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Wishing you a Happy, Healthy and Prosperous New Year

[ 0 ] December 31, 2013

Spectrum Financial Solutions, LLC, NJ, Happy New Year

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Happy holidays from George Klahre

[ 0 ] December 24, 2013

Spectrum Financial, NJ, Happy Holidays

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Don’t put Santa in debt this Christmas season

[ 0 ] December 20, 2013

Spectrum Financial Solutions, LLC, Christmas presents“The best of all gifts around any Christmas tree: the presence of a happy family all wrapped up in each other.” – Burton Hillis, columnist and author”

It all starts with Black Friday, Cyber Monday and spills over daily through Christmas Day. Shoppers toughing out the crowds, beating down the doors to get the best prices they could get their hands on. You spend your time and money (and sanity) to get everything on your loved ones’ list.

But what happens after Christmas?

The credit card statements start trickling in one by one. All those wonderful things you had purchased for your family need to be paid in full. You silently wonder, ‘Did I go overboard?’ and that little voice in your head says, ‘Nah, did you see their faces?’ And you go on about your day content that you had done the right thing.

The excitements of those gadgets wear off before you have paid off your credit card. This holiday season we have listed a few tips so that you don’t break your bank.

  1. Cut up those credit cards. You will be paying much more than the $18.99 you paid for that doll in the long run. Use your debit card or plain hard cash.  You’ll save yourself the interest rate payment.
  2. Budget…and stick to it! You don’t have to go overboard. Your wallet will feel better in the long run if you say to yourself, “I’m sticking to this budget. Everyone will enjoy what they get.”
  3. BOGO Combo Deals!  I just purchased a pair of much needed winter boots and then I saw the sign, “Buy 1 pair of shoes and get the 2nd pair for $1!”   Needless to say, I took them on their offer. Finding deals like that means you can buy two gifts for one.
  4. Compare prices! There are several shopping apps that you can easily download and do comparison shopping before making any purchases.
  5. Nothing says LOVE like a homemade gift. Get your creativity on and have some fun.  Knit those sweaters, bake that incredible dish, host a huge party, or design a beautiful portrait. Your hard earned time means more to your loved ones than anything your hard earned money can buy.

This Christmas make sure that Santa’s bank is as satisfied as your loved ones are.

Content provided by Transformer Marketing.

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Spectrum Financial And You

[ 0 ] December 18, 2013

Spectrum Financial is proud to be a leader in customer service.  To continue to provide excellent customer service we have gone viral!   You can find us on Facebook, LinkedIn, follow our blog, and through our website!

Follow our Facebook for incentives and promotions that we will offer in the future.  Get connected with us on LinkedIn and engage with us.  Follow our informative blog that will have up to date information and our website will offer everything!

Feel free to drop us a line!

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Business Protection Help

[ 0 ] December 11, 2013

Spectrum Financial Solutions, New Jersey, Florida, business protectionDear Clients, Colleagues, and Friends,

Larry and Harold, best friends and business partners for the past 20 years, operate their successful company as an S corporation. They started with nothing and built their business from the ground up, working hard to increase profits through the economy’s ups and downs. Their partnership is truly an American Success Story.

THE GOOD DEED:

Four years ago, Larry’s younger brother announced he was getting married. Larry was ecstatic with his brother’s new wife and asked what he could give the happy couple for their wedding gift. When his brother asked if Larry would be willing to co-sign a loan for a house, Larry didn’t hesitate. That’s what a good big brother does, right?

Unfortunately, four years of recession left Larry’s little brother unemployed and struggling to pay his bills. Larry had no idea how dire his brother’s situation had become until he received a notice in the mail that the bank was foreclosing on his brother’s house, which was now only worth half its mortgage.

THE PUNISHMENT:

Because of the personal guarantee Larry gave the lender, the bank comes after Larry for the remaining debt. After all, Larry willingly co-signed for the loan, leaving him responsible if his brother defaulted.   Unfortunately, the bad economy also hit Larry’s pocketbook, and he doesn’t have the cash or personal assets to pay off the debt.

Luckily for the bank, Larry owns a successful business. Larry believes his business assets and cash flow are protected from his personal creditors. Unfortunately, that is not the case.   Larry’s attorney chose the wrong entity when he formed the corporation, not realizing that corporate stock can quite easily be seized by a personal judgment creditor.

How does that happen?

Once the bank gets a judgment against Larry and his brother, the bank then receives a Writ of Attachment, allowing it to attach the debtor’s personal property.  Under a Writ of Attachment, the bank can take over Larry’s shares of the corporation and force the company to liquidate its assets, which then go to the creditor as the new shareholder. The bank can also vote to remove the current management and run the business itself until it can find a buyer, all while keeping the operating profits.

In short, Larry will lose everything he worked so hard to build. It’s not good for Larry, his brother, Harold, or the business.

BY CONTRAST:

Paul and Steve’s lawyer established their company as an LLC, rather than an S or C corporation. Paul also co-signed for a relative’s loan, and the relative later defaulted.

Luckily, because his business was organized as an LLC, Paul’s judgment creditor’s right to seize the LLC interest is quite limited. In fact, state law only allows the creditor to obtain a Charging Order (CO) after securing the judgment, rather than a Writ of Attachment, because no Writ of Attachment is allowed for a LLC membership interest.

A Charging Order restricts judgment creditors to receiving future distributions from the debtor’s interest if and when such distributions are made by the manager. The judgment creditor is expressly prohibited from interfering with the business while it waits for the distributions to be made or the judgment to be paid. In fact, under state law, a judgment creditor that obtains a Charging Order is deemed to be an “assignee partner/member”. This allows the business to operate normally, without impeding the partners’ business decisions or personal relationships.

It is also important to note that under federal income tax law, the “assignee partner/member” is required to report all of the LLC’s income (whether or not actually distributed by the LLC to the member). This is known as “phantom income”.   Because of phantom income, a judgment creditor will want to think twice before seeking to get the Charging Order registered against the LLC interest of the judgment debtor, as illustrated below.

Years ago, one of our clients was sued by a creditor and the creditor secured a Charging Order against our client’s LLC interest.  Under Rev. Rul. 77-137, we advised our client to send the judgment creditor his K-1 each year.  The creditor would not settle for less than the full amount of the judgment plus its fees and expenses of collection.  By the 3rd year under the Charging Order, the LLC sold a property that produced a capital gain of $2.4M.  The debtor’s LLC interest represented 90% of the total LLC, so pursuant to the IRS Ruling, the holder of the Charging Order was sent the K-1 representing 90% of the taxable capital gain, or $2.1M of taxable income.  Shortly thereafter, the creditor settled the outstanding debt for 10% of the original amount of the debt.

As I have been known to say:  The judgment creditor got KO’s with the CO.

THE SOLUTION:

The take-away from this lesson is that if one has the choice between operating their business as a Corporation (C or S) or an LLC, the LLC provides many more important options to consider. If you already own a C or S corporation, you can convert it to an LLC and elect to be taxed as a C or S corporation, as the case may be.

Despite the additional paperwork and costs, had Larry known about this choice, he would have gladly opted for this kind of business entity.

Don’t let a good deed punish what you’ve worked so hard to achieve. If you would like to know whether your corporation might qualify for this important benefit, contact us and we will gladly evaluate your situation for you.

We hope this helps.

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The Intersection of Blind Faith and Unvarnished Truth

[ 0 ] December 4, 2013

Spectrum Financial Group, NJ, FL, TruthI don’t claim to be the most well read person despite the fact that I read a great deal.  I also don’t claim to be the definitive source on all things economic and financial although I have worked my entire career counseling wealthy families on financial, estate and philanthropic planning matters.

What I do claim is that I am confused about the current state of our economy, the path of our country’s future and the blindness of both the right and left sides of our political and economic spectrum.  It strikes me that we may be near the intersection of blind faith and the unvarnished truth and that there will be a reckoning in the not-too-distant future.

As cathartic as writing thoughts and feelings may be, nothing mitigates the very real concern that I hold for our futures, not to mention our children’s and our grandchildren’s futures.  While Washington, Wall Street and the press “spin” a new reality almost daily, we as individuals, who have labored long and hard to reach where we are today, see a different reality…dare I say a true reality.

Truth…our national debt is somewhere in the area of $17 trillion (to get a grasp of its true enormity, that is $17,000,000,000,000…kind of feels different when all the zeros are added!).  When you add state and local debt (estimated to be in excess of $4 trillion), it becomes an even more significant number.  Even if the Affordable Care Act works perfectly and doesn’t cost the estimated $2 to $3 trillion as projected by various sources, folks, we have a national financial planning problem.

Just our basic national debt is in excess of $54,000 for every man, woman and child in our country…another truth!  And, the national debt is growing by over $2.7 billion every day (that’s $3,000 more each year for U.S. citizen).

It’s inevitable that our country will always have some element of debt.  Frankly, it would be virtually impossible not to have national debt.  And, to be equally frank, some national debt is desirable and necessary.  But, is this level of debt, not to mention the specter of increasing national debt, sustainable?

The problem is that, when and if national debt ever shrinks, it will only be done through tax collections.  This leads to the next set of truths which are equally as disturbing as those shared above.

Truth…the national unemployment rate is 7.3%.  The broader U-6 unemployment rate, which includes the unemployed, marginally attached workers, part-time workers who want full-time work and those who have dropped out of the workforce, is currently 14.3%.  These are not people who can pay taxes to reduce national debt.

Truth…47 million Americans are on food stamp programs.  It is estimated that over 100 million Americans receive some form of living subsidy or welfare. In several states (Massachusetts and Hawaii), the maximum welfare package available to families provide pre-tax wage equivalent benefits in excess of $50,000 per year (33 states provide welfare packages in excess of $30,000 pre-tax equivalents).  This group also isn’t capable of helping to reduce debt…or likely to find paying jobs at over $24 per hour to equal their welfare packages.

Truth…47% of all Americans pay no taxes.  As politically incorrect as his pre-election comments were, Mitt Romney was right.  The top 10% of taxpayers pay 70% of all tax collections.  The middle class in our country is stretched to its limits but is honestly trying to keep their jobs, save for retirement, support their communities and contribute to the Treasury.

So it appears glaringly obvious to this writer that reducing our national debt relies on either substantial economic growth in our country and/or higher taxation.  My sense is that our economy is faced with the task of untying a Gordian knot.

Where will good paying job opportunities be created?  What is the incentive for those unemployed to seek taxable jobs in light of various welfare subsidies?  What skills will be required to enter the new workforce?

When manufacturing represents only 17% of our GDP and with over 50% provided by finance, insurance, leasing, health care, social assistance, professional, business and educational services and government, where will the opportunities for modestly educated Americans be created?   And with government accounting for 13% of GDP, one wonders how it may expand the workforce in a meaningful way.

Quantitative Easing hasn’t made great inroads in spurring new job creation, although it certainly has helped the financial markets and banking industry.  Cheap money comes at a great cost though.  The trillions of dollars spent in this program haven’t percolated down equally to most Americans but it may enhance the already burgeoning national deficit in the future.

Thankfully, it has helped keep interest rates at historically low levels.  I can’t imagine the cost of carrying our national debt if natural market forces were allowed to prevail or, in another vein, how equity markets would perform in a more organic environment.

My guess is that, over time, equilibrium will be struck but it is likely to be very painful getting there.  In light of anemic job creation and the strong possibility of continued lackluster future growth, taxation is almost certainly to rise to not only support various entitlements but also to fund the national debt.  Additionally, because of the makeup of tax receipts in our country, the burden will fall squarely on the shoulders of our wealthiest citizens.  And, with the increasingly expanding pool of entitlement recipients coupled with spin on the wealthy embraced by the press and current political factions, tax based economic expansion (easing) has significant opposition in, at least, our near future.

How that affects job creation, capital development and philanthropic programs is sure to be an ongoing debate.  The prospect of higher marginal tax rates, elimination of deductions, “millionaire taxes” and estate taxation appear to be very real and logical future developments.  And, the question of morphing into a more European tax model is also a possibility.

While this column may give one a “sky is falling” impression, that is not its intent.  This is still the greatest country in the world and opportunities abound.  The closing thought is that it is time to understand the playing field ahead of us and to be proactive in our planning.  There are many programs available to address the emerging economy that wealthy clients, families and organizations should be aware of to make the best planning decisions for the future.  We are here to help eliminate blind faith and address the unvarnished truths of our future.  Give us a call.

Content provide by George Klahre.

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Creating assets for your grandchildren

[ 0 ] December 4, 2013

Spectrum Financial Solutions, New Jersey, Florida, Assets for grandchildren

Did you know that when you leave your children an inheritance the federal government taxes them?  And then the same thing happens when your children leave your grandchildren an inheritance.

If you were thinking about leaving your grandchildren the inheritance, the Generation Skipping Transfer (GST) tax has closed any tax loopholes for that.

With a couple of exceptions.

Gift Tax Exclusions

This exclusion allows you to gift up to $13,000 a year ($26,000 for married couples) to each grandchild, or another individual, without incurring a gift tax.

This path reduces the amount of your taxable estate and gives you the joy you create when giving these gifts to your loved ones.

Pay for Education and Healthcare

You can also pay all or part of your grandchild’s tuition or medical expenses.  There is no GST when opting for this route.

GST Gift Trust

You can create a GST gift trust for each of your grandchildren.   When  your grandchildren receive the trusts; the value may have grown dramatically thanks to the accumulation of interest and dividends. Your grandchildren will inherit the assets entirely free of estate tax and GST tax.

Dynasty life insurance trusts

This option is a much more sophisticated strategy involving insuring the lives of you and your spouse, placing the insurance policy in a trust, listing your grandkids as the beneficiaries and contributing money to the trust to pay the premium.

Contact us today to determine which way will work best for you.

Spectrum Financial Solutions, New Jersey, Florida

Spectrum Financial Solutions, LLC located in New Jersey and Spectrum Financial Solutions, LLC located in FL have been assisting individuals and businesses with their financial challenges for over 30 years.  Do you need to know about Privately Financed Universal Life Insurance located in FL? Call us today. Family Legacy Unitrust Edge located in NJ has been created to help families establish lifetime legacies in a unique manner that simultaneously addresses social and family needs. Applicable Federal Rates located in FL affect many of your planning tools.

George Klahre
10110 SE Osprey Pointe Dr.
Hobe Sound, FL 33455
732-450-9530
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Happy Thanksgiving from your friends at Spectrum Financial Solutions, LLC!

[ 0 ] November 27, 2013

As another year of blessings, health, love, laughter and fun passes, we would like to give thanks on this special day.

Thank you!  Thank you for your confidence and loyalty.  Thank you for your trust and friendship.  Thank you for illuminating our year.

We hope many more blessings are coming your way!

Happy Thanksgiving from Spectrum Financial Solutions, LLC!

Spectrum Financial Solutions, LLC, NJ, FL, Happy Thanksgiving

Spectrum Financial Solutions, New Jersey, Florida

Spectrum Financial Solutions, LLC located in New Jersey and Spectrum Financial Solutions, LLC located in FL have been assisting individuals and businesses with their financial challenges for over 30 years.  Do you need to know about Privately Financed Universal Life Insurance located in FL? Call us today. Family Legacy Unitrust Edge located in NJ has been created to help families establish lifetime legacies in a unique manner that simultaneously addresses social and family needs. Applicable Federal Rates located in FL affect many of your planning tools.

George Klahre
10110 SE Osprey Pointe Dr.
Hobe Sound, FL 33455
732-450-9530
Facebook | LinkedIn | Blog | Email

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Small businesses and Obamacare do not mix

[ 0 ] November 20, 2013

Spectrum Financial Solutions, FL New Jersey, ACA

President Obama promised that small businesses would be able to afford healthcare for their employees at reasonable rates.   According to the White House website, “the health law “makes it easier for businesses to find better coverage options” and “stops insurance companies from taking advantage of you, giving the consumer and business owner more control and making health-care coverage more affordable.”

Small businesses are disagreeing with him.

Many small businesses under 50 employees are choosing not to offer healthcare to their employees since they have that option. 64% of businesses that are between 40-500 employees believe that Obamacare will have a negative impact on their business.

In fact, many small businesses have changed their full time employees to part time.  Obamacare has defined a full time employee as someone who works 30+ hours a week.

Many companies are even capping their full time employees at 49 employees.  Businesses that have between 40-70 employees will  “make personnel decisions to keep” their “workforce below the threshold of 50 full-time employees and avoid the requirements and penalties associated with the new health care law.”

Read the entire article here.

Some content provided by http://online.wsj.com/news/articles/SB10001424052702303460004579192102917020082

Spectrum Financial Solutions, New Jersey, Florida

Spectrum Financial Solutions, LLC located in New Jersey and Spectrum Financial Solutions, LLC located in FL have been assisting individuals and businesses with their financial challenges for over 30 years.  Do you need to know about Privately Financed Universal Life Insurance located in FL? Call us today. Family Legacy Unitrust Edge located in NJ has been created to help families establish lifetime legacies in a unique manner that simultaneously addresses social and family needs. Applicable Federal Rates located in FL affect many of your planning tools.

George Klahre
10110 SE Osprey Pointe Dr.
Hobe Sound, FL 33455
732-450-9530
Facebook | LinkedIn | Blog | Email

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Obamacare: Not that great

[ 0 ] November 13, 2013

Spectrum Financial Solutions, NJ, No ObamacareSince October 1st, the Affordable Care Act, also known as Obamacare, has been tormented with problems.  See what plague has affected the launch of the Affordable Care Act:

  • The website is down, not taking any new enrollments, and just plain overwhelmed with glitches.  In order to fix the problem, the website has to go down nightly for maintenance and repair.
  • Employers all around the nation have been cutting back the hours of their employees to under 30 hours a week because they cannot afford the new health care reform.
  • President Obama had said that no one would lose their health insurance prior to the roll out.  However, people have lost their insurance.  The insurance companies are dropping patients all the time due to the patients specific plans do not measure up to the Affordable Care Act.  The patients now have to pay more money to get the same thing they have had all along.
  • Retirees from major corporations have lost their health insurance if they are eligible for Medicare.

By all appearances, the hoopla surrounding the launch of the Affordable Care Act is anything but affordable.

Original content provided by Transformer Marketing.

Spectrum Financial Solutions, New Jersey, Florida

Spectrum Financial Solutions, LLC located in New Jersey and Spectrum Financial Solutions, LLC located in FL have been assisting individuals and businesses with their financial challenges for over 30 years.  Do you need to know about Privately Financed Universal Life Insurance located in FL? Call us today. Family Legacy Unitrust Edge located in NJ has been created to help families establish lifetime legacies in a unique manner that simultaneously addresses social and family needs. Applicable Federal Rates located in FL affect many of your planning tools.

George Klahre
10110 SE Osprey Pointe Dr.
Hobe Sound, FL 33455
732-450-9530
Facebook | LinkedIn | Blog | Email

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