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nightmare of living probate might have been avoided and these decisions couldhave been made more efficiently through other vehicles.2. Planning for incapacitya. Planning for retirement income is a challenge for someone with full capacity.b. Not planning for incapacity can jeopardize a retirement income plan.c. Informally placing decision-making in a family member can have limitations.3. Planning considerations(1) No formal supervision of decision makers(2) The potential for financial abuse exists.(3) Even well-meaning family members can make bad decisions.a. The planning approach depends on client specific considerations.(1) What is the size and composition of the client’s wealth?(2) What type of financial, retirement, and estate planning objectives haveto be met?(3) What is the client’s level of comfort with respect to turning over the reinsto others as capacity diminishes?(4) Are there family members that are concerned about the client’sdecision-making capacity?b. Common client objectives include:(1) The client’s objective for simplicity to limit costs for professional advice(2) The client’s concern over retaining personal control for as long as possibleor willingness to delegate some responsibilities earlier to gain a level ofcomfort(3) The client may want his or her agents or trustees to have a great deal offlexibility with respect to making decisions or may want the decisions tofollow a fairly rigid or limited structure.c. Other related planning considerations4. Planning process(1) Are there current steps being taken to implement the estate plan to meetthe client’s legacy goals?(2) Will the loss of capacity be associated with long-term care issues thatwill require steps taken to qualify for public assistance programs suchas Medicaid?a. Identify existing plans (documents)b. Determine need for additional planningc. Consider available asset management documentsd. Identify appropriate professionals to implement the plan5. Asset management tools for delegating decisions:a. Durable power of attorney(1) Essential for continuing the asset management and decision-making for aclient that has lost capacityb. Revocable living trust4.37
(1) Often employed as a vehicle to hold and manage assets and makedistributions to the client and his or her family membersc. Irrevocable living trust(1) Might be used to make substantial gifts or provide for asset protection ifnecessary for the client who funds the trust and for future beneficiariesd. Special needs trust(1) Used in the circumstances where the client or another disabled familymember will need to remove assets to qualify for Medicaide. Guardian/conservator(1) Preferred that the actions of the guardian be limited and that most assetmanagement decisions be made through a more efficient mechanism6. Power of attorney for asset managementa. The “principal” delegates certain authorities to an agent (also known as attorney infact)b. Special power of attorney can be limited in scope to one or a few tasks.(1) For example, we may grant the power of attorney to an agent who can signan agreement of sale for a parcel of real estate.(2) Once the task and the time-frame have passed, the limited power ofattorney will terminate.c. A springing power of attorney is a document and process where the agent hasno current power but the power will spring into existence upon a specific event orcontingency.(1) Typically, the springing power of attorney will grant the power at the timethe principal loses capacity.(2) The problem with this type of document is how the loss of capacity isdetermined.d. The durable power of attorney currently grants an agent broad powers withrespect to the asset management and decision-making.7. Power of attorney(1) This power is defined in the document to affirmatively survive the principal’sloss of capacity.(2) This power will generally continue until the power is revoked, terminated,or at the principal’s death.(3) The durable power of attorney is typically viewed as the most effectiveform of power of attorney.a. Documents are construed narrowly by the courts under modern protective statutesto prevent financial elder abuse.b. Powers should be clearly specified, especially for special issues such as:(1) Powers to make Medicaid spend-downs(2) Powers to make gifts(3) Powers to fund, defund, create or revoke living trusts(4) Powers to make elections for tax or retirement plan purposes(5) Powers to deal with insurance contracts4.38
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Huebner School SeriesHS 353 STUDY O
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THEAMERICANCOLLEGE.EDUThrough The A
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c. But it is more comprehensive bec
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(3) Work part-time during retiremen
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SECTION 2: UNDERSTANDING RETIREMENT
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d. Solutions(1) The model considers
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. Other sources of retirement incom
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c. Another option for solving cash
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(b) Net worth statements that ident
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d. Be ready to reengage with the cl
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(b) In financial planning(c) In inv
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j. Planning Point: Planners can use
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e. We also need them to have a bett
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Assignment 2IDENTIFY RETIREMENT INC
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(2) Income4. Determining risk toler
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collaborative experience which focu
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6. Asset allocation and risk tolera
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c. How long will the income last?d.
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. Durationc. Reliabilityd. Other6.
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c. Supplemental Security Income (SS
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. An unused emergency fund can supp
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5. Inflation(2) The expense method
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Assignment 3CHOOSE APPROPRIATE STRA
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. Save as a percentage of income an
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(1) Note that 38% of second income
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(4) The AARP website has a national
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4. Contributions to IRAs and Roth I
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carve out the nondeductible contrib
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(2) Plus salary deferrals (for an i
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a. Example:(1) Save $10,000 in 25%
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(a) This requires knowing four fact
Page 69 and 70: . Solution(1) Li and Lin Lin are bo
Page 71 and 72: (1) The increase in dollar amounts
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Page 75 and 76: 2. Reverse mortgage basicsa. Almost
Page 77 and 78: 5. Planning considerations(b) Keep
Page 79 and 80: (2) Some funds that are promoted as
Page 81 and 82: (1) Berstresser, Chalmers, and Tufa
Page 83 and 84: RESOURCES FOR COMPETENCY 3: CHOOSE
Page 85 and 86: (2) From the previous employer(s) p
Page 87 and 88: 8. IRA funded plans (IRAs, SEPs, SI
Page 89 and 90: . Does the distribution election fi
Page 91 and 92: 6. Net unrealized appreciation rule
Page 93 and 94: a. Tax-exempt plans include Roth IR
Page 96 and 97: 8. Calculating required distributio
Page 98 and 99: (2) Exception: If there are separat
Page 100 and 101: 5. Impactc. Tax rates are low in ea
Page 102 and 103: (7) Based on ordering rules, identi
Page 104 and 105: 7. A married couple who file jointl
Page 106 and 107: (1) Needed to provide the appropria
Page 108 and 109: 13. Transfers at deatha. Wills(2) A
Page 110 and 111: (1) The Retirement Equity Act manda
Page 112 and 113: (2) Beneficiary designation of bene
Page 114 and 115: 13. Overview14. Types(2) The donor
Page 116 and 117: (1) Charity needs only to payout in
Page 118 and 119: c. Access should be granted to an a
Page 122 and 123: (6) Powers to represent their princ
Page 124 and 125: c. If the policy is term coverage w
Page 126 and 127: e. Factoring personal and family he
Page 128 and 129: problem. On the other hand, we can
Page 130 and 131: d. Adding a cost of living adjustme
Page 132 and 133: g. Planning Point: Sometimes a high
Page 134 and 135: (2) Clients may not be able to “a
Page 136 and 137: c. Ensure that the client is receiv
Page 138 and 139: a. Example: Because of physical and
Page 140 and 141: options about where to get his/her
Page 142 and 143: (2) Facilities, monthly fees, and s
Page 144 and 145: 8. Other strategies that help to co
Page 146 and 147: standard deviations of the returns
Page 148 and 149: a collapse in the real estate marke
Page 150 and 151: a. In a later competency we will di
Page 152 and 153: years of service with the employer)
Page 154 and 155: a. Planning Point: Planners should
Page 156 and 157: (2) If you have locked in food, ren
Page 158 and 159: (4) Loss-of-spouse risk—Deferred
Page 160 and 161: (1) Excess withdrawal risk—The us
Page 162 and 163: (5) Frailty risk—Managing assets
Page 164 and 165: 7. Practice good career management:
Page 166 and 167: Assignment 6CHOOSE APPROPRIATE STRA
Page 168 and 169: c. Example: Chuck and Sarah divide
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e. The bucket approach can be thoug
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3. Understanding systematic withdra
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(1) The time horizon used in the ca
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12. Four percent is not the number.
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markets have declined by a specifie
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(2) Annuities and long-term care an
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anticipates ramping down her activi
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c. Each of the three portfolios wil
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SECTION 4: THE ESSENTIAL VERSUS DIS
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d. Clients give up investment contr
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geared toward long-term growth. Thi
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. Trade-offs involve:(1) Irrevocabl
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(1) Rate at which banks lend to the
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. Dollar-denominated liabilities of
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(a) Dividend taxed in year paid out
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4. Taxationtheir return generating
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. Close ended(1) IPO style launch(2
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(3) Tax control17. Conversations in
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(3) Mutual funds provide lower cost
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way to obtain increasing payments t
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protection from the downside risk w
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6. Today’s annuitization rates ar
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h. Planning Point: Markets are very
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a. The client may not be clear abou
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a. Problems with implementation are
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c. Product solutions work together
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(1) A problem is that if the client
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(b) A traditional fund company(c) A
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d. Evelyn is in great health and he
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RESOURCES FOR COMPETENCY 7: INTEGRA
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