MDP Blog

By John Spacek

How will you pay for long term care? The sad fact is that most people don’t know the answer to that question. But a solution is available, a long Term Care Insurance Policy.

As baby boomers leave their careers behind, long-term care insurance will become very important in their financial strategies. The reasons to get an LTC policy after age 50 are very compelling.

Your premium payments buy you access to a large pool of money which can be used to pay for long term care costs. By paying for LTC out of that pool of money, you can preserve your retirement savings and income.

The cost of assisted living or nursing home care alone could motivate you to pay the premiums. Genworth Financial conducts a respected annual Cost of Care Survey to gauge the price of long term care in the U.S. Here is a summary of the 2013 survey’s key findings:

In 2013, the median annual cost of a private room in a nursing home was $83,950 or $230 per day — up 3.6 percent from 2012. In the past five years, the cost has risen about 4.5 percent annually.  READ MORE

By Bruce G. Kaserman

This weekend Warren Buffet, the “Oracle of Omaha” proclaimed that at DOW 15,000, the stock market will head progressively higher.  And Bill Gross, one of the premier money managers in the country a couple weeks back proclaimed that it was the time to buy US Treasuries.  I tend to disagree with both these pundits and tend to believe in what another market guru, John Bogle, has forecast; that over the next few years, the US equities markets will experience two separate fifty percent corrections.  Let me tell you why:  READ MORE

By Guy P. Jones, CFP

Many of you may remember the song by the same name released in 1982 by English punk band, The Clash.  If you do and you were in your late 20’s or early 30’s then, you are probably asking the same question about your employer-sponsored retirement plans, 401k, 403b, 457b and the like, right now.

Since the 401k was introduced back in 1978, it has been promoted as the “holy grail” of retirement savings vehicles, mostly by the mutual fund companies that it favors.  Since the introduction of the 401k, there has been a gradual, yet steady, decline in employer-sponsored pension plans by private sector employers to the point that they are almost nonexistent.  Unless you work for a very large company or work in the public sector, your pension plan was phased out a long time ago.  This has thrust a myriad of decisions regarding retirement planning on a workforce that is ill prepared to make the proper choices as to appropriate investment options.  They therefore have relied on their employer to choose for them.  In doing so, we now have a retirement system that is fraught with poor performing, high-cost, limited-choice, loss-incurring investment options.

But, wait, what if there was another, better option for some of you?  What would you do if you were suddenly handed a “Get Outta Jail Free Card” from your employer-sponsored retirement plan?  Well, guess what, you just have!  It’s called an “In-Service Distribution” or “In-Service Transfer” to an Individual Retirement Account (IRA).  READ MORE

By Chris Jarvis, MBA, CFP® & Michael Berry, ChFC®

The single greatest financial threat that all affluent families face is tax.  Even very successful family businesses can be forced into partial or complete liquidation to satisfy the taxes due nine months after the death of the owner.

The most common alternative is to make gifts to trusts for junior generations and use those funds to buy life insurance to cover eventual liquidity needs.  This strategy works well for families worth $10-$50 million, but is extraordinarily inefficient for families that measure their wealth in 9 to 10 figures.  This is because the premiums required to buy enough life insurance to pay the future estate taxes (often tens or hundreds of millions of dollars) are well beyond the lifetime and annual gift tax exemption amounts under the tax code.  As a result, these gifts come at a very heavy price- a Federal gift tax of 40%.

Consider for a moment that wealthy business owners will pay between 43% and 53% tax (depending on state of residence) on their income AND then pay 40% of the remainder they leave their heirs (either as gifts during lifetime or as estate taxes at death). This means that every dollar earned by an affluent American (worth more than $10 million) is ultimately only worth about 30 cents to his or her family. They are working twice as hard for the government as they are for their future generations.  READ MORE

By Vicki Rackner

This post is not your conventional marketing tip.  Rather, it’s the story of an act of kindness that made a big difference in my family.

My 15-year-old son– who lives to wrestle and play lacrosse– has been navigating some complex health challenges.  Even though his health has kept him off the active team rosters, he’s been at every practice for both sports.

Today he got medical clearance to play lacrosse, just in time to help his team secure a win at tomorrow’s tough game.

As I was speaking with Debbie, the go-to person in the high school athletic office, she pointed out that athletes must participate in 10 practice sessions before they can compete.  Further, there are only 8 practice sessions left in the season.

I knew how disappointed my son would be to learn that he would not play this season.  And I will confess to a maternal sense of relief.

What I didn’t know is that Debbie took matters into her own hands.  She mobilized an entire team of people to find a way for my son to play.  Within an hour they had a solution.  My son would practice with the JV team when his own freshman team played this week’s games.  That would bring the practice total to eight.

Debbie said the head coach offered the last piece of the puzzle. He scheduled two additional Saturday practice sessions just so my son could play at least one game this year.

I was overwhelmed with gratitude.  READ MORE

By Jane K. Penhaligen, Esq.

Estate planning for the medical professional is a little different than for most people and vitally important if the professional wants to make sure his or her family receives the most benefit from the practice they have built.  If one is in a joint practice, it is likely that they have agreements with the other medical professionals as to what will happen if one of them passes away or if they do not, then the advice in this article applies to them too.  If the medical professional is in a solo practice, it is imperative that they have planning in place in regard to the transition of his or her practice.   A medical professional should have a well crafted, comprehensive estate plan that provides for his or her family and designates someone to manage the medical professional's practice if  he or she becomes disables or dies.

Medical Practice Requires a Medical Professional
    
California law does not ordinarily allow non-medical professionals to operate medical practices or to own shares in medical corporations.  The Medical Board of California will allow a medical professional's successor in interest (heir) to continue to run the practice by employing  a contract medical professional for up to six months pending transfer of the practice.  Ideally, the medical professional will as part of their estate plan make provisions for another medical professional to step in and operate their practice if they die before retirement.  A contract laying out the terms of the interim operation of the practice by the contract medical professional should be in place.  If the medical professional dies, the most important thing an heir can do to retain the value of the practice is to keep a practice operating pending sale.  Employment agencies for medical professionals can be found in medical journals and on the Internet.  READ MORE

Vicki Rackner MD

What’s the fast-track to success homes sales to doctors? Successful RealtorsⓇ have focus.  
Hobbyists give into the temptation to be all things to all doctors.

If you want to join the ranks of high-performing RealtorsⓇ, identify a best-fit group of like-minded doctors with similar housing needs.   This focus allows you to reach your prospects most effectively.  

Here are the five homes doctors buy over their careers.  

First home sale: Most physicians purchase their first homes in the three to seven years following medical school. Incomes during residency--the apprenticeship years-- run in the mid-to-high five-figure range.  Once doctors begin their first “real jobs”, their incomes jump to the six -figure range.  Attractive doctor mortgage programs make it easier for doctors to get financing in this stage.

Second home sale:  Doctors upgrade to luxury homes homes as their incomes increase and their families grow.  The second home is typically purchased five or ten years after their first.  The trusted Realtor advisor represents the doctor in both the sale of the first home and the purchase of the second.  

Third home sale: Doctors’ third home purchase is often either a vacation home or a rental property.  More doctors are looking at real estate as an investment vehicle.

Fourth home sale:  Some doctors make late-career transitions.  While this is usually a result of divorce, some physicians move to assume a new job as a medical director.  Luxury homes are bought and sold in this stage.  

Fifth home sale: About 40% of practicing physicians are age 55 or older.  The kids are out of the house, and doctors are ready to down-size.  READ MORE

Over the past 16 years or so, we’ve observed doctors making numerous mistakes at all stages of their career.

We have taken our observations, as well as enlightening discussions with well-established doctors, and compiled this list of critical errors. Our hope in providing this list is to continue our mission of helping doctors and their families grow their net worth tax-efficiently while minimizing exposure to litigation.  READ MORE

By Eric Roukey & Michael Berry, ChFC

“Own Occupation” “Specialty Own Occupation” “Medical Occupation Definition”

How do you know which definition is right for you?

Are policies based on “Your Title” or “Your Duties”?

“Substantial Duties, Primary Duties, Important Duties, Regular Duties”…it’s Plural for a Reason.

Each insurance company has different language that they use to determine a “Full” or a “Partial” Disability. Not one of these companies has language in their contract that is based on your “title”….. “Interventional Radiology”….” Cardiovascular Surgeon”…..”Board Certified”….”Orthopedic Surgeon” …”Insert Specialty here”…..”Physician”…..

Why are so many policies sold based on the Physicians Title and not the actual duties of the Physician?

Where your income is derived from is what’s important. What would your CPT codes say?

Disability Income Insurance Policies are based on two simple things...  READ MORE

If you are like most professionals, you graduated with over $100,000 in student loans. While that debt may feel like a monkey on your back, it is well worth it. Unlike credit card debt which is used to fund consumption, your student loans financed your education and training, and was as an investment in your career. Not only that, but it was also like free money in a period when you weren’t earning any. Now you are earning money and one of the most commonly asked questions I get is “should I pay off my student loans?” The short answer is that it depends on whether you are making the decision emotionally or purely from a financial perspective. Here are some things to consider before paying down your student loan.

Money Loses Value

Inflation is the erosion of the value of the dollar over time. We have all heard someone say “I remember when a new car cost…” Inflation is the reason why it cost $5 to see a movie when you were 18, but now it costs $12; or why $100 just doesn’t seem to buy as much as it did 10 years ago. If your loan is on a fixed-rate, inflation is your friend. Your fixed loan payment does not change for the duration of the loan, but the value of that payment decreases over time. For example, if your current loan payment is $800 per month, in 10 years, the real cost of that loan payment would be equal to $595 assuming a 3 percent inflation (see calculation below). Hence the purchasing power of that $800 has declined in that 10 year period to just $595. If the rate of inflation is higher than your fixed interest rate, you are essentially coming out ahead every year.

History Doesn’t Lie

Most current home buyers would cringe at a 5 percent home loan, but it wasn’t that long ago that 8 percent was the average. In fact, in 1981, the average mortgage rate was 16.63 (www.freddiemac.com)! So historically speaking, interest rates are at all time lows. Interest rates on student loans are also at historical rates. No one knows if interest rates will ever reach double digits again, but markets do tend to revert to their historical mean. If you currently have a student loan with a very low fixed interest rate, it makes more economic sense to pay only the minimum payments because of the low fixes rate and because of inflation.  READ MORE