it out with Jack as to the price and terms of the sale.
4. In the event such a sale takes place and the sales price is paid out over a period of time, I have the utmost confidence that Jack or his estate shall pay my family the terms of the sales contract even if Jack dies or becomes disabled.
5. In the event my family wants to sell my share of the business to an outside party, I hereby direct that they negotiate any terms they want without consulting Jack, and request, but do not demand, that Jack get along with any other new owner of the company.
6. If I have a buy-out agreement with my company or Jack that has not been recently updated, I direct that my family sell my interest in the company at whatever price the old agreement says, even though it won’t reflect current fair market value.
7. In the event Jack or the company has no life insurance on my life, I really don’t care if Jack or the business becomes insolvent and cannot afford to pay my family the buy-out price.
8. I hereby direct the IRS to ascertain the value of my interest for estate tax purposes. I am sure the IRS, as a division of the government, will consider the needs of my family when determining any estate tax attributed to my business holdings.
9. I direct that all lines of credit that my business has at the time of my death be paid off at my death because I think the interests of my lenders are more important than those of my family and my business partner.
10. If I leave my business interest to my family and federal estate tax is due, I know my family will work twice as hard to pay the taxes due to the IRS and any state taxing authority.
11. If all or part of my business interest passes to my minor children upon my death, I direct my children’s guardian or trustee to sell the business as quickly as possible, regardless of price, because I do not want to burden my children’s guardian or trustee with the fiduciary responsibility of running a widget company.
IN WITNESS WHEREOF, I, John Smith, do hereby affirm this to be my wishes with respect to the business I spent
my lifetime building.   

The foregoing information regarding estate, charitable and/or business planning techniques is not intended to be tax, legal or investment
advice and is provided for general educational purposes only. Neither Guardian, nor its subsidiaries, agents or employees, provide tax
or legal advice. You should consult with your tax and legal advisor regarding your individual situation.

Steven L. White Jr.

Wealth Strategies Group

I recently attended a special event sponsored by an organization that supports and mentors emerging business owners and entrpenuers. What made the evening extra special is that I was introduced to an aspiring young man who began  a hobby that turned into a flourishing and very profitable business. I was truly inspired and impressed by this young man who managed to grow a business to such respectable revenues and incredible profitability! He attended the event because he is has maxed out his abilities to keep pace with purchase orders and is unable to expand into additional products due to time constraints. 

After listening to him talk about his situation a group of qualified professionals at the table offered a variety of recommendations as to how he could solve these problems being -how he could locate hire and train additional staff to keep pace with production and roll out new product.  What jumped off of the table as we conversed was what this young man needs to do before he hires anyone.  If you have found yourself in this position consider but do not limit your self to the following steps and take immediate action. “Protect” first! My legal friends may recommend an analysis of your Intellectual property-your trade name, your branding, entity election, anything that identifies your product or service that is not legally protected from some one else to use. An attorney may also suggest a review of your liability insurance and any state and federal equal opportunity guidelines, do’s and don’ts about hiring, corporate by-laws, resolutions and board selection. It may make sense to consult with a human resource company such as a Professional Employment Organization (PEO). An attorney may also suggest
 
A property and casualty insurance person may suggest that you take inventory of your auto, home and umbrella policies. Do you have enough coverage, is it enough and are your personal assets protected from suit?  A life insurance representative may suggest evaluating your personal life insurance portfolio, Your businessKey man  portfolio or any long term disability and medical coverage. These are your first and second lines of asset protection strategies. Remember,  without a qualified sick pay plan the Internal Revenue Code does not allow your company to compensate you if are not able to work due to injury or illness.

Income-The earned income and dividends this persons business is producing may justify setting up a qualified plan for the ownership and qualifying employees. There are several to choose from and a feasibility study would be the proper approach to determine what type of qualified plan is suitable. It may make sense to evaluate a Non-qualified deferred compensation strategy as well for key officers or shareholders of the company. Using post tax dollars as part of an accumulation strategy can help mitigate the future-unknown tax environments. 
Key man insurance and income protection-There are various types of life insurance that this person could evaluate.  My recommendation would be to evaluate a permanent life insurance strategy that may include convertible term.
 Protecting income from a long term disability is paramount! A significant amount of bankruptcies and foreclosures are caused by lack of income due to injury and illness.

 Your income provides you with money to live a life, pay your bills, and create a lifestyle. Without income how would you live? I recommend choosing an “own occupation” long term disability contract with future increase options and cost of living rider to help keep pace with inflation. I may also recommend business overhead protection that pays the bills and payroll for the company as well. These are just a few suggestions of many, that successful business owners can put in play to protect, preserve and grow  his or her company. As always, consult with qualified professionals before implementing any financial or non financial strategy.

Steven L White

Wealth Strategies Group

Starting off the year with a clearly defined set of financial goals is easy. Following through those goals is sometimes like trying to wrestle a greased up watermelon with one arm tied behind your back. Life and business can get real busy real quick and by the time you catch your breath it’s July 4^th. Like you, I have never been able to find the “Silver bullet” but I do know what other professionals have done to grind out. Simply put, just do it. Start by breaking down the financial goals into three primary categories, protection, savings and growth. Be sure to separate your goals into “Business” and “Personal” since the success of each is dependent upon the other. List your goals from the hardest to easiest or the most time consuming to least time consuming. I like this order because it puts the most important and labor intensive first. Get these done and the rest is as cake walk!

Wealth Strategies Group