Leave something for your loved ones and community.

Legacy planning can be an emotional and complex series of decisions. Whether you want to leave your assets to your heirs or charity or want to develop a succession plan for your business, we can help you design a strategy that allows you to share your life’s successes with others while also leaving a legacy for those you love.

You don’t need to be wealthy to take advantage of some of the legacy planning options available today. For example, trust funds are not only for the super-rich. You need to get comfortable with terminology like Power of Attorney, Payable on Death (POD) and Transfer on Death (TOD), and Next of Kin. When it comes to all of these techniques, you might need estate planners and attorneys to help you navigate the complicated rules around estate planning.

Call us today to ask how we could help you with your estate planning needs with your tax and legal professionals.

¹ “Estate Planning,” Investopedia, accessed February 27, 2020, https://www.investopedia.com/estate-planning-4427729

What can Capital Synergies offer you?

Financial services are easy to come by, but finding appropriate, personalized financial advice is more difficult. As a privately owned and independent financial services firm, we are free to look at a wide range of financial products, tools, and resources to provide you with the appropriate strategies for your situation. As an independent financial services firm, we have no pressure to use products or tools that may not be appropriate for the client. We believe our independence can mean a world of difference when planning for your future.

We are a client-centered financial services firm. Service that is timely and reliable is the key to building client confidence. Whether it is the simple act of returning phone calls promptly or spending the time to develop a sophisticated financial strategy, we treat you the way we wish to be treated, with respect and professionalism. Our commitment to offering the best is also found in our support staff who are dedicated, not only to exceptional services but also to maintaining high professional standards. We invest in long-term relationships with our clients; that means we are there for you every step of your financial journey.

In broad terms, retirement planning is the saving and allocation of finances for the purpose of retirement and financial independence. Although the underlying principle of retirement—save and invest early—is rather simple, the mechanics of retirement planning can be complicated. This is because the shape of retirement has significantly changed over the years and individuals are now living longer. Combine these factors with advanced concerns like employer-sponsored retirement plans and social security maximization strategies and a well-tooled retirement plan becomes a portfolio with many considerations. Likewise, retirement planning is a living process, subject to periodic evaluation, especially if you include growth products like annuities and cash value life insurance policies in the mix.

While retirement planning can be considered a specialized area of personal finance planning, when you think about it’s really the end goal (death benefit policies notwithstanding). Upon retirement you no longer have income earned from work and are now relying on your assets to sustain you and your ideal quality of living through the remainder of your life. This is why it is very important to undertake a retirement plan, to establish priorities, and to work with a retirement planning advisor that can maximize your portfolio.

Ideally you should begin the retirement planning process as early as possible. If you have stable income and a need to protect assets, you should consider retirement planning. Because every individual will have a unique situation and their own picture of retirement, the specific products and solutions involved in your retirement plan will vary. The first step in crafting a robust retirement plan is assessing your available instruments and your readiness-to-retire based on your desire lifestyle. Many retirement planning advisors will suggest taking full advantage of employer-sponsored programs like 401(k)s first, especially if the employer offers matching contributions.  Then you may want to consider cash accumulation policies like deferred annuities or permanent life insurance. Although the latter is primarily designed for death benefits, these types of life insurance policies can offer accumulation value that can be accessed during your life.

The key to a successful retirement plan is regular attention and evaluation. Retirement planning is not a one-time activity, but rather a process that grows and adapts with your unique situation as you live and work.  A common saying regarding retirement planning is that you don’t get much of a do-over. This is true and explains why starting as early as possible and working with a retirement planning advisor is critical to ensure a robust retirement portfolio.  Retirement planning advisors can offer income maximization strategies, asset protection solutions, and retirement plan benefits optimization programs that position you to enjoy a worry-free retirement.

One of the most critical decisions you can make regarding your retirement is when to start taking your Social Security benefits.

There are pros and cons for taking Social Security benefits at your earliest opportunity (currently age 62), and for delaying them until or even beyond your full retirement age (currently age 66).

Taking benefits at your earliest opportunity

• Pro: Earnings after 62 can still increase your Social Security retirement benefit if they replace $0 or low-earnings years

  • But only if it is one of your top 35 years of earnings

• Con: If you take Social Security early AND continue to work, your benefits COULD be reduced – $1 of benefits withheld for every $2 earned over $18,960 in 2021

  • But withheld amounts will be added back to your benefit calculation at full retirement age

Delaying benefits

• Pro: Your benefits could increase, based on your birth date and the number of months you delay the start of your retirement benefits

  • But your benefits stop increasing at age 70 whether you’ve started receiving them or not

• Con: As you age, energy and health issues may prevent you from enjoying the additional money you delayed receiving

  • But delaying can leave you with more resources later to face expected and unexpected medical expenses

Our team of experts at [Company Name] can provide a thorough review of your options and help you decide the best approach to maximize your Social Security benefits.

Broadly speaking, estate planning is the process of structuring your assets to provide maximum efficiency when transferring to heirs at minimum expense and effort. Without a properly shaped estate plan, your financial wishes may not be fulfilled and your beneficiaries could be needlessly burdened—both emotionally and financially.

Although the basics of estate planning are sometimes as simple as designating beneficiaries in wills and on policy forms, the actual mechanics of transferring wealth to the next generation can be quite difficult and complicated.

Why is Estate Planning Important?

With estate taxes set on the excess of $5.43 million per person in 2015, it may seem that estate planning is only a concern for the wealthiest of the wealthy. While most estates won’t be subject to this current estate tax rate, individuals still need to think about the impact of taxation on their assets issued to beneficiaries. This is because received assets will generally be subject to ordinary income tax, which can whittle significant amounts away from the accumulated value of an estate.

Certainly different asset types will be taxed differently, but someone’s life wealth can be reduced—in some cases by nearly half—through ordinary income taxes. This gets more complicated when the asset is not monetary, but rather physical, such as property, land, or houses. For many individuals that work hard their entire lives to leave wealth to their heirs, this prospect can be unsettling.

Thankfully, there are many strategies that can minimize the tax burden heirs may face. This can involve things like annuities, trusts, and life insurance policies, structured to ensure that beneficiaries receive the maximum possible.  To properly establish an estate plan that works in concert with your specific retirement plan, assets, and legacy goals, you should seek out as a financial advisor that provides an expert hand.

What is an Annuity?

An annuity is a financial product that can be used to accumulate cash value on a tax-deferred basis. Annuities can be a great tool for individuals to secure retirement income or to convert existing assets into a stream of income. There are four main changes everyone faces in retirement—longer life expectancies, taxes, inflation, and market volatility—and annuities help to address all four of these factors.

By accumulating tax-deferred, certain annuities are can grow larger before facing a tax liability. This, along with an interest rate of growth, helps to hedge against inflation. And because many annuities have guaranteed rates of return and are not directly exposure to the stock market, they are less susceptible to market volatility.

Annuity Structure

Most annuities have two phases—an accumulation phase and distribution phase. During the accumulation phase, premium payments are collected and cash value within the policy account grows at a pre-determined rate. Upon a triggering event, it most cases retirement, the annuity then begins to issue benefit payments. With a lifetime income rider, it is possible to receive benefit payments for the remainder of an individual’s life.

Just as you would find in the life insurance world, there many different types of annuities, all designed to meet different needs. Additionally, the specifics of an annuity will vary amongst the carriers and policy type.

Types of Annuities

While there are numerous versions of annuities, there are a few basic categories.

• Fixed (FA)
• Fixed Indexed (FIA)
• Single Premium Immediate (SPIA)
• Deferred Income Annuities (DIA)
• Variable (VA)

Fixed Annuity

A Fixed Annuity, sometimes referred to as a Traditional Fixed Annuity, provides a guaranteed interest rate as well as an initial interest rate. The actual interest rate may vary over the life of annuity but will not fall below the guaranteed minimum interest rate (GMIR). No matter stock market performance or the overall interest rate environment, the policy will continue to grow at the declared rate. There are Multi-Year Guaranteed Annuities (MYGA) that provide a particular interest rate over longer periods of time.

Fixed Indexed Annuity

A Fixed Indexed Annuity, sometimes referred to as an Equity-Indexed Annuity, gathers interest based on the performance of a specific stock market index, like the Dow Jones Industrial Average or the Standard & Poors 500. Some FIAs include a guaranteed rate of return or floor, securing a base return. While a Fixed Indexed Annuity is tied to the performance of a stock index, it does not directly participate in the markets. Additionally, FIAs are protected against negative index movements. Within FIAs, there will be many interest rates capturing and crediting methods to choose from.

Single Premium Immediate Annuity

Unlike Fixed or Fixed Indexed annuities, which provide tax-deferred growth, Single Premium Immediate Annuities do not have an accumulation or deferral period. Rather, as the name indicates, they are purchased with a lump sum of money. Benefits are then triggered within a year of purchase. The payment amounts you receive from a SPIA will depend on the lump sum used to purchase the contract, your life expectancy, and your gender, and other factors.

Deferred Income Annuity

A Deferred Income Annuity combines elements of Deferred Fixed Annuities and Single Premium Immediate Annuities. Like SPIAs, Deferred Income Annuities are purchased with a lump sum. However, benefits can be delayed for a set period of time, allowing the contract value to grow, increasing the benefit payment amounts upon triggering distribution. In addition, it may be possible to contribute over the initial purchase amount, which can increase benefit payouts. Because DIAs typically have a Lifetime Income Rider built into the product, they are sometimes referred to as “longevity insurance” or a “longevity annuity.”

Variable Annuity

A Variable Annuity shares many features with fixed and fixed indexed annuities. However, they are directly exposed to the stock market through underlying securities of the contract. The carrier guarantees a minimum payment, but the rate of return will vary based on the performance of the underlying securities. Harris & Hobbs Insurance Services does not provide variable product services; rather we focus directly on fixed products with guaranteed returns.

Lifetime Income Rider

This is a feature available in some insurance products like annuities and life insurance that provides an income stream that cannot be outlived. Typically a lifetime income rider will involve an additional fee or charge on the premium, but the ability to have a retirement resource that cannot be outlived is attractive to many consumers, especially with longer life expectancies.

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Bear in the mind that the information above is simply a high-level discussion of annuities. To properly address whether an annuity is right for your specific needs or to determine what type of annuity best helps achieve your financial objects, you should consult with a financial professional.