Category: Uncategorized

What We Kamaaina Need to Know about Hawaii Inheritance Law

Estate planning is important for most of us; not just for the uber-wealthy. However, most Americans have no plan in place. We need to rectify this. The good news for us kamaaina (and by the way, if this term is unfamiliar, then this article may be irrelevant) is that the state of Hawaii has no inheritance tax. Don’t celebrate, yet. Because the bad news is that Hawaii happens to be one of only twelve states with an estate tax. My goodness, this is getting complicated. What’s the difference? So let’s talk straight: First off, as a fiduciary and financial advisor, I do not provide tax advice. But I choose to work with island families because it’s my heritage. My family has been a part of the Aloha State for over 150 years and I delight in looking out for my island neighbors. Ohana is a very big thing here, so let me introduce some basic inheritance laws so that it can be beneficial to the hoi polloi. But make no mistake about it, estate planning is a hyper-complex endeavor. Estate planning is not a DIY project; be forewarned. At minimum, work with someone you trust, but go further and make sure they’re a ‘fiduciary’, Hawaii-licensed financial advisor. Together you can seek out and engage an estate planning attorney to help you navigate these complex waters.

Again, Hawaii does impose an estate tax on island residents. Remember, Hawaii is a very ‘Blue’ state and the democratic ideal (some say, ‘welfare state’) is prevalent in it’s laws too. Here’s what I mean, the Hawaii estate tax is clearly a ‘progressive’ one. That is, the tax percentage gets progressively higher the more you earn. Whereas, lower-income earners aren’t hit as hard. Fair enough. Irregardless of income, the exemption is set at $5.49 million deaths taking place in 2021. Therefore, if you call Hawaii home and leave behind more than $5.49 million, your estate may receive a Hawaii estate tax bill. It doesn’t stop there. The ‘federal estate tax’ is separate from the ‘Hawaii estate tax’. The federal estate tax is levied only on estates worth more than $11.7 million (again, for deaths occuring in 2021).

NOTE: A Hawaii estate tax report must be filed for estates valued at more than $5.49 million. This includes everything one has from the value of their real estate portfolio, to bank accounts, investment portfolios, life insurance policies, qualified and non-qual retirement accounts, as well as other assets.

At our firm, we often get the question of whether an individual should a have will or a trust. Both are estate planning tools that can help ensure your assets are protected and bequeathed to your heirs, (besides your spouse, which is generally not an issue). One thing is for certain, it is always best to create and leave a valid will and last testament. It’s about control, that is, it provides you with the most control over how and to whom your estate is distributed. A will is simply a written document expressing a deceased person’s wishes. Trusts take it a step further and offer more control of your assets. Yes, a trust is more expensive, but it does more and is actively managed. Whether you choose to leave behind a will or a trust depends on your circumstances. My professional advice is to seek the counsel of, and guidance from an estate planning attorney licensed in Hawaii.

So, what if you die without a will? Well, it’s called intestate. The state of Hawaii will get involved, and it is not the best route for you to take. Why? Because it is not about your express wishes. As I half-jokingly tell a few clients who dismiss the need for a will. I say, ‘get one, because if you don’t, the state of Hawaii has one for you…but you just might not like it.’ Instead take control of your personal wishes. Yes, the distribution of your assets is vitally important too; but your carrying out your wishes are the intangible, invaluable.

Do I need a trust? Is it expensive? What are they? These are common questions we frequently hear. For starters, there are many types of trusts. However, taking a high-level view, it comes down to having two categories: living and testamentary. You’ll find a lot of information on both categories online. One huge difference between a will and a trust comes down to ‘privacy’. A will goes through ‘probate'(term meaning, ‘to prove’), essentially proving in court that a deceased person’s will is valid. Upon your death, your will goes through probate(read publicly), and a trust does not. A living trust passes property outside of probate court; privately not publicly read. Another benefit is that there are no attorney fees after the trust is established. Your property can be passed immediately and directly to your named beneficiaries. 

As you can see, overseeing your own estate, or supervising the fine points of inheriting money from the estate of a loved one, can quickly get problematic. To alleviate the pain, I suggest people start by seeking out a trusted advisor. Better yet, hire a fiduciary–that is, the legal requirement for financial advisors to work in their customers’ best interest. Estate planning can be overwhelming. We recommend you speak with your financial advisor. 

Do You Know Your Social Security Options?

Social Security payments are a big part of many people’s retirement income –
and that may be the case for you.

If you’re nearing retirement or are already retired, you probably have several questions as it pertains to your Social
Security payments:
• How much could I receive in monthly benefits?
• What if I start taking my Social Security payments before I reach my full retirement age?
• What if I wait until my full retirement age to begin drawing my benefit? What will my benefit be?
• If I continue to work, how much of my Social Security benefit would be withheld?
• What happens when my spouse passes away?

How Are My Worker Benefits Calculated?
You can become eligible for Social Security benefits by working at a Social Security covered job for at least 10 years or until you have accumulated 40 quarters in the workforce. To calculate your benefit, 35 of your highest earnings years are averaged (if you haven’t worked for 35 years, your benefit will be averaged over the years you’ve worked, with the years needed to reach 35 counting as zero). In general, the more years you spend in the workforce and the higher your income, the higher your retirement benefit.

When Can I Start Receiving Benefits?
You can begin receiving Social Security payments at age 62, but if you do file at that age you’ll only get 75 percent of your full amount. If you wait past your full retirement age to begin receiving payments, you’ll get more than 100 percent of your benefit amount. File earlier; receive a smaller check for a longer period. Wait to file, and potentially receive a larger check and a larger survivor benefit for your spouse. An 8 percent delayed retirement credit will be added to your benefit for each year you delay receiving benefits after your full retirement age, which may enhance your benefit by as much as 32 percent.

Check this out!

Let us help YOU!

CONTACT M. Garrett Wheeler today. No cost/no obligation planning session with NO STRINGS ATTACHED.

As Mr. Wheeler points out, “Investments are a matter of opinion. Taxes are a matter of fact. When we are engaged by a client to deliver on our fee-based planning services, we start by making it 100% all about the client; not us!”

Wheeler goes on to say, “we focus on providing my clients with tax-reduction advice and strategies. Not on the latest financial product or investments (i.e. Crypto…).”

Understanding more about the U.S. tax system, how it works and getting ideas to help you maximize your income in retirement may be a conversation that you want to have. If it is the case, feel free to reach out to us. We can help you with all of this and make it relatively painless. We look forward to discussing your needs. Aloha!


A long-term care policy does many things. For one, clients tell me that they feel it is a great way to help them avoid being a ‘burden’—having to rely on family members for care. It’s not what they choose to be remembered for. But LTCi also enables you to remain in your home as long as possible. Many of my clients tell me, this is critically important, to remain in their homes. And then there is the ‘financial’. Additionally, it transfers this real ‘risk’ to the insurance company, instead of the high cost of care depleting your ‘life savings’. Let us help you protect your retirement nest egg.

You worked hard to plan for a comfortable retirement. Spending your life savings on long-term care services isn’t on your to-do list. Contact me to learn how long-term care insurance can help you protect your future.

Ask me about these strong LTCi features and benefits:

1. Cash Benefit with No Elimination Period: Our LTCi plan provides cash to pay for any cost associated with LTC expenses.
2. Stay-at-Home Benefit: Includes multiple benefits to help people stay at home as long as possible.
3. Partnership-Qualified Policies: Gives LTCi policyholders a Medicaid safety net.
4. Inflation Protection Options as Low as 1%: Allows you to reach a client’s desired premium.
5. Partner-Friendly Benefits: Includes benefits for partners who purchase identical coverage.


Handling Market Volatility

Garrett Wheeler says, “Hawaii investors who are nearing, or like my parents, are in retirement should use market volatility as an impetus to re-examine their portfolios. Let’s be clear, I’m not saying to transfer your entire holdings to a cash position. But I do suggest that our island retirees’ and those near-retired take a strong second look at their asset allocations. Retirement income planning, including withdrawal rates, are crucial given the expected longevity of our seniors’.” He suggests talking to your Financial Advisor.

The stock market was a solid one for investors in 2019, with several major indexes reaching record highs. But fear of an economic decline topped the list of CEO concerns heading into 2020. A global economic slowdown could mean increased market volatility.

When markets are volatile, sticking to a long-term investing strategy can be a challenge. But there are ways to help keep market turbulence from distracting you from your goals. First, have a game plan. Second, check your asset allocation. Third, use market volatility to fine tune your portfolio. A well-thought-out investment plan can help keep emotion from driving your decisions. For example, you might decide in advance to take profits when the overall market rises by a predetermined percentage. You might try to hedge the risks of one investment by buying something else that may profit if that investment struggles. Or you might use a buy-and-hold strategy for core investments, but be more flexible with other assets. Next, check your asset allocation. Has it changed because of market forces? If one type of asset now represents too small—or too large—a piece of your portfolio, you might want to rebalance.

If you want to adjust your allocation but are worried about making sudden moves at the wrong time, you don’t have to do everything at once. Dollar cost averaging into or out of investments lets you spread your risk over time and could help you reposition your portfolio gradually. Third, use market volatility to your advantage. Market cycles offer both obstacles and opportunities. For example, if you missed out on an investment in the past because it was too expensive, the price might be lower now. If you have losses in a taxable account, you may be able to use them at tax time to reduce the amount of income tax you’ll owe. And some investments are designed specifically to profit from market swings, though they may not be suitable for every investor.

Remember, markets go up… and down. Everyone faces investment setbacks; good investors learn from them.
All investments are subject to market fluctuation, risk, and loss of principal. When sold, investments may be worth more or less than their original cost. Asset allocation is a method used to help manage investment risk; it does not guarantee a profit or protect against investment loss. Dollar-cost averaging does not ensure a profit or prevent a loss. Such plans involve continuous investments in securities regardless of fluctuating prices. You should consider your financial ability to continue making purchases during periods of low and high price levels. However, this can be an effective way for investors to accumulate shares to help meet long-term goals.

BROADRIDGE “FINRA reviewed,” Reference: FX2020-0130-0266/E Org Id: 114212

  1. Handling Market Volatility (#VCA_Mark_Vol_2020)
    Rule: FIN 2210

How Much Annual Income Can Your Retirement Portfolio Provide?

Concerned About outliving your money?

Provided by: Broadridge Investor Communication Solutions, Inc.
Your retirement lifestyle will depend not only on your assets and investment choices, but also on how quickly you draw down your retirement portfolio. The annual percentage that you take out of your portfolio, whether from returns or the principal itself, is known as your withdrawal rate. Figuring out an appropriate initial withdrawal rate is a key issue in retirement planning and presents many challenges.

Why is your withdrawal rate important?
Take out too much too soon, and you might run out of money in your later years. Take out too little, and you might not enjoy your retirement years as much as you could. Your withdrawal rate is especially important in the early years of your retirement; how your portfolio is structured then and how much you take out can have a significant impact on how long your savings will last.Gains in life expectancy have been dramatic. According to the National Center for Health Statistics, people today can expect to live more than 30 years longer than they did a century ago. Individuals who reached age 65 in 1950 could anticipate living an average of 14 years more, to age 79; now a 65-year-old might expect to live for roughly an additional 19 years. Assuming rising inflation, your projected annual income in retirement will need to factor in those cost-of-living increases. That means you’ll need to think carefully about how to structure your portfolio to provide an appropriate withdrawal rate, especially in the early years of retirement.

Current Life Expectancy Estimates
At birth: Men = 76.2 Women = 81.2
At age 65: Men = 83.1 Women =85.7
Source: NCHS Data Brief, Number 355, January 2020

Conventional wisdom
So what withdrawal rate should you expect from your retirement savings? The answer: it all depends. The seminal study on withdrawal rates for tax-deferred retirement accounts (William P. Bengen, “Determining Withdrawal Rates Using Historical Data,” Journal of Financial Planning, October 1994) looked at the annual performance of hypothetical portfolios that are continually rebalanced to achieve a 50-50 mix of large-cap (S&P 500 Index) common stocks and intermediate-term Treasury notes. The study took into account the potential impact of major financial events such as the early Depression years, the stock decline of 1937-1941, and the 1973-1974 recession. It found that a withdrawal rate of slightly more than 4% would have provided inflation-adjusted income for at least 30 years.

Other later studies have shown that broader portfolio diversification, rebalancing strategies, variable inflation rate assumptions, and being willing to accept greater uncertainty about your annual income and how long your retirement nest egg will be able to provide an income also can have a significant impact on initial withdrawal rates. For example, if you’re unwilling to accept a 25% chance that your chosen strategy will be successful, your sustainable initial withdrawal rate may need to be lower than you’d prefer to increase your odds of getting the results you desire. Conversely, a higher withdrawal rate might mean greater uncertainty about whether you risk running out of money. However, don’t forget that studies of withdrawal rates are based on historical data about the performance of various types of investments in the past. Given market performance in recent years, many experts are suggesting being more conservative in estimating future returns.

Past results don’t guarantee future performance. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful. Rebalancing involves selling some investments in order to buy others. Investors should keep in mind that selling investments in a taxable account could result in a tax liability. Diversification does not guarantee a profit or protect against investment loss.

Inflation is a major consideration

To better understand why suggested initial withdrawal rates aren’t higher, it’s essential to think about how inflation can affect your retirement income. Here’s a hypothetical illustration; to keep it simple, it does not account for the impact of any taxes. If a $1 million portfolio is invested in an account that yields 5%, it provides $50,000 of annual income. But if annual inflation pushes prices up by 3%, more income — $51,500 — would be needed next year to preserve purchasing power. Since the account provides only $50,000 income, an additional $1,500 must be withdrawn from the principal to meet expenses. That principal reduction, in turn, reduces the portfolio’s ability to produce income the following year. In a straight linear model, principal reductions accelerate, ultimately resulting in a zero portfolio balance after 25 to 27 years, depending on the timing of the withdrawals.

Volatility and portfolio longevity
When setting an initial withdrawal rate, it’s important to take a portfolio’s ups and downs into account — and the need for a relatively predictable income stream in retirement isn’t the only reason. According to several studies done in the late 1990s and updated in 2011 by Philip L. Cooley, Carl M. Hubbard, and Daniel T. Walz, the more dramatic a portfolio’s fluctuations, the greater the odds that the portfolio might not last as long as needed. If it becomes necessary during market downturns to sell some securities in order to continue to meet a fixed withdrawal rate, selling at an inopportune time could affect a portfolio’s ability to generate future income.

Making your portfolio either more aggressive or more conservative will affect its lifespan. A more aggressive portfolio may produce higher returns but might also be subject to a higher degree of loss. A more conservative portfolio might produce steadier returns at a lower rate, but could lose purchasing power to inflation.

Calculating an appropriate withdrawal rate
Your withdrawal rate needs to take into account many factors, including (but not limited to) your asset allocation, projected inflation rate, expected rate of return, annual income targets, investment horizon, and comfort with uncertainty. The higher your withdrawal rate, the more you’ll have to consider whether it is sustainable over the long term.

Ultimately, however, there is no standard rule of thumb; every individual has unique retirement goals, means, and circumstances that come into play.
Registered representatives offer securities and investment advisor representatives offer advisory services through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Mutual of Omaha Advisors is a marketing name for Mutual of Omaha Investor Services, Inc. Mutual of Omaha Investor Services, Inc., The Wheeler Group LLC and Broadridge Investor Communication Solutions, Inc. are not affiliated.

Trading instructions sent via e-mail will not be honored. Please contact my Hawaii Division Office at (808) 942-8133 or Mutual of Omaha Investor Services, Inc. at (800) 228-2499 for all buy or sell orders. Please note that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets.

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances.To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable–we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Copyright 2020 by Broadridge Investor Communication Solutions Inc.
All Rights Reserved.

Changing Jobs? Know Your 401(k) Options

What should you do with your 401(k) when you switch jobs?

Provided by: Broadridge Investor Communication Solutions, Inc.
If you’ve lost your job, or are changing jobs, you may be wondering what to do with your 401(k) plan account. It’s important to understand your options.

What will I be entitled to?
If you leave your job (voluntarily or involuntarily), you’ll be entitled to a distribution of your vested balance. Your vested balance always includes your own contributions (pre-tax, after-tax, and Roth) and typically any investment earnings on those amounts. It also includes employer contributions (and earnings) that have satisfied your plan’s vesting schedule.In general, you must be 100% vested in your employer’s contributions after 3 years of service (“cliff vesting”), or you must vest gradually, 20% per year until you’re fully vested after 6 years (“graded vesting”). Plans can have faster vesting schedules, and some even have 100% immediate vesting. You’ll also be 100% vested once you’ve reached your plan’s normal retirement age.It’s important for you to understand how your particular plan’s vesting schedule works, because you’ll forfeit any employer contributions that haven’t vested by the time you leave your job. Your summary plan description (SPD) will spell out how the vesting schedule for your particular plan works. If you don’t have one, ask your plan administrator for it. If you’re on the cusp of vesting, it may make sense to wait a bit before leaving, if you have that luxury.

Don’t spend it.
While this pool of dollars may look attractive, don’t spend it unless you absolutely need to. If you take a distribution you’ll be taxed, at ordinary income tax rates, on the entire value of your account except for any after-tax or Roth 401(k) contributions you’ve made. And, if you’re not yet age 55, an additional 10% penalty may apply to the taxable portion of your payout. (Special rules may apply if you receive a lump-sum distribution and you were born before 1936, or if the lump-sum includes employer stock.)If your vested balance is more than $5,000, you can leave your money in your employer’s plan at least until you reach the plan’s normal retirement age (typically age 65). But your employer must also allow you to make a direct rollover to an IRA or to another employer’s 401(k) plan. As the name suggests, in a direct rollover the money passes directly from your 401(k) plan account to the IRA or other plan. This is preferable to a “60-day rollover,” where you get the check and then roll the money over yourself, because your employer has to withhold 20% of the taxable portion of a 60-day rollover. You can still roll over the entire amount of your distribution, but you’ll need to come up with the 20% that’s been withheld until you recapture that amount when you file your income tax return.

Should I roll over to my new employer’s 401(k) plan or to an IRA?
Assuming both options are available to you, there’s no right or wrong answer to this question. There are strong arguments to be made on both sides. You need to weigh all of the factors, and make a decision based on your own needs and priorities. It’s best to have a professional assist you with this, since the decision you make may have significant consequences — both now and in the future.
Reasons to consider rolling over to an IRA:
*You generally have more investment choices with an IRA than with an employer’s 401(k) plan. You typically may freely move your money around to the various investments offered by your IRA trustee, and you may divide up your balance among as many of those investments as you want. By contrast, employer-sponsored plans generally offer a limited menu of investments (usually mutual funds) from which to choose.
*You can freely allocate your IRA dollars among different IRA trustees/custodians. There’s no limit on how many direct, trustee-to-trustee IRA transfers you can do in a year. This gives you flexibility to change trustees often if you are dissatisfied with investment performance or customer service. It can also allow you to have IRA accounts with more than one institution for added diversification. With an employer’s plan, you can’t move the funds to a different trustee unless you leave your job and roll over the funds.
*An IRA may give you more flexibility with distributions. Your distribution options in a 401(k) plan depend on the terms of that particular plan, and your options may be limited. However, with an IRA, the timing and amount of distributions is generally at your discretion (until you reach age 72 and must start taking required minimum distributions in the case of a traditional IRA).
*You can roll over (essentially “convert”) your 401(k) plan distribution to a Roth IRA. You’ll generally have to pay taxes on the amount you roll over (minus any after-tax contributions you’ve made), but any qualified distributions from the Roth IRA in the future will be tax free.

Reasons to consider rolling over to your new employer’s 401(k) plan (or stay in your current plan):
*Many employer-sponsored plans have loan provisions. If you roll over your retirement funds to a new employer’s plan that permits loans, you may be able to borrow up to 50% of the amount you roll over if you need the money. You can’t borrow from an IRA — you can only access the money in an IRA by taking a distribution, which may be subject to income tax and penalties. (You can give yourself a short-term loan from an IRA by taking a distribution, and then rolling the dollars back to an IRA within 60 days; however, this move is permitted only once in any 12-month time period.)
*Employer retirement plans generally provide greater creditor protection than IRAs. Most 401(k) plans receive unlimited protection from your creditors under federal law. Your creditors (with certain exceptions) cannot attach your plan funds to satisfy any of your debts and obligations, regardless of whether you’ve declared bankruptcy. In contrast, any amounts you roll over to a traditional or Roth IRA are generally protected under federal law only if you declare bankruptcy. Any creditor protection your IRA may receive in cases outside of bankruptcy will generally depend on the laws of your particular state. If you are concerned about asset protection, be sure to seek the assistance of a qualified professional.
*You may be able to postpone required minimum distributions. For traditional IRAs, these distributions must begin by April 1 following the year you reach age 72. However, if you work past that age and are still participating in your employer’s 401(k) plan, you can delay your first distribution from that plan until April 1 following the year of your retirement. (You also must own no more than 5% of the company.)1
*If your distribution includes Roth 401(k) contributions and earnings, you can roll those amounts over to either a Roth IRA or your new employer’s Roth 401(k) plan (if it accepts rollovers). If you roll the funds over to a Roth IRA, the Roth IRA holding period will determine when you can begin receiving tax-free qualified distributions from the IRA. So if you’re establishing a Roth IRA for the first time, your Roth 401(k) dollars will be subject to a brand new five-year holding period. On the other hand, if you roll the dollars over to your new employer’s Roth 401 (k) plan, your existing five-year holding period will carry over to the new plan. This may enable you to receive tax-free qualified distributions sooner.

When evaluating whether to initiate a rollover always be sure to (1) ask about possible surrender charges that may be imposed by your employer plan, or new surrender charges that your IRA may impose, (2) compare investment fees and expenses charged by your IRA (and investment funds) with those charged by your employer plan (if any), and (3) understand any accumulated rights or guarantees that you may be giving up by transferring funds out of your employer plan.

What about outstanding plan loans?
In general, if you have an outstanding plan loan, you’ll need to pay it back, or the outstanding balance will be taxed as if it had been distributed to you in cash. If you can’t pay the loan back before you leave, you’ll still have 60 days to roll over the amount that’s been treated as a distribution to your IRA. Of course, you’ll need to come up with the dollars from other sources.

1Due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, required minimum distributions (RMDs) are waived in 2020.
Registered representatives offer securities and investment advisor representatives offer advisory services through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Mutual of Omaha Advisors is a marketing name for Mutual of Omaha Investor Services, Inc. Mutual of Omaha Investor Services, Inc., The Wheeler Group LLC and Broadridge Investor Communication Solutions, Inc. are not affiliated. Trading instructions sent via e-mail will not be honored. Please contact my Hawaii Division Office at (808)942-8133 or Mutual of Omaha Investor Services, Inc. at (800) 228-2499 for all buy or sell orders. Please note that communications regarding trades in your account are for informational purposes only. You should continue to rely on confirmations and statements received from the custodian(s) of your assets.Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable–we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.Copyright 2020 by Broadridge Investor Communication Solutions Inc. All Rights Reserved.

Need TDI? HawaiiTDI

Does your Hawaii-based business need Hawaii-state mandated, Temporary Disability Insurance(TDI) coverage? If yes, you’ve come to the best place. We guarantee it.

For the past twenty years, HawaiiTDI has been the market leader. We care about our clients. Call us and you’ll see the difference.

By state law, employers in Hawaii must provide temporary disability insurance (TDI) for their employees. However, state-mandated minimum coverage may not meet the needs of all employers and their employees. We offer competitively-priced TDI plans that fully comply with all state requirements, but we also offer plans that enhance required TDI plans and offer employees income protection beyond basic benefits.

As licensed Financial Advisors, we do a lot more than just ‘insurance’. But if trhat’s all you need, then that’s what we’ll give you. We look forward to having the chance to serve your business needs. Please email, or call today. Aloha and thank you very much!

M. Garrett Wheeler



Critical Illness Insurance Can Aid in Business Continuation Planning

We all know people who have had cancer, a heart attack or a stroke. In fact, every 19 seconds, someone in the U.S. is diagnosed with cancer. Every 25 seconds, someone suffers a coronary event. Every 40 seconds, someone in the U.S. suffers a stroke.*

I have found that when it “hits home” for people is when it has happened to someone they love. So I’m upfront and direct about the seriousness of not having this protection. I explain to clients who are business owners: Are you prepared for how one of these illnesses might impact not only your future personal plans, but your future business plans? Whatever their answer may be, my main concern is to serve them by helping them get this protection. In doing so, I’ve done my job in bringing it to their attention and offering to help with this type of planning. Of course, the bottom line is that not many of us can afford to say, “It won’t happen to me.”

It is impossible to predict how we might react if diagnosed with a life-threatening condition. Some may choose to return to normalcy as soon as possible, while others may make drastic changes to life and work routines. Others, because of their medical circumstances, have no choice. Critical illness insurance, a specified disease policy that provides a lump-sum benefit amount upon diagnosis of certain medical conditions (as defined by the policy), benefits different individuals in different ways. The proceeds from a critical illness policy can provide needed funds for those wanting to change their lifestyles and financial security for those whose medical conditions prevent them from having much choice.

Have you ever thought about how you would pay your mortgage if you couldn’t work because of an illness?

Following are some business applications where critical illness insurance can help.

Critical Illness and Buy-Sell Planning

With buy-sell planning in the life insurance context, business owners enter into a legal agreement requiring the purchase of their ownership interest upon their death. The most common structures for these agreements are the entity purchase (the business buys the interest) and the cross purchase (the co-owners buy the interest). In these scenarios, life insurance proceeds are used to effectuate the agreement.

Firms also can set up an agreement that is triggered and funded upon the diagnosis of a critical illness. Which type of plan – the entity or cross purchase – is better for a critical illness buy-sell agreement? The answer: It depends.

A cross-purchase agreement using critical illness insurance has the same benefits as the cross-purchase agreement that uses life insurance. The remaining owners have the funds to purchase the shares without incurring precarious debt. Also, they receive an increase in basis equal to the amount they pay for the shares. All of the owners have the security of knowing that, should they be the one to incur a critical illness, they won’t have to accept installment payments or worry that the business will collapse before the purchase price is paid.

An entity-purchase agreement may be the solution if flexibility is the primary concern. With this option, the proceeds would be paid directly to the corporation. The shareholders can agree in advance under which circumstances the critically ill shareholder could or must be bought out. Further, they may also wish to include a “waiting period” to allow the critically ill shareholder the time to decide whether he or she wishes to remain in the business postdiagnosis.

The key to using this strategy effectively is to plan in advance who is to decide whether and when the purchase will be carried out.

FANG Stock: Be Diligent

fangOut of curiosity I just Googled, “FANG Stock”. Here’s what I got: Diamondback Energy Inc. NASDAQ: FANG – Sep 6, 4:40 PM EDT. That is not what I was looking for. What I was actually in search of was more details on FANG, the acronym for Facebook Inc.,, Inc., Netflix, Inc. and Google (which is now Alphabet Inc.). Because these are top-performing technology stocks, they get a disproportionately large amount of the headlines when it comes to stocks. And that’s for good reason, what they have created is smack-dab-in-the-middle of pop culture. All four companies are disrupters. You could say they run our tech world. Of course there are other major players that I like (i.e. Cisco, etc.). But with my brother, Milton, introducing me to “Narcos,” on Netflix, FANG has been on my mind. That doesn’t mean you should go out and mortgage the house (or short the farm), but to me it’s worthwhile to look at, if you have an interest. And I’m curious.

The companies that make up FANG are popular for good reason. But what does analytics tell us about their past performance? Are they worthwhile investments? You bet they are and have been. Google it. How about moving forward? Your guess is as good as any. But before you pull the trigger, have a plan. Most new traders worry only about when to buy a stock. Experts tell us that we should have an exit strategy as well. That is, when you’ll sell. Investopedia says, “…while buying at the right price may ultimately determine the profit gained, selling at the right price guarantees the actual profit, if any.” (

Most recently (June 2016), headlines like, “US Equity Markets Plunge As ‘FANG’ Stocks Give Up 2016 Gains”, dominated. But today, other analysts are saying, “investors rushing into the safe haven of FANG stocks…all-time highs for Facebook and Amazon”. And course, no one person really knows what the future holds. So if you’re interested in dipping your toes into “FANG”, do your homework. That is, do your own due diligence, study it hard and go with what you know—not exactly like buying fine art, where some say one should buy what they enjoy looking at, aside from upside economic potential. The key to due diligence, I think, is the diligence part. You have to pay attention, be thorough and careful. And that takes time, interest and wherewithal. Right now, I plan to google and study Netflix. Because it’s been a stock that has been haunting me since I did not pull the trigger on a buy when Netflix shares hit a split-adjusted $2.56 per share during the crisis. And by the way, the stock has now risen 1,670 percent since. Ouch! But today Netflix is trading at a very high multiple and doesn’t generate positive cash flow. I think Netflix is good, yet it might be the least impressive FANG stock. As of today, Facebook and Alphabet seem most remarkable. So which FANG stock? Well, there are a lot of factors to consider, but for me the lower risk seems to be Google. But then again, you get to decide which FANG stock is worthy of your hard-earned dollars. Be diligent!

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2016 Cost of Living Adjustments

2016 Tax Data You Should Know

The tax law places limits on contributions to retirement plans and individual retirement arrangements.  These limits are adjusted annually for cost-of-living increases, but for 2016 most contribution limits are unchanged.

For example, the elective deferral limit for 401(k) plans remains at $18,000, the compensation cap for qualified retirement plans remains at $265,000, and the contribution limit for IRAs remains at $5,500.  Many other limits will remain unchanged as well.

NOTE: The Wheeler Group LLC agents or employees do not give tax or legal advice.  Clients must consult their own tax or legal advisors regarding their individual situations.