Financial Planning: Managing Health Care Costs in Retirement
It is not surprising that a survey last year by T. Rowe Price found that health care costs are the biggest financial worry among retirees.
Author: Brandon Jordan, CFP®, CHFC®, CEPA®, CVGA®, CLU®, MSA, EA | CEO of Impact Advisors Group
Phase II of IAG’s Business Planning process is to “Defend” the business from internal and external threats.
Sample Internal Threats
Sample External Threats
Death of a business owner can wreak havoc for a business and often results in the business closing its doors. A common and effective approach to defend against this threat is a well drafted AND funded buy-sell agreement. A recent Supreme Court Ruling (“Connelly v. United States”) has materially shifted the landscape for business owners in how to defend against the tremendously negative impact of the death of one of the business owners. Prior to this ruling, the life insurance, which is the most commonly used tool to fund a buy-sell agreement, proceeds were NOT included in the valuation of the company. As a result of the Connelly decision, the proceeds received in a redemption style buy-sell agreement, ARE includable in the valuation of the business. This inclusion is a big deal because it drastically increases the death tax liability of the deceased party’s estate… and now may not have the available funds to settle that obligation with the IRS.
This isn’t bad news per se. Rather, it’s only bad news IF business owners are unaware and thus don’t plan accordingly. Don’t be one of them!
IAG is a member of the XY Planning Network (“XYPN”). Not only does XYPN help us to have best in class compliance programs and tech stack, this membership-only network also provides us with valuable information from the industry’s top thought leaders. XYPN’s Ben Henry-Morland is one of them. His assessment of the Connelly decision and buy-sell agreement structuring is quite insightful.
Let IAG help you defend your business against this threat review, create, and/or modify your buy-sell agreement to reflect the material changes caused by the Connelly decision. Your business, your employees, and your family depend on getting this right.
It is not surprising that a survey last year by T. Rowe Price found that health care costs are the biggest financial worry among retirees.
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