special needs trust strategies

1. Ascendancy Consultants 7/30/2011 Copyright (C) 2011 Ascendancy Consultants LLC. All Rights Reserved Developing Financial Strategies for your Special Needs Trust Presenter: Ken Rupert Founder CEO Ascendancy Consultants LLC

2. Agenda

Ice Breakers

Overview - Strategy

Pre-Trust Planning

Prep-Steps of Trust Planning

Understanding Investments

Volatility, Inflation, & Taxes

Investment Vehicles

How to Grow Investments

7/30/2011 Copyright (C) 2011 Ascendancy Consultants LLC. All Rights Reserved

3. ITS ALL ABOUT PERCEPTION

All our knowledge has its origins in our perceptions. Leonardo da Vinci

4. Ice Breaker I ~Filters~

How many saw the wine goblet?

How many saw two faces?

Filters the way you have been conditioned to see things they causes you to either see a wine goblet or two faces.


5. Ice Breaker II ~Focus~ IAMNOWHERE I AM NO WHERE I AM NOW HERE Focus Things we identify as more important , more prominent will cause us to see one over the other. 7/30/2011 Copyright (C) 2011 Ascendancy Consultants LLC. All Rights Reserved

7. THE CONCEPT OF STRATEGY

Strategy without tactics is the slowest route to victory.

Tactics without strategy is the noise before defeat. Sun Tzu

8. What is Strategy?

Strategy is a process not a singular event

Moving from where you are to where you want to be.

It focuses on the future while acknowledging the present.


9. Factors That Influence the Future

Income constraints

Unexpected expenses

Excessive liabilities

Political policies

Inflation & taxation

Geo-political events


10. Gap Analysis

Assess Current State

Identify Desired State

Recognize Gaps

Develop SMART Goals

S pecific

M easureable

A ttainable

R ealistic

T ime Limited

11. The Financial 7 Deadly Sins

Ignoring Your Cash Flow

Making Impulsive Purchases

Using Credit Cards for Purchases You Cant Pay Off

Forgetting an Emergency Fund

Procrastinating Saving for Retirement

Turning Down 401(k) Matching Funds

Being Content with Unimpressive Bank Accounts


12. Portrait of the median American household 7/30/2011 Copyright (C) 2011 Ascendancy Consultants LLC. All Rights Reserved They have $3,800 in the bank No one has a retirement account (in 50% of American households) Their neighbors (the other 50%) only have $35,000 saved for retirement They have no mutual funds, stocks, or bonds The house is worth $160,000 But the family owes $95,000 on it to the bank They make $43,000 a year But cant manage to pay off a $2,200 credit card balance

13. TRUST PLANNING

The present was an egg laid by the past that had the future inside its shell. Zora Neale Hurston

14. Trust Planning Considerations

Preliminary Planning

Emergency Fund

Household Debt

Financial Plan

15. Pre-Trust Planning

Establish an emergency fund

Get out of debt

Develop a comprehensive financial plan that includes:

Retirement savings

Trust savings for your child w/special needs

College savings for siblings of your special needs child

Paying off mortgages

Building wealth


16. EMERGENCY FUND

The fact is that it is reasonable for us to say that there is going to be an emergency that happens that we cannot budget for.

Allyson Schwartz

17. Developing an Emergency Fund

Decide how big of a cushion you need

Initially think in terms of two significant events

Eventually think in terms of three months to six months

Expenses vs. take home pay vs. gross pay

Dont touch it

An emergency fund is not for budget line items that are improperly funded

A real emergency is a non-planned for event that threatens your survival not just your desire to be comfortable

Threaten food, clothing, shelter, transportation

Put it in the right place

Savings account FDIC insured but poor return

Tax free money market account (417) Mutual fund company

http://online.barrons.com/public/page/moneymarketfunds-taxfree-A.html


18. Where to Store an Emergency Fund

DO

Savings account at a bank (FDIC insured)

Money Market account at a Credit Union

Mutual Fund companys money market account w/check writing privileges and /or a debit card

DO NOT

Put it in a CD (Certificate of Deposit)

Invest it


19. REDUCING DEBT

When you find yourself in a financial hole, stop digging! Ray Pritchard

20. Two Rules for Paying Off Debt

RULE #1

Apply any extra financial resources towards the elimination of your current debt

RULE #2

Do not continue to operate on debt as you are trying to eliminate your current debt


21. Becoming Debt-Free

Credit card debt destroys wealth

Average credit card debt per household with credit card debt: $15,788


22. Debt Reduction Planning

Start with smallest amount of debt


24. Complete Emergency Fund

Apply your debt payments towards your emergency fund

Build it to three to six months of expenses

Leave it alone


25. STRATEGY

establish the vision for the future and set the strategy for getting there.

John P. Kotter

26. Developing a Financial Plan

Take inventory

Identify opportunities

Build a model

Commit to the model

Execute the model

Document results

Make adjustments


29. Building Strategy Review

Assessed your current state

Identified your desired state

Gap analysis and goal development

Established a plan to

Set up an emergency fund

Pay or debt

Completed the emergency fund

And set in place a model of income distribution

Move into establishing a trust.

30. Prep Steps

Putting in place the framework of the Trust

Establish a brokerage account

Identify sources of funding

Set goals and objective

Develop a strategy

Identify investments opportunities

Execute strategy and evaluate results


31. Framework Three Functional Parts

Parents or guardian's Will

Irrevocable trust document

Legal Documents

Asset management account


32. Establishing an Asset Management Account

Trust Application

Certification of Trust


33. Identifying Sources of Funding

Gifts of cash

Cash from unconventional sources

Rebates/refunds

EBay sales/yard sales

Savings from purchases on sales

Tax refunds

Wages, overtime pay & employer bonuses

Brokerage account (dividends and capital gains)


34. GROW YOUR MONEY

You reach a point where you dont work for money.

Walt Disney

35. Identifying Investment Opportunities

Types of Investments

Cash or cash equivalents

Bonds

Open End Mutual Funds

Closed End (Mutual) Funds

Exchange Traded Funds

Exchange Traded Notes

Stocks

Fixed assets

Risk Reward Continuum

As the risk goes up so does the expected reward (rate of return) 7/30/2011 Copyright (C) 2011 Ascendancy Consultants LLC. All Rights Reserved

36. Risk Tolerance

Fixed Asset This is the safest of all strategies and uses checking accounts, savings accounts, money market accounts, money market funds, certificates of deposits, and treasury securities.

Conservative This strategy is designed for a cautious or beginning investor. The goal is to preserve capital and minimizing risk through the use of investing in lower risk securities like fixed income securities (bonds) and money market funds with minimal exposure to the equity markets.

Balanced or Moderately Conservative This strategy is designed to balance income with risk producing some potential for capital appreciation. Using a mix of fixed income funds and equity funds, this strategy preserves investors capital in addition to providing some conservative growth potential.

Moderate Growth This strategy is designed to create a relatively stable portfolio of growth equity and equity funds while limiting market fluctuations in values. Investment vehicles can include Growth Mutual Funds, Closed End Funds (CEFs), Exchange Traded Funds (ETFs), and Exchange Traded Notes (ETNs).

Moderate Aggressive Growth This strategy exposes the investor to the large equity markets through minimal allocations to fixed income and money market instruments. While the goal of this strategy is to realize a potential for inflation protection with an above average opportunity for growth, this strategy takes on a higher level of risk. This strategy is suited for investors with longer time frames.

Highly Aggressive Growth This strategy experiences the greatest exposure to market risk and could result in a loss of principle. However, it is also designed to provide the maximum growth of an investors assets. The investor employing this strategy should have the highest level of risk tolerance.


37. Risk Volatility

Volatility refers to the amount of uncertainty or risk associated with the size of changes in a security's value

A lower volatility means that a security's value does not fluctuate dramatically

A higher volatility means that a security's value can potentially be spread out over a larger range of values


38. Risk - Inflation

Sustained increase in the price of goods and services

When inflation rises the buying power of the dollar decreases

Printing money usually is a precursor to inflation


39. Risk Taxes

Qualified Dividends

Non-Qualified Dividends

Long-Term Capital Gains

Short-Term Capital Gains


40. Understanding Stocks & Bonds

Stocks (Equities)

Ownership in a Company

Traded on exchanges like DJIA, Nasdaq, FSTE, Hang Seng, Nikkei, & DAX.

Return comes from an increase in value or through the payment of dividends.

Bonds

Debt Instruments

Borrowed money from an investor.

Pays an interest rate to the lender (investor)

Pays principle at maturity


41. Mutual Funds

Open End Mutual Funds

Priced on NAV (net average value of pooled investments)

Shares issued fluctuate

Purchased at end of trading day (4:00 PM EDT or EST)

Pays dividends and capital gains typically semi-annually or only annually.

Closed End Mutual Funds

Priced on supply and demand with an underlying NAV

The NAV provides an opportunity to purchase at a discount

Fixed number of shares

Purchased real-time during trading day

Pays dividends monthly, quarterly, semi-annually, and annually

Pooled investments that are mutually funded by a group of investors 7/30/2011 Copyright (C) 2011 Ascendancy Consultants LLC. All Rights Reserved

42. Exchange Traded Instruments

ETFs

Ownership instrument

Redemption / creation feature resembling open end mutual funds.

Designed to track an indexs performance

Cannot issue debt or preferred shares

ETNs

Debt instruments

Designed to track an indexs performance


43. Growing Investments

DRIP Dividend Re-Investment Plan

Dividend to cash

Dollar Cost Averaging

Buy & Hold Strategy

Buy Capture Sell Strategy

Buy Sell Strategy


44. Implementing Strategy

Take inventory

Identify opportunities

Build a model

Execute the model

Document results

Make adjustments


46. Evaluating Results

Use software for month over month tracking

Macro vs. Micro tracking

Quarterly adjustments


special needs trust strategies

Economy & Finance

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