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Do Physicians Need Asset Protection?

Posted by Larry Jones on Jul 12, 2018 9:30:00 AM

Is your doctor taking good care of you?

When we visit our doctor, we may literally be placing our very lives in his hand. Is he doing his best to take care of you? Or is he constrained by outside factors over which he has no control? Today's Physician faces challenges to his practice that a doctor 40 years ago could never have imagined. Not only must he be constantly up on all the latest medical advances and treatments, but his administrative burden has increased exponentially, and he is surrounded by a sea of litigators looking to capitalize on his every mistake. It's no wonder that private practices are closing at record rates, and many future Physicians are choosing another career path.

Recently a relative of mine was informed by his doctor that he could no longer prescribe a certain heart medication. His entire practice was moving away from this (very common) medicine because the medical-malpractice insurance company was requiring it. Now, it just so happens that this medicine had been controlling his heart condition for 20 years, and he had been told by another doctor that he should "never, ever let another doctor take you off of this medicine. Nothing else will work as well for you."

Because of a fear of litigation, a doctor is taking my relative off of an effective medicine that has kept him alive for over 20 years.

My first thought was that this doctor needs a good asset protection plan for his practice. Then he'd be free to practice good medicine, and put his patient's best interests first.

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My Defense of Used Car Salesmen

Posted by Larry Jones on Jul 10, 2018 9:30:00 AM

Did you see the 1980 film "Used Cars?"

The film starred Kurt Russell as a sleazy used-car salesman. The film drew laughs because it so fit the sterotype that American's have regarding the person who may have sold them their last car.

It just so happens that on the "trustability" scale, car salesman don't seem to rank very high. I'm beginning to wonder if we're not being too hard on them.

The recent TV series about Bernie Madoff detailed how one of the greatest financial criminals in U.S. history systematically stole somewhere between $20-50 BILLION from investors through an elaborate Ponzi scheme, which went undetected by the SEC for decades. Let's see the car salesman top that! ( I won't even go into how a politician can be nearly broke when they enter politics, and be worth hundreds of millions years later, while earning nothing more than a public servant's salary...)

Most people have a very happy relationship with their stockbroker. Many times I have asked folks, "how's your portfolio doing?" only to have them tell me something like, "it's been doing good lately." When I ask them for specifics, many times they can't tell me what "good" actually means. Often, when I analyze their holdings they have in fact been doing good, for the last year or two, but they are very surprised to discover that they are no better off than they were ten years ago! Why did they stay in the holdings they were in? They trusted their stockbroker.

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Case Study: Reducing taxes by augmenting your 401-K

Posted by Larry Jones on Jul 5, 2018 9:30:00 AM

What is the largest item in your monthly budget?

If you said, "my mortgage" or "my grocery bill" you'd most likely be wrong. The correct answer for the vast majority of Americans is "my tax bill!"

By the time you finish with your Federal and State returns, property taxes, sales taxes, hotel taxes, phone taxes, cigarette and liquor taxes, etc. you've really forked over a hefty sum to our benevolent governors.

Is there anything you can do to soften this tax burden? Yes! I have written in the past about the three main vehicles used for sheltering investment growth from future taxation: (1) Municipal Bonds, (2) Roth IRA's, and (3) Life Insurance. In this case study I want to take a look at the beauty of life insurance as a tax-shelter.

"Wait a minute, Larry! I have a great tax-deferred, employer sponsored 401-k. I know that this money is not taxed, and it will grow that way. I don't have to pay taxes on this money until I retire. So there...", you might say.

But hold on there, buckaroo. Here's what the government doesn't want you to know: Tax qualified plans don't avoid taxation. They just delay it. And eventually that tax bill will be worse...much worse.

Let's suppose you put away $100 a month into your 401-k for 30 years. Assume you earn an average of 10%. You'll end up with a little over $226,000. Using a conservative 20% tax rate, you will have saved $7200 in taxes over those years. Sounds good, huh?

Now you retire and begin drawing on the money. At the same 20% rate you'll now owe more than $45,000 in taxes. At a 40% tax rate you'd owe more than $90,000! Reducing taxes was your goal. How well did you do? You will have effectively spent $90,000 to save $7,000. 


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Three Different Approaches to Financial Planning

Posted by Larry Jones on Jul 3, 2018 9:30:00 AM

What do you expect from your financial planner?

I can't tell you how many times I've heard something like, "I've got $75,000 from selling a house. What should I do with it?" Many times the person who will ask me that kind of question is a relative stranger.

Financial planning is a process. Some would say it's more of an art than a science, but it's still a defined process. The question above does not contain enough information for me to give a reasonable ethical answer. As a Fiduciary, I need to know what your financial situation looks like now, what your goals are for the future, your tolerance for risk, where you are in life, and more. Only then can I make any sort of recommendation. That's why it's important to provide your planner with accurate information. The financial plan that I come up with is only as good as the information you give me. You tell your doctor what is bothering, don't you? Why would you withold information from the person who is formulating your financial plan?


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Topics: Financial Services

Are you thinking about a 401-k rollover? Here's some things to consider.

Posted by Larry Jones on Jun 28, 2018 9:30:00 AM

Should you consider rolling over your 401-k to a personal IRA?

If you have recently left your job (or if it has left you), it's likely that you have an orphan retirement account at your old firm. Should you leave it there? If not, what should you do with it? What are the tax implications of your decision? What questions should you be asking that you don't know you should be asking?

Here are some guidelines to help:

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Topics: Retirement Plan Rollovers

Is Your Disability Insurance Coverage What You Think It Is?

Posted by Larry Jones on Jun 26, 2018 9:30:00 AM

When was the last time you took an 8 week vacation?

How about 10 weeks? How about 30?

"Man," you say, "my company wouldn't keep paying me for that long!" And you're right. Most wouldn't. But now suppose an accident forced you to miss work for 10 weeks or longer. Could you count on your firm to take care of you? What would happen to your family when those paychecks stop? If your company provides you with disability coverage as a benefit, then you can rest easier. 

Or can you?

Perhaps your firm offers coverage as part of your benefit package. Many good companies do, either with short-term coverage, long-term, or both. If not, you may have purchased a disability policy of your own.

There are some things you need to know, however. Many group disability policies aren't worth the premiums that are paid, because of very limiting language in the policy. You could find your false sense of security shattered in the event that you can't work.

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Topics: Disability Insurance

Estate Planning Case Study: Too Much Life Insurance

Posted by Larry Jones on Jun 21, 2018 9:30:00 AM

The Scenario:

Jack Howard, age 70, and his wife Marcy, 64, are very comfortable financially. Jack made a large amount of money from a series of successful patents obtained through the years. The value of Jack and Marcy's estate is calculated to be $11.9 million. Included in that amount will be a $1 million life insurance payout, from a policy on Jack, to Marcy. The life policy currently has a cash value of $700,000

Unfortunately, that million dollars will be included in Marcy's estate when she dies, and it will push her over the Estate and Gift Tax exemption, which is $5.45 million for the first to die, and then is rolled over to the surviving spouse, for a total exemption of $10,900,000. That will leave an estate tax bill of around $400,000. Now, that amount can easily be obtained from the life insurance payout. But is there a better way?

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Topics: Case Studies

Could the U.S. Health Insurance Market Be Imploding?

Posted by Larry Jones on Jun 19, 2018 9:30:00 AM

Is your health insurance premium going up?

Recently I received a call from a lady asking about health insurance. She currently has a policy through one of the major health insurers, and has received (another) notice of a price increase. Her premiums are going up $160 a month. Five years ago her cost was less than $250 a month. Now, it's over $700. "What can I do," she asked?

When I met with her, she unleashed her fury over the insurance company. "Aren't these companies accountable to anyone," she asked? "They just don't care about us at all! How much higher do you think they'll go?"

After considering her question, I answered her that, "in my opinion, in a couple of years you won't be able to get health insurance at all." She seemed surprised by this. She shouldn't be.

Blue Cross Blue Shield, United Healthcare, and Humana have all announced big cutbacks in their offerings of health insurance. They are paying their sales force pennies on a sale in an effort to discourage them from selling the stuff. When is the last time you heard of a major company discouraging their sales people from pushing the product that made them the company they are? A recent Wall Street Journal article declared that the health insurers are losing about 17 cents on every dollar of health insurance they sell.

How could this happen?

Pre-existing conditions.

Imagine that your wife or husband just passed away. You decide that you'd like to have some cash, and so you take out a million dollar life insurance policy on the deceased. Of course you know that's ridiculous. After all, your spouse is dead. He or she has what insurers call a pre-existing condition, in this case death. Common sense tells you that any insurance company that would offer a life insurance policy on someone who was already dead would soon go out of business. You cannot buy flood insurance after the hurricane watch goes up for the same reason.

Yet, that's what the health insurers are being required to do. The Affordable Care Act no longer allows insurers to use the hundred years worth of actuarial data they have accumulated to determine how to price a policy, nor can they turn you down for pre-existing conditions. Not for a cold. Not for cancer. No matter how sick you are, you must be granted coverage. 

That sounds good from a warm and fuzzy political candidate point of view. But for a functioning health insurance company, it's a recipe for disaster.

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Topics: health insurance

Can Life Insurance Be a Reasonable Investment?

Posted by Larry Jones on Jun 14, 2018 9:30:00 AM

The Hare vs. the Tortoise

Let's face it, Wall Street is sexy. Where else can the lure of 150% returns and the calculation of standard deviation, variance, and geometrically weighted returns create such excitement? Wall Street is the red Ferrari, the F-16 fighter, the Rocky Balboa of earning money. Just remember that Rocky took some hard knocks along the way!

But what about "good old, boring life insurance?" Can it be a good investment?

Many advisors today would tell you that the answer to that question is no. Certainly those advisors who also happen to be stockbrokers would say that. But our parents would have had a different idea. To the “greatest generation” the idea of risking money in the market brought back unpleasant memories of losing everything in the great depression.

But it's just not sexy, insurance. Ugh! Why would anyone want the tortoise when they can have the rabbit?

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Topics: Investment Advice

How will your family handle your long term care situation?

Posted by Larry Jones on Jun 12, 2018 9:30:00 AM

Are you a reasonable person?

What a question, huh? Of course you are!

Why would I even ask such a question of a reader? "After all, isn't the fact that I faithfully read this blog, and am nearly physically ill when I miss one, proof enough that I'm a reasonable person?", you might say. Point taken.

Well then, this blog is for you! The subject is your family....or more specifically, your family and how your need for long term care might affect them, and their lifestyle. Is that important to you?

If so, read on.

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Topics: Long Term Care

What you don't know can hurt you!

As a fiduciary I am required to always act in your best interests, and as a professional planner, it's my job to be familiar with all types of possible solutions and financial vehicles. In short, I have no interest in selling any particular product or any affiliation with a particular company. I work for my clients.

Are you:

  • concerned that your tax bill is too high?
  • tired of watching your nest egg decline by significant amounts every 5-7 years?
  • wishing you could find more free time?
  • looking for ways to help protect yourself against litigation that could destroy all you have worked for?
  • worried that Uncle Sam is going to enjoy your retirement more than you are?

If any of the above describes you and you'd like to get a question answered then just click the button below and we'll be in touch.

Let's Meet!

p.s. we have the ability to meet virtually regardless of your location! Give us a shout!


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