Reply #1 and #2: Post provides specific, constructive, and supportive feedback.
Reply #1: Financial planners can play an important role in estate planning. The estate planning process can be complex and overwhelming. Financial planners can provide value for clients when making these crucial decisions. There are various steps that are taken and topics that need to be discussed relating to the estate planning process.
Financial planners create their client’s estate tax balance sheets. They also explain to the client’s the idea of a two-share estate plan. The financial planner explains that there are four things that can be done with their money. Clients could spend their money or donate a specific amount to charity. “Third, they can aggressively use estate planning techniques to try to maximize the assets passed down to future generations” (Weininger, 2021). The last option involves handing half to the government. Clients must understand what a revocable living trust and testamentary trust are. Financial planners also discuss who the appropriate executors and trustees will be with clients.
There are various structural issues relating to estate planning. Clients can include generation-skipping provisions. This provision is for clients that are married that have over $2 million in estates. “A “generation–skipping transfer” (GST) is, generally, a transfer to an individual who is assigned to a generation that is two or more generations below the generation of the transferor (a.k.a., a “skip person”) or to a trust for the benefit of only skip persons” (Brown, 2021). Financial planners must understand these provisions and the tax benefits they may provide.
The client’s estate plan must have flexibility. The second-look provision can provide this for clients. “However, a second-look provision (limited power of appointment) could allow the surviving spouse the potential to reallocate assets unequally among descendants—and sometimes charity” (Weininger, 2003). This would allow a spouse to change how assets are allocated. Another means of flexibility involves being able to change a trustee or a trustee remover.
Reply #2: Before and after reading the article provided by Bruce Weininger, I believe that estate planning is extremely important to everyones financial plan. The way we like to think about it at work is that the last thing grieving family thinks of you is the payments for your funeral or the money they receive. In most cases it is going to feel much better knowing that your family is taken care of.
The hardest part of estate planning is that no on wants to talk about estate planning. When it is brought up, people start to squirm, get uneasy, and don’t like to think about their life coming to an end. This is why they need to decide “the four things they can do with their money” (Weininger, 2003). This will try and help them realize what they need to do so their money does not go to waste.
When this conversation comes to life, the next hardest part is to make sure “when the client begins the process, the then don’t procrastinate and fail to follow through” (Reardon, 2022). Another saying that we like to present is a little of something is a better than a little of nothing. Clients need to understand that yes, a process like this is not very fun to talk about. What is worse than talking about it now is trying to tell your family that the remainder of the assets will have to be divided between the family. This is the last thing a family wants to do after the loss of a loved one.
The most important part of estate planning in my opinion is getting life insurance needs in line. I recommend that at the minimum clients are able to cover their funeral expenses for the simple reason that a whole life final expense policy will be a greater return compared to purchasing a funeral out right. If you are purchasing a funeral, you are paying $1 for $1. If the funeral costs $25,000 then that is how much you pay. Compared to a whole life policy, if you were to pay $2,500 for 6 years and then you pass, you will be paying significantly less for a policy to then pay out $25,000 and have your funeral covered. This will make it much easier on family and will allow people to grieve without having to be presented with a bill.
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Reply #3 #4 #5 and #6: Response is substantive, insightful, provokes further thought. ******* responses should be researched and must include a citation using APA format.********
Reply #3: A company that recently went public is The Honest Company. Founded by actress, Jessica Alba, the consumer goods company went public on May 5, 2021, with a price of $16.00 per share and a valuation of $1.4 billion (Kunthara, 2021). The company issued a total of 25,807,000 shares of common stock.
The major underwriters for the offering are Morgan Stanley, Jefferies, and J.P. Morgan, in addition to Citigroup, BofA Securities, William Blair and Guggenheim Securities. Co-managers for the offering include C.L. King & Associates, Telsey Advisory Group, Loop Capital Markets, Penserra Securities LLC and Ramirez & Co., Inc. (The Honest Company, 2021).
Relevant financial information from the prospectus includes increased revenues by 27.6% from 2019 to 2020, increased gross margins by 370 basis points, attained an adjusted EBITDA of $11.2 million in 2020, and generated a net loss of $14.5 million in 2020 (The Honest Company, Inc., 2021).
Reply #4: An initial public offering (IPO) is the process of offering shares of a private corporation to the public in a new stock issuance. Vivakor, Inc. went public on February 14, 2022, Vivakor offered 1.6 Million shares of common stock at $5.00 per share, with aggregate gross proceeds of $8.0 Million. Vivakor, Inc. is an operator, acquirer, and developer of clean energy technologies and environmental solutions. The Company focuses on soil remediation.
Vivakor granted the underwriters a 45-day option to purchase up to an additional 240,000 shares of Common Stock at the public offering price less the underwriting discounts and commissions, to cover over-allotments, if any. The offering was expected to close on or about February 16, 2022, subject to satisfaction of customary closing conditions. Vivakor listed underwriter of the IPO is EF Hutton.
Reply #5: Life insurance companies invest in government securities, corporate securities, mortgages, real estate, and policy loans. The main investment by life insurance companies is corporate bonds. Assets held by life insurers back the companies’ life, annuity, and health liabilities. Most life insurance company assets can generally be classified as bonds, both corporate and government, stocks, mortgage and real estate holdings, and policy loans. Assets are divided between two accounts that differ largely in the nature of the liabilities or obligations for which the assets are being held and invested.
The life insurance industry is one of the most profitable industries in the world. The insurance company makes money in primarily two ways: from the profit, it makes on premium payments and from investing in those premiums. Life insurance policies are often sold with high premiums and low payouts. The companies make more money from the people who buy policies than they have to payout in death claims.
Reply #6: Insurance companies charge a premium or fee, for the services. These premiums will be invested until the funds are needed. Insurance companies want to generate more of return, while keeping a manageable risk level. There are a number of different insurance types that most insurance companies offer. There are two different types of ownership a insurance company can have. These are stock ownership or mutual ownership. Stock ownership is stock that is owned by the insurance companies shareholders. Mutual ownership is stock that is owned by the insurance companies policyholders (Madura, 635). There are four common types of life insurance policies. The first is whole life insurance, which is a policy that looks after the policyholder until they pass away or stop paying their premiums. The next is term insurance, which is more temporary and is only used for a certain amount of time. The next is variable life insurance, which is any benefits given to the beneficiary is based on what assets are being used in the policy. The last is universal life insurance, which is a combination of term and whole life insurance. The main way insurance company spends their money is by investing it. They want to create a higher gain, then they started with. An important way insurance companies create their funds is through the premiums. The most money comes from annuity plans. These give a fix amount of income during retirement for individuals.
