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Journal of Financial Service Professionals - Current Issue

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Vol. 74, No. 5, September 2020

FOCUS ON Estate Planning & Financial Planning

Implementing Guardianship Policies in Special Needs Planning: Five Possible Pitfalls
Annemarie M. Kelly, JD, LLM
Lewis B. Hershey, PhD, MA
Christina N. Marsack-Topolewski, PhD, LMSW
This article reviews recent literature, policies, and litigation concerning guardianship matters to analyze public and private guardianship programs across all 50 states. Special needs planners should consider that guardianship issues are rife with systemic inequities and inefficiencies. The authors conclude that planners must be aware of at least five possible pitfalls to best serve their clients: (1) There is a pressing need for improved government oversight of guardianship arrangements; (2) A full guardianship order can sometimes remove more rights than necessary; (3) Guardians can face conflicts of interest between their income and fiduciary duty; (4) Federal and state governments do not have comprehensive datasets to analyze guardianship matters in detail; and (5) Guardianship reform policies are stymied by insufficient government funding.

Common Business Valuation Methods and Related Topics
David K. Smucker, CPA, CLU, ChFC, MSM
Valuation of a closely held business is frequently a stumbling block in a succession or estate planning engagement. Formal valuations may eventually be necessary, but at the beginning they are often viewed as time consuming and expensive. Several major insurers offer informal assistance in valuing closely held businesses. This article will assist financial services professionals to become conversant with common valuation formulas and related topics, so they can be more effective in assisting in succession and estate planning engagements that require business valuations.

Paycheck Protection Program: Piecing Together the Loan-Forgiveness Phase
Suzanne M. Gradisher, JD, MTax, MBA, CPA (inactive)
Terri Tassell-Getman, JD, CLU, ChFC, RICP, AEP (Distinguished)
Since the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, it has garnered nationwide attention. A program that generated significant excitement from the small-business community is the Paycheck Protection Program (PPP), because it appeared to offer owners an incredible opportunity for relief from the economic crisis caused by the coronavirus pandemic. Unfortunately, guidance has been released in a piecemeal fashion, creating difficulty in the implementation of the requirements. With all of the challenges business owners have faced so far in maneuvering the PPP provisions, the greatest test will be whether the average PPP borrower will be able to sift through all the guidance to find how to determine forgiveness. This article will help financial professionals understand the criteria to achieve forgiveness of PPP loans.

Retirement Income Planning Issues for 2021
Anthony P. Curatola, PhD
J. William Harden, PhD, CPA, ChFC
James W. Rinier, CPA, EA
David R. Upton, PhD
Congress has been particularly busy the past 2 years making a number of changes to the distribution requirements for owners of qualified retirement plans, including IRAs. In addition, the Department of Treasury (Treasury) has recently revisited the life expectancy tables and issued proposed regulations that increase the life expectancy tables for individuals, beginning with tax year 2021. Since Congress temporarily suspended the required minimum distributions for tax year 2020, taxpayers and financial service advisors have a chance to catch their breath to assess how best to address these changes for their clients and prospective clients. This article focuses on the new legislation and regulations that are relevant to those in the financial services area as they respond to these numerous changes affecting retirees.


Editor’s View
Three Ways the Tax Code Helps Low- and Moderate-Income Clients
Kenn Beam Tacchino, JD, LLM
Many financial planners focus on assisting high-net-worth clients. However, it can be reasonably argued that those in the lower- and moderate-income groups may need the most support with financial matters. In light of the recent pandemic-induced economic turmoil that squeezed the livelihood of many Americans, it might be a good time for the financial service industry to roll up its collective sleeves and pitch in. One place to start is to identify tax code provisions that enable less affluent individuals to plan for retirement, pay for college, and cope with student debt.

Economics & Investment Management
Do Presidential Elections Predict Market Returns?
John E. Grable, PhD, CFP
You have probably heard that equity investors prefer Republicans over Democrats in the White House. This column explores this piece of conventional wisdom by looking at one-year market performance after a presidential election. It turns out that there may be a short-term trading opportunity for risk-tolerant investors; but over the long run, the markets do not appear to favor Republicans or Democrats.

Estate Planning
Estate Planning during the Pandemic
Dennis C. Reardon, JD, LLM, CLU, ChFC
This column is a summary of ideas and concepts to consider as you communicate with your clients during the pandemic. First, planners should note that the virus may tend to help people to overcome the procrastination that so often occurs with estate planning. Second, planners should consider recommending a transfer of a business interest while the value of the entity is low because of uncertain projections of future profits. Historically low interest rates can also propel effective estate planning.

Ethics & Regulation
The Increasing Importance of Digital Assets in Estate Planning
James Pasztor, MSF, MPAS, CFP
The coronavirus pandemic has accelerated internet usage and creation of so-called digital assets. This in turn has increased the importance of helping clients to properly manage their digital assets when putting together an estate plan.

Executive Compensation
The CARES Act Impacts Executive Compensation
Paul J. Schneider, JD, LLM
As a consequence of the economic distress arising from the COVID-19 pandemic, policymakers are taking exceptional measures with respect to public health, public finance, monetary policy, corporate governance, and day-to-day business operations. Among the latter are issues regarding executive compensation. This column will highlight the aspects of executive compensation that have been impacted by two provisions of the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act). The first is the provision imposing limits on the compensation paid to certain higher-paid executives and the second is the provision authorizing a coronavirus-related distribution to be made to eligible retirement plan participants.

Financial Gerontology
Aging, Social Isolation, and Resilience: What Do We Need to Know?
Sandra Timmermann, EdD
Here’s a headline that catches our attention: Researchers are warning that social isolation can be as damaging to a person’s health as smoking 15 cigarettes a day. Older persons are particularly vulnerable, especially during the time of coronavirus. On the other side of the coin, older persons are known to be resilient. They have lived a long life with its ups and downs. Despite the pandemic, they are able to look at the big picture and are taking things in stride. Family members and financial service professionals have a role to play in identifying those who may be feeling isolated and lonely, and provide some support that can make a difference in their lives.

Health Insurance
William S. Custer, PhD
The rapid adoption of telehealth could change the structure of health plan networks. While the opportunities to increase access to care in underserved rural areas is the most obvious effect, telehealth increases access to care in urban areas as well. As consumers become more comfortable with telehealth, forming competitive health plan networks for new entrants into a health insurance market may be easier if it can utilize telehealth. It has the potential to increase competition in the health services market, which could lower health insurance claims costs.

Practice Management
Regulation Best Interest: A Workable Solution
Douglas B. Richards, JD, MBA, CLU, ChFC
Regulation Best Interest is upon us. The ratio of regulation to commentary is, once again, an indication of a massive effort to try to align the duties of brokers with those who provide investment advice.

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