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Seven Things Every Woman Needs to Know About Her Finances August 2, 2012 Kenwood Country Club Cincinnati, Ohio 4901 Hunt Road | Suite 200 | Cincinnati, OH | 45242 | 513.792.6648 PH | 513.792.6644 FX | TruepointInc.com

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Seven Things Every Woman Needs to Know About Her Finances

August 2, 2012 Kenwood Country Club

Cincinnati, Ohio

4901 Hunt Road | Suite 200 | Cincinnati, OH | 45242 | 513.792.6648 PH | 513.792.6644 FX | TruepointInc.com

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Agenda | 8.2.12

Truepoint’s Women’s Wealth Counsel exists specifically to address the unique aspects of managing wealth for women. Today’s session will cover the seven things every woman needs to know about her finances.

I. Managing Your Ins and Outs: Cash Flow

II. What Do I Have and How Do I Access It?

III. Get Acquainted with Your Tax Return

IV. Insurance Policies that Make Sense for You

V. Estate Documents: Ensuring Your Wishes are Known

VI. Communication and Support Systems are Essential

VII.What Do I Want and How Do I Plan for It?

VIII.Q & A

2

Managing Your Ins and Outs Cash Flow

What is it? Knowing your cash inflows and outflows

Continual monitoring and readjusting to stay on track toward your goals

Cash Inflows

Accumulator – Wages, self-employment, stock option exercises

Retiree – Social security, pension, other income

Cash Outflows

Needs vs. Wants

Why go through this exercise? Many events are out of your control; managing your cashflow is IN your control.

This exercise can be the basis for ongoing financial decision making.

This exercise illustrates the amount of money that is saved to a portfolio (accumulators) or withdrawn from a portfolio (retirees).

Understanding your cash flow allows for re-allocation of dollars to higher-priority areas

3

Managing Your Ins and Outs Cash Inflows

Earned Income You Spouse

Salary/Wages

Self-employment income

Deferred compensation income

Stock option income

Restricted stock income

Retirement Income You Spouse

Social Security

Company pension

State pension (e.g. STRS)

Foreign country pension

Annuity income

4

Managing Your Ins and Outs Cash Inflows (continued)

Other Inflows

Rental Property Income

Outside business investment/K-1 income

Farm income

Alimony

Child Support

Irrevocable trust income distribution

Disability income

Gifts received from others

Total

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Managing Your Ins and Outs Cash Outflows - Needs

Food Medical Groceries Prescriptions

Transportation Co-pays

Auto payment Medical supplies

Fuel Insurance

Auto maintenance/repairs Homeowners/Auto/Umbrella

Household Disability

Household supplies Life

Home maintenance Long-term Care

Condo/HOA fees Medical/Dental/Vision

Property taxes Personal

Mortgage payment/Rent Clothing

Utilities Hair Salon/Barber

Landline/TV/Internet Dry cleaning

Cell phone Other

Gas/Electric

Water/Sewage

Waste disposal Total

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Managing Your Ins and Outs Cash Outflows - Wants

Recreation Helping Others Dining out Gifts to family/friends

Sporting events - tickets Charitable contributions

Arts events - tickets Private K-12 tuition

Travel College funding

Country club membership Children's activities/sports

Health club membership Other Hobbies

Boat/RV expenses

Household Lawn service

Cleaning service

Home décor

Pet Care Pet food

Pet medicine / Veterinarian

Kennel Total

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What Do I Have and How Do I Access It?

What is a Net Worth Statement?

This is a summary of your assets and liabilities (what you HAVE and what you OWE).

This is reflected as of a given point in time.

Assets include:

Cash accounts

Investment accounts

Retirement accounts

Personal assets and other assets

Liabilities include:

Personal debts (credit cards, auto loans)

Home loans (home equity lines of credit and mortgages)

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What Do I Have? Net Worth Statement

You Spouse Joint Total Liquid Assets

Checking Savings

Total Liquid Assets

Investment Assets Fidelity

Other Brokerage Account

Total Investment Assets

Retirement Assets

Fidelity Traditional IRA

Company 401(k)

Fidelity Roth IRA

Total Tax-Qualified Assets

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What Do I Have? Net Worth Statement (Continued)

You Spouse Joint Total Personal Assets

Personal Residence Personal Property

Total Personal Assets

Total Assets

Short & Long Term Liabilities

Credit Card Debt

Home Equity Line of Credit

Residential Mortgage

Total Liabilities

Total Net Worth 529 Plan Account Child A

529 Plan Account Child B

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What should I track?

Names of all financial institutions that hold your accounts/loans

All account types and numbers

Contact name and phone number for each financial institution

Online access for all accounts, if available:

− Web address to login

− Usernames and passwords

− Security questions and answers

Note: If there is no online access, maintain a hard copy file for statements.

Passwords

A list of all internet passwords should be maintained on an ongoing basis and stored in a secure location.

Tell partner, trusted friend or family member where this list can be found.

What Do I Have and How Do I Access It?

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Tax returns are NOT scary #1 Rule – Review and sign your return each year. Innocent Spouse Situations – Consequences of not knowing your taxes Tax Return Overview – Key forms and how to find information

− Form 8879 – Signature Form

− Form 1040 – Key line items

• Pages 1 and 2 – Sub-schedules

• Taxable Income

• Adjustments – Reductions in taxable income

• Itemized Deductions – Schedule A

• Total Tax

__________________________________________________________________________________ Homework – Review your most recent tax return.

Get Acquainted with Your Tax Return

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Life Insurance - There are four main reasons for life insurance

Replace income

Provide liquidity

Provide supplemental income

Create wealth for heirs/legacy

Long Term Care Insurance (LTC) - Statistics

70% of people who reach age 65 will require LTC services at some point in their lives

Some individuals will need only a few months of care, while others will require a few years.

The average cost of one year of care today is $75,000.

The average stay in a LTC facility is 2.4 years or $181,000 of care.

Two thirds of claim dollars are used for the care of women because they typically outlive men.

Insurance Policies that Make Sense for You

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Things to Consider If Purchasing a Traditional LTC Policy

If married (or have a domestic partner), a “Shared-Care” policy is a good idea. This

allows you to share the total pool of benefits.

Consider a fixed term policy, also called short-pay options (5 or 10-pay policy). This

is more expensive up front, but reduces the chances of future premium increases

because the policy is paid-up after the limited pay period.

Single pay contract, allowing you to pay in one lump sum for future LTC needs.

Some come with a life insurance component if you don’t use the LTC insurance

(return of principal).

Regardless of what type of policy you choose, we recommend an inflation protected

policy to guard against increased health costs.

Insurance Policies that Make Sense for You

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Disability Insurance - Statistics

Just over one in four of today’s 20-year-olds will become disabled before they retire.

36 million Americans are classified as disabled. This is about 12% of the population.

More than 50% of those disabled Americans are in their working years, ages 18-64.

The average long-term disability absence is nearly three years.

Insurance Policies that Make Sense for You

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Understand your group coverage. Group coverage is taxable to the employee. Most policies

pay 60% of gross salary which, depending on your tax bracket, may net about 40% of gross

salary. Most policies also have a maximum monthly coverage. If the employee makes the

payment, the benefits are tax free.

Different Definitions of Disability: Any Occupation – This policy will pay if you cannot perform the duties of any

occupation.

Modified Own Occupation – This policy will pay if you cannot perform the duties of your own occupation and you are not working in another occupation.

True Own Occupation – This is the best definition of disability. It states that you will be considered disabled if you cannot perform the material and substantial duties of your occupation even if you are engaged in another occupation.

Workers should have disability insurance. There are different types of policies, so please

consult with your advisor to discuss your individual needs, types of policies and coverage that is

appropriate for your family.

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Homework – What types of policies do you have and where are the insurance documents

located?

Insurance Policies that Make Sense for You

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Estate Documents Ensuring Your Wishes are Known

Why do I need estate documents? These documents ensure that assets pass on according to your wishes. As the survivor, this provides peace of mind that you will be cared for. The death of a loved one is an emotional time and having those wishes in writing

provides clarity. If I already have estate documents, why revisit?

Engage in a periodic review, every 3-5 years Your wishes and the needs of your heirs can change. The tax laws and forms of documents change. You may be the one left in charge.

If I’m not married and/or don’t have children, do I still need documents?

Elderly or disabled parents “Black Sheep” sibling Charitable intent

What documents are important to have while still living?

Financial Power of Attorney Health Care Power of Attorney Living Will

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What documents are important to ensure your wishes are carried out after your passing? Last Will and Testament

Various types of trusts

What if I become incapacitated without these documents? No one can act on your behalf; you will have a court-assigned guardian.

This is costly and lengthy. Bills go unpaid and decisions are delayed.

What if I die without these documents? “Intestate”

Court-appointed administrator

In the absence of beneficiary designations, assets flow according to probate process

Ohio Probate asset flow: Spouse? Children?

No consideration of tax consequences or a beneficiary’s ability to handle assets

What should I discuss with my spouse and/or advisor? Who is named in the documents and what are their roles?

If my spouse dies, what rights do I have to the assets?

After second death, what rights are granted to subsequent heirs?

What are the current beneficiary listings on my and my spouse’s accounts?

Estate Documents Ensuring Your Wishes are Known

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Estate Planning Organizer 2012

Financial Power of Attorney (FPOA) A legal document which gives the authority to a named individual to carry on a person’s financial affairs and protect their property by acting on their behalf. Typically, the FPOA is effective immediately after signing, giving the attorney-in-fact immediate powers. FPOA helps an individual pay bills, write checks, make deposits, sell or purchase assets or sign any tax returns. If FPOA document has not been executed, then a family member must request a court to appoint a guardian. A guardianship is time consuming, expensive and emotionally draining. A FPOA document will keep the courts and public out of your personal affairs. Consider the people who will act on your behalf regarding financial affairs. Select one primary individual, as well as alternates:

Primary -

Alternate -

Second Alternate -

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Health Care Power of Attorney (HCPOA) A legal document which gives a named individual the authority to make health care decisions on your behalf, if you are incapable of doing so. This document is effective only upon incompetence or incapacity. The HCPOA appoints someone you trust to be your health care agent to ensure that doctors and other health care professionals provide the type of care you wish to receive. Consider the people who will act on your behalf regarding health care decisions. Select one primary individual, as well as alternates:

Estate Planning Organizer 2012 (continued)

Primary -

Alternate -

Second Alternate -

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Living Will Allows you to specify the health care you want to receive if you become terminally ill or permanently unconscious and cannot make your intentions known. A living will authorizes your physician to withhold artificially or technologically supplied nutrition or hydration if: You are in a permanent unconscious state and your physician, plus at least one other physician who has examined you, have determined to a reasonable degree of medical certainty that artificially or technologically supplied nutrition and hydration will not provide comfort or relieve pain. Consider the people you would like to be notified in the event that physicians intend to cease artificial nutrition and hydration. Select one primary individual, as well as alternates:

Primary -

Alternate -

Second Alternate -

Estate Planning Organizer 2012 (continued)

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Last Will and Testament Within your will, you will designate an executor to settle your estate. An executor is a personal representative who acts for you after your death. The person chosen will act in your place to make the decisions you would have made if you were still alive. An executor’s responsibilities typically last from nine months to three years. The functions of an executor are varied, but generally your executor:

Locates and probates your will Inventories, collects, and sells (if necessary) your assets Pays legitimate creditor claims Pays any taxes owed by your estate Distributes any remaining assets to your beneficiaries

Consider the people who would serve as executor upon your death. Select one primary individual, as well as two alternates:

Estate Planning Organizer 2012 (continued)

Primary -

Alternate -

Second Alternate -

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Revocable Trust A revocable trust is a legal contract between you (grantor) and the trustee (the grantor is typically the trustee). This contract provides instructions to the trustee. The trust specifically identifies how the assets of the trust should be administered and distributed during the life of the grantor and after their death. A revocable trust states that the trust may be changed by the grantor while he/she is living. At death, the trust becomes irrevocable. An additional advantage of titling assets in the name of a trust is the ability to bypass the costly probate process upon a person’s death. One of the most important aspects of the trust is identifying the trustee. A trustee follows the rules of the trust regarding distributions of the assets. Typically the person creating the trust will be the initial trustee, with at least two named successor trustees. You may want to consider family members as successor trustees or an independent corporate trustee. Truepoint has a working relationship with an independent trustee, National Advisors Trust Company. Consider the people who would serve as trustees. Select one primary individual (this is typically the person creating the trust ), as well as two alternates:

Estate Planning Organizer 2012 (continued)

Primary -

Alternate -

Second Alternate -

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Asset Distribution Consider your total net worth. How should assets be distributed upon your death? Please detail your general thoughts regarding the ultimate distribution of your assets upon death:

Estate Planning Organizer 2012 (continued)

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Why are communication and support system essential?

Women, 65 and older, are three times as likely as men of the same age to be widowed.

This is the first time in history that four generations are living simultaneously.

As women, we will need to be able to continue to live meaningful, enriching lives in light of a loss and without burdening future generations.

What should you do prior to a loss?

Have a dialogue with your loved ones regarding your estate plans. Allow them to ask questions and clarify your intentions and their roles.

Discuss elderly care preferences, specifically in-home care vs. an assisted living facility.

Discuss funeral arrangements – buried vs. cremated and where you want your remains.

Discuss with your spouse where your cash reserves reside and how to access them.

What should you do after a loss?

Contact your professional support system (attorney, financial advisor, CPA, etc.).

Rely on your personal support system.

Do not make large financial or life decisions within the first year.

Communication and Support Systems are Essential

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Homework

Call a family meeting to discuss your estate plans, funeral arrangements and elderly care preferences.

Identify your personal support systems outside of those shared with your spouse and children. Find others with like interests – join a book club or bridge group; become part of a tennis league or golf group; join a garden club or volunteer for an organization about which you are passionate.

Communication and Support Systems are Essential

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Exercises Visualize your perfect day, picturing an ideal day six years in the future. Think about the specific details of the day as you are actually living it.

Imagine that you are financially secure. How would you live your life? What would you change?

What Do I Want and How Do I Plan for It?

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Exercises You have five to ten years to live in good health. What will you do with your remaining time?

You have 24 hours to live. What feelings arise? What did you miss?

What Do I Want and How Do I Plan for It?

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My Goals 10-year 5-year 1-year

What Do I Want and How Do I Plan for It?

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Thank you!

Seven Things Every Woman Needs to Know About Her Finances