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Can a Policy Review Save You Money? We Say Yes…

Policy Review: Lower Premium;  Increased Life Insurance, Tax-Free Income

Whenever we make a major purchase, we always look for the best return on our investment: whether it’s a car, a home, or an insurance policy.
When it comes to our tangible assets, it’s easy to see when they need updating or maintenance. Unfortunately, less tangible assets like insurance policies often get filed away and forgotten, but it’s just as important to review and revisit these on a regular basis. Here’s why you should always consider a policy review.


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Leverage Your Insurance – Get More for Less

Leverage Your Insurance – Get More for Less

Whenever we make a major purchase, we always look for the best return on our investment: whether it’s a computer, a car, a home, or an insurance policy. When it comes to our tangible assets, it’s easy to see when they need updating or maintenance. Unfortunately, less tangible assets like insurance policies and investments often get filed away and forgotten but it’s just as important to review and revisit these on a regular basis.  Here’s why.

A recent case came about from a  simple insurance review that uncovered an expensive contract that did not match the goals of the insured: too high a premium, not enough in the form of benefits.
As we talked with our client about his individual needs needs and goals, we were able to offer a solution that:
  • Lowered their insurance premium by $21,000 per year;
  • Added tax free income beginning at age 66 for a period of 20 years
  • Maintained a life insurance benefit

Leverage Options 5 - More for Less

Whether you’re looking at minimizing your tax bill, maximizing your retirement income, or options for long term care, we know we can find a solution that meets your specific needs. Give us a call at (617) 527-9736 or send us an email



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Picture8Remember the “good old days”  when after-dinner  discussion on Sunday revolved around sports, food, family, and finances? Food was all about the just-eaten meal, sports covered Mickey Mantle vs. Willie Mays, family was about that one annoying relative, and I distinctly remember finances being about smart men putting their money in Municipal Bonds.  As an adult I realize why. Because Municipal Bonds were safe and they were tax free, and setting up an option for tax free income was a smart thing to do in those days.

Somehow, that philosophy of establishing tax free income  became less popular as declining bond values were replaced with the lure of  unlimited upside growth  from the stock market. Slowly and for a variety of reasons, no one really talks about Municipal Bonds Picture9anymore and that moved the conversation away   from talking about tax free income and safety.

However, in an environment of high personal income and capital gains taxes, the importance of tax free income can never be overstated. The more tax free income you can derive, the lower you can drive your tax bracket, and  although wealth managers  convince people that they will be in a lower tax bracket when they retire, the
reality is  that we really will not be in a different tax bracket if we are expecting $150,000 or more of  retirement income. So the question I ask when working with a new  client is “How much money do you have in the tax free zone?”

The tax free zone is where assets grow and are distributed tax free. Municipal Bonds are in that zone, so are Roth IRAs as well as Life Insurance.  As a planner, I use life insurance almost exclusively when planning tax free growth and income. It is a far more flexible asset because it does not have the limits of a Roth IRA nor the low interest rate callability of a municipal bond.

Picture10What if we could target the cash value build up (as best as one can target when determining future values) so that the cash withdrawals from the tax free insurance can be withdrawn to pay future taxes on retirement income, which are usually high? What impact would that have?

Furthermore, if we believe that the stock market will keep growing, would it not be a  good idea to hedge our stock market investment from negative growth?

We found three extraordinary outcomes when we started putting people in the tax free zone:

 First, a well planned out insurance contract can end up paying the income tax on retirement income at a huge discount and withdrawal streams can last longer because of their tax free nature. When you do not pay taxes on income, you do not have to withdraw as much money from retirement accounts.

Second, by creating tax free income, we were able to keep incomes high and tax brackets lower. This was an extraordinary reality; taking the tax money you did not pay the government in the form of a tax deduction, start your tax free account creating future tax free income while lowering your tax bracket.

Third, we were able to hedge against loss.

Based on these results, Goldwater Financial created ” Planning in the Tax Free Zone” which takes a deep look at how our clients grow their money and what the tax outcome will be. We are creating tax deductions through pension contributions and using the tax savings to start alternative insurance programs that will create tax free income in the future. All of these tax reduction ideas are folded into the Tax Free Zone style of planning.  If this type of planning intrigues you, then contact us at  617-527-9736 to learn more.



Long Term Care (and more) For C-Corps

If you own a C-Corp and wonder how you can offer Long Term Care benefits (and then some), then check out this 2 minute video!  We show you how a family C-Corp can deliver LTC for family members and their spouses, tax deductions, life time coverage, premium coverage and extraordinary company benefits for family owners.  Here’s how….


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Untitled-24Are you truly aware of how you can pay your future taxes at a discount?  Are you ACTIVELY working with your advisers—be they CPAs or attorneys—to implement strategies that will ensure you do not pay unnecessary taxes or leave you vulnerable to unprotected risk?

Here are a few questions you should be asking:Picture1

  • Have you created a TAX FREE ZONE for savings and income?  (Note that your 401(k) or pension is NOT a tax free zone).
  • Do you know HOW MUCH INCOME you will need in retirement?
  • Do you know what your SOURCES OF INCOME will be in retirement?
  • Do you know what the TAX ON YOUR INCOME will be in retirement?
  • Will you be in a LOWER TAX BRACKET in retirement?
  • Are you in a position to pay future taxes at a discount and protect your assets in case of a severe health event?

If you answered NO to one or more of these then now is the time to take a look at your portfolio to analyze whether your retirement savings and retirement assets are fully protected from taxes.

There are three ways that you can effectively create lower taxes on income in retirement:  you will either have to lower your income, create tax losses to offset your income, or create a tax free zone where all income is usually received tax free (I say usually because it is imperative that you follow the uncomplicated rules).  In the tax free zone, wealth transfer is usually tax free and health protection benefits are received tax free. The illustration below shows these options.








A TAX FREE ZONE is the most under-utilized position in most peoples’ portfolios. Contact Goldwater Financial Group TODAY at 617-527-9736 to determine how a tax free zone can be added to your existing portfolio.

*Disclaimer:  rules must be followed for these strategies to work effectively


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TAXES – Deduct, Leverage & Save

Infographic 8 - Taxes - Deduct, Leverage, Save

We believe an excellent way to viably tax deduct a buy sell agreement is through a profit sharing or defined benefit pension plan. On the surface, these plans appear complex, but when broken down are quite straightforward.

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Man with  TelescopePrivate Financing has long been a concept that estate planners have used regularly, but it has become even more popular recently. With low interest rates, transferring wealth can now be done with less capital, less cost, and less administration.

The mid-term Applicable Federal Rate (AFR) is the interest rate that applies to private financing transactions where the loan term is greater than three but no more than nine years. The rate has increased slightly from its 2012-2013 lows, but is still lower now than its historic averages1 – making now an attractive time to take advantage of wealth transfer arbitrage.

 Who might take advantage of this opportunity?

People with large estates may have a need for larger amounts of life insurance than what can be purchased with their annual exclusion gifts and they may object to the gift taxes associated with gifting the additional dollars to an Irrevocable Life Insurance Trust (ILIT)2.

Private Financing may be able to provide an alternative method for funding these annual premiums. This strategy may be considered for those who have exhausted their lifetime credit or those who want to use that lifetime credit to gift other assets.

Once an irrevocable life insurance trust is established, cash can be loaned on an annual basis or in a single sum to pay premiums. Because the loan is usually coming directly from the insured and going to his or her ILIT, collateral is not required as it would be with a commercial loan. Once the loan is made, the trust will invest the assets.

All income received over and above the required annual interest payment could be used to purchase life insurance inside the trust. This loan interest is based upon the current AFR, so the lower that rate is, the more attractive the private financing  concept becomes. This lump sum loan strategy may not work as well for individuals in their early 70s and older and will generally only be a fit for individuals with large amounts of cash at their disposal.

CoupleLet’s consider the example of a wealthy married couple who are both age 65 and healthy3.

They can set up an ILIT and seed it with a $500,000 gift4. The ILIT will then purchase a Survivorship Universal Life policy on their lives with a $5,306,479 face amount and $151,198 premium due annually for nine  years5. The ILIT borrows the premium from the Grantor for a total loan of $4.5 million. The ILIT’s annual interest payments are received income tax  free from the trust to the Grantor. With a nine year loan term, they can lock in mid-term AFR. For our example, we are assuming this to be 2%. After the term, the loan will be paid back in full.

Private Finance Chart

For appropriate individuals and families, the current environment may present an excellent opportunity to put needed insurance in place.

For more information Private Finance options, call us now at (617) 527-9736 or click here to contact us.



1 http://apps.irs.gov/app/picklist/list/federalRates.html.
2 Trusts should be drafted by an attorney familiar with such matters in order to take into account income and estate tax laws (including the generation skipping tax). Failure to do so could result in adverse treatment of trust proceeds.
3 Case studies are offered to show how we can provide insurance solutions in the advanced sales marketplace. Results may vary, and this example does not guarantee a similar result.
4 The interest earned inside the trust is assumed at 4.0%, a 40% estate tax rate is assumed, and 100% of the note is includible in the Grantor’s taxable estate.
5 Prudential SUL Protector, based on a 65 year old male at preferred non-tobacco and 65 year old female at preferred non-tobacco in the state of Alabama. Illustration run May 22, 2015.



Do YOU Have a Boiler Plate Retirement Plan?

Picture13Whether we like to admit it or not, most of us do indeed have a boiler plate retirement plan.  We start work and immediately sign up for the 401(k) plan with the employer match. We assiduously contribute to the plan and our employers assiduously match our contribution. We don’t know the first thing about investing so we’re advised to put our contribution into the “higher risk” plan if we’re young, “average risk” plan if we’re in the middle of our careers, and “low risk” plan if we’re nearing retirement. That’s where the investment/retirement planning ends for many of us. Maybe we move the funds around now and then, maybe we don’t. By the time we hit 50 and check to see the “millions” that have supposedly accumulated in our plans, we’re disappointed to see that we’re nowhere near ready for retirement.

What’s more, what we have accumulated will be further reduced by the time we retire: we’ll need to pay taxes, the cost of living will be considerably higher and we have no idea what our medical costs may be. So what do we do?

Before panic sets in, there really is something that you can do. As the famous Stephen Covey famously said the first step is “begin with the end in mind”, then you seek out the adviser who can help you reach that end.

Beginning with the end in mind means you need to ask yourself some tough questions:

  1.  At what age do you want to retire?
  2. How much annual income (after taxes) do you need to retire comfortably? Remember you’ll need to adjust this for inflation!!
  3. What is the value of your current retirement plan and, based on historic growth, what will it be by the time you retire?
  4. How much of that plan will go to paying the taxes due on that income?
  5. Once all of this is taken into account, will you have enough to retire and if not, what’s your plan to get there?

Man on Ladder 2While these questions may seem initially overwhelming, with the right adviser, they needn’t be, but here’s a hint: the right adviser is most likely NOT your 401(k) adviser.  When looking for the right adviser, make sure you find someone who can not only estimate the future value of your current plan based on historic growth, but also account for inflation and taxes to give you a realistic picture of “the bottom line”. The right adviser should also give you options to minimize your tax bill as well as increase retirement income to offset inflation. You really do have more options available to you than you think. Click HERE to download GFG’s Wealth Management & Retirement Handbook to check out just a few of them….