Tamaños de los envases y
metaSPC 8: PT3 and PT4 – Desinfectante de superficies concentrado con yodo
Reading this chapter will enable you to:
1–9 Explain issues related to special planning needs.
pecial needs come in many forms. While many clients will have fairly consistent planning needs, there will be clients with issues that make their financial picture a little different. Some of the issues that will be described in this chapter are listed below.
divorce/remarriage considerations
charitable planning
adult dependent
disabled child
terminal illness planning
closely held business planning
Divorce/Remarriage Planning
Divorce planning is somewhat of a specialty. There are many problems that are unique to divorce. The best time to plan for divorce is prior to marriage. Of course, this sounds strange. Few people get married with the intention of getting divorced. Unfortunately, 50% of marriages do not work out, and divorce is the result. A prenuptial agreement can reduce some of the significant financial problems faced in divorce. Discussion of a prenuptial agreement may be difficult (not exactly the most romantic topic), and there are legal implications (legal counsel is required), but the conversation may be worthwhile—especially where
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large amounts of assets may be involved. If a prenuptial agreement is in place there is still significant planning that needs to occur. State laws control much of divorce planning. Some states have formulas for child support but not
maintenance. Other states have very specific rules that define maintenance and division of assets. Many states ignore basis or tax consequences in addressing division of assets. Clients can come to an agreement without representation.
Many planners find that encouraging clients to use a mediator who is knowledgeable about state laws and planning can allow a couple to create a scenario that they can both live with. Problems such as not requiring a spouse to refinance a mortgage can make the other spouse unable to secure financing to purchase a residence. Business ownership and professional practices can end up having both the value split and the income generated from the asset split, making it difficult for the business owner to create the capital needed to continue
growing the business. Who receives which asset may be important. While each spouse may receive stock with an FMV of $100,000, the one who receives the
$100,000 with a basis of $10,000 will not be as happy as the other who receives stock that has a basis of $80,000. As a planner, you need to become aware of the issues and guide clients to appropriate council, whether that is legal or mediation.
Divorce Issues
The problems associated with divorce involve three major areas: income, property distribution, and child custody. Part of determining the mix of alimony, property split, and child support will be the taxation of each of these. Therefore it will be important to create a pro-forma for each of the divorcing individuals and see how and when they may liquidate assets, their projected tax brackets, etc.
Income becomes an issue primarily because whatever income was available for the support of one household must now be used, in some manner, to support two households. The divorce agreement often provides maintenance for the spouse who earned less income during the marriage and adequate financial support for any minor children. Alimony is generally deductible to the payor and taxable to the recipient. Child support is neither taxable nor deductible but it can determine
who takes the dependency deduction for the children. There are further tax consequences and important rules to learn concerning transfer of retirement plan benefits, division of property, etc. that are beyond the scope of this course. You will learn more in Income Tax Planning.
One interesting fact that arises after a divorce is that of Social Security benefits.
When a couple was married for ten years or more, each person may choose between their own Social Security retirement benefits or 50% of those of the ex-spouse. If there has been more than one ten-year marriage for one or both of the divorcing spouses, each individual may choose the spouse’s benefits or their own; whichever is greater. More detail than this is beyond the scope of this module.
An increasing number of couples today are not in their first marriage, and more first marriages are taking place when the spouses are older. People with more life experience when they marry usually have more assets. A prenuptial agreement allows each party to be comfortable in the knowledge that each spouse can retain whatever assets he or she brought to the marriage if the marriage dissolves. However, if one spouse retitles an asset to include the other spouse, it may become a marital asset and defeat the intent of the prenuptial agreement. An individual in the throes of a divorce may make decisions based more on emotions than rational thinking. The financial planner specializing in divorce planning may be able to help steer a client away from inappropriate emotional decisions, thus maximizing any benefits to be realized and minimizing some of the emotional difficulties.
Dealing with the custody of children is generally beyond the scope of a financial planner’s responsibilities. However, if the planner is working with the custodial parent, control of finances may be critical. Child support payments are often determined by a state-established formula, so it is not likely the planner will have any input. Advising a divorced parent on how to reduce expenses and extend available funds is, however, within the purview of the planner.
In counseling clients, a financial planner must be careful not to run afoul of the unauthorized practice of law. However, a planner can make recommendations that will ease the transition of divorce, should it occur. The planner can
recommend that each person have at least one credit card in his or her name to establish a personal credit history. Each person should have a liquid cash account in his or her name instead of having all accounts in both names. Each spouse should be involved in the month-to-month finances of running the home so each has a realistic idea of the costs involved and how those costs change over the years. Budgeting that involves both spouses will help each of them understand where the couple’s funds go each month.
Remarriage Issues
Remarriage, on the other hand, introduces different issues into the financial planning process. Each spouse coming into the marriage generally is interested in having his or her heirs get their assets when they die. The names of beneficiaries on life insurance policies obtained during a prior marriage may have to be changed. Planners should be careful in this area. Many divorce settlements require that certain amounts of life insurance be maintained for the ex-spouse or for child support obligations. There are court cases in which the first spouse received the death benefits of group insurance because the original beneficiary designation wasn’t changed. This has happened even after 10 or more years of marriage to the second spouse, following a one- or two-year marriage to the first.
In general, beneficiary designations will go to the named beneficiary, which is one more important reason to request statements and review beneficiary designations every few years.
Estate planning is beyond the scope of this module. However, financial planners should become familiar with how changing property titles to include a new spouse, or to balance the estate and minimize estate taxes, may result in a loss of premarital property. When working with clients in the area of estate planning, the planner should warn clients of potential problems should there be a divorce before either of them dies.
The laws of intestacy (dying without a will) differ from state to state. This can create difficulties for persons involved in a second marriage, especially when there are children from the first marriage. Careless estate planning may
ultimately leave everything to the children of a second spouse and disinherit an individual’s children. Although the details of this issue are beyond the scope of this module, it is important that financial planners be aware of potential problems that may arise in a second marriage. You will be learning more about this area in Estate Planning.
Charitable Planning
Most clients will make charitable donations each year. For some clients, this is an important part of who they are. For those clients, learning how to efficiently gift assets, such as appreciated stock versus cash, bundling contributions to offset large gains, and use of various techniques that can allow a client to make substantial gifts while meeting their own goals requires special expertise. You will learn more about the taxation issues in income tax planning and estate requirements in the Estate Planning course.
Clients who are charitably inclined are often asked to remember one charity or another in their estate plan. Many well-to-do clients establish their own charitable foundations. The details of these activities will not be discussed in this module, but a competent financial planner will recognize charitable giving as an
important part of some clients’ financial plans. At a minimum, it requires provisions in the will, and may require specialized trust documents as well. In addition to helping a client find the appropriate professional to help design and implement charitable giving plans, a planner can help the client balance
charitable giving with the need to meet basic family financial obligations. Gifting will be covered in the Estate Planning course of this program.
Needs of the Dependent Adult or Disabled Child
In addition to their other financial concerns, clients who support dependent adults or disabled children generally are concerned about what will happen to these individuals if they are not around to take care of them.
While the parents or children who provide the support are alive, they can provide much of the needed care. They can also seek out required services.
Unfortunately, there are often needs that can only be met by a person who is dedicated to supporting the adult dependent or the disabled child, or by a paid support person. Paying for support services is often quite expensive. In many cases, families establish special trusts to take care of dependent individuals for as long as they live. A trust that meets certain requirements may still allow the dependent person to receive state-provided support without having to be totally impoverished. The planner can recommend an expert lawyer to prepare this trust.
Beyond the legal requirements, having a potential life-long dependent can change the type and amount of life insurance purchased and the amount of disability coverage needed. Whole life that will be there even if the parent lives to 110 may be important. The planner will need to carefully assess the life expectancy of the dependent, potential medical expenses, possible long-term care needs, the financial support, and living requirements that will be needed in addition to routine data gathering.
Terminal Illness Planning
Terminal illness planning is difficult for everyone involved. The person who seems to have the easiest time with it is often the one who is terminally ill. Most family members will not want to talk about estate plans, business continuation, charitable issues, funerals, or financial decisions when facing the death of a loved one. This is the time, however, that these issues must be discussed. One big advantage of discussing them at this time is that, for the most part, circumstances that will exist at death are known. Individuals drafting a will attempt to determine what they want to happen when they die, not knowing which family members will still be alive, and not knowing many things that might affect their wishes.
While decisions made during the dying process may be quite emotional, at least the wishes of the terminally ill person can usually be known. This is a critical time to make sure all legal documents are completed, current, and accounted for.
After death, the ill person’s input is unavailable, and for some time, emotions will make decision making more difficult and possibly quite costly.
Another issue that occurs during this stage is that clients and families are so consumed with medical care and estate planning that they may ignore and miss opportunities. For example, most employer group term insurance can be
converted to permanent coverage without insurability if done so within 30 days.
Some disability policies also have this conversion clause. The rates will be more than a normal person would pay but would have great benefit for the terminally ill person. Missing the deadline for conversion can be a very costly mistake. The same problem can occur if the person who is ill is normally the one to pay bills and handle financial issues. Many life insurance policies have lapsed just prior to a client’s death because the check was not put in the mail in time. As a planner, you can help the family avoid some of these pitfalls. That same pitfall can happen to long-term care policies without adequate protection. Many policies will allow the client to set up automatic notification if a payment is missed to a third party.
Closely Held Business Planning
Most closely held businesses fail to survive their founder because no succession planning is done. No one knows who is supposed to run the business, and to make things “fair” to everyone, the founder often lets everyone share equally in the business when he or she dies. Unfortunately, this generally leads to
disagreements as to how the business ought to be run, or whether the business should be sold. Too often, the bickering continues long enough that the business fails and the decedent’s lifetime of work becomes worthless.
While the details of planning for closely held businesses are beyond the scope of this module, it is important for planners to recognize that a client who owns a closely held business has additional financial considerations. Most businesses will fail without adequate planning and adequate legal documentation. A planner who does a good job can assure the client that the business will live on even after the client dies and that the value of the business can be received by the family.
Summary
he material in this module provided a comprehensive overview of the financial planning process. It also introduced the basic financial statements. Above all, the material in this module communicated the importance of gathering adequate information and recognizing the many different issues that a financial planner may face when counseling clients.
Having read the material in this module, you should be able to:
1–1 Explain the what and why of the steps in the financial planning process.
1–2 Explain the rationale for gathering specific financial information.
1–3 Construct and interpret personal financial statements.
1–4 Recommend assets appropriate for use in an emergency fund.
1–5 Analyze a client’s financial situation to identify issues related to budgeting.
1–6 Explain different forms of debt and their uses.
1–7 Explain the issues involved in the lease versus buy decision.
1–8 Identify sources and strategies for funding a college education.
1–9 Explain issues related to special planning needs.
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Before moving on to the next module, answer the Module Review Questions that follow, and check your answers with those provided (following the questions). Review the module text to help you master any learning objective areas where you are not able to adequately answer questions.
Module Review
Questions
1–1 Explain the what and why of the steps in the financial planning process.
1. Explain personal financial planning.
Go to answer.
2. Identify the functions completed in the six steps in the financial planning process.
Go to answer.
1–2 Explain the rationale for gathering specific financial information.
3. How do the goals of the client affect the nature of information gathered in the data gathering process?
Go to answer.
4. What specific information is gathered concerning each topic below, and how is it used in the planning process?
a. retirement Go to answer.
b. education or other accumulation goals Go to answer.
c. emergency reserve goals Go to answer.
d. debt management goals and concerns Go to answer.
e. investment management concerns Go to answer.
f. health insurance concerns Go to answer.
g. disability contingency planning Go to answer.
h. loss of life contingency planning Go to answer.
i. long-term care needs contingency planning Go to answer.
j. property and liability concerns Go to answer.
k. legal documents and estate planning distribution plan Go to answer.
l. anticipated changes in lifestyle, family, health or other concern Go to answer.
5. When you collect the following documents, what are you looking to learn and give an example of how it could impact the financial plan?
a. last two paystubs Go to answer.
b. three years’ tax returns including supporting documents such as W2s Go to answer.
c. cash flow statements Go to answer.
d. benefit package descriptions Go to answer.
e. copies of personal insurance policies and latest statements Go to answer.
f. investments and bank statements including retirement accounts Go to answer.
g. Social Security statement Go to answer.
h. liability contracts/debt statements including family loans Go to answer.
i. copies of wills, durable powers of attorney, trusts, pre-nuptial
agreements, divorce decrees, business entity formation, gift tax returns, and other legal documents
Go to answer.
1–3 Construct and interpret personal financial statements.
6. What is the significance of including the words “As of December 31, 201X”
in the heading of the statement of financial position?
Go to answer.
7. Describe briefly each of the three major components of the statement of financial position.
Go to answer.
8. Using a simple formula(s), describe the relationship that exists among the three major components of the statement of financial position.
Go to answer.
9. Identify items that typically are placed under each of the asset categories on the statement of financial position.
a. cash/cash equivalents Go to answer.
b. invested assets Go to answer.
c. use assets Go to answer.
10. At what value are assets usually shown on the statement of financial position?
Go to answer.
11. What is the significance of including the words “For the Year Ending December 31, 201X” in the heading of the cash flow statement?
Go to answer.
12. Identify items that typically are placed under each of the following categories on the cash flow statement. Do not include savings and investments.
a. inflows
Go to answer.
b. fixed outflows Go to answer.
c. variable outflows
Go to answer.
13. Under what circumstances would the category “Savings and Investments”
appear as an inflow on the cash flow statement?
Go to answer.
14. What is the purpose of footnotes to personal financial statements?
Go to answer.
Read the client profile below to determine what additional data you will need to gather from the client to create financial planning recommendations. Then, answer questions 15-17.
William and Nancy Webb have come to you for assistance in developing a financial plan. From your initial meeting with them, you have gathered the
William and Nancy Webb have come to you for assistance in developing a financial plan. From your initial meeting with them, you have gathered the