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Five Smart Ways to Protect Your Assets

The truth is that your position as a flourishing business owner brings with it a major disadvantage: being a potential target for lawsuits. Although they can be ridiculous and uncalled for, these types of attacks can cause significant problems for your financial wellbeing.

That’s why it’s crucial to take certain steps to begin protecting your hard-earned assets. Failing to do so will become a financial security dilemma not only for your company but also for your family.

Importance of Asset Protection

The concept behind asset protection planning is straightforward. You place protective measures surrounding your assets that make it as hard as possible for creditors, litigators, and others to take assets away from you.

Rather than trying to win a battle in court that could take months or years just to eventually lose, the litigant would only see that the best option for them legally is to settle for a small amount of money or leave empty-handed. Take note: Asset protection is not a means to hide your money in any form. On the contrary, you want to show anyone who might be interested in taking your assets away that the path toward it is difficult. The goal here is to simply steer them away and motivate them to settle for a negotiation for a smaller amount of money instead or just walk away. By now, you are probably aware of the threats to the wealth you’ve worked so hard for. The majority of successful business owners are concerned about being a target for unjust lawsuits or being a victim in divorce proceedings.

The bad news is that only about 27% of these business owners have prepared a formal asset protection plan. The percentage is even worse for those who say they are concerned about protecting their assets. With the risks that you and your colleagues face in such litigious culture, the numbers are way too low. Important: Around half of the successful business owners who are not worried have a formal asset protection plan at the ready. It’s only reasonable to have these plans in place, as it not only provides additional layers of protection but also provides business owners with the confidence knowing that they are well-protected.

Vital Steps to Protect Assets

If you are one of those business owners who does not currently have an asset protection plan or if you’re wondering whether your existing plan is sufficient, consider the following steps.

Acquire Protection Before a Claim Is Made

You can benefit a lot when you decide to protect your hard-earned wealth before a liability occurs. With the concept called “fraudulent conveyance,” you can benefit very little if you do it after.

Just like insurance, the best time to obtain asset protection is well before it is needed.

Cover the Fundamentals

The next step is to begin evaluating what your liabilities are, including other relevant insurances. You want to maximize these as much as possible. The quickest move you can make outright is to obtain a large umbrella policy that safeguards all of your assets.

Another good approach is to name the assets to someone else, such as your spouse. In case of a lawsuit, assets owned by the spouse are usually untouchable.

Ensure that you can trust your spouse as well as the marriage before deciding to transfer asset ownership to them. In case of a divorce, the spouse could possibly acquire all of the assets.

Consider More Advanced Asset Protection Techniques

Really wealthy business owners usually take complex steps to protect their wealth after covering the basics. Options to consider are:

  • Equity stripping. Some business owners protect their assets from unjust lawsuits by utilizing bank loans to strip out equity. In concept, one simply has to take out a bank loan and secure it using the assets. In this manner, the creditors need to pay off the loan before they can get to the encumbered assets.
  • Captive insurance companies. This type of insurance company is set up to insure the risks of a parent company. The person who owns the parent company also owns the captive. As the business owner, you can also control the operations of the captive insurance agency, which includes handling claim decisions, investment policies, and underwriting.
  • Onshore and offshore trusts. At this time, several states allow domestic asset protection trusts. Countries like Belize, The Cook Islands, and the Bahamas are ideal locations to have offshore trusts. Assets that are placed in these places are outside the reach of creditors. However, the rules concerning these trusts depend on the jurisdiction you’ve chosen. It is therefore important to understand the specifics of a jurisdiction before committing to one.

Ensure an Attorney Is Qualified to Protect Your Assets

Many financial professionals are not in a position to provide the proper guidance and implementation concerning asset protection. Consider equity stripping, for instance. There are only a few specialists who are familiar with equity stripping, and an even smaller percentage have provided this solution to a client.

Avoid Mistakes That Can Hinder Asset Protection

The more advanced asset protection techniques are far more complicated and require an in-depth understanding of how they work to be applied effectively. Poorly implemented asset protection strategies are ineffectual once required, with many business owners being in a false sense of security.

Example: Many advisors don’t like protecting business owners both on a personal and professional level. Consider real estate developers who normally put each of their projects within separate limited liability companies (LLCs). In this manner, one project that gets a lawsuit will not affect the others.

The problem here is that these LLCs have already been set up so that the developers own them directly. If they are hit with a personal lawsuit, all of the assets in the LLCs could be taken away.

Next Steps

Asset protection is vital for business owners, as it allows them to stay confident knowing that their assets are in safe hands in case of a lawsuit.

If you want to discuss asset protection strategies, call us at (310) 820-4411 or request a 15-minute phone call for more details.

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The Many Benefits of Building a Family Brand

A brand is what a company’s known for — may it be their tagline, logo, statement, or image that relates to them.

It is something that immediately communicates with your customers, and for many entrepreneurs, branding helps define the company’s mission and values. However, is branding just for businesses?

Let’s stop for a moment and think about the last time we’ve thought about our family’s culture and values. What do we stand for as one? Isn’t it surprising that we may not have thought about it until now? Like us, there are many people who find it easier to recognize values that relate to their career, rather than their families.

Similar to businesses, we can also incorporate branding and take it as opportunities to recognize our family’s values and culture. Not only will it help us improve our relationships with our family — it will also lead us to a more meaningful and prosperous life.

Why a Family Brand?

Defining businesses’ brands and their stories led Chris Smith, founder of The Campfire Effect, to do the same with families. In his latest venture called “The Family Brand”, he takes lessons in corporate branding and incorporates them into families.

According to him, the best way to create better leaders, have healthier connections, and a greater society overall starts with the most crucial part, which is family and how strong our intention is with regard to our culture and values.

The main concept is that, if we haven’t defined yet who we are and who we want to be, the world will do it for us. Nowadays, social media and news are great factors that influence us, and these things build up over time. They grow into us, and we can’t help but be influenced by them in some ways. They tend to pressure us on what to buy, how to act, and what to do in certain situations.

The only way we can remove the pressure from our lives is if we block it all out and focus on what we really care about as a family. However, this is not as easy as it sounds.

Many families are so focused on other things that they are not able to take notice of what’s in front of them. If we compare life at home where we do not get recognition for our hard work, it makes it easier for us to work on things that will give us quick results instead — like work, where we are praised instantly by others after a job well done.

That does not mean that we stop building our brand. In many cases, families who have recognized their cultures and values have forged a stronger connection with their other family members. They are happier and they enjoy each other’s company more compared to when they hadn’t discovered their branding yet. Many families also find that their problems involving depression, divorce, and abuse lessen when they are on the same page with their values and goals.

When it comes to financial securities and net worth, families who have built their family branding have more chances to preserve their wealth compared to those who haven’t. There’s a finding that 70% of families lose their wealth by their second generation, while 90% lose theirs by the third generation.

Having a family brand creates a unity of shared trust and values that involve children and even grandchildren. Taking the time to talk to and teach them about financial matters lays the groundwork for smarter spending and a more disciplined outlook on life and money. Because they are taught certain values, they will tend to spend their inheritance in a more meaningful way — not just for them, but also to help their community.

The Three Pillars of a Family Brand

There are three pillars of the family brand. Let’s discuss each one by one.

1.   Culture

How do we approach our family? Do we do it with complaints or possibilities? Culture is how we connect with our family. It is the mindset that we bring into family situations, both good and bad. Our job is to define and reassess culture if we want to change it for the better of our family.

The culture that exists now — or the one we want to create — opens doors of possibilities for us. The key in finding our family’s culture is by discussing it together, getting ideas on which one fits all the members, and then discussing how and what it means for everyone.

Important: Leadership and ownership is the most important key in the family culture. Regardless of what it is, we must act on it and demonstrate it through our actions, not just on paper.

2. Language

Language plays a huge part in the family culture. It is how we will declare values and take a stand in what we believe in. It also creates the environment in which we live. If we say “can’t” and “what we should do is…” all the time, we could change it to “can” and “we can do this”.

Here are the three key written documents similar to the aspect of key branding:

  • A mission statement detailing what we stand for.
  • A vision statement of what we want to be known for.
  • A values statement detailing what we should live by.

Here are some tips:

  • Start the mission statement with “We believe…” instead of “Our mission is…”
  • Start the vision statement with “We are committed to…” instead of “Our vision is…”
  • Attach your last name to the values. Say “Johnsons believe…” and it will have more power compared to “Our values are…”

3. Experiences

We cannot control the experiences that come our way, but we can create them. Creating experiences with the family can be done using the following:

A connection blueprint is where to detail times when our family is the happiest or the activities we were doing that make us all feel connected. When we feel disconnected, we can always look at this to find our way back and connect again.

A traditions audit is the assessment of whether certain traditions should be taken off the activities and which ones will serve the family well. The traditions that make the family connect more as a unit are much more valuable than the big ones that mean nothing.

Final Thoughts:

Family branding helps improve a family’s physical, emotional, and financial health. Other forces and influences may shape our family if we don’t do it now — so we must block them all out, plant our flag, and build our brand!

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Is a Private Wealth Management Firm for You?

For a long time, the Super Rich (those with a net worth of $500 million or more) have had connections to the most outstanding financial advisors for their specific situations. They’ve been able to join forces with those professionals via family offices, something with which you might be familiar. Family offices, in essence, are organizations that put their full focus on the needs of those whose net worth is $500 million and above.

Here’s some good news for you—our world’s various technological advancements, regulation changes, and some top-of-the-line professionals have opened the doors of family offices and their many benefits to more of the affluent (not just the Super Rich). So, if you’re not super-wealthy just yet, not to worry. You can still get the same spectacular results the Super Rich enjoy!

Your next option is to work with a Private Wealth Management, which is an entity that builds itself specifically around you, your family, your needs, and even as far as your hopes, wants, and issues within your financial life and lifestyle. It aims to mirror the types of family offices that the Super Rich have at their disposal.

Sound perfect to you? It very well might be! First, however, it’s essential for you to consider the financial and lifestyle advice you’re getting now and compare it with what you could get with a Private Wealth Management to decide if we are really what you need.

Compare What You’ve Got with a Private Wealth Management

If you had the choice, it’s likely you’d pick only experienced financial advisors to work with for any and all of your situations. However, the truth is, many investors just like you and families like yours aren’t currently working with professionals who are really capable of delivering the advice and help needed. If you feel in the dark, you wouldn’t be the first—many affluent families aren’t sure if they’re getting the best solutions available for their financial situations.

So, that said, take a moment to assess your own situation by answering the questions below:

  1. How well and how deeply do your current professionals understand you as a person outside of just your financial situation? (This would include any accountants, financial advisors, attorneys, etcetera.)
  2. How well are your professionals communicating with you regarding all matters of solutions and strategies they propose to you?
  3. What does your personal relationship look like with your professionals? Do they jump proactively at the call to assist you?

What Confidence Wealth Management will provide you with is a team of financial professionals who endeavor to understand you on a deep and personal level—when they look at you, they don’t just see numbers. They’ll help optimize your financial world to its fullest potential by synchronizing custom solutions that aim to fit your every need and want. They use what they know about you, like what matters most to you and what doesn’t, to help shape their custom plan, and it enables them to assist you in getting the results you are looking for. Have a look at the three key components we employ to make this happen:

  • Client-centered discovery. This is the process by which we will learn about you and the people that you care about.
  • Coherent, connected communication. This is when we explain your solutions and advice to you in a way that makes sense, allowing you to make better-informed choices.
  • Deep, intimate relationships. This means we will constantly be working to develop a closer trust and rapport with you, which helps us know you on an even deeper level and communicate things to you even clearer.

Here are three more questions to ask yourself about your current financial advisors:

  1. How often do the financial professionals you work with reach out to and coordinate with the top specialists in specific fields when certain matters are beyond their expertise?
  2. Do you think your current financial advisors are providing or are able to provide you with the best solutions and expertise you can get?
  3. How often do your wealth advisors and brokers get you to the front of the line with regard to getting the solutions and expertise you need?

Most times, whether or not you can get the expertise you need depends on your financial professionals knowing someone they can refer you to when a situation calls for it. But Confidence Wealth Management has put together a network of experienced professionals in their fields to assist you in achieving your stated objectives. It’s the tools and strategies that we use that helps make a big difference. Have a look below:

  • Contacts. This refers to our network of resources that we’ve worked with and curated over the years to help you achieve your goals.
  • Capabilities. This means that we are able to deliver specialized, custom solutions. Many financial advice is written for the masses.
  • Preferential agreements. This refers to the ability of us being able to bump you to the front of the line when accessing solutions and specialists, and it also refers to our ability to get you these things in a cost-effective manner.

Finally, here are three last questions to ask yourself about your current professionals:

  1. Do your financial advisors catch and fix any failures by means of systematic processes and constantly keep an eye on the management of your financial situation?
  2. Are your wealth advisors often thinking about “what if’s” in order to unearth new opportunities and decide on the best future plan of action you can take?
  3. Do your financial professionals come back to your solutions and reevaluate to see if you’re still on the best possible course or if a different path would do better for you?

Intricate coordination of sophisticated and complex solutions and synergies is key to Confidence Wealth Management’s ability to provide outcomes that could be beneficial for you and your family. While some wealth advisors approach your financial challenges and the like often in an inconstant way, we don’t. We employ systematic processes for you to help find possible gaps in your wealth plan. We are able to accomplish this because we’re designed to:

  • Address failures. We will seek out mistakes and possible faults in solutions and processes thus far and iron them out.
  • Identify opportunities. We are consistently on the lookout for any missed opportunities that we can take advantage of and help you decide if they’re a good idea to pursue.
  • Continuously improve. We review your current plan in place and check if they are up-to-date.


Many people like yourself often don’t answer the questions mentioned above in a very positive note. This is usually the case when their financial lives and situations are fairly complex. For instance, let’s say you’ve got a lot of financial issues on your plate that need attention (like estate planning) and nonfinancial issues to attend to (like health care concerns). This is a circumstance when a coordinated Private Wealth Management firm can really help you.

The upshot: Your needs are paramount, so it’s most important that you work with the financial professionals that are the best fit for your specific situation. If your life is complicated and difficult to navigate, give some thought to how we would be able to help you

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Selling A Business? Avoid These Four Big Mistakes

Successful entrepreneurs dedicate most of their lives to developing high-value companies. Ultimately, most of them end up selling these businesses to others.

Sometimes, there’s simply no one available to continue their business, or health problems can also be a reason for selling. Usually, though, they’re presented with an opportunity that’s too tempting to pass up.

When a business is sold, owners have the potential to become quite wealthy. They may even join the ranks of the super-rich (those with at least $500 million in net worth). With proper preparation and marketing, an operational company can fetch a good price and the owner can walk away with a huge payday.

In some cases, however, the opposite is also true. Business owners that make significant mistakes when selling risk losing out on money they could have pocketed. They may even miss out on the amount of money they truly deserve, given the time and effort they’ve invested over the years.

For any entrepreneur or business owner, we know which outcome we’re going for, especially when planning to cash out. With that said, here are the four mistakes that research has shown can hinder a business sale, together with advice on how they can be avoided.

Mistake 1: Ineffective Negotiation With Providers

Most business owners know that the amount of money a brand is worth is highly influenced by the negotiations that take place between the buyer and seller. Yet, the negotiation aspect isn’t the only important part of selling a company. Only a small amount of successful entrepreneurs negotiate with their own experts concerning the transaction.

For instance, most company owners rely on investment bankers to help find potential buyers and streamline their sale. However, only a small margin of business owners think about negotiating their contracts and agreements with these investment bankers.

Some of the potential mistakes in such agreements are:

  • A relatively long timeframe concerning exclusive rights. At times, investment banks may ask for as long as two years, when the standard is usually just a waiting time of six months or so.
  • Paying a similar amount for the investment bank to raise debt, which is easier to do, rather than increasing equity, which is more difficult.
  • A lack of mutual indemnifications. At present, it’s commonly only the investment banks that require companies to indemnify them with regards to misinformation they provide to potential buyers. However, companies should also require investment banks to indemnify them for the same.

So, how big of a problem are these? It appears that almost 80% of corporate attorneys mention that poor negotiations with providers are quite common nowadays. Meanwhile, only a mere 6% state that poor negotiations are not typical in their field.

Mistake 2: Being Unable To Properly Prepare Crucial Personnel for the Sale

Often, business success is highly dependent on its key members, particularly with regards to the top salespeople and senior executives. Ensuring that these individuals are incentivized to remain with the business and the new owners are vital for the sale and the price.

There are several methods to encourage these key personnel to stay and help in facilitating the ownership transition:

The most commonly used approach is to provide them with employment contracts that come with bonuses. Another tactic is to provide “exit event stock options” that can only be exercised once the company has been sold or goes public.

A similar aspect to consider is non-solicitation and non-compete agreements. It’s clever to set up severance plans for essential personnel so that they don’t compete or solicit customers throughout the period of severance payments. Failure to prepare these essential individuals is one of the most common problems mentioned by 72% of surveyed lawyers. Meanwhile, only a meager 12% stated that it was an uncommon concern for them.

Mistake 3: Failure To Prepare the Company for Sale Financially

Business owners who ensure that the financial aspect of their company is as appealing as possible to potential buyers can result in a significantly better sales price. It’s not that different from renovating old or broken parts of a home before placing it on the market for sale.

Despite this, it’s still quite common that entrepreneurs fail at initially doing as good a job as they should when preparing a company financially.

A fifth of corporate lawyers who were surveyed mentioned that this is a big concern, while half of them reported it to be common. In stark contrast, only 15% of lawyers said it was an occasional problem, and just 10% reported that it was uncommon.

Here are some ways that entrepreneurs can prepare the finances of their company prior to putting them up for sale:

  • Improve the balance sheet: A company can improve how it manages its financials by being more effective in cash management and accounts receivables while getting rid of non-performing assets.
  • Address the cost of funds: Having the right loan covenants, for instance, could make a huge difference when selling a business. The overall aim is to maximize the working capital arrangements.
  • A lack of audited financial statements: Failing to audit financial statements increases the chances that entrepreneurs will experience liabilities once the sale closes.

Mistake 4: Failing To Get Rid of Potential Deal-Breakers

There are several possible deal-breakers that can derail the sale of a company. For instance, businesses with tax issues will often have hesitant buyers, or those asking to push down the price. One example is if the business owner is compensating their family members much more for a service at a significantly higher rate than they would be willing to pay a third party service for the same work.

Another potential deal-breaker is when a business has material violations of state, local, or federal environmental regulations. This requires potential buyers to fix the concerns themselves, with the cost often difficult to justify.

What Does This Mean for Business Owners?

Business owners planning to sell their companies only have one opportunity to make things right, with no do-overs allowed. That’s why it’s vital to avoid these four mistakes, as they can lower company value in the eyes of potential buyers, thus making it difficult to sell.

It’s only sensible to assemble a group of professionals who can help in navigating this route. The earlier business owners can do so, the better.

If you have questions or concerns regarding selling a business, call us at (310) 820-4411 or request a quick 15-minute phone call.

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Wealth Planning: What Is Private Wealth Management? Why Does It Matter?

The world of private wealth management is so important to people just like you — high-net-worth individuals and their families, and those who are quickly becoming wealthier. There are a lot of moving parts involved in managing high-value estates, businesses, assets, and portfolios, and it’s far too common for predators and pretenders to look for ways to exploit you and your family.

That’s why we feel it’s important to go over exactly what private wealth management is and why it matters so much to those with high-net-worth. Read on to find out everything you need to know.

What is Private Wealth Management?

For many. there are eight primary types of planning strategies that financial advisors in private wealth management use. Understanding what these strategies are and what they involve will help you understand private wealth management and if it suits you. Let’s dive a little deeper:

Income Tax Planning

  • Income tax planning typically revolves around mitigating taxes on any money that a client has earned while working or through any investments they’ve made. For example, in private wealth management, a wealth advisor may recommend strategies and changes in your portfolio, and in turn, reduce the rate of income tax.

Generational and Estate Planning

  • In essence, estate planning is when estate planners and financial professionals decide how and by whom assets will be owned in the future. This is done using legal strategies and various financial solutions. The key here is that both professions are integrated and working together rather than independently.

Marital Planning

  • Marital planning (which can include other similar relations) is when we plan ahead for any fall-outs between spouses and family members. The main goal of this is to protect a client’s wealth and assets.

Business Succession Planning

When it comes to transitioning the business into someone else’s hands, business succession planning comes into play. This is done in tax-efficient ways to save clients and their families a big tax bill.

Asset Protection Planning

  • Asset protection planning is there to make sure that a client’s money is never unfairly taken away. Financial professionals do this using clear and legal strategies, concepts, and financial solutions so that the client always knows exactly what’s going on.

Charitable Tax Planning

  • Some clients enjoy generously donating to charity. Charitable tax planning helps these individuals by providing recommendations and strategies to not only give back to the community but also gain tax benefits in the process.

Cross-border and Inbound Planning

  • When a client has businesses in different countries or is planning to move abroad, things can get tricky. A private wealth management will research international tax laws to help the client pay as little tax as possible.

Life Management Planning

  • Life management planning is a popular strategy. When it comes to planning a client’s wealth, we want it to last a lifetime. With Confidence Wealth Management, we will go over everything and face any worries head-on.

Many of these strategies are intertwined and used side by side by our wealth advisors. For example, when deciding on assets for estate planning, we may also find ourselves presented with the chance to work on asset protection. Similarly, estate planning is often very closely related to business succession planning. Looking at the above strategies, it’s pretty clear that private wealth management, above all, is designed to help clients meet their financial wants, needs, and goals.

Why Does Private Wealth Management Matter?

So, what is it that truly makes private wealth management different, you ask?

Their focus. Private wealth management focuses on the human element of the situation — You! — rather than just the strategies and financial solutions.

The Human Element

One of the main goals in Private Wealth Management is to understand each of their clients on a deep, personal level — a level that goes way beyond just the numbers.

How does this differ from the technically skilled financial advisors out there in the world?

Well, there’s quite a contrast. These financial advisors tend to focus on the mass financial products. It doesn’t offer the same level of personal relationship and understanding that an a private wealth manager will share with you.

As private wealth advisors, we believe that the human element is the most important aspect to consider. Everything we do revolves around you, the client, and you must be considered at all times and with any decision made. Our mission is to match up all of our technical solutions and capabilities with whatever it is that you specifically want or need as a person, not chuck decisions at your head without any involvement or consideration.

More often than not, a standard financial advisor overlook the human element in the race to prove their financial and legal expertise. On the other hand, we believe that you can’t get meaningful results without truly understanding a person at their core. Over time, we work to build up a relationship of trust, familiarity, and security, working together to help meet your financial and personal needs and goals. This is exactly why Private Wealth Management matters.

Be Wary

Keeping the above in mind, it’s so important to keep a watchful eye out for financial advisors and wealth planners with the wrong intentions.

There are those who pretend and can’t keep up with their promises, possibly not recognizing their own limitations. There are predators who set out to cheat clients out of their money by promoting solutions that are simply far too good to be true, and there are those who aim to exploit wealthy individuals — their eyes more focused on a stack of cash than doing their job correctly.

Private Wealth Management is Right for You

Chances are, you didn’t get to where you are today by sitting on your hands or twiddling your thumbs. Apply your drive and foresight to planning for your future and managing your wealth proactively.

Request a 15-minute call or call us at (310) 820-4411 to learn more about how you can benefit from private wealth management. We’re here for you.

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Long-Term Care: Should I Insure or Self-Fund?


Crystal Oculee:

Hi, I know you joined us a couple of weeks ago, or I should say probably a month ago, not even a couple of weeks ago. Time flies by when you’re on a lockdown during 2020, right? Sometimes it freezes, sometimes it passes by. We had a longterm care Q and A session, and a lot of people were asking questions. After that, I got a lot of questions about people wanting to self-fund. I have a lot of clients that are also self-funding. Really, the big question at hand was, is there a way I can self-fund in a smarter way? Because I want to have access to my money where it’s liquid, and I don’t want to give it up if I don’t use it. So, that’s why I’m bringing Brian back really quickly to give you this little quick tip of, Brian, is there such a thing? Can you explain it to us a little bit?

Brian Kelca:

Absolutely, and thanks, I’m always happy to talk to the clients at Confidence Wealth, or people that are considering being clients. The first thing I want to do is really, so everybody can understand what self-funding means, self-funding is typically when somebody thinks, well, I have plenty of assets to pay for long-term care, and I’m just going to spend down my assets over time to pay for that coverage. That obviously is one way to do it, but there are some significant benefits with having a long-term care plan through an insurance company. For example, one thing I want to talk about is, if somebody does have significant amount of assets, there’s a plan out there that, let’s say you had $100,000 in a CD or a money market, is that you can actually transfer that over to your other pocket and get a long-term care plan. Because this long-term care plan gives you 100% liquidity of money. You can get at it at any time. It also gives you a death benefit, so at least that money’s going to come back to your heirs. Thirdly, most importantly, it gives a long-term care benefit on top of it, which is significantly more than you actually put into your other pocket. So, by transferring money from one pocket to another, you still have 100% liquidity, a death benefit in that amount or more, plus long-term care benefits. That’s really what we’re looking for.

Crystal Oculee:

Okay, so the best example, I think, because sometimes we learn from example, Brian, the reason I brought this up is because you helped one of my clients where that’s exactly what she did. She had extra cash sitting aside, $150,000 earning less than 0.1%. So, now she has it in that policy that covers her for seven years, giving her, I think about $7,500 a month, approximately, give or take, and obviously [inaudible 00:02:35] free.

Brian Kelca:

Plus she has the inflation rider on that one too. So, the benefit does go up year by year, whether she’s on claim or not, because there’s inflation in-

Crystal Oculee:

Thank you for pointing that out. Absolutely, because she’s in her mid fifties. So, by the time she’s 80, that $7,500 has grown to a lot more, and she always has access to that $150,000. The $150,000 she put in, she’s always able to access it if she chooses that she doesn’t want the policy and take the money back. From what I learned, was that if she doesn’t use it at all, that $150,000 goes back to her heirs, correct?

Brian Kelca:

That’s absolutely correct. Or if she uses just a portion of it, maybe she uses $75,000 or $80,000 then unfortunately passes away. So, the balance of that $150,000 would go back to her heirs. So, in every instance, either she or her heirs will have access and be able to have that money.

Crystal Oculee:

Yeah, and you know what’s really funny is, I’m super sizing my savings to this long-term care plan. It was really funny because I didn’t think about it that way because it’s literally taking her cash and supersizing it for the cost of long-term care and have it always be available. Now, I know you said something also that it allows care coordination. Can you explain that a little bit to me?

Brian Kelca:

Yeah, in fact, a lot of people that purchase long-term care that are a very high net worth, they say, I really don’t need this. But one of the main reasons I’m getting this is for something known as care coordination. Let me just ask a question to the audiences, let’s say your doctor comes in and says, you’re going to need assistance, you’re going to need home health care or nursing home, who’s the first person you call? I mean, if you ask your doctor that question, no. Okay, what do I do now? They are not experts in that particular area. Well, most of the carriers, not everyone, but most of the carriers have what is known as care coordination services. These care coordinators, what they do is they’ll help you understand the benefits of your policy. They’ll guide you through the claims process and also all the claims, papers, and forms, which can be very daunting. They’ll also give you indication or tell you where the best care is because there’s many nursing homes, especially in the greater LA area, but which ones have the best reviews, which ones have the worst reviews, the cost for them. So, things of that nature. They also work with your family to construct a plan so that it meets not only the family needs, but also your needs as well. So, that’s just a few of about a dozen different benefits under care coordination.

Crystal Oculee:

Actually, you just mentioned the family. I was reading this blog about ultra wealthy families and why sometimes they use insurance. It was interesting, and it’s all about how is your care going to be if it’s covered by insurance versus if it’s your assets. Can you go a little bit deeper into that and tell me why someone who has money that can self-fund chooses to self-fund through a product like this? What’s the purpose behind this coverage, and where it leaves the family in a better situation?

Brian Kelca:

Yeah, let’s just first summarize the fact that the care coordination for these wealthy people that can self-fund, the care coordination is really, really [inaudible 00:06:00] because to rely on your family members to do that can can be difficult. Then you may have some squabbling amongst the family members on how that care coordination could [inaudible 00:06:11]. Now you have a third party doing that for you. One of the other things is these private nursing homes, the first thing they’re going to ask you is, do you have private insurance, because they want to be paid promptly. The private insurance does, they pay promptly on time. Whereas, if you’re relying on a family member to make those payments, it may be delayed sometimes.

Brian Kelca:

The only way I can say this is just giving you an example. I actually have a client that is in a nursing home right now, in a wonderful, wonderful nursing home, getting great care. The son came up to me and he said, Brian, I’m so happy that she purchased that long-term care policy from you. I said, well, [inaudible 00:06:56], he says, because I would never put her in such a nice place. I said, why wouldn’t you? It’s your mother? He says, well, she’s now spending my money because he’s looking at it from an inheritance standpoint, she’s not spending my money. Maybe she would have been better in something that’s a little bit less expensive, but instead, now she’s got the best care possible and he doesn’t have to worry about his money being spent.

Crystal Oculee:

That’s a really good point. That’s a really good point, Brian, because you’re absolutely right. We don’t think about this, but when it comes to money, people start thinking that way. It may not be the son, it may be the wife, it could be anybody else.

Brian Kelca:

The daughter-in-law.

Crystal Oculee:

That’s right, the daughter-in-law, yeah. That’s what I mean, exactly. Hey, why do you need your mom in such a nice nursing home, because this is going to eat away $100,000 per year or $80,000 per year and that’s coming out of inheritance. So, that’s a really good point. Maybe this is exactly why the ultra wealthy uses insurance, so they can have the best care without the family interfering in the process. Oh, that’s funny. Money does make things…

Brian Kelca:

People react differently when it comes to money.

Crystal Oculee:

Absolutely. So, I’m excited that we got a chance to talk about this really quickly. I think it’s so important for people to see and be educated, because obviously, these also you have to qualify for, it’s not like you can go in and they take everybody. So, Brian, what would you say would be the next step? If someone is hearing this and they’re like, this sounds like something I want to do. I want to self-fund through an insurance company with some of my own money, what will be the best way for them to get ahold of you?

Brian Kelca:

Yeah, the first thing we need to do is have a conversation. The best bet is to give me a call at (424)273-8844. If we both have time at that point in time, we can talk. If not, we can set up a time where it’s convenient for both of us. We’ll discuss a custom plan specifically for you, everything from how much coverage you need, assets, everything’s customized for you individually.

Crystal Oculee:

Perfect, that sounds great. So, learn about it. You have a go-to person, you’ve been hearing Brian in the last Q and A session a few times. I have a lot of clients that love talking with him and really educates them very well. I’m super excited that I learned about this particular fund, because I really liked the fact that you don’t lose your money. That’s important. That’s one of the things that we’re always passionate about, keep your hard earned money and don’t just give it up in case you don’t use it. So, thanks Brian, for being in this quick little tip of the week segment with us today.

Brian Kelca:

Thank you.

Crystal Oculee:

Have a good one, everyone


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July 15 Due Date Approaches for Federal Income Tax Returns

The due date for federal income tax returns and payments is Wednesday, July 15, 2020. Due to the coronavirus pandemic, the original due date for filing federal income tax returns and making tax payments was postponed by the IRS from April 15, 2020, to July 15, 2020. No interest, penalties, or additions to tax are incurred by taxpayers during this 90-day relief period for any return or payment postponed under this relief provision.

The relief applied automatically to all taxpayers, who did not need to file any additional forms to qualify for the relief. The relief applied to federal income tax payments (for taxable year 2019) due on April 15, 2020, and estimated tax payments (for taxable year 2020) due on April 15, 2020, and June 15, 2020, including payments of tax on self-employment income. There is no limit on the amount of tax that could be deferred.

Need more time?

If you’re not able to file your federal income tax return by July 15, you can file for an extension by the July due date using IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Filing this extension gives you an additional three months (until October 15, 2020) to file your federal income tax return. You can also file for an automatic three-month extension electronically (details on how to do so can be found in the Form 4868 instructions).

Pay what you owe

One of the biggest mistakes you can make is not filing your return because you owe money. If the bottom line on your return shows that you owe tax, file and pay the amount due in full by the due date if at all possible. If you absolutely cannot pay what you owe, file the return and pay as much as you can afford. You’ll owe interest and possibly penalties on the unpaid tax, but you will limit the penalties assessed by filing your return on time, and you may be able to work with the IRS to pay the unpaid balance (options available may include the ability to enter into an installment agreement).

It’s important to understand that filing for an automatic extension to file your return does not provide any additional time to pay your tax. When you file for an extension, you have to estimate the amount of tax you will owe; you should pay this amount by the July due date. If you don’t, you will owe interest, and you may owe penalties as well. If the IRS believes that your estimate of taxes was not reasonable, it may void your extension.

Tax refunds

The IRS encourages taxpayers seeking a tax refund to file their tax return as soon as possible. Apparently, most tax refunds are still being issued within 21 days of the IRS receiving a tax return. However, the IRS is experiencing delays in processing paper tax returns due to limited staffing.

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How Secure Is Social Security?

If you’re retired or close to retiring, then you’ve probably got nothing to worry about — your Social Security benefits will likely be paid to you in the amount you’ve planned on (at least that’s what most of the politicians say). But what about the rest of us?

The media onslaught

Watching the news, listening to the radio, or reading the newspaper, you’ve probably come across story after story on the health of Social Security. And, depending on the actuarial assumptions used and the political slant, Social Security has been described as everything from a program in need of some adjustments to one in crisis requiring immediate, drastic reform.

Obviously, the underlying assumptions used can affect one’s perception of the solvency of Social Security, but it’s clear some action needs to be taken. However, even experts disagree on the best remedy. So let’s take a look at what we do know.

Just the Facts

According to the Social Security Administration (SSA), approximately 68 million Americans currently collect some sort of Social Security retirement, disability or death benefit. Social Security is largely a pay-as-you-go system, with today’s workers (and employers) paying the benefits for today’s retirees. (Source: Fast Facts & Figures About Social Security, 2019)

How much do today’s workers pay? Well, the first $137,700 (in 2020) of an individual’s annual wages is subject to a Social Security payroll tax, with half being paid by the employee and half by the employer (self-employed individuals pay all of it). Payroll taxes collected are put into the Social Security trust funds and invested in securities guaranteed by the federal government. The funds are then used to pay out current benefits.

The amount of your retirement benefit is based on your average earnings over your working career. Higher lifetime earnings result in higher benefits, so if you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily.

Your age at the time you start receiving benefits also affects your benefit amount. Currently, the full retirement age is in the process of rising to 67 in two-month increments, as shown in the following chart:

What Is Your Full Retirement Age?

Birth Year Full Retirement Age
1943-1954 66
1955 66 and 2 months 
1956 66 and 4 months
 1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later 67

Note: If you were born on January 1 of any year, refer to the previous year to determine your full retirement age.

You can begin receiving Social Security benefits before your full retirement age, as early as age 62. However, if you retire early, your Social Security benefit will be less than if you had waited until your full retirement age to begin receiving benefits. Specifically, your retirement benefit will be reduced by 5/9ths of 1 percent for every month between your retirement date and your full retirement age, up to 36 months, then by 5/12ths of 1 percent thereafter. For example, if your full retirement age is 67, you’ll receive about 30 percent less if you retire at age 62 than if you wait until age 67 to retire. This reduction is permanent — you won’t be eligible for a benefit increase once you reach full retirement age.

Demographic trends

Even those on opposite sides of the political spectrum can agree that demographic factors are exacerbating Social Security’s problems — namely, the number of retirees is increasing and the birth rate is decreasing. This means that over time, fewer workers will have to support more retirees.

According to the SSA, Social Security is already paying out more money than it takes in. However, by drawing on the Social Security trust fund (OASI), the SSA estimates that Social Security should be able to pay 100% of scheduled benefits until fund reserves are depleted in 2034. Once the trust fund reserves are depleted, payroll tax revenue alone should still be sufficient to pay about 77% of scheduled benefits. This means that in 2034, if no changes are made, beneficiaries may receive a benefit that is about 23% less than expected. (Source: 2019 OASDI Trustees Report)

Possible fixes

While no one can say for sure what will happen (and the political process is sure to be contentious), here are some solutions that have been proposed to help keep Social Security solvent for many years to come:

  • Allow individuals to invest some of their current Social Security taxes in “personal retirement accounts”
  • Raise the current payroll tax
  • Raise the current ceiling on wages currently subject to the payroll tax
  • Raise the retirement age beyond age 67
  • Reduce future benefits
  • Change the benefit formula that is used to calculate benefits
  • Change how the annual cost-of-living adjustment for benefits is calculated

Uncertain outcome

Progress on addressing Social Security’s financial challenges has been slow. However, the SSA continues to urge all parties to address the issue sooner rather than later, to allow for a gradual phasing in of any necessary changes.

Although debate will continue on this polarizing topic, there are no easy answers, and the final outcome for this decades-old program is still uncertain.

In the meantime, what can you do?

The financial outlook for Social Security depends on a number of demographic and economic assumptions that can change over time, so any action that might be taken and who might be affected are still unclear. But no matter what the future holds for Social Security, your financial future is still in your hands. Focus on saving as much for retirement as possible, and consider various income scenarios when planning for retirement.

It’s also important to understand your benefits, and what you can expect to receive from Social Security based on current law. You can find this information on your Social Security Statement, which you can access online at the Social Security website, by signing up for a my Social Security account. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor, and disability benefits. If you’re not registered for an online account and are not yet receiving benefits, you’ll receive a statement in the mail every year, starting at age 60.

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U.S. Government Sends Millions of Economic Impact Payments by Prepaid Debit Card

In May 2020, the IRS sent Economic Impact Payment (EIP) prepaid VISA debit cards to individuals who qualified for a stimulus payment under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and didn’t receive a payment via direct deposit.

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