Planning
Charitable Planning
Did you know that there is more money given to charities in the United States than in any other country in the world? In 2003, more than $2,046,921,512,436 was given to non-profit agencies, which does not include money given to organizations not registered.
Have you ever thought about charitable giving as part of your family's planning? One common misperception is that people don't feel that they have enough money to give away. That could not be further from the truth. The fact is that a family's assets are more than money. A family's true assets are:
Financial Capital
Intellectual Capital
Social Capital
Moral Capital
Family giving is not necessarily about having large sums money to give away, but is more about creating a Family Legacy.
A Family Legacy can be defined as having two parts. The first part is affluence, or the finances of wealth transfer. The second part is influence, or the leverage of wealth transfer. The key is learning to use both.
Giving helps to create a two-way relationship between parents and their children. First, it is a blessing for the children. They have to the honor of distributing their parents' wealth. This wealth is more than just a Financial Inheritance. It is a Family Legacy. The difference between a Financial Inheritance and a Family Legacy is: "A promise bestowed upon the heirs' future". The promise is comprised of four main elements:
Transfer of Authority
Meaningful Communication
Special Future
Character Investment
This process helps change the way parents view their children. They become adults.
The second way giving creates a two-way relationship is that it is an honor for the parents. Through giving, parents gain the opportunity to have their children involved in the organizations and charities that meant the most to them. It also provides parents with:
Time with Family
Valued Opinion
Making a Difference
There are many aspects to leaving a Family Legacy. It is extremely important to meet with a competent advisor to see how this idea might fit into your charitable planning.
Estate Planning
For Special Needs Trust
Children with special health care needs have chronic physical, developmental, behavioral, or emotional conditions. It is estimated that between 12 and 13 percent of children have special needs. (The Center for Children with Special Needs: www.cshcn.org)
Background
The government offers a number of programs that offer financial assistance for things such as medical care, group housing, personal attendant care, vocational rehabilitation, job coaching, transportation assistance, and more. However, the government also puts conditions on receiving these benefits in that none of the efforts may be duplicated. Money is provided on an as-needed basis. If an individual receives funding for any of these purposes from another source, the government has the authority to cut back support, such as a reduction in Social Security benefits.
As a caregiver leaving behind a loved one with special needs, you might be tempted to simply make provisions in your will for him or her to receive a bequest or become the beneficiary of any life insurance or qualified plan. However, these funds may jeopardize his or her eligibility for government benefits. If the assets are in excess of statutory limits, he or she may lose entitlement benefits such as Social Security and Medicaid. Even a large bequest may inadequately replace terminated entitlement benefits depending on the duration of your loved one’s life and any medical conditions.
A unique wealth sharing solution
Many caregivers turn to what is known as a “Special Needs Trust” funded with life insurance. It is an estate planning tool that can help assure the funds to maintain a loved one’s ongoing health care needs and guarantee his or her continued care. The trust is irrevocable, so you should seek legal consultation for how to best structure one based on your needs. There are two types of trusts:
- Testamentary Trust – Creates a gift payable at death, established through a will. At death, a Special Needs Trust is created based on the terms and conditions specified in the will. The trust receives all assets indicated in the will in addition to proceeds from any insurance policy(ies) so directed.
- Inter-Vivos (Living) Trust – Creates access to the liquid funds in the trust to help pay medical or supplemental expenses while you are living, and leaves money in the trust to take care of your loved one after your death.
As part of the trust agreement, the beneficiary may not own or have direct access to the funds. Trust funds should only be used to provide for expenses not covered by entitlement benefits, and the trustee must be other than the beneficiary and have absolute discretion regarding the disbursement of funds for the beneficiary’s supplementary needs.
How it works
Life Insurance allows you to guarantee the money will be there to help care for your special needs loved one even if you are not. You can purchase a policy paying premiums for as long (or as short) a period as you choose, depending upon your preference and current financial situation. Permanent life insurance in the trust can provide a guaranteed death benefit and/or tax deferred cash value that can be used in the future through loans or withdrawals to help meet expenses over the years after your death. When properly structured, the trust ensures that benefits are received in addition to entitlement payments.
Business Succession Strategies
Imagine what would happen if your business suddenly had to continue without you, a partner or key employee.
Death, disability or retirement of a key executive can create a succession crisis. If you died, would your family be able to successfully operate the business? If your successors had the opportunity to buy the business, where would they get the money? If a partner were no longer there, could you afford to buy his or her share?
With a carefully constructed business succession plan, you can create a rock solid foundation for the future of your business and the people who depend on it.
Working together with your accountant, attorney and other advisors, we can help you pull together the necessary elements of a successful succession plan.
Financial Strategies
Although it may seem difficult, setting and achieving your financial goals can be simple if you take it step by step. Sitting down with a competent advisor and addressing your financial concerns can alleviate a lot of stress and anxiety in your life. You can achieve financial independence if you follow these steps:
Step 1: Set and prioritize your goals.
Most individuals never take the time to formulate and address their specific financial and personal goals.
Step 2: Create your action plan.
Once you have developed your specific goals and objectives you must work on a plan to achieve them.
Step 3: Implement your plan.
Now that your action plan has been established, it is time to put the plan in motion.
Step 4: Monitor your progress.
Every year to 18 months, you need to get together with your advisor to be certain that you are staying on track.
The Hancock Group's team of professionals can work with you through this process. A small time commitment on the front end can alleviate countless hours of stress and anxiety and get you on the road to financial freedom.
Corporate Annual Meetings
Is your corporate record book up to date? Do you know where your record book is? Did you know that not having your record book up to date could cause you major problems in the future?Having and maintaining a corporate record book could be one of the most important issues you handle as a business owner. Most business owners believe that they are protected from any lawsuits because of their corporate structure.
But not having an updated record book, complete with annual board minutes, might jeopardize that protection. The plaintiff might be able to "pierce the corporate veil" and sue for your personal assets.
Maintain your corporate protection by keeping your corporate record book up to date.
If you have any questions regarding any of the information contact, Allan Hancock, (814) 844-8849.
