The Planning Process

planning process diagramPlanning for your financial future may seem complicated in today's world. A broad knowledge of everything, from complex investment products to elaborate tax laws, is required.

We can help. With our experience, knowledge and resources, we can help you navigate changing tax laws, volatile financial markets, inflation and evolving personal or business circumstances. We're here to help you find solutions and achieve your financial goals.

Throughout the financial planning process, we never lose sight of one essential element - personal service. We provide the best of both worlds: the resources of a large company and the personal attention you need to establish a plan for your financial future. When you partner with us, you work with a team of professionals in investment and retirement planning, education funding, insurance, estate planning and business owner planning.

Business Owner Planning

Tell us your situation and we'll help you develop clear and understandable solutions. Feel free to contact us regarding any of your concerns. We can assist with your business, investment and insurance needs, including the following: 

Buy-sell agreements
Gifts of corporate stock
Life insurance
Private annuities
Self-canceling installment notes
Family limited partnerships
Management control

Buy-sell agreements

A buy-sell agreement is a contract between two or more business owners that outlines the terms of ownership transfer in the event that an owner retires, divorces, becomes disabled or dies. Provisions in any buy-sell agreement also should address the possibility of bankruptcy or loss of a professional license and should be based on a mutually agreed upon market value of the business. Corporate buy-sell agreements are usually structured in one of three ways: stock redemption, cross purchase or a "wait and see" agreement.

  • Stock redemption occurs when the corporation buys back stock from the shareholder or a deceased shareholder's estate.
  • Cross purchase agreements call for the remaining shareholders to buy the stock of the departing or deceased shareholder.
  • "Wait and see" is a hybrid agreement designed to give individuals the flexibility to determine an appropriate buy-sell plan - given tax laws, the market environment, business and family situations - at the exact moment needed.

Private annuities

Private annuities are ideally suited for family situations where a parent wishes to transfer an asset such as a business interest to the next generation free of estate taxes. Typically the parent sells the asset to the child, who in return promises to pay the parent an income for life. This is a legally enforceable contract right, but is not secured.

To be successful, the present value of the annuity payments have to be equal to the fair market value of the asset being sold. The child takes the risk that the parent lives past the life expectancy; the parent takes the risk that the child will not meet the current payment schedule.

Self-canceling installment notes (SCIN)

A SCIN is an installment debt obligation that by its terms is extinguished at the death of the seller. It is similar to a private annuity in that an asset is sold on an installment basis. However, with a SCIN, the installments are usually shorter than the seller's life expectancy. The buyer (child) usually pays a "risk premium" in the form of an above-market interest rate to the seller (parent) as a consideration for the cancellation provision. Generally, nothing will be included in the seller's gross estate, but any deferred gain on the installment obligation will be reported for income tax purposes.

In addition, management may not be able to react quickly in situations that require shareholder or board approval. Finally, the initial cost of registration and continuing compliance can be high - including reporting requirements, board of director and shareholder meetings, proxy solicitations and investor and financial community relations.

Family partnerships

A family partnership may be used to shift both the income tax burden and the appreciation of assets from parents to children or other family members. It is possible to transfer business interests to children and maintain control by retaining the general partnership interest. You can receive a discount, for gift tax valuation purposes, if the partnership interest transferred is a minority interest. Discounts also can apply due to the lack of marketability of partnerships. Any appreciation on transferred interests should not be included in the transferor's estate, assuming a valid partnership has been established.

Gifts of corporate stock

Making a lifetime gift is often the most effective way to reduce estate taxation. It is common practice for a financial plan to include a model of the asset base and cash flow requirements of the donor before making significant gifts. Gifts can be made outright or in a trust. The basic benefits of gifting include:

  • Shifting the income and growth of an asset out of a higher income tax bracket.
  • Tax leveraging.
  • Allowing a "testing ground" for future management skills.

Life insurance

Life insurance offers a practical and popular planning tool because of its premiums relative to policy proceeds and its estate liquidity. Proceeds can be subject to estate tax, however, so it's a good idea that the life insurance be owned outside of the estate to avoid inclusion of the proceeds for tax purposes. Placing life insurance in an irrevocable trust or ownership by adult children are two solutions to accomplish this.

In addition, management may not be able to react quickly in situations that require shareholder or board approval. Finally, the initial cost of registration and continuing compliance can be high — including reporting requirements, board of director and shareholder meetings, proxy solicitations and investor and financial community relations.

Management control

You may wish to transfer the equity of your company to family members by gift, bequest or sale, yet still be uncomfortable with the new shareholder's business insight. In that case, consider one of the following solutions:

  • Voting agreements are one of the easiest and least expensive techniques to retain management control. Business matters are put to a shareholder vote and decisions are based on a pre-determined scope of the voting agreement.
  • A proxy is written authority given by a shareholder to another person to vote on shareholder matters. Typically, a proxy statement is for management to vote the shares of shareholders unable to attend a specific meeting, but the scope of proxy authority doesn't have to be limited to that alone.
  • Voting trusts are used when voting parties agree to surrender their stock to trustees who represent the parties to vote the stock. Often shareholders receive a trust certificate as evidence of their beneficial ownership of stock held by the trust. The voting trust agreement is usually more difficult to break than a simple voting agreement and can be designed to give trustees full discretion on voting the stock or to be more restrictive.

Education Funding

An Early Start

If your child is young, establishing a savings plan now can put time on your side. Consider alternatives to the traditional savings account.

Mutual Funds

Setting up a custodial account in your child's name with a mutual fund company and making regular contributions to that account can help you towards reaching your child's college funding goals. Custodial accounts have significant legal and tax implications. For one there is the "kiddie tax, " which taxes the investment income of children over $2300 at their parent's top federal income-tax rate if the child is under age 18 and the child's earned income does not exceed one-half of the child's own support for the year, or, a full-time student who was under age 24 at the end of the tax year and the child's earned income does not exceed one half of the child's own support for the year (excluding scholarships).

Coverdell Education Savings Account

If your income isn't too high you can contribute up to $2000 a year to an Coverdell Education Savings Account for each of your children or grandchildren under age 18. All withdrawals (including investment earnings) that are used to pay the child's qualified education expenses are income-tax free. The $2000 contribution limit is phased out with income between $95, 000 and $110, 000 (individuals) or between $190, 000 and $220, 000 (married couples filing jointly).

Prepaid Tuition Plans

Many states and individual colleges offer tuition prepayment plans. With these plans, you make a series of payments or pay a lump sum now for your child's education. In return, the plan guarantees that your investment will cover the child's expenses when he or she is ready to attend. Some plans lock in the cost of future education at today's prices. Before choosing this route, though, be sure to find out what will happen to your investment if your child doesn't attend the sponsoring college.

Never Too Late

If your child will be starting college within the next couple of years or has already started, there are still financing methods available for you to consider.

Financial Aid

Most schools have a limited pool of funds, so you should file financial aid forms as soon as possible. Generally, the school will calculate how much aid your child will receive based on your financial situation. Also, your child should apply for all available governmental or private grants and scholarships.


Your child's aid package may include loans from the federal or state government, the college or a commercial lender. The loan offers may vary considerably, depending on the program, so be sure to carefully check the interest rates and terms of each. Home equity loans, retirement plan withdrawals, and the cash value of your life insurance are other possible loan sources you might consider.

Tax Incentives

If you do take out a qualified higher education loan, up to $2,500 of the interest paid is tax deductible. (Certain restrictions may apply. ) You also may be eligible for the American Opportunity Tax Credit and the Lifetime Learning Credit. The American Opportunity Tax Credit is worth up to $2,500 a year for each student's years of eligible post-secondary education expenses. The Lifetime Learning Credit is available for up to $2,000 of qualifying expenses paid for each year of education. Both of these credits are phased out at higher income levels, however.

While it's best to get an early start, it is never too late to plan for the cost of your child's education. For assistance, call your professional financial advisor. He or she can help you plan today for your child's education tomorrow.

Estate Planning

Estate Preservation Strategy

Anybody who has worked hard, saved, and invested needs an estate preservation strategy. A good one can help ensure that your assets are protected and loved ones cared for in the future. One of the best reasons to preserve an estate is to honor what you’ve done. People don’t want everything they’ve worked for in their lives to have no value in the future.

Estate preservation strategies vary greatly. Each must address the unique financial situation of the individual for whom it was crafted. Admittedly, some estate issues are complex. However, your financial professional is readily available to deal with every imaginable issue and can be invaluable in creating an estate plan—a formal roadmap to safeguarding your finances and possessions.

When should you develop an estate preservation strategy? There is no “right” age—but delay is unwise. It’s best to start early but, unfortunately, few people do. For example, 70 percent of Americans don't have a will.1 Reasons for delay vary. Many of us lead hectic lives. Others are uncomfortable discussing a time when they won’t be here. Still others want to avoid dealing with complex financial and legal issues.

While these factors are understandable, they’re outweighed by the benefits of having a sound estate preservation strategy. These include reducing estate taxes, allowing for a timely resolution of your estate and ensuring assets are distributed and protected according to your wishes. In addition, a strategy guarantees that, if you’re unable to make them, financial and health care decisions reflect your desires. While differing greatly from person to person, estate strategies typically are developed using a similar process.

The first step is to find expert assistance. A good team of advisors—including your attorney, financial professional, accountant, insurance agent and investment advisor—is essential. Once a team is assembled, start setting goals. Answering two questions will help:

How much money will you need for your lifetime?

It’s most important when goal setting to ensure you have enough to live on. This is known as the “necessary estate.” Without determining how much you will need for the rest of your life, and knowing that you are comfortable, you can’t move on to preparing an estate plan. Pinpointing your necessary estate and thus your “excess estate”—the money you won’t need—is more likely to lead to good decisions.

Where do you want your assets to go?

There are really only three places: heirs, charity or estate taxes. So, think carefully about the first two categories and, if this meets your objectives, do all possible to reduce the effect of the third.

After establishing goals, work with advisors to create a formal estate plan. This provides both a vision of the future and a path to get there. Estate plans can have many elements. However, almost all contain a few basics, such as:

  • A will. This is the most basic and necessary of all estate documents. It determines where assets go.
  • Health care power of attorney. This document spells out who will make health care decisions for you, if you cannot.
  • Financial power of attorney. This identifies who will make financial decisions, if you cannot.
  • A trust. Trusts come in many different forms. However, one of their chief functions generally is to protect assets. They also can avoid the delays and costs associated with probate. Trusts are not for the very rich alone, but can serve the needs of a wide range of people.

Once an estate plan is completed, be sure that all assets are titled so they reflect what’s in it. If they aren’t, the plan could be ineffective, confusing and counterproductive.

Remember that estate plans are not static. Tax laws are revised. Property is bought and sold. Marital and family statuses change. Objectives change. These events and others can affect a plan. So, monitoring is important. Annual—or even quarterly—reviews are appropriate.

While estate strategies often focus on personal assets, business owners also should safeguard their commercial interests. Without a plan, part or all of a business may have to be sold to pay estate taxes. Address business needs at about the same time that you deal with your estate. Consider drafting a succession plan that speaks to long-term management and ownership.

Finally, leave a paper trail. Write a list that covers all your assets and liabilities. Put that in a safe place with all your important documents, especially those related to your estate plan. Make sure that people you trust know where the list and papers are located.

1 “You need a will—even if you’re not “rich.” 02/04/19.

Insurance Analysis

A big part of keeping your dream alive is making plans to protect the financial situation of your loved ones, particularly your dependents. We believe that sound planning begins by building a strong base of financial security. We have access to a full spectrum of insurance products designed to help you manage the risks of premature death, disability and health care. We can provide guidance in choosing the type of coverage that is appropriate for you and your family, including those available through your employer. Insurance products offered through Lincoln affiliates and other fine companies.

Disability income insurance
Long term care insurance
Life insurance


Life insurance

Life insurance is often purchased to replace income that potentially can be lost with the death of a wage earner. Life insurance policies work from the same basic idea - they help protect the financial security of your family in the event of your untimely death. You pay the insurer "premiums" and the insurer promises to pay your beneficiaries a death benefit when you die. At that time, your beneficiaries receive the death benefit in effect at the time of your death.

Why buy life insurance? It can help protect your beneficiaries' home and livelihood, help replace your income and minimize the debt load for your survivors. In addition, proceeds paid to beneficiaries are not subject to income tax.

Universal life offers flexibility. The amount of premiums may vary as long as the available cash value is sufficient to cover the costs of the policy. You also can opt to increase or decrease the amount of the death benefit while the policy is in force.

Variable universal life is designed with the flexibility of a universal life policy together with variable investment options. The cash value varies with performance of an underlying portfolio of subaccounts. You select how to allocate the net premium among investment options (subaccounts) offered. Subaccount values fluctuate with market conditions.

Whole life is traditional life insurance. Premiums are guaranteed in the policy for the entire time the policy is in force. You accumulate a cash value, but the insurance company determines the interest rate credited to the cash value.

Term life insurance is purchased for a specific term of years: one, five, 10 or longer. If you die during the term, your beneficiaries receive the death benefit. But, if you're still living when the policy expires, coverage ends and there is no payout.

One thing is true for all types of life insurance - the younger you are and the healthier you are when you purchase life insurance, the less it will cost you to own a life insurance policy. You should consider your life insurance needs when major events occur in your life such as marriage, the birth of your children or a business startup.

Disability income insurance

Disability income insurance provides supplemental income to an individual whose earnings have been impacted due to an accident or illness. If you're an individual employee, disability insurance may help replace part of your income until you get back on the job. If you're a business owner, coverage may help pay day-to-day operating expenses if you're unable to work. It also helps provide funds to purchase a disabled partner's share of a business through a buy-out agreement or compensate for profits lost and expenses incurred if replacing a disabled key individual.

Disability income insurance is typically identified as one of three variations - partial disability, recurrent disability or total disability - and is designed to replace part of your income until you are able to return to work.

Generally, partial disability pays a portion of the total disability benefit to you if you are unable to perform one or more of your occupational duties because of disability. This provision is built into some disability policies or is available as a rider with others.

Recurrent disability describes situations where a disability occurs, you recover for a short period of time, then experience a recurrence of the same or related disability.

Usually, "total disability" considers you totally disabled if you are unable to perform the important duties of your occupation due to injury or sickness, aren't working in another gainful occupation and are under a physician's care.

Definitions of types of disabilities and coverage provided vary according to the provisions of a particular disability policy.

Long term care insurance can provide added reassurance in the event of a disabling illness or injury. Likewise, individual life insurance can help you plan for your future, making sure you have enough income to provide for loved ones or even the continuation of a business after you're gone.

Long term care insurance

Long term care insurance provides you with day-to-day assistance when a serious illness or disability renders you unable to care for yourself, whether physically or cognitively, for a lengthy period of time. Long term care can be provided at home or at nursing, assisted living or alternate care facilities.

Long term care insurance can help provide a sense of security. You can gain maximum protection against the potentially high costs of long term health care while helping to preserve your resources.

Decisions about long term health care are seldom easy. You'll need to consider several basic factors in making your choices for long term coverage. Your eligibility and long term care rates are based on your age, sex, health type and amount of coverage selected.

An effective long term care plan can be tailored to suit your needs with supportive protection benefits such as home health care protection. This is when a home health care aide cares for you up to eight hours a day and your primary care giver, such as a spouse or a child, cares for you the remainder of the time.

In addition, you may want to consider inflation protection, which ensures that your benefits keep pace with nursing home costs. For an additional premium, inflation protection offers an annual increase in benefits.

You may wish to consider partnering your long term care plan with a disability insurance plan, as well as life insurance coverage, to provide a well-rounded protection plan.

Investment Planning

Diversify beyond investments

Diversification alone may not be sufficient to protect your investments. By taking a broader view, a financial planning strategy can put safeguards in place to help protect yourself and your family.

For instance, purchasing disability income insurance provides protection for your ability to earn a living. Life insurance is another form of protection. It can help preserve your estate assets and reduce the risk that a disaster could wipe out your family's standard of living. Life insurance can also provide the necessary cash for your survivors to pay estate taxes and other expenses, or to carry on a family-owned business.

A properly planned estate can also be a part of your overall strategy. Simply having a will may not be enough. You may need to coordinate your will with trusts for your children, life insurance and estate tax planning. Estate planning can help preserve and direct the distribution of your assets after your death.

A diversified financial planning strategy will not eliminate risk or guarantee success. But it does offer an approach to help protect your assets, reduce risk and potentially grow assets over time. Talk with a qualified professional about how to put an effective financial planning strategy in place.

You've heard the old investment adage, "Don't put all your eggs in one basket." It's good advice. A diversified portfolio should be at the core of any well-planned investment strategy. While a worthy goal at any age, it's especially desirable as your net worth grows over the years. The basic purpose of diversification is to reduce risk and volatility. It's primarily a defensive type of investment policy. Depending on your investment goals and tolerance for risk, your strategy may emphasize one type of investment over another. But overall, your investment plan should be diversified. That's because no single type of investment performs best under all economic conditions. A diversified program is capable of weathering varying economic cycles and improving the trade-off between risk and return. Of course, diversification cannot entirely eliminate the risk of investment losses. Diversification offers returns which are not directly related over time and is intended for the structure of a whole portfolio to help reduce the risk inherent in a particular security.

Retirement Planning

Financial independence during retirement is a goal that many of us desire but rarely plan for adequately. We can estimate what you need to maintain your current lifestyle at retirement. Any company-sponsored retirement plans, individual retirement accounts, savings accounts, and other sources of income are evaluated. Then, an effective, step-by-step strategy is determined, taking advantage of current tax laws and suitable investment vehicles. Creating a strategy can help set the stage for a comfortable retirement.

Five essential steps on the road to retirement 

Establish Your Objectives
Determine Your Investment Style
Evaluate Investments
Choose an Appropriate Investment Plan
Execute and Periodically Examine the Plan

Establishing your retirement plan through Lincoln Financial Advisors means investment flexibility. You have the ability to select and then reposition your portfolio holdings to satisfy ever-changing personal and economic conditions. Our selection of self-directed retirement accounts includes:

Traditional IRA - An account established and funded by individual contributions or an individual retirement plan transferred from another financial institution.

Rollover IRA - A retirement account funded by distributions received from an employer's qualified pension or profit-sharing plan upon termination of employment.

SEP-IRA - A retirement account established and funded by employer contributions.

Start now!

The longer you wait to create a retirement plan, the more you jeopardize your future happiness. You'll thank yourself tomorrow for what you start today.