What areas should you consider?A financial plan is a holistic look at your entire financial picture as well as factoring in your life goals and covers several keys areas which include:Investment Strategy - This allows you to quantify the sufficiency of your capital and answer the question “will we have enough?” accounting for such things as a rising tax environment and rising inflationInsurance and Asset Protection - It’s important to ensure that you have the proper levels and types of insurance for health, life, property, casualty & disability to protect you and your family from unforeseen circumstances.Estate and Gift Planning - Do you have a will? What will happen to your assets after you’re gone? Estate Planning allows you to determine what kind of legacy you want to leave your family and allows you to ensure that your wishes are met.Retirement Planning - Can you retire the way you want? What kind of lifestyle do you expect to keep? Here it is important to explore what the tax and financial implications are for retiring at certain ages. You’ll want to examine qualified holdings like pensions, social security, 401(k)s, and IRAs as well as non-qualified holdings and optimize an appropriate distribution strategyTax Management - Is your portfolio is structured for tax savings. Do you have the ability to defer income? By reducing your tax obligation you are able to keep more of your wealth for yourself and your family.
Panelists Sharon Uyeda Fong, CFP (Moderator) – Vice President and Senior Private Banker, The Private Bank Teresa Tabel, CFP – Vice President and Wealth Strategist, The Private Bank Carlee Harmonson – Senior Vice President and Regional Director – Trust and Estate Services, The Private Bank2|
Areas We Will Examine Today • Personal Financial Statement • Insurance and Asset Protection • Investment Strategy • Estate and Gift Planning • Retirement Planning3|
The Importance of a Financial Plan • Helps you achieve your life goals • Connects all elements of your financial life (Attorneys, CPAs) • Involves gathering information, examining your current status, setting goals and building a strategy for achieving those goals • Helps you gain greater understanding of your options • Need to be an ongoing process – not a one-time document or exercise4|
Personal Financial Statement • What are your assets and liabilities? • What does your cash flow look like? • Reviewing your budget5|
Net Worth Statement Personal Financial Assets Mary John Total Union Bank Savings Account 37,500 37,500 75,000 Union Bank Checking Account 10,000 10,000 20,000 UBIS Investment Account 200,000 200,000 400,000 Investments 247,500 247,500 495,000 Union Bank 401(k) Account 250,000 0 250,000 Johns 401(k) Account 0 350,000 350,000 Qualified plans & traditional IRAs 250,000 350,000 600,000 Retirement Plans 250,000 350,000 600,000 Personal Financial Assets 497,500 597,500 1,095,000 Personal Assets Mary John Total Primary House 375,000 375,000 750,000 Personal residences 375,000 375,000 750,000 Personal Assets 375,000 375,000 750,000 Total Assets 872,500 972,500 1,845,000 Current Liabilities Mary John Total Mortgage 111,113 111,113 222,226 Total Liabilities 111,113 111,113 222,226 Personal Net Worth 761,387 861,387 1,622,7746|
Insurance and Asset Protection How much and what do I need: • Life Insurance • Casualty & Liability Insurance • Long Term Healthcare9|
Estate Planning • Do you have your documents in place? • Are your assets titled correctly? • What is the role of the trustee?10 |
Duties of a Trustee INVESTMENT DISTRIBUTION STARTING THE BOOKKEEPING RESPONSIBILTIES TAX PAYMENT AND MAINTAINS ADMINISTRATION MANGEMENT UPON TRUST RESPONSIBILITIES TO BENEFICIARIES RECORDKEEPING NEUTRAL POSITION COORDINATION TERMINATION Files annual income Draws up Records all income Makes distributions tax return and Arranges partial or Manages investment strategy Reviews Trust and principal to beneficiary as provides Seeks legal counsel final distribution recordkeeping for according to Agreement distributions and directed by information for when and if needed according to trust all assets objectives of trust receipts agreement beneficiary tax agreement agreement return Completes an Manages Supplies detailed inventory of all trust investments statements on a Compiles a record Divides the assets assets – keeps Reports actions to Marshalls the Takes care of all according to market regular basis of adjusted cost of the trust property track of all cost an independent assets transaction activity circumstances, outlining principal, basis and taxable between basis and auditor safety of principal, income, and income beneficiaries acquisitions for tax and income needs investment activity purposes Meets with Collects all income, beneficiary and/or Arranges for e.g., dividends, grantor to appraisal of trust interest payments. Takes care of Manages Follows terms of Supplies Regularly reviews determine assets and Ensures they are financial obligations investments to trust agreement and accounting performance and investment determines reinvested or for medical needs, allow minimal tax avoids conflict of information and tax objectives objectives an d property insurance distributed as if beneficiary is ill exposure interest data income/principal needs established in needs agreement11 |
Retirement Planning and Benefits • What and where are my retirement assets and benefits? • 401(k) • Pension Plan • Stock Options • Deferred Compensation • IRA’s • Social Security • Benefits • How much will I need at retirement? • Timing • Monthly cash flow12 |
Real Estate • How does real estate fit into your long-term financial goals? • How important is payment flexibility in your mortgage, given your overall financial plan?13 |
30 year fixed vs. 15 year fixed Sample 30 Year Fixed Rate 15 Year Fixed Rate 15 year fixed rate Loan Amount Loan Amount $1,000,000 $1,000,000 Interest Rate 5.00% 3.875% Payment $5,368.22 $7,334.00 Interest paid life of $932,559 $320,120 loan Pay off loan faster with 15 year loan and save $612,439 in interest14 | Rates utilized are for illustrative purposes only and may not reflect actual rates.