Having success is often related to avoid deadly wealth destroying mistakes.  In this ebook, I share ten of the most common mistakes I have seen people make over the past 16 years of my financial advising career.  Come lean and make sure you avoid these mistakes like the plague!

Big Mistake #1: Paying too much $$$ in fees

Big Mistake #2: Getting advice from the wrong places

Big Mistake #3: Choosing the wrong places to store wealth

Big Mistake #4: Failing to plan ahead

Big Mistake #5: Failing to properly account for inflation, taxes, and long-­term health care

Big Mistake #6: Spending more than you make

Big Mistake #7: Failing to properly understand risk

Big Mistake #8: Failing to save regularly

Big Mistake #9: Using debt to consume rather than to conserve

Big Mistake #10: Gambling with your assets instead of investing

Download the ebook here:

10 Mistakes Ebook

Things you can do before and for the New Year.  Your list may be long, but get started today!

The end of the year is a good time to review your personal finances. What are your financial, business or life priorities for 2012? Try to specify the goals you want to accomplish. Think about the consistent investing, saving or budgeting methods you could use to realize them. Also, consider these year-end moves.

Think about adjusting or timing your income and tax deductions. If you earn a lot of money and have the option of postponing a portion of the taxable income you will make in 2011 until 2012, this decision can bring you some tax savings. You might also consider accelerating payment of deductible expenses if you are close to the line on itemized deductions – another way to potentially save some bucks.

Think about putting more in your 401(k) or 403(b). The IRS hasn’t announced the contribution limit for 2012 yet. Given the moderate inflation of late, we might see the annual limit rise to $17,000 from the present $16,500, or not. In 2011, you can contribute up to $16,500 per year to these accounts with a $5,500 catch-up contribution also allowed if you are age 50 or older. Has your 2011 contribution reached the annual limit? There is still time to put more into your employer-sponsored retirement plan.

Can you max out your IRA contribution at the start of 2012? If you can do it, do it early – the sooner you make your contribution, the more interest those assets will earn. (If you haven’t yet made your 2011 IRA contribution, you can still do so through April 17, 2012.)

We don’t yet know if the 2012 contribution limits on traditional and Roth IRAs will rise from 2011 levels. If the IRS leaves limits where they are now, you will be able to contribute up to $5,000 to your IRA next year if you are age 49 or younger, and up to $6,000 if you are age 50 and older.

Should you go Roth between now and the end of 2012? While you can no longer divide the income from a Roth IRA conversion across two years of federal tax returns, converting a traditional IRA into a Roth before 2013 may make sense for another reason: federal taxes might be higher in 2013. Congress extended the Bush-era tax cuts through the end of 2012; their sunset may not be delayed any further.

Some MAGI phase-out limits affect Roth IRA contributions. If the phase-out limits aren’t adjusted north for 2012, phase-outs will kick in at $169,000 for joint filers and $107,000 for single filers. Should your MAGI exceed those limits, you still have a chance to contribute to a traditional IRA in 2012 and then roll those IRA assets over into a Roth.

Consult a tax or financial professional before you make any IRA moves. You will want see how it may affect your overall financial picture. The tax consequences of a Roth conversion can get sticky if you own multiple traditional IRAs.

If you are retired and older than 70½, don’t forget an RMD. Retirees over age 70½ must take Required Minimum Distributions from traditional IRAs and 401(k)s by December 31, 2012. Remember that the IRS penalty for failing to take an RMD equals 50% of the RMD amount.

If you have turned or will turn 70½ in 2011, you can postpone your first IRA RMD until April 1, 2012. The downside of that is that you will have to take two IRA RMDs next year, both taxable events – you will have to make your 2011 tax year withdrawal by April 1, 2012 and your 2012 tax year withdrawal by December 31, 2012.

Plan your RMDs wisely. If you do so, you may end up limiting or avoiding possible taxes on your Social Security income. Some Social Security recipients don’t know about the “provisional income” rule – if your modified AGI plus 50% of your Social Security benefits surpasses a certain level, then a portion of your Social Security benefits become taxable. For tax year 2011, Social Security benefits start to be taxed at provisional income levels of $32,000 for joint filers and $25,000 for single filers.

Consider the tax impact of any 2011 transactions. Did you sell any real property this year – or do you plan to before the year ends? Did you start a business? Are you thinking about exercising a stock option? Could any large commissions or bonuses come your way before the end of the year? Did you sell an investment that was held outside of a tax-deferred account? Any of these moves might have a big impact on your taxes.

You may wish to make a charitable gift before New Year’s Day. Make a charitable contribution this year and you can claim the deduction on your 2011 return.

You could make December the “13th month”. Can you make a January mortgage payment in December, or make a lump sum payment on your mortgage balance? If you have a fixed-rate mortgage, a lump sum payment can reduce the home loan amount and the total interest paid on the loan by that much more. In a sense, paying down a debt is almost like getting a risk-free return.

Are you marrying next year, or do you know someone who is? The top of 2012 is a good time to review (and possibly change) beneficiaries to your 401(k) or 403(b) account, your IRA, your insurance policy and other assets. You may want to change beneficiaries in your will. It is also wise to take a look at your insurance coverage. If your last name is changing, you will need a new Social Security card. Lastly, assess your debts and the merits of your existing financial plans.

Are you returning from active duty? If so, go ahead and check the status of your credit, and the state of any tax and legal proceedings that might have been preempted by your orders. Review the status of your employee health insurance, and revoke any power of attorney you may have granted to another person.

Don’t delay – get it done. Talk with a qualified financial or tax professional today, so you can focus on being healthy and wealthy in the New Year.  Give us a call today at 866-594-9919 if we can help you plan!

A recent survey found that over 60% of women feel they are better at handling money than men are. However, married women sometimes find themselves in perplexing financial situations – conditions that might be avoided with a little planning and/or foresight. With vigilance, you can plan to steer clear of these 7 mistakes.

1. Not saving enough for retirement after marriage

If your spouse earns a huge salary and has invested avidly, you may have less impetus to save for retirement yourself. Your IRA, 401(k) or 403(b) may start to seem more supplemental than primary. Yet what happens if the relationship ends someday and you personally end up with a retirement savings shortfall? Keep contributing to your own retirement accounts.

2. Dipping into retirement savings once married

If your spouse is really wealthy or has much greater net worth than you do, your retirement nest egg may seem minor in comparison. Your spouse may tell you that with all the investments and savings that you collectively possess, you taking a loan out of your 401(k) won’t be that bad. Well, drawing down your own retirement savings could look like a very bad move 20 or 30 years from now. Who knows what changes life could have in store? Resist the temptation to siphon off your retirement savings.

3. Trusting a reckless spouse with your finances

When you love someone who is cavalier with money, look out. Beware of ceding financial control or your financial say in such a situation. If you marry someone with severe debt problems, don’t think that you will be financially immune from the effects of those problems. If your spouse is a wastrel or has a terrible credit rating, do not “hand over the keys” to the household finances. Watch what goes on with the bank accounts, investment accounts and credit cards among you– keep communication open and encourage transparency.

4. Forfeiting some or all of your financial identity

You may have taken your spouse’s name, but that does not mean you need to give up your own credit card for a shared one, merge your personal checking account into a joint one, and so forth. If you don’t use a credit card for several months or years, you won’t have to pay a fee but it could show up as “inactive” on your credit report. The credit card issuer may move to close the account, and losing the credit history of that card could hurt your credit score. Retain individual savings and investment accounts and individual credit cards.

5. Divorcing with an “equal” rather than equitable financial settlement

If a divorce happens, the impulse may be to amicably split things “50/50” … or, the focus may be on keeping custody of your kids or keeping your home with your financial potential a distant second. However, you must keep your financial future in mind.

Quite often, a woman will be instrumental in building a business or professional practice with her spouse – but she may not be a part of that successful company or professional entity after a divorce. If you divorce and have helped your spouse build a business to greater or lesser degree, you may not only find yourself out of work but taking a job that pays less or having to learn new skills to compete in the job market. Your earnings potential and retirement savings potential may be affected. If you should divorce, seek an equitable settlement that considers your future financial potential; this is even more important than retaining material wealth or real property from the marriage.

6. Losing touch with your career path

If you have happily put a career aside to raise kids, keep in mind that you might find yourself returning to work sooner rather than later. Life events, economic necessity, personal desire and growing children may all be factors. Yet a long, total absence from the workplace can make it difficult to step back in – the technology or outlook of any given field can change radically across a few short years. Try to keep a foot (or at least a toe) in your career via consulting or networking efforts.

7.  Not knowing where your accounts are held

I have met way too many widows who not only did not know where their investment accounts were held, they also were unsure how much if any life insurance was available.   Try to keep a summary document of where all of your accounts are held along with phone numbers. List out life insurance policies, where wills and other estate documents are held, and have a plan in place in the event your spouse goes before you do.

The takeaway: You can plan your financial life together, but make sure you have a plan in place to account for these 7 common mistakes.  A little planning can go a long way!   Please call us at 866-594-9919 if we can help you plan!

Companies sponsoring group health plans should be aware of the changes coming to the health insurance industry as part of the “second stage” of health care reform. These major and minor adjustments should be kept on your radar.

What’s new for 2012? Insurers that issue group health plans will have to abide by some new requirements.

• Should plan benefits materially change, the plan issuer will have to provide notice in writing at least 6o days beforehand to plan sponsors and participants.
• Health care plan summaries will have to meet new formatting and content guidelines for clarity, and in the case of fully insured plans, the plan issuer must provide electronic or hard-copy summaries at designated times during the enrollment process.
• Group health plan participants could actually get rebates in 2012 under certain conditions. In 2011, insurers had to start notifying the Department of Health and Human Services of their medical loss ratios – that is, the percentage of premiums that they spend on clinical services and efforts to improve health care quality as opposed to administrative overhead. The minimum medical loss ratio is 80% for individual and small group insurers and 85% for large group insurers. If a plan issuer doesn’t meet this medical loss ratio test for 2011, it must issue rebates to enrollees beginning on August 1, 2012.^1,2

What happens in 2013? There are four important changes scheduled for 2013 that employers must recognize and publicize.

• Companies will have to disclose the value of employer-sponsored health insurance coverage to employees on W-2 forms for the 2013 tax year. (Big businesses are already doing this, but the IRS allowed a grace period for companies with less than 250 W-2 employees.)
• Companies will also be required to inform their workers about health care insurance exchanges, health care premium subsidies and free choice vouchers.
• There will be a $2,500 cap placed on annual flexible spending account (FSA) contributions, with COLAs in future years.
• Either the plan issuer or the plan sponsor must pay an annual per-member fee to the Patient-Centered Outcomes Research Institute for fiscal year 2013 (which starts October 1, 2012) and subsequent fiscal years. This annual fee equals $1 x the number of covered lives; in fiscal year 2014, it will double to $2 per covered life.^1,2

What is scheduled to happen in 2014? The second stage of health care reform wraps up with a flourish in this year, with 10 significant changes. By this time, a whole new health insurance market is supposed to be in place and businesses will step into the “new world” of health care insurance.

• In 2014, firms with 50 or more employees will be required to offer a minimum level of health care coverage to active employees. So what exactly is minimum coverage? The federal government defines it using two criteria: the health plan chosen has to cover at least 60% of covered health care costs, and the plan can’t cost a worker more than 9.5% of his or her household income.
• If firms with 50 or more employees can’t meet this test, they will pay a penalty of $2,000-3,000 per employee. (Some companies may elect to do this.)
• New reporting requirements start for businesses. Employers will annually have to inform the IRS if they are offering minimum health care coverage or not, the duration of any waiting period, the number of FTEs per month covered and their names, addresses and taxpayer ID #s. They will also have to report the monthly premium for the cheapest coverage option in each enrollment category and the employer’s percentage of the total allowed cost of benefits under the plan.
• Your company might be eligible for the Small Business Health Care Tax Credit if a) it employs 25 or fewer FTEs (apart from owners or family members) whose annual wages are $50,000 or less and b) you pay 50% or more of the health care coverage for single workers.
• Also, the wellness program incentives cap rises from 20% to 30%, so here’s another reason to encourage your workers to participate in wellness program (and to seek federal grant funding for said programs).
• Businesses with 200+ employees will be asked to automatically enroll all FTE and PTE into group health plans. (Employees may opt out.)
• As state health insurance exchanges are supposed to be up and running, you must provide a free choice voucher to qualifying employees in 2014.
• Employers cannot make employees wait more than 90 days for health insurance coverage in 2014, and non-grandfathered plans must also provide coverage for clinical trials related to life-threatening illnesses.
• The retiree reinsurance program reimbursing firms for up to 80% of qualifying retiree medical expenses will be gone in 2014 (and maybe before then if its funding runs out).^1,3,4

Prepare yourself – and your business. You, your employees and whoever handles your payroll will have much to keep up with in the near future. So confer periodically with your group health plan adviser to stay up to speed.

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.

While we clean up damage from Hurricane Irene, it makes sense to evaluate our preparedness for the next disaster.  Whether you live on the East or West Coast, somewhere in between, or in anther part of the world, one thing is for certain:  We need to be financially prepared for disasters!

Wildfires, hurricanes, terrorist attacks, floods, earthquakes

There are many disasters, both man-made and natural, that could happen without warning. For many, preparedness is a way of life. If you’ve lived all your life on a fault line, for example, then making your home and belongings earthquake-ready may be a no-brainer. But are you totally prepared? Are you financially prepared?

You’ll need more than nails and two-by-fours

It’s hard to “board up” something that you can’t physically see or touch. For most of us, our “net worth” is simply a number and not a “Fort Knox” of dollar bills and coins stashed in our basement. So, how do you protect what you can’t see? While I can’t possibly cover every angle of disaster preparedness in this article, the following constitutes a good starting point …

Your job. It’s important to find out how your job could be affected in the event of a disaster. If we look at those affected by Hurricane Katrina, for example, in many cases they had no job to return to … even if they could. Find out now if your employer has a disaster plan, and what that plan is. If the company shuts down, will you be able to collect unemployment compensation? If the shut-down is temporary, will you continue to collect a paycheck? If not, can you use sick time or vacation time in the interim? The answers to these questions can vary from employer to employer, so find out now what YOUR employer’s policies are. The more you know in advance, the better you can prepare.

Your cash flow. Even if you consider yourself to be very wealthy, you could still experience serious financial woes in the days following a disaster. For example, what if all power goes out in your area? If there’s no power, it’s likely that ATMs and merchants bank card processing equipment will not operate. Banks may be closed. How would you pay for any immediate needs? While you may have a disaster kit in your basement that includes food, water and clothing, does it include any money? Consider adding a small (but sufficient) amount of cash to your kit, as well as quarters (for pay phones) and traveler’s checks. If you’re unsure how much cash to include, a good rule of thumb is to consider how much money you and your family would require over a seven-day power-outage.

Your home. Although the events that followed Hurricane Katrina certainly increased awareness, many homeowners still do not realize that homeowners insurance does not cover all disaster damage. Pay close attention to what your policy does or does not cover. You may want to opt for disaster insurance or a disaster mortgage protection plan. There are also many things you can do around your home to help prevent or reduce disaster damage. In known natural disaster zones, you may choose to take advanced mitigation measures (like having your home anchored to its foundation, or building a “safe room” in your basement).

Your documents. Is a fireproof lockbox or safe sufficient? If a flood swept away your home, could it sweep away that safe or lockbox with it? Birth certificates, passports, deeds, titles and more can help you rebuild your life following a catastrophe. Consider enlisting the assistance of an online document back-up service to assure that you can access important information even if the originals are lost. You may also wish to have physical photocopies stored with an out-of-state relative or trusted friend.

Yourself. What if you are injured, disabled or killed as a result of a disaster? What if it happens tomorrow? It’s important to have your financial affairs in order, in case the unexpected occurs. Do you have insurance, including life and disability? Do you have an estate plan? What about a living will (advance health care directive)? And have you designated a health care proxy? It’s critical to have these things organized as soon as possible, because a disaster can strike at any time. It’s a good idea to enlist the assistance of a lawyer and a financial professional who can help you to plan your estate and draft the associated documents.

What are your thoughts?  What are some of your best practices to prepare for a disaster?

For generations, Americans have thought of life insurance as a midlife purchase of the middle class. Today, that perception is less accurate.

Wealthier Americans seem to be buying more life insurance. Affluent individuals are recognizing what it may help to accomplish for their families and their companies. They see the twofold tax break offered by whole life and universal life policies – the death benefit goes untaxed, and the policy has a chance to accumulate cash value through a tax-deferred savings or investment account.

As tax rates may rise before the end of the decade, cash value life insurance may seem increasingly attractive to those in the top tax brackets.

Here is some recent history to mull over:

· In 2007, a striking 55% of tax-free investment gains inside universal life and whole life policies belonged to the wealthiest 10% of U.S. families. In fact, 22% of these assets belonged to the richest 1% of American families. (That data comes from the Federal Reserve.)

· In that same year, the life insurance industry research group LIMRA conducted a survey for the Wall Street Journal. It found that policies for $2 million and more comprised almost 40% of the face value of whole life and universal life policies sold that year. In 1997, large policies made up just 10% of the life insurance market; in 1987, they made up 1% of it.

· Prudential Financial Inc. says 31% of its life insurance policy sales in 2009 were made to households with investable assets of more than $250,000. In 1999, that demographic accounted for just 19% of its life insurance polices in force.

When you consider that households with adjusted gross incomes above $250,000 face a 0.9% income tax increase and a new 3.8% investment income tax in 2013, you have yet another factor that may contribute to the trend.

An option to consider

Whether you see life insurance as an alternative investment or merely a resource to pay estate taxes or facilitate a buy-sell agreement, it may have merit as a complement to your retirement strategy – especially given the volatility of the stock market and the possibility of higher income taxes in the next few years.

Analyzing the Ten Key Areas of  Your Faith-Based Financial Plan

1: Ownership. God Owns 100% of everything. This i the foundation of any plan determining who is the owner of all that is entrusted to you.

Key Verses:

Haggai 2:8 “The silver is mine and the gold is mine,” declares the Lord.

Psalm 24:1 “The earth is the Lord’s, and everything in it, the world and all who live in it.”

Key Coaching Areas:

• Assess attitudes & motives in your personal financial planning.

• Rather than, “How do I protect/use my money?” the question becomes, “How can I best look after/use God’s money?”

• To rely on God and his provision not on our wealth or our ability to create wealth.

2: Integrity.  Business, Personal, and Financial Life Coaching. I find many people who do not have passion in their lives.  They lack the motivation and drive to succeed because their dreams and goals may be out of alignment.

Key Verses:

Colossians 3:22-24 “Slaves obey your earthly masters in everything; and do it not only when their eye is on you and to win their favor, but with sincerity of heart and reverence for the Lord”

1 Timothy 6:20 “Timothy, guard what has been entrusted to your care.”

Key Coaching Areas:

In Personal life:

• Tax minimizing is fine – response to “cash” deal?

• Responsibilities as a Christ-Follower

• How do you grow spiritually?

In Business life:

• Responsible employer – what are your measures of success?

• Honorable accounting & management practices.

• Fair treatment of employees.

In Financial Life:

• Parable of the Talents:  how do you maximize all God entrusts to you?

• Moral & Ethical investments?

3: Generosity: How do you get more so you can give more? As Christ followers, we should be known for what we stand for.  How can we be more generous and help more of God’s people?

Key Verses:

Leviticus 27:30 “A tithe (10%) of everything from the land whether grain from the soil or fruit from the trees belongs to the Lord; it is holy to the Lord.”

2 Corinthians 9:7 “Each man should give what he has decided to give, not reluctantly or under compulsion, for God loves a cheerful giver.”

Key Coaching Areas:

• What should I give? To whom should I give? When should I give?

• Planning the budget after deciding on giving not before. Give first, then decide on other  spending.

• Giving without guilt, generously and with grace.

4: Planning:  Creating your roadmap – where are you heading? Without a plan, it is nearly impossible to reach your desired destination.

Key Verses:

Proverbs 6:6&8 – “Go to the ant you sluggard; consider its ways and be wise! .. it stores its provisions in summer and gathers its food at harvest.”

Proverbs 21:20 – “In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.”

Luke 14:28-30 – Building a tower.

Key Coaching Areas:

• Knowing what God has called you to do with your life and your money. Do your current practices help or hinder?

• Setting goals for (e.g.):

* Giving

* Budgeting/spending plan

* Paying off debt

* Saving, financial independence

* Providing for dependents

* Funding your calling

5: Budgeting:  Getting your money to work for you instead of you working for your money. No matter how little or how much you make, without a spending plan, you could spend more than you make.  This is one of the biggest financial mistakes.

Key Verses:

Proverbs 25:28 “Like a city whose walls are broken down is a man who lacks self control.”

1 Timothy 6:6-8 “But godliness with contentment is great gain…But if we have food and clothing we will be content with that. People who want to get rich fall into temptation and a trap…”

Key Coaching Areas:

• Know how much (a) income there is. Know how much (b) spending there is. Keep (b) less than (a).

• Run a spending plan – think future not past, “What shall I spend my money on next  week/month/year?”

• Avoid a consumptive lifestyle, living beyond your means.

• Avoid the compulsion to spend, spend, spend; keeping up with the Jones’.

6: Borrowing: Getting and staying out of debt. This focuses on being a cautious debtor and only using debt as a last resort.

Key Verses:

Proverbs 22:7 “The rich rule over the poor, and the borrower is servant to the lender”

Romans 13:8 “Let no debt remain outstanding.”

Key Coaching Areas:

• Poor budgeting & spending more than you earn leads to debt.

• Debt restricts flexibility and choice.

• Debt presumes upon and mortgages the future.

• How much should we borrow and for how long?

7: Saving for a rainy day: Creating and maintaining emergency funds and funding your future. Those who save and have emergency funds are better prepared for difficult times.  The past few years have shown us the importance of having a proper savings strategy.

Key Verses:

Proverbs 28:19 “He who works his land will have abundant food, but the one who chases fantasies will have his fill of poverty.”

Proverbs 21:20 “… a foolish man devours all he has.”

Key Coaching Areas:

• Save to build an emergency fund (equivalent of 3 months of income).

• Save for major purchases to avoid debt (water heater, automobile repairs, home entertainment system, vacation, etc.).

• Save for future needs and giving (missionaries, charitable gifts, friends in need, etc.).

• Save for retirement.

8: Investing with a Purpose: Using your Blessings to Bless Others. Many invest without a purpose – just to accumulate. Additionally many invest in companies that are far removed from their faith and values. Let’s look at what values are important to you and create an investment plan around those values.

Key Verses:

Proverbs 13:11 – Dishonest money dwindles away, but he who gathers money little by little  makes it grow.

Ecclesiastes 11:2 “Give portions to seven, yes to eight, for you do not know what disaster may come upon the land.”

Key Coaching Areas:

• Get rich slow/don’t try to get rich quick – risk?

• Don’t hoard but invest for a purpose.

• Invest with the/an end in mind & work out a realistic target.

• Faith-based investing – choosing your investments

• Asset allocation and diversification

9:  Protecting All God Places in Your Care:  Prudent Strategies. Having proper insurance plans in place are critical.  This includes health, life, disability, long-term care, and property insurances.

Key Verses:

1 Timothy 5:8 “if anyone does not provide for his relatives, and especially for his immediate family, he has denied the faith and is worse than an unbeliever”

Ecclesiastes 5:13 “wealth lost through some misfortune so that when he has a son there is nothing left for him…”

Key Coaching Areas:

• God protects us but we should provide.

• How much insurance is wise? Can you over insure or under insure?

• Looking at proper amounts and if you should carry life, health, disability, home & auto, liability, and long-term care insurance

10: Legacy Planning – How will you be remembered? This involves setting up an estate plan – wills, trusts, health care directions, and powers of attorney.  This also includes charitable gifting strategies.

Key Verses:

Proverbs 13:22 “A good man leaves an inheritance to his children’s children, And the wealth of the sinner is stored up for the righteous.”

Proverbs 17:2 “A servant who acts wisely will rule over a son who acts shamefully, And will share in the inheritance among brothers.”

Key Coaching Areas:

• Analyzing your wills, trusts, and beneficiary designations

• Making sure you have all the proper legal documents and organizing your affairs to make it easier on your beneficiaries

• Legacy planning tools

• Getting your wishes on paper

30% of Americans have no life insurance whatsoever. So says a 2010 study from LIMRA (a worldwide association of insurance and financial services company), which also revealed this troubling fact … right now, fewer Americans own individual life insurance policies than at any time in the last 50 years. If you’re not insured, you’re not alone.

Did you cut your coverage due to financial hardship? Are you waiting for sturdier financial times? The non-profit Life and Health Insurance Foundation for Education (LIFE) found, via poll in 2008, that 27% of Americans would be willing to cancel their life insurance coverage to save money in hard times.  But if the unthinkable happens, a lack of insurance could make even the toughest times more difficult for loved ones.

LIFE wants to awaken Americans to the need for life insurance, and its remarkable utility as an estate planning and tax-saving tool.

Did you realize that life insurance could be more than merely an inheritance planning tool? It may also be a vital piece of the financial strategy puzzle for empty-nesters who want to retire to a comfortable lifestyle. Own a business? A buy-sell agreement funded with life insurance allows a surviving business owner to buy the company interest of a deceased owner at a previously established price. Key-person insurance can aid a business if a core employee passes away. (It is possible for a business to fund a buy-sell agreement and key-person insurance with pre-tax dollars, making these moves truly tax-efficient.)

If you do have life insurance, have you reviewed it lately? Some people purchase a life insurance policy and name a son or daughter as a beneficiary. This thoughtful decision has one little downside. If you own the policy, the death benefit is included in your taxable estate.

You have an alternative here. You don’t have to own your life insurance policy. Your children (or other beneficiaries) can own it. If they do, they will receive a large payout free from federal estate and income taxes when you pass away.

You can make gifts to your kids to acquire the insurance, and your kids can pool their money and buy policies on Mom and Dad. The more kids you have, the less the premium burden. Not only that, some policies can build up cash value (tax-free growth within the policy).

Here’s another way to remove life insurance proceeds from your taxable estate: an irrevocable life insurance trust. You can have the trust own the policy, and you can periodically fund the policy through gifts made to the trust. The trust will get the proceeds from your policy when you die, and those proceeds can be distributed according to your wishes – they can go to your loved ones or charity, they can be used to pay estate taxes.

As you plan to build wealth, consider … There are cash-rich life insurance policies with tax-advantaged savings features that offer you the potential to earn interest based on the gains of an equity index. Others permit you to direct a percentage of your premiums to investment sub-accounts which may generate tax-free earnings. These policies can be useful when it comes to business continuation and employee benefits, retirement planning, education planning and estate planning.

Think life insurance isn’t affordable? You might be surprised. Let’s say you just want term life, just basic life insurance without the capability to accumulate cash value. You’ll pay relatively less for it: it isn’t that expensive compared to other forms of life insurance coverage. Premiums for standard-risk term life insurance got smaller and smaller from the mid-1990s through the late 2000s, and only recently have they started to increase as a consequence of higher capital and reinsurance costs (which are byproducts of tighter credit markets).

Many insurers have raised premiums on term policies by 1-5% within the last couple of years (sometimes more). Some insurance industry analysts think this may prove to be only a temporary increase. Others think now is the best time to buy term coverage.

It can’t hurt to double-check your life insurance, to be certain you are using it wisely and that your coverage is adequate.

What does a life insurance trust do? It enables you and your family to do three things in particular. One, it provides you, your spouse and your heirs with life insurance coverage after it is implemented. Two, it allows a trustee to distribute death benefits from a life insurance policy as that trustee sees fit. Three, it gives you the chance to reduce your estate taxes.

When you create a life insurance trust, you are creating an entity (the trust) to buy life insurance policies for you and your loved ones. You don’t own the policies, the trust does. So the insurance proceeds go into the trust when someone passes away. Because the trust owns the insurance policies instead of a person, the insurance proceeds aren’t subject to probate, income taxes or estate taxes. The trustee can distribute those proceeds to one or more parties as stipulated in the language of the trust. Also, if your estate ends up really large, the trust can buy additional life insurance to provide additional cash to pay additional estate taxes.

Sometimes these trusts establish investment policies for life insurance proceeds, and even timelines for who receives what when (families may want to delay an heir from legally receiving an inheritance until age 18 or 21, for example).

Why not just have someone else own my insurance policy? That scenario can lead to major financial and familial headaches. If that person dies before you die, the cash value of the policy will be included in their taxable estate. So the heirs (and relatives) of that person will have higher estate taxes to pay as a result. Also, if you do this, you surrender control of your policy; the loved one you trust could end up naming another beneficiary or even cashing your policy out.

A decision for life. Almost all life insurance trusts are irrevocable trusts. That is, they are legally “set in stone” once created, unlike a revocable trust which can be amended or revoked after creation. You can make these trusts revocable, but if you do, you lose the tax benefit: the insurance proceeds will be included in your taxable estate when you die, which could increase the estate tax bill for your heirs. However, some irrevocable life insurance trusts purchase survivorship life insurance in a profit sharing plan to permit the ability to change beneficiaries.

If you’d like to know more about life insurance trusts or the potentially significant changes in estate taxes over the next few years, send me an email or call me and let’s talk!

#1: Tax-deductible contributions. These accounts are funded with pre-tax income. Your annual contribution limit to an HSA depends on your age and the type of insurance plan you have in conjunction with the account. For 2010, the limit is set at $3,050 (individual plan) and $6,150 (family plan). If you are older than 55, those limits are nudged $1,000 higher.

#2: Tax-free growth. The money in an HSA grows untaxed – and some HSAs even have investment options, including mutual funds. Some HSA owners choose to invest the assets in money market funds, but they are commonly held as cash.

#3: Tax-free withdrawals (as long as withdrawals pay for heath care costs). To make withdrawals even easier, many HSAs offer you checkbooks and debit cards to make it easier to pay healthcare expenses and reimburse yourself. There is no need to provide reimbursement claims to the IRS; all you need to do is keep your receipts in case of an audit.

Add it up: an HSA lets you avoid taxes as you pay for health care. Additionally, these accounts have other merits.

You own your HSA. If you leave the company you work for, your HSA goes with you – your dollars aren’t lost.

No use-it-or-lose-it rule. This is an improvement from a Flexible Spending Account (FSA). If you don’t use the money in an FSA at the end of a year, you lose it. With an HSA, there is no such penalty. For the record, you can’t have both an HSA and an FSA.

Hidden social advantages? Since HSAs impel people to spend their own dollars on health care, the theory goes that they spur their owners toward staying healthy and getting the best medical care for their money.

How about the downside? Well, HSA funds don’t pay for all forms of health care. For example, you can’t pay for over-the-counter drugs with HSA assets.³ In the worst-case scenario, you get sick while you’re enrolled in a high-deductible health plan and lack enough money to pay medical expenses.

If you use funds from your HSA for non-medical expenses, the federal government will hit you with a withdrawal penalty – 10% in 2010, going north to 20% in 2011. And in case you might be wondering, some HSAs do assess monthly fees and transactional charges to account owners.

Even with those caveats, younger and healthier workers see many tax perks and pluses in the HSA.

Who is eligible to open up an HSA? You are eligible if you enroll in a health plan with a sufficiently high deductible. For 2010, the eligibility limits are a $1,200 annual deductible for an individual or a $2,400 annual deductible for a family. You aren’t eligible if you are enrolled in Medicare or if someone else claims you as a dependent on their federal return.

You don’t need an employer-sponsored health plan to have an HSA. You can open one with a personal health plan, too. In June 2010, the American Medical Association’s American Medical News reported that HSA enrollment had reached the 10 million mark, growing by 2 million alone during 2009.

As health insurance costs are repeatedly increasing for businesses, and as health plans with higher deductibles generally cost less for a company compared to traditional coverage, you will likely see the population of HSA owners growing in the 2010s.