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Estate Planning Wealth Management Business Continuity Making Retirement Work

Page 16 | Friday, October 21, 2011


Pop Quiz:

TEST YOUR FINANCIAL SAVVY Procrastination is one of the main ways the average Joe and Jane get in trouble with their finances. Break the bad habit – starting now! Answer these basic questions and see how you rate.





According to actuarial charts, how many years can you expect to live?



c. 66 d. 68



What percent of a retiree’s income will be spent on healthcare, on average? a. 5 percent b. 10 percent c. 25 percent d. 20 percent

Income taxes go away after a worker retires. True or false?





How many years, on average, will a U.S. citizen spend in retirement? a. 10 b. 15 c. 20 d. 25

What percent of early baby boomers, age 56-62, are expected to run out of money to cover basic retirement living expenses? a. 17 percent b. 23 percent c. 42 percent d. 47 percent


QUESTION 7 Registered Investment Advisor. Licensed Representatives Offer Securities Through KMS Financial Services Inc. Member FINRA & SIPC.

True or false?

If you die without a will, your surviving spouse will be granted all or most of your assets.


Minimize Taxes Owed and Maximize What You Leave to Your Loved Ones






Your credit score is: a. a snapshot of your credit risk b. an objective measurement used by lenders c. available to you on request d. all of the above

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a. b. c. d.


You can improve your credit rating by: correcting inaccurate information as soon as possible disputing negative information correction on the worst report asking that negative information not be included in your credit report

Answers 1. The U.S. Social Security Administration estimates that a man reaching age 65 today can expect to live, on average, until age 83. A woman turning age 65 today can expect to live until age 85. To calculate your expected lifespan, go to: 2. C: 66 years old. 3. D: 20 percent. 4. False. Pretax money a worker contributed to a retirement plan is subject to income taxes when it’s withdrawn during retirement years. 5. S: 20 years. 6. D: 47 percent. 7. False. Every U.S. state has unique laws governing who will own the property. To calculate the outcome in your state, go to 8. C: Handling risk. 9. D: All of the above. 10. A: Correcting inaccurate information as soon as possible. CTW Features




Planning to sell your business and financially retire? Here’s the Bullet Point Approach By Bill Pearsall



T DOESN’T MATTER if every penny is pinched. A calamity can arrive unannounced and wipe out any family’s financial security. The only way to ensure protection is to start paying attention to the invisible risks that could lie ahead.

he publisher said, “Tell us everything you know about planning to sell but tell it in less than 500 words and don’t use a lot of syllables.� After the first 1,000 words I decided, Bullet Points are the answer. Not all the answers but some thought starters.

It’s not easy, though, to get a focus on the insurance protection a family really needs – and can afford.

Years, Dollars or Business Goals? Define your objectives. “I’ll sell when I’m 60 or when I have enough bread to retire or when I’m number one in the state.� Then ask yourself, “If I had the dollars now, would I care about the years or the business goals?�


LIFE INSURANCE Even the financially unsophisticated have heard about life insurance, an insurance policy that pays a sum to a spouse, or provides for children or other dependents should one suddenly pass away. In fact, that’s the central reason to buy life insurance: to replace the income dependents would need.

Visit the Social Security website at to learn more about disability programs.


“Term� life policies are the least expensive, which is why it’s often the choice of young adults who have responsibilities, such as kids and a mortgage, but not a lot of extra cash. The premiums for term life insurance only pay out should you die during the specified period.

In our aging society, nearly everyone knows someone who needs years of nursing care, which can quickly put a drain on life savings. Fortunately, as long-term care needs become more prevalent, insurers are offering more way to insure against the cost.

“Permanent� life insurance pegs a portion of each premium payment as savings, which the insured can borrow against – or in some instances, withdraw from – to pay for certain expenses.

The cost of long-term care plan varies, depending on the amount of coverage and whether home, assisted-living and nursing care are included.

Permanent insurance comes in two main types: Whole and universal. Premiums for whole life policies tend to stay level, while premiums for universal policies allow you to elect to pay certain minimums, with a lesser investment build-up over time.


DISABILITY INCOME INSURANCE Death is certain. But none of us know whether an accident or serious illness will prevent us from working for a prolonged period. According to the Insurance Information Institute, 43 percent of workers between ages 40 and 65 will suffer a disability that causes an earnings disruption of at least 90 days. The Social Security system has a disability benefit program and many lower income workers depend on this.

Paying for health insurance and saving are two of the biggest financial challenges families face. If you purchase a high-deductible health insurance plan – either on your own or through your employer – you may qualify for a health savings accounts, paying less for premiums and building savings. Briefly, because deductibles are high – for 2010 and 2011 it’s at least $2,400 for families – monthly premiums are lower. An employee can contribute to a tax-advantaged savings account and tap it to pay the deductible when needed or keep on saving, perhaps for retirement health expenses. CTW Features

t,OPXMFEHFJTQPXFS Don’t guess. Find out if you can meet your dollar objectives or need more time and more effort. Learn what your business is worth and take the valuation along with your personal balance sheet to an unbiased “Fee Based� financial planner. The planner will include your Real Estate, insurance policies, Social Security issues and the cash in your sock drawer and not try to sell you anything. Don’t guess. Research your position in the market place and in your industry. Bring your CPA into the loop early to advise you on Buy/Sell tax issues.

Update job descriptions, policy & procedure and employee manuals.

t*ODSFBTFZPVSWBMVF The valuation you bought in the second bullet point should have some good indications of areas for improvement. Reduce the dependency on you and your largest customers and suppliers. Work on diversifying and work on eliminating yourself. Make yourself a Semi-Absentee Owner. Retire in place. Implement some of the growth plans from your “Buyer’s eyes� list. Don’t defer purchases. Make business decisions like you were keeping it forever.

t1SPUFDUZPVSTFMG What are you personally guaranteeing? The building lease? The supplier accounts? Service agreements? Vehicle or equipment leases? Your AP clerk’s apartment? Longterm warrantees? Step up and pay a few hundred dollars to have these and other risks assessed by your business attorney. If you don’t have a Biz Attorney then get one. A few hundred here can save you thousands.

Tip: Look at your business through a Buyer’s eyes.

t-PPLBUZPVSCVTJOFTT UISPVHIB#VZFSTFZFT Business Buyers are very different from Business starters. Entrepreneurs start businesses and re-entrepreneurs buy and grow to the next level and beyond. So look at your business through the eyes of a Buyer. Make a list of what you would do to grow the company if you were stepping in with another ten or fifteen years on your clock.

t$MFBOJUVQXSJUFJUEPXO Identify the warts. Clean up and organize your financial records and State & Fed Tax Returns. Update employee records, customer & supplier files. Get rid of obsolete equipment and inventory. Sweep up.

t4FMMJOH*OTJEFPS0VUTJEF After completing all of the above. Start thinking about potential Buyers. Look inside first. If you have a family member or employee with the desire and skill-set to take over then consider using an Intermediary as a neutral party to manage the succession including arranging financing. Keep the transaction at arm’s length. Self-marketing a business to outside Buyers is not for the faint of heart. A properly prepared business will draw well over a hundred inquiries and less than ten will be qualified. Make sure that you have achieved ‘retired in place’ status so you will have the time to work on the Buy/Sell process. Get referrals from your CPA and Biz Attorney and interview a few Business Brokers.

William E. Pearsall, P.S. is a Business Broker and affiliated with Harvest Business Services in Bellevue. Bill’s firm focuses on exit and retirement planning for small business owners with sales revenue from under $1 million to over $10 million. Pearsall can be reached at or 425-865-9802. 'BYtXXXICTBEWPDBUFTDPN


Genuine financial security often includes a few safety nets. Here’s an intro to insurance options to get on the road to feeling secure.

Friday, October 21, 2011 | Page 17

Page 18 | Friday, October 21, 2011




he current economic and market environment has prompted many Americans to rethink their retirement strategies. If you are experiencing a job transition— particularly if the transition is unplanned and unexpected—such a reassessment may be particularly important for you. While it may be tempting to focus more on your immediate needs, you should not lose sight of long-term goals, especially your retirement strategy.

Some Basic Decisions Your employer-sponsored retirement plan is likely to be a key component of your retirement strategy. Because it represents a key source of future retirement income, it is important to carefully consider your alternatives for administering these assets. During a job transition, you will usually have three options: take a lump-sum distribution, leave your assets in the employer-sponsored plan or move your assets into a Rollover IRA. Taking a direct, lump-sum distribution—With this option, the assets in your plan are distributed directly to you in a lump sum, which provides you with immediate access to your funds. Depending on your short-term needs, that may appear to be an attractive alternative. However, a distribution will likely result in substantial federal and state income taxes and, if you are under age 59 ½, a 10% IRS penalty tax, which can significantly reduce the amount of the distribution. Because you will be receiving the distribution directly, the plan administrator must withhold up to 20% of the value of the distribution for federal income tax purposes. Moreover, you will lose the benefit of the tax-deferred status of these assets, which could reduce the amount ultimately available to you at retirement. The status quo option—You can decide to do nothing, leaving your assets in your former employer’s plan. That will protect the tax-deferred status of your assets and allow you to transfer the account assets at a later time to a new employer’s retirement plan that accepts rollovers. But you may be limiting your investment choices and control because employer plans typically have a restricted investment menu and require the consent of your spouse before you can name someone else as a beneficiary. Establishing a Rollover IRA—A Rollover IRA simultaneously addresses the issues of taxation, flexibility and control, and may hold significant benefits for you as a result: t If your distribution is transferred directly to a custodian, rather than to you, the Rollover IRA eliminates the withholding requirement and penalties that may result from a lumpsum distribution.


t The entire rollover amount can be invested immediately, according to the strategy you specify. t Your assets and any earnings continue to have the potential to grow tax-deferred until you retire and begin taking withdrawals. t You may gain access to a wider range of investment options and more retirement planning and distribution flexibility. t You can name any beneficiary, including a trust, without needing the consent of your spouse (although special rules may apply in community property states). For example, investment products in an employer plan are usually limited to mutual funds and company stock. With a self-directed Rollover IRA, you can work with your financial professional to structure a portfolio using stocks, bonds, annuities and other investments utilizing an asset allocation1 that is customized to help you meet your retirement investment objectives. And your retirement strategy can be further tailored with a wider range of beneficiary selection and distribution choices. Keep in mind, leaving your assets in a former employer’s plan does have some benefits. For example, many qualified retirement plans include loan provisions that are not available with an IRA, but may still be available to you. And you should look at the costs associated with any investments you may be considering because it could be less expensive for you to leave your assets in the former employer’s plan.

Consider Consolidation However, this may also be an excellent time to deal with multiple IRAs you may have opened over the years, and with account balances you may have left in the plans of former employers. Together, these assets may represent a significant sum. There are good reasons to consider consolidating them all in a Rollover IRA: Comprehensive investment strategy—It can be difficult to maintain an effective investment strategy—one that accurately reflects your goals, timing and risk tolerance—when assets are spread among multiple financial institutions. When you consolidate, your financial professional can help you ensure that these assets are part of your overall asset allocation strategy that is reflective of your current financial situation and long-term retirement goals.

Greater investment flexibility—A self-directed IRA generally offers you the ability to choose from a wide range of investment products, including stocks, bonds, mutual funds, annuities and more. Simplified tracking—It is easier to monitor your progress and investment results when all your retirement savings are in one place, because you will receive one statement instead of several. That simplifies your life while protecting the environment. Lower costs—Reducing the number of accounts may also reduce your account fees and other investment-related charges. Dealing with one account rather than several also simplifies the distribution process—including complying with complex minimum distribution rules when you reach age 70½. And you avoid the risk of losing track of your retirement accounts or access to the account assets should your former employer merge with another company or go out of business. Your financial professional can help you assess your alternatives so you can make decisions based on what’s best for you. You may find that this time of transition holds benefits for your retirement assets.

For More Information If you would like to learn more, please contact: The Cox Shook Harsch Group at (206) 926-1027 Visit our website at TheCoxShookHarschGroup/

Asset Allocation does not assure a profit or protect against loss in declining financial markets.

Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Smith Barney Financial Advisors do not provide tax or legal advice. This material was not intended or written to be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Individuals are urged to consult their personal tax or legal advisors to understand the tax and related consequences of any actions or investments described herein.

Article by Morgan Stanley Smith Barney LLC. Courtesy of your Morgan Stanley Smith Barney Financial Advisor. © 2011 Morgan Stanley Smith Barney LLC. Member SIPC.


Friday, October 21, 2011 | Page 19

What a Widow needs to Know


The death of a husband launches many women into uncharted territory: financial planning


LTHOUGH WOMEN generally outlive their spouses, it’s still common in this day and age for husbands to handle long-term financial planning with little or no involvement from their wives. Once widowed, women often find that financial advisers who did business with their husbands fail to address their concerns. In fact, 70 percent of widows considered firing their advisers within three years of their husbands’ deaths, according to research by Minneapolis based Allianz Life Insurance Co. Some women cede control not only because they’re over whelmed by the estate settling and grieving processes but also because they doubt their abilities when it comes to “high finance� says behavioral psychologist Matt Wallaert, the lead scientist at Thrive, a New York based financial management Web site (JustThrive. com). Women routinely handle day-to-day household finances such as paying bills and managing bank accounts, but due to lack of exposure they tend to under estimate their investment-management capabilities. When put to the test, though, women usually know more about investing than they think they do. The basics of financial planning can be learned. Meanwhile, newly widowed women should make it clear they intend to retain control over their investments, that they’ll make adjustments in their own time and that they won’t tolerate strong-arm tactics or dismissive

treatment. Take six months to a year to reassess relationships with advisers, lawyers and accountants. A widow’s first order of business when working with an adviser is calculating how much it will cost her to live. The adviser should provide her with a list or records she needs to assemble. She might want to take someone with her who’ll ask questions that don’t occur to her. Before inviting a family member, she should consider whether that person’s interests might be selfserving. She should take notes and ask that any recommendations be put in writing. It’s a difficult time; things go in one ear and out the other. A widow also should find our whether the adviser has an assistant who can answer basic questions. That way, she’s less likely to feel like a burden or like she’s being ignored in the event the adviser is busy with other clients. Initially, the goal is to make sure the widow has sufficient income to pay her current expenses.


Get multiple, certified copies of the death certificate.


Find the will and any trusts.


Find any life insurance, including company insurance and put in a claim immediately.


Inventory the safety deposit box.


If you’re covered under your spouse’s company health insurance, find out immediately about keeping the policy.


Find the rest of the assets (including deeds, securities, bank accounts, retirement accounts, stock options) and liabilities (including mortgages and debts).


Pay all bills on time if they relate to your personal life.


Claim any benefits you’re entitled to.


Call your spouse’s employer to see how much money is due and follow up with a letter. Source: “Making the Most of Your Money� by Jane Bryant Quinn (Simon & Schuster, 2010)

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Page 20 | Friday, October 21, 2011


An Estate Plan… Who, Me?

You don’t need to live in a fancy house in a gated community to have an estate. Establishing a solid financial plan, with documents that govern what you own and bequeath, is key to moving ahead in life with confidence and security.


EOPLE TEND TO delay or avoid estate planning as though drafting a will might somehow hasten their demise. But thought of another way, estate planning actually prolongs one’s presence among the living. An estate plan allows for calling shots from the grave. The value of property at the time of its owner’s death is an estate. Estate planning begins by taking inventory of someone’s assets, including investments, retirement saving,

insurance policies, real estate and business interests, and then deciding to who these assets should go. Individuals also must decide who should handle financial and medical affairs if they are incapacitated and ask if they’ll serve as financial and health care power of attorney, respectively. It’s smart to work with a qualified lawyer to create the legal documents that govern the process of protecting the estate and passing along assets as planned. Take time to get educated on the basics

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before choosing a professional and sitting down to work on a plan.

A WILL The centerpiece of a comprehensive estate plan is a will. The reason a will is important, regardless of net worth is so assets go to the right people, says Alexandra Armstrong, certificated financial planner with the Washington, D.C. based investment advisory firm Armstrong, Fleming & Moore. Die without one, and in most cases each state applies its standard formula to decide who gets what, without regard to wisher or the needs of heirs.

A LETTER OF INSTRUCTION A letter of instruction to survivors includes bequests not specified in the will, including sentimen-

tally valuable possessions like Grandma’s china and the oil painting over the mantel. Here’s where to communicate to family members the type of memorial service wanted, including ‘in lieu of flowers’ specifications and wishes to be cremated or buried.

A LIVING WILL A living will or advance medical directive spells out wishes regarding life support or medical intervention and care. For someone in a coma who does not want to be kept alive on life support, a living will spells that out. A health care proxy names a person to carry out those wishes. A lawyer can create this document. Keep signed, witnessed copies at home; give signed copy to those entrusted to make decisions. Because of strict privacy rules that govern doctors and hospitals set for the by the Health Insurance Portability and Accountability Act. A HIPAA waiver also should be considered. This lets people name individuals with whom health care providers can discuss conditions and care. Unlike a power of attorney, folks named in the waiver are not entitled to make medical decisions on someone else’s behalf.

POWER OF ATTORNEY A durable power of attorney names a person to act on an individual’s behalf in financial matters: investing money, signing checks, selling real estate. Keep a signed copy handy and give on to the person designated.

A TRUST In some cases, individuals decide to create a trust, which puts conditions on how and when assets will be distributed. Trusts are designed to achieve different goals. Often, they allow the wealthiest among us to reduce estate taxes. They can also be used to hold money for underage children; provide care for disabled children; or equalize inheritances. A financial adviser can help determine whether it makes sense to set up a trust. Keep in mind that retirement accounts such as IRA and 401k plans, have designated beneficiaries apart from what it says in someone’s will. So it’s important to review and amend these accounts periodically - along with a will, pensions plans and life insurance policies – especially if marital status changes.

to six months’ expenses is also a key component of an estate plan. Settling an estate doesn’t happen overnight and meanwhile a surviving spouse needs something to live on, a cash reserve to carry them through. A final and crucial step in estate planning is assembling pertinent documents (see below) and making sure a survivor is aware of and has access to them. You’d be surprised by the number of life insurance policies that are issued but never paid because the survivors don’t even know they exist. Keep original documents in a bank safe deposit box and a set of copies at home. It’s important to designate a signatory who is authorized to unlock the box in the event we die; otherwise, a court order must be obtained.

GET ORGANIZED Assemble and store these documents in a bank safe deposit box and/or a fireproof safe to which a trusted individual besides your spouse has access.


Will, trust agreements and letter of instruction


Contact information for advisers including attorney, accountant, financial planner and stockbroker


Powers of attorney (financial, health care)


List of retirement, bank and brokerage accounts with PINs


Investment documents (certificates of deposit, stock certificates, etc.)


Life insurance policies


Health and long-term care insurance policies


Social security and pension information, and military discharge papers (if benefits transfer to survivors)


Marriage certificate

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John and Mary Smith have a problem â&#x20AC;&#x201C; a gifting problem. Their wants and desires are to provide for their children and they also want to give to charity. The purpose of this article is to discuss two alternatives that provide for the Smith children as well as satisfy the Smithâ&#x20AC;&#x2122;s charitable desires.



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he first alternative is to have a number of ways they can make establish a charitable lead their contribution to charity. They can trust (CLT). A CLT is a trust give assets outright â&#x20AC;&#x201C; directly to the arrangement where the in- charity â&#x20AC;&#x201C; or they can establish several come for a specified number of years types of trusts (including the CLT as is paid to charity. After the specified described above). The life insurance number of years has elapsed, the trust part is a bit trickier. The goal is to distributes to their children. The char- have the proceeds from the life insurity gets the lead interest (the income) ance not included in the estate of eiand the children receive the assets ther Mary or John. To avoid inclusion after a certain length of time. If the in their estates they must have no inCLT is established while the Smiths cidence of ownership. In order to acare alive, there is a complish this goal, the gift. But the value Smiths will need to esof the gift, for gift tablish an Irrevocable But what is clear tax purposes, is Life Insurance Trust is that the Smiths determined by sub(ILIT). The ILIT will tracting the value purchase the life incan make their of the charitable surance and make the charitable donations interest from the premium payments. fair market value of The money for the preand still provide for the property used mium payments will their children, their to establish the ultimately come from childrenâ&#x20AC;&#x2122;s children CLT. By adjusting John and Mary. This the charitable paycash contribution is a and so on. out and the length taxable gift. However, of time the trust is by giving the benefiin existence, the value of the gift, for ciaries the right to withdraw the cash gift tax purposes, can be reduced to a contribution, the contribution will be minimal amount. If the Smiths were a gift of a present interest and qualify more interested in providing for their for the annual exclusion. When John grandchildren, the terms of the CLT and Mary die the proceeds from their could specify the assets go to their life insurance will pass according to grandchildren. Or the Smiths could the terms of the trust document; in mix the distribution of assets between this case to their children. their children and grandchildren. These two alternatives provide a The second alternative is to give as- rudimentary description of what is sets to charity and cover the value of available for the Smiths. There are nuthose assets with life insurance. The merous variations on the theme. But objective is to have the dollar value of what is clear is that the Smiths can the assets given to charity be replaced make their charitable donations and with the dollar value of the life insur- still provide for their children, their ance. Using this technique, the Smiths childrenâ&#x20AC;&#x2122;s children and so on.

Gary Holcomb is an estate tax expert at Berntson Porter & Company, PLLC in Bellevue, WA. He can be reached at 425-289-7636 or

Page 22 | Friday, October 21, 2011


“Making Retirement Work in An Up or Down Market…”

Principle #2 - Taxes are Likely Your Biggest Retirement Risk

Let’s begin our discussion looking at the 3 basic investment questions folks near retirement typically ask. 1) Do I have enough money to last as long as I do? 2) Are my investments appropriate for retirement? 3) How do I take money out of my accounts to provide an ample income? Since everyone’s situation is different I can’t give specific investment advice here, but there are four important principles that we can apply in answering those questions.

Principle #1 - You Can’t Invest Just for Income Advisors talk about two phases of investing; accumulation while working and distribution during retirement. At retirement, the goal and strategies

inflation rate after you’ve taken out what you need for retirement income, in order to provide future incomes that keep up with the ever increasing cost of living.

BY RAY EADS change from growth to income. Today people are likely to live much longer than they anticipate. Forget whatever the life expectancy number is; instead look at the IRS chart for mandatory distributions from an IRA. It says that for a 70 year old couple, one of them is likely to be taking IRA withdrawals at age 97. That’s a 30 year retirement and 20 years past life expectancy. Even with a modest inflation rate, the cost of living could more than double during retirement. So, your portfolio needs to have a growth component.

Many retirees are going to forfeit 2030% of their investment returns every year to the IRS. That loss, however, can be reduced with proper planning. People should consider things like spending principle. It’s tax free. An immediate annuity, for example, provides a consistent and guaranteed income that is nearly income tax free, by distributing both principle and interest over the life of the policy. Also consider spending already taxed investment like a CD and delaying as long as possible taking income from tax-deferred accounts like an IRA or deferred annuity. Spend taxable accounts first and let tax-deferred accounts grow. Remember, you’ll need growth to provide that larger income later. I’ve seen people who take money out of their IRAs and let bank accounts accumulate which means they are unnecessarily paying taxes on both and are consequently pushed into a higher tax bracket.

Principle #3 – Lifestyle Choices Your investment goal should be a port- Make an Impact folio that is growing by at least the

Too often we look just at the money side and ignore the really important

question of, “What do I want my life in retirement to look like?” It’s only after you have a clear picture of what you want retirement to look like that you can figure out what it’s going to cost and consequently how to structure your investment portfolio. Also, look at your retirement budget and decide which expenses are mandatory, like the utility bill, and which are discretionary, like a Hawaiian cruise. Discretionary expenses can usually be put off until a year that your investments perform particularly well.

Principle #4 - Leaving a Legacy/ Inheritance Changes Everything If it’s not important to you, follow the advice from the bumper sticker that says, “Spend your kid’s inheritance.” If it is important to you, you need to plan accordingly. Some people make provisions in their wills while others make gifts during their lifetime. It’s just something that you need to think about because if could affect your retirement income. It’s always about planning.

Ray Eads is an Accredited Investment Fiduciary with Wealth Management Northwest, Inc., in Lynnwood. He can be reached at (425) 672-1003 or ray Securities offered through KMS Financial Services, Inc. member FINRA & SIPC

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Friday, October 21, 2011 | Page 23

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Page 24 | Friday, October 21, 2011



Kit and Frank Klein move several seniors every year. A FREE Home Warranty is provided for every listed property for seniors.

CALL for private planning Kit and Frank Klein Kit: 206-719-8749 Frank: 206-714-8729

Provided By Dave Griffith, Northwestern Long Term Care Insurance Company


omen experience extra The costs of such care can be overchallenges in life unique whelming, even for those prepared.* to their half of the popu- Typical safety nets, such as Medicaid, lation, one of them be- may not cover the entire cost, even afing their longer life span. The average ter you are able to qualify. And while woman can expect to live to age 80.2, Medicaid will pay for certain types which is 6.8 years longer than a man.1 of long-term care, eligibility usually Add to that the fact that in our society comes only after contributing most of today, experts say, for any income you rethe first time, more ceive and exhausting women are living A womanâ&#x20AC;&#x2122;s longer life means most assets. without a husband she has an increased chance For an ever-growing than with one.2 number of people,

of suffering a chronic illness

A womanâ&#x20AC;&#x2122;s longer long-term care inlife means she has which requires care. surance has become an increased chance Long-term care insurance is an essential part of of suffering a chronretirement funding. ic illness which re- fundamentally a womenâ&#x20AC;&#x2122;s And there are many quires care. This fact issue. How will you be cared factors to consider alone raises queswhen choosing a tions around who for if you become unable to long-term care insurwill provide care in do simple things, such as eat, ance policy. For this your later years, and dress, use the bathroom or reason itâ&#x20AC;&#x2122;s important at what price? Who to work with a prowill decide these is- get in and out of bed alone? fessional who undersues? By including Could you do these things for stands your needs long-term care planand can design a ning in your retire- someone else and still work policy that gives you ment plans, you can and take care of yourself? the best protection provide answers to you can afford. some of these quesItâ&#x20AC;&#x2122;s also important to look at the track tions and maintain some control over record of the company providing the the long-term care options. insurance. To ensure that coverage will Potential risks ahead The high cost of long-term care makes it imperative for women to learn what potential risks are ahead and to plan accordingly for those risks. As a woman in America today, you also need to consider in your planning whether or not you are likely to become a caregiver. Sixty-one percent of caregivers in this country are women, mostly middle-aged. However, 13 percent are age 65 or older.3 Women are at greater risk of bearing the costs â&#x20AC;&#x201C; financial, physical and emotional - associated with providing care to others. For these reasons, long-term care insurance is fundamentally a womenâ&#x20AC;&#x2122;s issue. How will you be cared for if you become unable to do simple things, such as eat, dress, use the bathroom or get in and out of bed alone? Could you do these things for someone else and still work and take care of yourself? Article prepared by Northwestern Long Term Care Insurance Co. with the cooperation of Dave Griffith. Dave is a Financial Representative with Northwestern Mutual, based in Bellevue. A financial representative is a licensed insurance agent. He is licensed and appointed to sell long-term care insurance for Northwestern Long Term Care Insurance Co., Milwaukee, WI, a subsidiary of Northwestern Mutual Life Insurance Companyâ&#x20AC;&#x201D;Milwaukee, WI. Northwestern Mutual is the marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company (NM), Milwaukee, WI, and its subsidiaries and affiliates. To contact Dave, please call 425 455 0156 or email him/her at Northwestern Long Term Care Insurance Companyâ&#x20AC;&#x2122;s long-term care insurance policy contains exclusions and limitations. Northwestern Long Term Care Insurance Company and the Northwestern Mutual are not financially responsible for products issued by The Northwestern Mutual Life Insurance Company.

be there when you need it most, make sure the company is well established, with a solid history of treating its policyholders well. Choose a company that has been given the highest possible ratings for financial security from the insurance rating services. And buy early, while you are still insurable and premiums are more affordable in your 40s and 50s. The plan you establish now can spare you and your family the anguish of depleting your assets to pay for your or their longterm care. By planning ahead, you can reduce the risk of losing your independence and help ensure your continued financial security to live your life your way. *For more information on Long-Term Care, visit

The purpose of this material is for the marketing and solicitation of insurance. Insurance Policy forms RS.LTC (0708) and RS.LTC.ML.(0708). Policy form RS.LTC.ML (0708) is only available in NJ, NY, OH and PA.

1. Statistical Abstract, 2009; Printed copies available upon request. 2. Sam Roberts, â&#x20AC;&#x153;51% of Women Are Now Living Without Spouseâ&#x20AC;? New York Times, published January 16, 2007. 3. U.S. Department of Health and Human Services, National Womenâ&#x20AC;&#x2122;s Health Information Center, Printed copies available upon request.



Friday, October 21, 2011 | Page 25

Business Continuity: Making Sure Your Business Continues If You Do Not




Loan Officer # MLO-110348

425.635.4794 Payments and rates listed are meant as a tool for real estate professionals and are not considered specific quotes. Rates and payments vary based on each borrower; payments are stated before tax and insurance. All rates are quoted with a 55day lock period as of 10/11/2011; and full income disclosure to qualify; rates are based on a 700 mid score, $750,000 loan amount at 75% loan to value. Reserves required. Rates and programs are subject to change and full lender approval. Individual(s) listed are employees of Legacy Group Lending, Inc., NMLS ID #4455. For state specific licensing information visit Affiliated companies: Legacy Group Capital, LLC NMLS #999045, Legacy Group Escrow, LLC License # 540-EA-40580.


Business continuity planning is a means of handling a variety of transfer events and consequences that impact the business and the remaining, or new, owner(s) when you, the original owner dies. It is about preserving and protecting the business and your legacy. Succession is the most obvious problem facing a company but it is only one of four vital issues. BY ALLAN VANDERHAMM

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This is the critical issue in a solelyowned company. In fact, there is no continuity unless you take steps to create a future owner or ownership group. For multi-owner companies, continuity of ownership is not an issue when signed owner transfer agreements are in place and funded with life insurance. To ensure continuity, create and implement a written plan to allow the business to continue after you are gone. Do everything you can to prevent key employees from leaving because they are indispensable to the businessâ&#x20AC;&#x2122;s continued existence. If you are a multiowner company, be sure there is an up-to-date, adequately funded buy/sell agreement for the remaining owners to acquire your interest in the business.

COMPANYâ&#x20AC;&#x2122;S LOSS OF FINANCIAL RESOURCES If you are a principal source of funding for your multi-owner company, your unexpected absence can put enormous pressure on the business to perform or face the risk of third parties refusing to lend or make guarantees on behalf of the company. For a sole owner, the business may not survive despite a plan. An ownerâ&#x20AC;&#x2122;s sudden death or incapacity can cause other stakeholders such as banks, bonding companies, and leasing companies to discontinue their relationships. These challenges can best be met in two ways. First, use life insurance to fund for the anticipated need. Second, start now to develop successor management. Motivate them with current and deferred cash and/or ownership should something happen to you. The only way to make the business continue without you is to make the business be more than just you.

LOSS OF KEY TALENT â&#x20AC;&#x201C; YOU Your talents, experience, relationships with customers, employees and vendors may be quite difficult to replace. Without planning, few businesses have the finances or successor management to weather this storm. To overcome this risk you must create value now, within the company and distinct from you, capable of filling the void left by your unexpected departure. In a co-owned business the loss of an owner is not as drastic, provided your co-owner(s) can carry on without you. If not, train employees now to perform the same, or parts of the same, roles as you.

LOSS OF EMPLOYEES AND CUSTOMERS A common consequence of an ownerâ&#x20AC;&#x2122;s unexpected departure is the speedy emigration of employees and customers. When the workforce leaves, contracts cannot be completed and are breached, work is unperformed and creditors call in their paper. Only preplanning provides a chance to preempt these scenarios. Employees must know that a plan exists that guarantees their compensation and clearly names your successor. With these assurances, most employees and customers will stay with the company.

CONCLUSION In order to survive your demise, your company must have adequate cash, which is almost always subsidized by insurance on your life, to survive. In the short run, money is required to effect a buy-out, provide capitalization, replace your balance sheet with respect to lenders, and provide cash incentives to entice your employees to stay. In the long run, a successful business is one you can either sell for top dollar and exit in style, or one that can survive, in style, your exit.

Allan VanderHamm is a Principal at Berntson Porter & Company, CPAs and Consultants, in Bellevue, WA. He is a specially trained expert in owner exit planning, business transactions and business valuation. Please contact Allan VanderHamm, CPA/ ABV, CVA, CM&AA, CExP at 425-289-7613 or for a confidential, complimentary discussion.

Page 26 | Friday, October 21, 2011


â&#x20AC;&#x2DC;Twas the night before Christmas, When all through the house not a creature was stirring, not even a mouse; The stockings were hung by the chimney with care, In hopes that St. Nicholas soon would be there!

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Planning for the Future