While our concerns will depend mainly on our individual situation — our age, job security, financial situation, and family obligations to name a few — here are some common areas to consider when we’re forced to manage finances in uncertain times. 

Check in on Your Monthly Budget

Before you can judge the effect on your monthly budget, you’ll need a monthly budget. If you have one, great. If not, this is the perfect time to create one. 

If you have a budget: 

• Evaluate your spending habits. Even if your personal situation is secure — job, health, savings, and long-term planning — things outside your control are volatile. Now’s the time to cancel that monthly subscription service you never use or the landline phone you don’t need. Eliminate any credit card debt to free up money in the future. 
• Assess your emergency fund. Experts say that, ideally, we should have anywhere from three to nine months stored away in an easy-to-access emergency fund — money in a savings account that you could live on if your income suddenly stopped. If you have an emergency fund, check on the balance. If not, take the money you saved from your monthly budget-cutting and start one.

If you don’t have a budget: 

• Start one. Keep it simple but comprehensive. Include all of your expenses and income. Monthly credit card statements come in handy here. 
• Evaluate your spending habits. See above. If you’re new to the budgeting world, you’ll likely be surprised at some of what you’re spending. 
• Start an emergency fund. If you didn’t have a budget, it’s unlikely you had an emergency fund. That’s okay — start one now. If you can set aside $25 a week, you’ll have more than $1,300 in the fund by this time next year. 

If your job is secure and you have adequate health insurance for you and your family, you won’t have to adjust your habits radically. 

But remember: leaking roofs and faulty transmissions have their own timelines. If you’re faced with an unexpected major expense, you may need to use your credit card as a fallback option. 

The Impact on Your Investment Strategy 

One of the biggest shocks from occurrences like the coronavirus is the instability they cause in the markets. Markets don’t like uncertainty, and large-scale buying and selling is more the result of panic than strategy. 

The best advice? Do nothing at the outset. 

That doesn’t mean that you shouldn’t reassess your investment strategy periodically. If you’re retired or near retirement age, you’re counting on your savings. Hopefully, your investments have shifted to a lower risk balance over time, which will enable you to weather the current storm. 

And while you may be tempted to sell stocks as prices drop, remember that the market has always bounced back (see below). Also, remember the tried-and-true adage: buy low and sell high. If you need immediate cash, it’s better to draw from bonds and give your stocks a chance to rebound. 

If you’re a ways from retirement, stick with your plan. And stop looking at your portfolio every day. 

Remember That We’ve Been Here Before

In the middle of a global crisis, it’s easy to think that we’re in uncharted territory. No doubt there are unique aspects to what’s happening, but we’ve faced the unknown before. And we not only survived, we came back stronger. 

Beginning with HIV/AIDS in 1981, there have been 12 epidemics that have impacted the markets, including SARS, H1N1, and Ebola. The impact of these outbreaks on market drawdowns averaged less than 2 months, with the exception of AIDS (5.1 months). 

Although epidemics can spur market corrections, their impacts are finite. That said, it’s difficult, if not impossible, to predict exactly how long it will take the market to recover when we’re still dealing with a pandemic. That’s why a steady, calm, and patient financial course is best. 

How to Move Forward 

It’s difficult to be a rational, calm investor in turbulent times. The best way to become one is to have a strong plan in place before the next roller-coaster ride comes along and stick with it. 

Because the ups-and-downs and complexities of investing can be overwhelming even in the best of times, consider working with a financial advisor who is trained in retirement income planning or wealth management planning, which means they will have the expertise to help you weather the storm with confidence. In the end, that may be your surest route to a smoother ride. 

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

At the same time, college is expensive. Here’s the average cost of tuition and fees in the 2019 — 2020 school year, as reported in the U.S. News annual survey: 

For private colleges: $41,426 

For public colleges: 

• In-state residents: $11,260 
• Out-of-state residents: $27,120 

Those costs don’t cover room and board. Also, consider that tuition tends to rise every year, with increases between four and 10%. Depending on your child’s age, you may be looking at a cost that’s considerably higher than what parents face today. 

Given everything that’s at stake — your child’s future and your financial stability — it makes sense to understand all of your options to pay for college. 

529 Plans 

529 plans, or “qualified tuition plans,” are savings plans sponsored by states, state agencies, and educational institutions. These plans offer tax-advantaged savings for educational expenses and come in two categories:

• Prepaid tuition plans. These plans enable you to purchase credits at public colleges and universities at current prices. The money can only be used for tuition and fees, not room and board, and most have state residency requirements. You receive the full value of the benefit only if your child attends the participating institution. Otherwise, you will only receive a portion of the benefits you paid. 
• Education savings plans. These plans can generally be used to cover expenses at any college or university, including some foreign institutions. These savings can also be applied to room and board. Also, under the revised 2017 tax code, education savings plans can be used for private elementary and high school tuition for up to $10,000. 
• Private plans. This is a prepaid tuition plan for approximately 300 participating private colleges and universities. 

529 plans offer a range of tax benefits. The compound savings are tax-free, and some states offer tax deductions and matching contribution incentives. However, some fees may apply to 529 plans, such as account applications and maintenance fees. 

The College Savings Plan Network provides links to all state 529 plans.

Grants 

The federal government, state governments, and colleges and universities provide grants based on financial need. Unlike loans, grants don’t have to be repaid. 

To qualify for a grant, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA) form. Colleges and universities also use this information to determine what need-based aid your child may be eligible for, including institutional scholarships.

Loans

Families turn to loans to finance approximately 20% of the cost of college. Educational loans are available from the government and from private lenders. Federal loans include more protection and better rates, so consider those first. Again, you’ll need to fill out the FAFSA to qualify. 

Students can take out federal loans, with first-year undergraduates able to borrow up to $5,500 and an additional $1,000 for every subsequent year. Direct PLUS loans are targeted to parents. While these loans come with a higher interest rate than student loans, the amount you can borrow is determined by the college and is intended to cover the full cost of attendance, minus any scholarships your child may be offered.

$2,500 Tax Credit 

The American Opportunity Tax Credit is a benefit for parents whose adjusted gross income is less than $90,000, or $180,000 if filing jointly. You can reduce your taxes after paying tuition, fees, books, room, and board by up to $2,500 a year per child.

Other Options

You may want to consider other savings and funding options, including:

• Roth IRAs 
• Traditional IRAs 
• FDIC-insured savings accounts 
• A home equity line of credit 

Whatever option, or combination of options, you choose, it’s best to start as early as possible. And know that you’ll seldom pay the college’s advertised “sticker price.” According to the College Board, undergraduate students in 2018-19 received an average of $15,210 in aid. 

To maximize your savings and ensure you’ve got the best possible plan in place, consider working with a financial advisor who specializes in long-term planning. Your child’s future is worth it.

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

Even well-respected experts have opposing viewpoints on life insurance. 14 million listeners tune into Dave Ramsey's podcast on personal finance each week. Ed Slott is a respected tax advisor and keynote speaker on tax planning. Both men have decades of experience. Both are also authors of best-selling personal finance books. 

Dave Ramsey fiercely defends that life insurance protection should never be permanent. He believes term insurance is the best type of life insurance, period. Ed Slott believes that permanent life insurance should be the "bedrock of any serious financial plan." He believes permanent life insurance is an attractive asset due to its favorable tax treatment. 

Why would two knowledgeable experts have completely opposing viewpoints? Which expert should we listen to? An in-depth Google search often leads to more confusion. You definitely don’t feel like you are receiving the full picture when you speak to a life insurance agent. 

Researching life insurance facts should not have to be so tedious and overwhelming. After 13 years in the insurance industry, I decided I had had enough of seeing one-sided arguments. I became fed up with hearing professionals and media preach that only one type of life insurance was best for all. 

This guide provides a balanced perspective of each policy type, so you can make a wise decision. Your specific situation, needs, and goals should dictate what a wise decision is. This guide includes insights from over a decade of industry experience. Reading this guide will give you a clear understanding of your options. You will have the knowledge to secure a policy that is best suited for you today. You will also learn how to position your family for success in the future. 

• Here is what you are about to learn: 
• The basics of each type of life insurance 
• The advantages and disadvantages of each policy type 
• Who each policy type is most suitable for 
• Unique policy provisions and features to look for to maximize the value of your policy 
• How to create a plan that provides the greatest flexibility in the future 

Term Insurance 

Basics of Term Insurance 

Term insurance is the most straightforward type of life insurance policy to understand. When setting up a term policy, you select your desired coverage amount and duration. The duration of your coverage will determine when your coverage expires. 

Advantages 

Term life is the most cost-effective type of life insurance in the marketplace. Most term policies have premiums that will remain the same for the entire term duration. This transparent setup makes term policies predictable and easy to manage. Your beneficiaries will receive the full insurance benefit if you die before your policy expires. 

Disadvantages 

Although very affordable, over 97% of term life policies end up not paying out a death benefit. According to the statistics, you have a high likelihood of outliving your term policy. 

If you decide you want to extend your term coverage, you will need to apply for a new life insurance policy. At this point, you will be applying based on your age and health when submitting your new application. If you are still very healthy, you will still pay higher coverage rates based on your older age. If you are no longer as healthy, your policy may receive a lower health rating or get declined. 

Who Term Insurance is Most Suitable For 

Term insurance is most suitable for individuals or families with a limited budget. Many families have a hard time finding more money to save. Additionally, young families often need higher life insurance coverage for the following reasons: 

• Higher amounts of debt (student loans, consumer debt, mortgages) 
• More years of income to replace 
• Children are younger 
• Low amount of assets saved 

This combination makes term life insurance the easy choice for most younger families. 

Term insurance may also be most suitable if you need coverage for a finite period. This assumes you have already accounted for other factors, such as income replacement and education costs. Some examples include protection while paying down your mortgage or business debt. Since you have a clear idea of when you will pay the debt off, you can select an appropriate term duration. 

Key Considerations

Convertibility feature 

Most term life policies include a conversion feature. The conversion feature allows you to convert your term insurance to permanent insurance. When converting to permanent insurance, you are purchasing a new policy. The key advantage here is you will not have to take a new medical exam. Instead, you will be able to apply the same health rate class from your term policy to your new permanent policy. This can be very impactful if you are no longer as healthy as you were when you started your term policy. 

You do not have to convert your entire term to permanent insurance. A partial term conversion may be affordable and make perfect sense. 

Although your health rate class remains the same, your age is not locked in for your new policy. You will pay insurance rates based on your age when you convert to a permanent insurance policy. Since insurance costs more as you age, converting at a younger age can help you save on insurance costs. 

Make sure your term policy has a conversion feature if you plan to buy permanent insurance in the future. You can ask your insurance agent to run options to convert your term during your annual review. You will be able to weigh costs and benefits to make a wise decision for your family. 

You can only exercise your term conversion with the carrier you placed your term policy with. For this reason, you'll want to know if the permanent policies offered are in alignment with your goals. Be clear on when your policy's term conversion period expires, as it varies among carriers. 

Unique Policy Features 

Some carriers offer innovative features that may be valuable for some policy owners. Be sure to ask your agent about options available to you based on your goals. 

A few carriers offer a term policy with return of premium. These policies may cost 20-30% more than a traditional term policy. If you outlive your term policy, you can receive a full refund of all premiums at the end of your term duration. 

One carrier offers a policy that allows you to keep coverage beyond the term duration. You will have the option to pay the same premium for a reduced amount of life insurance coverage. If you are no longer as healthy or can't afford a new term policy, this feature can benefit you. 

Some carriers even offer term policies with an accelerated death benefit. Qualifying trigger events may include chronic, critical or terminal illness. 

Life insurance bands (cheaper cost at certain benefit amounts) 

Many life insurance buyers are not aware of face amount bands, also known as premium bands. Face amount or premium bands offer a lower cost for coverage at higher insurance amounts. Although rate bands vary among carriers, a standard rating band may look like this: 

• Band 1: 100,000-249,999 
• Band 2: 250,000-499,999 
• Band 3: 500,000-999,999 
• Band 4: 1,000,000+ 

This knowledge will help you get the best value for your life insurance premium dollars. 

Permanent Insurance 

Basics of Permanent Insurance 

Permanent life insurance protection lasts for your entire life. Unlike term life, permanent insurance policies do not expire. Your death benefit is guaranteed to pay out as long as you pay enough premiums. Since you have lifetime protection, premiums are much higher for permanent policies. 

Most permanent life insurance policies have a cash value component. Cash value is the equity you build within your policy during your living years. You can draw money from the policy's cash value while you are still alive. 

Permanent Insurance Policy Types 

There are variations of permanent life insurance policies, each having unique features. This summary covers each permanent insurance policy type, along with its unique features. 

Whole life 

A whole life policy is generally considered the most secure form of insurance. Whole life policies have more rigid premium payment requirements than universal life policies. As long as scheduled premium payments are paid, the cash value is guaranteed to increase each year. A whole life policy may be most suitable for you if you are seeking the greatest predictability in your future policy values. 

Universal life 

Universal life policies provide more flexibility in premium payments. These policies offer more transparency around fees and expenses as well. There is a premium schedule of minimum payments to cover annual insurance costs. Premiums paid above the required amount are added to the cash-value account and earn interest. A universal life policy may be suitable if you are seeking premium flexibility. 

The life insurance company determines the interest rate credited to the universal policy. Factors that impact interest rates include expenses, mortality rates, and investment experience. An indexed universal life policy is a variation of a universal life policy. Interest rates credited in these policies are based on annual returns of one or more indices selected. A universal life policy may be suitable if your income fluctuates. Flexibility in your premium payment schedule can be a valuable feature. IUL policies may be suitable for those seeking upside potential from linking cash value returns to a stock market index. It is important to consider other nuances (i.e. cap and participation rates) when buying an IUL policy. 

Guaranteed universal life 

Guaranteed universal policies work similarly to term insurance policies. Instead of lasting for a specific amount of years, you select an age to have protection through. Policies will remain in force as long as premiums are paid. Since GUL policies have little to no cash value buildup, premiums are much lower than traditional permanent policies. A GUL policy can be suitable if you are looking to make minimal premium payments to have pure protection. 

Variable universal life 

A variable universal life policy provides the policy owner more control. You can select from a list of sub-accounts (similar to mutual funds) to create a portfolio. You can also adjust investment allocations to align with your investment objectives. Your cash value returns directly correlate to your investment allocations. One key difference is that you risk the potential for loss of cash value in a VUL policy. VUL policies generally have a minimum death benefit guarantee as long as you continue to pay premiums. VUL policies may be suitable for those seeking more control over policy performance, while accepting the accompanying investment risk. 

Overfunded permanent policy 

An overfunded policy refers to extra premiums paid into a permanent insurance policy. The surplus premiums buy more coverage and increase cash value in the policy. You can choose to overfund either whole life or universal life policies. This can be an attractive strategy if you want the option to withdraw cash from your policy in the future. A knowledgeable agent may be helpful in designing and servicing an overfunded policy. 

Advantages of Permanent Insurance Protection 

The main advantage of a permanent insurance policy is the security it provides. There is certainty that your life insurance will pay out when you die, not if you die during the term duration. The certainty of a death benefit provides flexibility to your financial plan. 

One example is having a paid-up permanent insurance policy during retirement. A paid-up policy is when no more premiums are due for the rest of the policy owner's life. This policy can provide peace of mind for a family in many ways. Here are some reasons a couple may value a permanent insurance policy: 

• What if there is a major stock market or real estate correction before the insured dies? The beneficiary may avoid selling a depreciated asset at a bad time. 
• What if the couple spends more than they originally planned while enjoying retirement? The surviving spouse will have some assets replenished through life insurance proceeds. 
• What if there is still debt outstanding when the insured dies? The surviving spouse will have the option to pay down the debt. 
• What if their goal were to leave an inheritance behind for the next generation? Life insurance proceeds pay out in a lump-sum, tax-free at the time of death. 

The instant liquidity life insurance provides leaves beneficiaries with options and flexibility. This peace of mind can be invaluable for many families during retirement. 

Permanent life insurance provides an efficient way to pass wealth to future generations. If you know how much to expect your policy to pay out, you can spend down your retirement assets with confidence. Since the death benefit is income tax free, you will know the exact amount of wealth that will pass to future generations when you die. 

Having access to the cash value in a permanent insurance policy while you are alive can be a major benefit. You can access the cash value in a permanent policy while you are still alive. Assuming you've selected the right type of policy, you can expect your cash value to exceed the premiums paid into your policy over time. 

Life insurance policies experience unique tax treatment. Cash value grows on a tax-deferred basis. This means taxes are not paid on interest earned within a permanent insurance policy. You can access cash value in any policy year on a tax-favored basis. 

Here are some examples of when having access to cash value can be beneficial: 

• You have an emergency that requires immediate cash. 
• You want to make a major purchase. 
• You want to make a major investment. 

You may prefer to avoid liquidating existing investment holdings or incurring debt. In these instances, you may find the access to cash value in your policy to be an attractive option to have. 

Disadvantages 

Permanent insurance policies require much higher premiums than term insurance policies. This factor in itself makes permanent insurance unaffordable for many households. 

Properly funding a permanent life insurance policy is a long-term financial commitment. You need to pay premiums for many years to sufficiently fund a permanent policy. Stopping premium payments early will result in lower cash value and death benefit. Sometimes, you may lose life insurance protection altogether. This commitment may become a challenge if your income becomes disrupted. 

Permanent insurance policies are more complex to understand and manage. Ongoing monitoring is necessary with policy components such as cash value and policy loans. Two examples that may need attention are outstanding policy loans or changes to policy interest rates.

Who Permanent Insurance is Most Suitable For 

A permanent insurance policy is suitable for one seeking a permanent death benefit. 

A permanent insurance policy is suitable for you if one or more of the following applies to you: 

• You are seeking a permanent death benefit 
• You are looking to build cash value 
• You are a disciplined saver with a long-term time horizon

Key Considerations 

Life insurance receives unique tax treatment. 

It is important to understand the different ways you can access your cash value. Options such as surrendering your basis or policy loans can avoid incurring taxes. It is important to understand the impact of withdrawals have on your policy values. Be sure to work with a knowledgeable agent or financial planner when you decide to withdraw cash. A professional can help create a plan to avoid a policy lapse or tax consequences. 

Adding a disability rider to your policy is worth considering. Also called a waiver of premium rider, this rider waives your premiums in a disability event. According to the Social Security Administration, a 20-year old has a one in four chance of becoming disabled during their working years. For this reason, the cost of the rider may be worthwhile for many professionals. 

Some carriers offer an optional long-term care rider. This rider gives you access to your death benefit in the event you need long-term care. Studies show over 66% of 65-year-olds will need long-term care in their lives. With LTC costs being a major financial risk during retirement, this rider has gained popularity. Unlike a standalone LTC policy, you will not lose unused benefits with a rider. 

Conclusion 

At this point, you have learned that the best type of life insurance policy for you today depends on factors such as your:

• Budget and savings habits 
• Expected future income
• Length of protection desired 
• Desire for living benefits such as accumulating cash value 
• Financial plan 

If you have a limited budget, chances are a term life insurance policy will be the most suitable for you today. There are some important considerations to keep in mind as you set up your term policy. 

Your life insurance program does not have to be 100% term or permanent insurance. Having a combination of both policy types can make great sense for many policy owners. It may be affordable to complement your term policy with a smaller permanent policy. Setting up a permanent policy today locks in the lower cost of insurance at a younger age. This results in more efficient growth of policy values. 

Change is the one constant we are guaranteed to experience in our lives. Most professionals find that their income peaks in their early 50s. What is most suitable for you today may change in your future. Your future may not play out according to your original plans, for better or for worse. The best type of life insurance program should suit your needs today, while providing flexibility for your future. Work with an insurance expert to set up a term policy through a carrier who provides strong conversion options. 

Last but not least, be sure to review your policy once a year. If you need to increase or lengthen coverage, make the changes while you are young and healthy.

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

A reasonable assumption would be that the advisor on the other side of the table is required to act in your best interest; however, that is not always the case. Here are some questions to ask before deciding to work with a financial advisor. 

First, I recommend asking if the advisor is a fiduciary. It might be surprising to know that not all advisors are held to a fiduciary standard. Registered investment advisors are regulated by the SEC and are held to the fiduciary standard, which requires that they make recommendations based on their clients' best interests. 

Second, ask the advisor how they are paid. Are they paid a fee directly from their client, or are they paid by commissions and/or mutual fund trails? If they are paid in a way other than a fee from their client, this can be problematic because it presents potential conflicts of interest. For example, that advisor may be tempted to make recommendations to earn commissions rather than what’s best for their client. You should also ask what kind of investment products they offer. If the advisor is primarily recommending proprietary products, or products from their company, this may also present potential conflicts of interest. In my opinion, it’s always best to avoid conflicts presented by compensation. Financial advisors should be paid by their client and not product providers. 

Lastly, I recommend asking if the financial advisor holds any advanced professional designations, such as the CERTIFIED FINANCIAL PLANNER™ (CFP®) or Chartered Financial Consultant® (ChFC®). Many financial advisors choose to earn professional designations to set themselves apart from other practitioners by having a foundational financial education background. Having a strong background not only benefits clients through being able to offer sound advice, but it can also boost advisor marketability in an often-crowded marketplace. The American College of Financial Services first started offering the ChFC® in 1982 as an alternative to the CFP® designation. The CFP® is the more popular designation of the two; however, the ChFC® actually requires more coursework. The CFP® requires seven college-level courses, while the ChFC® requires eight. The topics covered are alike; in fact, the first seven courses under the ChFC® program satisfy the CFP® educational requirements. Additionally, the ChFC® includes modern topics not currently covered by the CFP® such as behavioral finance and planning for same-sex couples, divorcees, and blended families. The main difference between the two is that after completing the course requirements, CFP® holders are required to take and pass one comprehensive board exam, currently offered only three times a year, while ChFC® practitioners have to pass individual tests for each subject.

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

One of the things I learned from these families was that having a child or grandchild with special needs often comes with many challenges. Someone always needs to be available to care for them. Family vacations are infrequent. Trips to the grocery store are difficult. Going to a crowded movie theater on a Friday night isn’t ideal. And taking some “me time” is almost always an afterthought. 

And then there’s the reality that the child may not ever be able to live a fully independent life away from home. This means that those responsible for the child’s care need to put into action a plan for now, a plan for when they can no longer care for the child, and a plan for when they are no longer here with them. If you are a grandparent of a special needs child, you may wish to share this article with the child’s parents. 

The Importance of Estate Planning for Families with Special Needs Children 

Estate planning is usually not the most comfortable area of financial planning to address for many clients. You may be thinking of the complexity, the cost, the time commitment, and the emotions that come along with this planning. If you are someone who needs to plan for a child with special needs, these thoughts and feelings are even stronger, but the need to plan is even greater. The focus for you will be to establish the necessary documents to act on behalf of your child and ensure that they can live a full, quality life when you are no longer able to help them. 

You will also want to be certain that everything is in place if you become disabled. You will need to create what is called a Life Plan. 

A Life Plan helps to ensure the right people are in place to care for your child and that they have everything they need to follow your directions. It also gives you a way to efficiently leave assets to your child, while considering the need for government benefits if they cannot work to meet the “substantial gainful activity” level, as defined by the Social Security Administration. In the Life Plan you will outline the present and future personal, legal, and financial needs. 

To help you get started, below is a list of categories derived from the book Planning for the Future: Give your Child with a Disability the Gift of a Safe and Happy Life (Russell & Grant, 2010). For each of the categories we recommend listing four priorities on which you’d like to focus. These will be your stepping-stones to help you prepare a Letter of Intent when you meet with your CERTIFIED FINANCIAL PLANNER™ and your Special Needs Attorney to formalize your Life Plan. 

• Residential: If you die or go into a nursing home, where do you want your child to live? 
• Education: What is your long-term perspective of your child’s capabilities?
• Employment: What has your child enjoyed? List their goals, aspirations, limitations, etc. 
• Social/Recreational: What activities make life meaningful for your child? List sports, hobbies, etc. 
• Religion: Is there a special church, synagogue, or other holy place for fellowship? 
• Medical Care: What has worked and what has not? 
• Behavioral Management: Does your child have special behavior problems? What behavior management techniques have been effective in the past? 
• Advocate/Guardian: Who will look after your child, advocate for your child, and be a friend? 
• Trustees: Who do you trust to manage your child’s funds? 
• Other Areas of Concern: What other aspects of your child’s life are important to note? 

To learn how Modera can help you develop a comprehensive Life Plan, please reach out to your team of advisors or Contact Us at advice@moderawealth.com. 

Modera Wealth Management., LLC is an SEC registered investment adviser with places of business in Massachusetts, New Jersey, Georgia, North Carolina and Florida. SEC registration does not imply any level of skill or training. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. 

For additional information about Modera, including its registration status, fees and services and/or a copy of our Form ADV Disclosure Brochure, please contact us or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). A full description of the firm’s business operations and service offerings is contained in our Disclosure Brochure which appears as Part 2A of Form ADV. Please read the Disclosure Brochure carefully before you invest or send money. 

This article is limited to the dissemination of general information about Modera’s investment advisory and financial planning services that is not suitable for everyone. Nothing herein should be interpreted or construed as investment advice nor as legal, tax or accounting advice nor as personalized financial planning, tax planning or wealth management advice. For legal, tax and accounting-related matters, we recommend you seek the advice of a qualified attorney or accountant. This article is not a substitute for personalized investment or financial planning from Modera. There is no guarantee that the views and opinions expressed herein will come to pass, and the information herein should not be considered a solicitation to engage in a particular investment or financial planning strategy. The statements and opinions expressed in this article are subject to change without notice based on changes in the law and other conditions.

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

Often, family members or close friends want to help you by gifting to your child or leaving an inheritance to them. Though this generosity may be appreciated, there can be unintended side effects of gifting outright to someone who has special needs. 

Outright gifts can affect your child’s eligibility for some government benefits if they are 18 or older. This is important to keep in mind because frequently an adult with special needs cannot earn enough income working to meet their own basic living expenses. Medicaid and Supplemental Security Income (SSI) are needs-based government programs designed to cover costs related to food, shelter, and medical care. 

These benefits can be valuable by alleviating some of the financial burden that falls on you as the parent. In turn, they allow you to focus your own financial planning around supporting your child with supplemental expenses not covered by these benefits, saving for your retirement or your future long-term care costs, or providing for your other children. 

Outright gifting also raises concerns about who will manage the assets that are given to the individual and how they will be protected from fraudulent attempts or creditor situations. There are planning strategies that can help with these areas. These strategies cover two categories: those gifts or inheritances that have already been completed, and future gifts and inheritances. 

Completed Gifts and Inheritances

With completed gifts and inheritances, different considerations apply depending on whether your child is a minor or an adult. If you have a minor child who has received gifts or inheritances in their name, the money might be held in a Uniform Gift to Minors Act (UGMA) account or Uniform Transfer to Minors Act (UTMA) account. Any money deposited into a UTMA is an irrevocable gift, which means, even though you’re the parent, you cannot simply transfer the assets into your own account. Instead, the strategy to consider is using these accounts to cover expenses before your child reaches the age of majority. The idea is to allow them to benefit from this money now, while it is shielded from the Medicaid and SSI asset tests. In order to qualify or to continue to qualify for these government benefits when your child reaches age 18, they typically cannot own more than $2,000 in assets. 

If your child received a larger windfall that will not be spent down in time, or if they are already close to adulthood, you may want to consider a “self-settled” special needs trust. This is a trust that is set up by a parent or grandparent where the child is the beneficiary. This trust is funded using your child’s own assets. 

An attorney can help you decide which type of self-settled special needs trust is best. There will be specific language written into the trust document that limits the use of the trust to those expenses not covered by government benefits. If there are any remaining assets in the trust after the life of the beneficiary, the money will first pay back the expenses covered by Medicaid before being disbursed to the remainder beneficiaries. 

Future Gifts and Inheritances

For those gifts or inheritances that have not yet been completed, you can plan in advance by establishing a “third party” special needs trust, where your child is the beneficiary. This trust is funded using assets that are not owned by your child. Like the self-settled trust described above, the attorney who is helping establish the third-party trust should include specific language limiting the use of the money to supplement, not replace, income provided by SSI or Medicaid. Unlike the self-settled trust, any money that remains in the trust will not be used to repay Medicaid. Other remainder beneficiaries are named to receive the leftover assets. 

The assets in both trusts will be protected against creditors should an issue arise with your child in the future. There will also be a trustee named who will oversee the money. This function protects your child if they are unable to manage their own finances or if they are susceptible to fraudulent phone or email attempts to obtain money. 

You will likely name yourself as the trustee so that you can manage the investments and make withdrawals to cover your child’s supplemental expenses. Keep in mind that any payments from the trust should be made for the benefit of your child only and should be paid directly to the service provider. 

You will also name a successor trustee to step in, if something were to happen to you. This person should be familiar with your child and have no conflicts of interest with the money. The person should be financially competent and agree to serve when the time comes. You may also want to consider a professional or corporate trustee as a co-trustee. This trustee can act as the investment manager of the assets or take over the administrative tasks surrounding the trust and help with the coordination of SSI and Medicaid benefits. 

Having a corporate trustee can provide some relief to the other trustee who may have other responsibilities to focus on. An alternative option is to name a “trust protector” who can advise the trustee on issues around investments and government benefits. The trust protector will not have any legal authority over the trust but can provide support when needed. 

Finally, the trust should be accompanied by a Letter of Intent, written by you. This is not a legal document, but it outlines, in specific detail, your wishes for your child when you pass away. This document will be helpful for your successor trustee and other family members who will be supporting your child. 

There are many complexities surrounding special needs trusts and special needs planning in general. Be sure to seek guidance from professionals who have expertise in this area. To learn more about how the advisers at Modera can help you, contact us at advice@moderawealth.com. 

Modera Wealth Management., LLC is an SEC registered investment adviser with places of business in Massachusetts, New Jersey, Georgia, North Carolina and Florida. SEC registration does not imply any level of skill or training. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. 

For additional information about Modera, including its registration status, fees and services and/or a copy of our Form ADV Disclosure Brochure, please contact us or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). A full description of the firm’s business operations and service offerings is contained in our Disclosure Brochure which appears as Part 2A of Form ADV. Please read the Disclosure Brochure carefully before you invest or send money. 

This article is limited to the dissemination of general information about Modera’s investment advisory and financial planning services that is not suitable for everyone. Nothing herein should be interpreted or construed as investment advice nor as legal, tax or accounting advice nor as personalized financial planning, tax planning or wealth management advice. For legal, tax and accountingrelated matters, we recommend you seek the advice of a qualified attorney or accountant. This article is not a substitute for personalized investment or financial planning from Modera. There is no guarantee that the views and opinions expressed herein will come to pass, and the information herein should not be considered a solicitation to engage in a particular investment or financial planning strategy. The statements and opinions expressed in this article are subject to change without notice based on changes in the law and other conditions.

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

Below I’ve outlined four main areas to focus on when assessing your tax situation. A Certified Public Accountant (CPA) or a tax adviser who is familiar with special needs planning is an important person to have on your financial team. This tax professional can help to ensure you’re taking advantage of all tax deductions that you are eligible for and that you maintain them in the future. 

Medical Expenses 

As of 2019, an itemized deduction is available for medical expenses greater than 10% of Adjusted Gross Income (AGI). For many this is a large hurdle to overcome, but for someone with costs related to a disability or special need, you may be spending double the amount of a typical taxpayer. The key is to be diligent in tracking your medical expenses, obtaining documentation of physician recommended expenses, and planning ahead with your CPA. 

Examples of deductible medical expenses are: prescription drugs, over the counter insulin and/or syringes, dental costs, psychological or psychiatric services, premiums paid for Medicare Part B, and the cost of guide dogs, wheelchairs, etc. Keep in mind that you cannot deduct expenses for non-prescribed medicines, drugs, vitamins, or health foods. 

Some medical expenses that are deductible are often overlooked. These include costs related to special schools and institutions, capital expenditures, medical conferences and seminars, nursing home expenses and long-term care costs, and medical travel and transportation. 

• Special schools and institutions: If your child attends a qualifying special school, you may deduct the entire unreimbursed cost as a medical expense. In addition to tuition, the costs can include lodging, meals, transportation, incidental education costs, supervision at the school, treatment, and training. Private tutoring expenses may also qualify. 
• Capital expenditures: If a physician recommends that a capital improvement should be made to your home for medical reasons, you may deduct the cost in excess of the increase in your home’s fair market value (FMV). If the recommendation is to remove structural barriers, the full cost may be deductible. An example is installing a lift for someone with a physical limitation. The full cost of the lift and installation may be deductible. The ongoing costs to maintain it may also be deductible in subsequent years, if a medical reason still exists. 
• Medical conferences and seminars: If your doctor recommends that you attend sessions to learn more about your dependent’s medical condition in order to assist them, the cost of attending these conferences and seminars, including transportation, is deductible. Lodging and meal costs are not. 
• Nursing home and long-term care: Expenses incurred in a nursing home or long-term care (LTC) facility are deductible if you are chronically ill or the facility is primarily for medical care. In most cases, facilities primarily provide custodial care. The medical care component specifically may be deductible if separately stated on the bill. You may also deduct a portion of the cost of LTC insurance premiums. 
• Medical travel and transportation: The cost of travel to a medical facility, not including trips to improve general health, is deductible. If you use your own personal automobile, you may deduct a certain amount based on miles traveled. Unlike for medical conferences and seminars, a portion of lodging costs for you and one other person may be deductible, if an overnight stay is required. The meals during your stay, though, are not. 

In addition to tracking expenses for a deduction, you should consider a Flexible Saving Account (FSA) to set aside pre-tax money to directly lower your taxable income. This account is used to cover medical expenses throughout the year. Keep in mind that the full account balance must be used by year end. 

Impairment Related Work Expenses (IRWEs) 

You may also deduct expenses that are necessary for you or your dependent with special needs to be able to work. Examples include attendant care services required to prepare for work or required while you work, a reader if you are blind, transportation costs, service animals, medical devices, medication, or other expenses that are necessary in order to do your work satisfactorily. This deduction is considered a business deduction and is not subject to the 10% of AGI limitation. 

Retirement Plan and IRA Distributions 

If you withdraw from a qualified retirement plan or Individual Retirement Account (IRA) before age 59 1/2, your distributions are subject to a 10% penalty. A penalty waiver may apply, if you meet the definition of disability from the Social Security Administration and are receiving Social Security Disability (SSDI). 

A penalty waiver may also apply if you have substantial medical expenses. If distributions are used for medical care, the penalty is waived on amounts less than or equal to your allowable medical expense deduction (excess of 10% of AGI). This holds true whether you are eligible to itemize your deductions or not. Before withdrawing from a retirement plan, you should speak with your CPA and financial planner to determine the best strategy. 

Refundable and Non-refundable Credits 

There are two refundable credits you may be able to take advantage of in 2019: The Earned Income Tax Credit (EITC) and the Child Tax Credit. Both are subject to income phaseouts. 

• The EITC amount depends on your earned income and the number of qualifying children you have. 
• The Child Tax Credit applies to each qualifying child, under age 17. There is also a nonrefundable credit for a qualifying dependent, such as a child over 17 years old or a parent. 

There are two non-refundable credits that may also benefit you in 2019: The Child and Dependent Care Credit and the Adoption Expense Credit. Again, both are subject to income phaseout. 

• The Child and Dependent Care Credit is designed to relieve the burden of two-earner families who incur dependent care expenses. A qualifying dependent is either under age 13, any age if the person is physically or mentally incapable of self-care and qualifies as a dependent, or a spouse who is physically or mentally incapable of caring for themselves. 
• The Adoption Expense Credit may be claimed per child. For a qualified adoption of a child under age 18, expenses related to legal fees, court costs, and other related costs may be eligible for the credit. For an adoption of a child with special needs, you may receive the full credit regardless of expenses. 

There are a few other items that are important to remember when reviewing your tax strategy. If you are elderly or blind, you may claim an additional amount for your standard deduction. If you have high investment income, such as a substantial realized capital gain, you may be subject to the Medicare Surtax. Though the threshold was increased, you may also be subject to Alternative Minimum Tax (AMT) after certain deductions are added back to your income. 

Working closely with your CPA and CERTIFIED FINANCIAL PLANNER™ can help you prepare in advance to create a tax strategy that accounts for all these factors, which may ultimately help to alleviate some of the high costs you may be incurring throughout the year. 

If you need help with tax planning for special needs, Modera advisers who specialize in this area are available to help you. To learn more, please contact us at advice@moderawealth.com. 

Modera Wealth Management., LLC is an SEC registered investment adviser with places of business in Massachusetts, New Jersey, Georgia, North Carolina and Florida. SEC registration does not imply any level of skill or training. Modera may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. 

For additional information about Modera, including its registration status, fees and services and/or a copy of our Form ADV Disclosure Brochure, please contact us or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). A full description of the firm’s business operations and service offerings is contained in our Disclosure Brochure which appears as Part 2A of Form ADV. Please read the Disclosure Brochure carefully before you invest or send money. 

This article is limited to the dissemination of general information about Modera’s investment advisory and financial planning services that is not suitable for everyone. Nothing herein should be interpreted or construed as investment advice nor as legal, tax or accounting advice nor as personalized financial planning, tax planning or wealth management advice. For legal, tax and accounting-related matters, we recommend you seek the advice of a qualified attorney or accountant. This article is not a substitute for personalized investment or financial planning from Modera. There is no guarantee that the views and opinions expressed herein will come to pass, and the information herein should not be considered a solicitation to engage in a particular investment or financial planning strategy. The statements and opinions expressed in this article are subject to change without notice based on changes in the law and other conditions.

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

When you contribute cash, securities, or other assets to a donor-advised fund at a public charity, like NCF, Waterstone, or others, you are generally eligible to take an immediate tax deduction. Then those funds can be invested for tax-free growth and you can recommend grants to virtually any IRS-qualified public charity. 

When you give, you want your charitable donations to be as effective as possible. Donor-advised funds are the fastest-growing charitable giving vehicle in the United States because they are one of the easiest and most tax-advantageous ways to give to charity. By the way, you can give anonymously as well if you want. 

See this Scott Thomas video on "What is Donor Advised Fund?" 

Not all donor advised funds are the same. Administration costs vary, and investment options, support, and service varies a lot as well. 

For example: what if you wanted to gift real estate or business interest? Most DAFs would not offer help, but rather refer you to get an attorney and team of advisors. 

Would you like to engage an experienced chartered advisor in philanthropy and giving strategies across large spectrum of giving be helpful? Or do you know exactly what you want to do and how, and simply want an efficient portal and an 800 number to get on your way? 

Check out my other videos and subscribe to Stewardship Matters on YouTube. Or reach out to me scott@stewardshipmatters.net.

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.

Did you finance your home, or did you purchase outright with cash? Leverage (loans) works best to purchase appreciating assets like houses or income producing business assets instead of paying cash. 

Do you realize that nearly all private equity and hedge funds use low cost leverage to increase investment returns? Would you like to get $3 to $1 match on your savings contributions? You can! We show you how to thoughtfully increase your retirement savings contributions! Thoughtful Advisors partners with a specialized provider for individuals or households earning $100,000 or more per year. We bring Wall Street finance ethically to Main Street USA. If you could create up to 60% - 100% more income (than you could save on your own) for retirement AND immediately improve the financial security of your family, would you want to learn how? 

What is TTFI? 

TTFI is available to individuals or as a non-qualified employee benefit. It allows clients to maximize their savings dollars with the opportunity for pension-like recurring tax-free cash flow in retirement. TTFI overcomes traditional retirement issues that limit successful savings:

1. Limits on annual contributions 
2. Large contributions are simply unmanageable for many successful earners until they reach their fifties or sixties 
3. Investment market corrections and crashes impair overall returns 

Our $3 to $1 match makes the most of your savings dollars. It creates a larger savings amount that compounds so you can make up for lost time. It provides market gains without market losses. Compounding rates of returns are more efficient with downside loss floor protection.

How It Works 

Client or employee funds five annual payments to their plan. Those payments are combined with low-cost non-recourse bank financing that adds approximately 75% more to the contributions. Low-cost overfunded life insurance policy is the sole security for the loan. Non-recourse loan means the client, employee or business does not sign loan documents and has no responsibility for the loan. Thoughtfully combining low-cost bank financing with top-rated low commission insurance companies and proprietary insurance contracts, provides a much higher probability of achieving savings goals ahead of schedule, while also protecting against the “what if’s” that happen in life. 

Bottom Line…TTFI Provides: 

• More Money - substantially more tax-advantaged income for retirement years 
• More Protection - if something happens unexpectedly to interrupt savings contributions 
• More Confidence - that your retirement cash flow survives economic downturns 

Next Steps 

Contact Gary LoDuca at Thoughtful Advisors by calling 813 251-2600 or email thinking@thoughtfuladvisors.com to learn how to improve the financial security of employees or individuals and how much tax-free income could be added to retirement cash flow using this unique non-qualified retirement plan solution.

This content and information was created by a third party and not The College. The College assumes no legal liability for the accuracy, completeness, or usefulness of any such content and information and the views expressed therein do not necessarily represent the views of The College.