QUESTIONS & ANSWERS

Q&A FOR BUSINESS OWNERS:

1. What will happen to my business and family if I get sick, injured or die?
As a professional you recognize the importance of a sound business plan. Has your plan considered the impact Disability, Critical Illness, or Death would have on the financial security of your family? What about the stability of your business?

It is important to stay on top of these issues. Professionals must reflect on some of the “what-if’s” in Financial Planning. Smart professionals expect the best and plan for the worst.

Can you imagine what would happen if you were unable to work for the next year, or even longer? What impact would that have on your career? Your family? Would your income be significantly reduced or eliminated? How would your absence affect your business? Are there clients that might consider going elsewhere? Would the bank, or other creditors start changing the terms of payments. Do you have key staff that might consider working elsewhere? All of these factors must be taken into account when developing a solid risk management plan, both for your family and your business.

Financial Architect Network works with Professionals like you to assess these risks, and design strategies to reduce, or eliminate the impact they might have on your practice and family.

2. How will I leave my business, on my terms, when I want to go?

As a business owner you face the challenge of evaluating financial questions from three distinct perspectives:

1. What is best for the business?
2. What is best for you as the owner?
3. What is best for your family?

The answers to these questions are not always the same. Do you have a plan for balancing the different needs of each of these stakeholders? Does your plan allow for the evolution that naturally takes place within your business, your family, and even the ownership of your business?

Business succession planning focuses on the business and family. In order to best serve our individual client’s needs, Financial Architect Network employs a Six Step Business Succession Planning Process, which is comprised of these six distinct steps:

Clarify Present Situation
Identify Business, Family and Personal Goals and Objectives
Identify Financial Challenges
Provide Written Recommendations and Alternative Solutions
Implement the Right Strategy
Provide Periodic Review and Revision

3. Will I outlive my retirement savings?

All of us have different visions of what our retirement will be like. Some people dream of spending more time with friends and family. Others want to travel, while many want to participate in recreational activities. No matter what your vision for retirement is, you could benefit from planning ahead for your retirement income. Where will your retirement income come from? Will it be enough to meet your needs and desires?

For most Americans, their retirement income will be provided by a combination of sources. Social Security and Retirement Plans are the most common. Other vehicles may also be appropriate for you, such as Insured Annuities. At Financial Architect Network, we work with clients nearing and in retirement to determine what level of income they will have available, and if it will meet their needs. We do this through the use of financial planning tools that analyze your sources of income, lifestyle needs and estate objectives. We also work to ensure your sources of income interact in an efficient manner, to help avoid excess taxation. We review your investment strategy and work to help ensure your needed growth and risk tolerance are in line with each other.

4. How can I maximize my business structure for my family’s benefit?

You may have one or more Corporation. You may have a Holding Company. You may also have a Family Trust. Business owners generally have flexibility when considering income splitting, timing of income, and forms of income. Advance planning regarding Estate Planning can make a significant impact, when taking corporate structures into consideration. Our Financial Directions planning service provides a concise analysis of how these options would apply in your specific situation.

5. What will my financial picture look like in retirement?

If you are like many business owners we work with, much of your wealth may be tied up in your business. While this strategy may have served you well so far, and allowed you to build a successful business, it may not be the best strategy to provide for your retirement. Getting value out of your business will be dependant on finding a Suitable Buyer, or Successor for your business when you want to walk away. How can you be sure of the value you will receive? How can you be sure a buyer will be available when you want to sell? For these reasons and many others, it is critical for you to accumulate wealth in other vehicles, which will diversify your sources of income when you want to retire.

Financial Architect Network can help design strategies using traditional vehicles such as IRA’s and defined contribution plans.

Q&A FOR FAMILIES:

1. In the event of your premature death, could your family afford to maintain the lifestyle that you have worked so hard to achieve?

If someone depends on you financially, chances are you need life insurance.
Life insurance provides cash to your family after your death. This cash (known as the death benefit) replaces your income and can help your family meet many important financial needs like daily living expenses, mortgage payments and college savings. What’s more, there is no federal income tax on life insurance benefits.

Most Americans need life insurance. To figure out if you need life insurance, you need to think through the worst-case scenario. If you died tomorrow, how would your loved ones fare financially?

Would they have the money to pay for your final expenses (e.g., funeral costs, medical bills, taxes, debts, lawyers fees, etc.)? Would they be able to meet ongoing living expenses like the rent or mortgage, food, clothing, transportation costs, healthcare, etc? What about long-range financial goals? Without your contribution to the household, would your surviving spouse be able to save enough money to put the kids through college or retire comfortably?

The truth is, it’s always a struggle when you lose someone you love. But your emotional struggles don’t need to be compounded by financial difficulties. Life insurance helps make sure that the people you care about will be provided for financially, even if you’re not there to care for them yourself.

2. Have you considered the impact long term care will have on you, your parents and your children? It could be significant.

If you can afford long-term care insurance, you should probably consider it. Why? Because the cost of long-term care, should you need it, can quickly deplete your life’s savings. For instance, having a home health aide visit just three days a week can cost more than $20,000 annually. Full-time nursing home care, the most expensive type of care, can average more than $60,000 per year. In some regions of the country, like the Northeast, the cost may be twice that amount.

But what are the odds that you’ll need these kinds of services? Greater than you might imagine. There’s about a 50 percent chance you’ll need some type of long-term care after age 65. And long-term care services are not just for older people. A young or middle-aged person who has been in an accident or suffered a debilitating illness may very well require long-term care services. In fact, 40 percent of patients receiving long-term care are under age 65.

While long-term care insurance is right for many people, it’s certainly not for everyone. If you can afford to pay for care without significantly impacting your assets, you may not need long-term care insurance. Conversely, if your assets, not including your home, are less than $80,000 if you’re married (or $30,000 if you’re single), you may not be able to afford the premiums. A good rule of thumb is to spend no more than 7 percent of your gross income on long-term care insurance premiums.

3. How do I manage the impact taxes have on my current and future financial success?

Taxes are one of the certainties in life, but that doesn’t mean you have to pay more than your fair share. The very vehicles you use over your lifetime to manage your tax burden, such as RRSP’s, capital gains and real estate just to name a few, can be the source of the highest portion of taxes at the time of death. Planning strategies such as RRIF Insurance and Capital Gains Minimization, require advance planning and can provide significant benefit to your estate planning objectives.

4. Have you planned to make the most of all of the LIFE EVENTS you and your family have yet to face?

An increasingly important approach to planning for your future is to consider your life events and how you’d like to make the most of each. LIFE PLANNING goes beyond the normal financial planning process in that it places value on your ability to live according to you dreams instead of your fears and financial limitations.

At every stage of your life you have an opportunity to make the most of it. We can help.

LIFE is always changing. We’ll look at the opportunities you have to make the most from each stage of your life according to your wishes.

5. How can I help ensure I plan properly for my childrens’ and my parents’ future?

For our children, we all want to give them the best start in life. Education is critical to giving them the tools for success. 529 Plans are one financial tool useful in this planning area. Depending on your personal circumstances, there may be a number of other appropriate strategies to consider.

Many of our clients feel like they are sandwiched in between their children and their aging parents. As your parents get older they may need more and more of your assistance. It may be prudent to discuss their Financial Planning with you now. We work with many mature parents, helping them to get and keep all their financial affairs in order. The issues range from their Income Flow, Consolidating Important Documents, updating Wills and Power of Attorney, and Other Estate Planning Matters.

Q&A FOR RETIREES:

1. In the event of your premature death, could your family afford to maintain the lifestyle that you have worked so hard to achieve?

If someone depends on you financially, chances are you need life insurance.
Life insurance provides cash to your family after your death. This cash (known as the death benefit) replaces your income and can help your family meet many important financial needs like daily living expenses, mortgage payments and college savings. What’s more, there is no federal income tax on life insurance benefits.

Most Americans need life insurance. To figure out if you need life insurance, you need to think through the worst-case scenario. If you died tomorrow, how would your loved ones fare financially?

Would they have the money to pay for your final expenses (e.g., funeral costs, medical bills, taxes, debts, lawyers fees, etc.)? Would they be able to meet ongoing living expenses like the rent or mortgage, food, clothing, transportation costs, healthcare, etc? What about long-range financial goals? Without your contribution to the household, would your surviving spouse be able to save enough money to put the kids through college or retire comfortably?

The truth is, it’s always a struggle when you lose someone you love. But your emotional struggles don’t need to be compounded by financial difficulties. Life insurance helps make sure that the people you care about will be provided for financially, even if you’re not there to care for them yourself.

2. Have you considered the impact long term care will have on you and your children? It could be significant.

If you can afford long-term care insurance, you should probably consider it. Why? Because the cost of long-term care, should you need it, can quickly deplete your life’s savings. For instance, having a home health aide visit just three days a week can cost more than $20,000 annually. Full-time nursing home care, the most expensive type of care, can average more than $60,000 per year. In some regions of the country, like the Northeast, the cost may be twice that amount.

But what are the odds that you’ll need these kinds of services? Greater than you might imagine. There’s about a 50 percent chance you’ll need some type of long-term care after age 65. And long-term care services are not just for older people. A young or middle-aged person who has been in an accident or suffered a debilitating illness may very well require long-term care services. In fact, 40 percent of patients receiving long-term care are under age 65.

While long-term care insurance is right for many people, it’s certainly not for everyone. If you can afford to pay for care without significantly impacting your assets, you may not need long-term care insurance. Conversely, if your assets, not including your home, are less than $80,000 if you’re married (or $30,000 if you’re single), you may not be able to afford the premiums. A good rule of thumb is to spend no more than 7 percent of your gross income on long-term care insurance premiums.

3. How do I help manage the impact taxes have on my current and future financial success?

Taxes are one of the certainties in life, but that doesn’t mean you have to pay more than your fair share. The very vehicles you use over your lifetime to manage your tax burden, such as capital gains and real estate just to name a few, can be the source of the highest portion of taxes at the time of death. Planning strategies such as second-to-die life insurance, require advance planning and can provide significant benefit to your estate planning objectives.

4. Will I outlive my retirement savings?

All of us have different visions of what our retirement will be like. Some people dream of spending more time with friends and family. Others want to travel, while many want to participate in recreational activities. No matter what your vision for retirement is, you will benefit from planning ahead for your retirement income. Where will your retirement income come from? Will it be enough to meet your needs and desires?

For most Americans, their retirement income will be provided by a combination of sources. Social Security and Retirement Plans are the most common. Other vehicles may also be appropriate for you, such as Insured Annuities. At Financial Architect Network, we work with clients nearing and in retirement to determine what level of income they will have available, and if it will meet their needs. We do this through the use of financial planning tools that analyze your sources of income, lifestyle needs and estate objectives. We also work to help ensure your sources of income interact in an efficient manner, to avoid excess taxation. We review your investment strategy and work to ensure your needed growth and risk tolerance are in line with each other.

5. Have you prepared the best possible will to account for your wishes and help ensure your family is taken care of?

Less than 50% of people I meet have a valid will that is current and reflects their true wishes. There are too many issues to consider and a proper will needs proper planning with a financial profesisnal and lawyer. We have several respected lawyers we regularly refer our clients to. Most fo them have been referred to us by our clients.

Q&A FOR PROFESSIONALS:

1. What will happen to my family and my practice, if I get sick, injured or die?

If someone depends on you financially, chances are you need life insurance.
Life insurance provides cash to your family after your death. This cash (known as the death benefit) replaces your income and can help your family meet many important financial needs like daily living expenses, mortgage payments and college savings. What’s more, there is no federal income tax on life insurance benefits.

Most Americans need life insurance. To figure out if you need life insurance, you need to think through the worst-case scenario. If you died tomorrow, how would your loved ones fare financially?

Would they have the money to pay for your final expenses (e.g., funeral costs, medical bills, taxes, debts, lawyers fees, etc.)? Would they be able to meet ongoing living expenses like the rent or mortgage, food, clothing, transportation costs, healthcare, etc? What about long-range financial goals? Without your contribution to the household, would your surviving spouse be able to save enough money to put the kids through college or retire comfortably?

The truth is, it’s always a struggle when you lose someone you love. But your emotional struggles don’t need to be compounded by financial difficulties. Life insurance helps make sure that the people you care about will be provided for financially, even if you’re not there to care for them yourself.

2. How will I leave my business, on my terms, when I want to go?

As a professional you face the challenge of evaluating financial questions from three distinct perspectives:

What is best for the practice?
What is best for you as the owner?
What is best for your family?

The answers to these questions are not always the same.

Do you have a plan for balancing the different needs of each of these stakeholders? Does your plan allow for the evolution that naturally takes place within your practice, your family, and even the ownership of your practice?

Succession planning focuses on the practice and family. In order to best serve our clients’ needs, Arbutus Financial employs a Six Step Succession Planning Process. This process will help ensure you understand all your options and make informed decisions about the issues and opportunities facing you.

You may have one or more Corporations. You may have a Holding Company. You may also have a Family Trust. Professionals generally have flexibility when considering income splitting, timing of income, and forms of income. Advance planning regarding Estate Planning can have a significant impact, when taking corporate structures into consideration, and managing taxes on death. Charitable Giving options are also worthy of advance planning. Our approach to Financial Planning for professionals provides a concise analysis of how these options would apply in your specific situation.

3. How do I plan ahead for financial independence?

If you are like many professionals we work with, much of your wealth may be tied up in your practice and your home. While this strategy may have served you well so far, and allowed you to build a significant Net Worth, it may not be the best strategy to provide for your retirement. Getting value out of your practice will be dependant on finding a Suitable Buyer, or Successor for your practice when you want to walk away. How can you be sure of the value you will receive? Will a buyer be available when you want to sell? For these reasons and many others, it is critical for you to accumulate wealth in other vehicles, which will diversify your sources of income when you choose to retire.

Financial Architect Network can help design strategies using traditional vehicles such as 401k’s and ROTH IRAs. We can also assess if you are a candidate for enhanced vehicles such as Executive Pension Plans or Insured Retirement Plans. We will also determine how these strategies will interact with Government Benefits as you near and enter retirement. Debt Management strategies help make sure you use the resources you have available to direct to your future goals.

4. How can I use my business structure for my family’s benefit?

You may have one or more Corporation. You may have a Holding Company. You may also have a Family Trust. Business owners generally have flexibility when considering income splitting, timing of income, and forms of income. Advance planning regarding Estate Planning can make a significant impact, when taking corporate structures into consideration. Our Financial Directions planning service provides a concise analysis of how these options would apply in your specific situation.

5. What will my financial picture look like in retirement?

If you are like many professionals we work with, much of your wealth may be tied up in your business. While this strategy may have served you well so far, and allowed you to build a successful practice, it may not be the best strategy to provide for your retirement. Getting value out of your practice will be dependant on finding a Suitable Buyer, or Successor for your practice when you want to walk away. How can you be sure of the value you will receive? How can you be sure a buyer will be available when you want to sell? For these reasons and many others, it is critical for you to accumulate wealth in other vehicles, which will diversify your sources of income when you want to retire.

Financial Architect Network can help design strategies using traditional vehicles such as IRA’s and defined contribution plans.