“Do You Have Your Act Together?”

Do You Have Your Act Together?™

Last month I was in a doubles tennis match and two of my buddies mentioned they enjoyed reading this column but many of the answers were still “over their heads”. Mind you, one of them is a family law attorney, and the other is a Regional President of a large corporation. They felt what they really needed was a simple, easy to understand, lay person’s “education” on the basics.

Coincidentally, many advisors in our network have asked if we could “bottle” what we do for our clients into a really easy to read/easy to use resource guide and organization product. A tool to help people get started so they are better informed, less stressed and feel more in control about their wealth management situation. Great idea ­ thank you! Help people to know what they need.

So, we listened, and are launching the “What You Need To Know Kit™”!
The 3 part Kit includes:

1. The Binder: an easy to read resource book filled with concise definitions, information on products you¹ll need, and the questions to ask your advisors. Overviews of trust and insurance products, investment and tax vehicles, education savings plans to long term care. All the things to consider, and the do’s and don’ts to guide you. A guide designed to help you take care of you, your assets, your family and others.

2. The Box: an annual filing box system that comes with pre-printed folders giving you an easy way to file all your important documents, bills and statements for the entire year!

3. The CD: easy to fill in, customizable spreadsheets and letter templates to help you determine your net worth, manage your budget, fund your trusts, get insurance claims, etc. Formulas included!

Give the “What You Need to Know Kit” as a gift to yourself, your children, your clients or employees. Kits will be available April 1st. Order online: www.act.mattersathand.com/kit or call 1-800-705-2911.

Help yourself and others to get in control. Guaranteed to improve your game!

Q: I am 51% owner in a C Corp, and we are expanding into Europe. Any reasons from a tax standpoint to switch to an S Corp?

A: Whether you expand in Europe or not, we generally recommend an S corporation for closely held businesses to avoid corporate double taxation and possibly for payroll tax savings. If you make an S election now, you will have to wait 10 years to sell its assets in order to avoid the Built-In Gains Tax. Also, the C corporation portion of your Retained Earnings will be taxable as dividends when distributed.

D. Dean McCormick III, CPA, MBA, President, McCormick Wealth Insights, www.mccinsights.com

Q: As founder of an early stage company, should I create a Grantor Retained Annuity Trust to hold my shares as a wealth transfer tool to later generations?

A: Consider annual exclusion gifts first. You and your wife can annually gift $24,000 of stock to a grantor trust per beneficiary. Assuming your stock is at $1 now and appreciates to $24, you’ve made a tax free transfer of $576,000 to a child in a grantor trust which you control. A GRAT (an irrevocable trust that pays fixed annuity payments over time with the property in the trust eventually going to a beneficiary), might be a better idea after you have exhausted your annual exclusion gifting.

Renee M. Gabbard, Partner, West Coast Chair of Estate Planning, Paul Hastings, www.paulhastings.com

Q: Are Index Funds a good strategy investment, and if so, for what percent of my investable assets?

A: Index Funds can be a good strategy depending on a client¹s overall investment goals. They combine diversification and tax efficiency with low costs and investment minimums, while providing returns that are equal to a market index. Considered a “passive” versus “active” investment, many advisors suggest a combination of both active and passive strategies, since they will likely have different performance levels depending on market conditions.

Carolanne M. Chavanne, CFP®, VP, Senior Financial Planner, Comerica Bank Wealth & Institutional Management, www.comerica.com