Texas Financial Partners Director, Celeste C. Moya, and Texas attorney, Gilberto A. Siller, recently collaborated on a customizable presentation for foreign nationals on the impact of estate taxes on their U.S. assets and solutions to mitigate their tax exposure. Already, they have shared their insights with many foreign investors to help make them aware of the tax issues they face based on their US holdings.
While we have worked with Celeste for more than a decade, she recently joined our team in 2018. She is fluent in both English and Spanish and is a Certified Translation Professional in Spanish. Her life insurance industry expertise, knowledge of Latin American business practices, and fluency in Spanish—a combination which few other people in Texas can claim—put her in a unique position to serve foreign national clients from Latin America.
Gilberto Siller is the founder of the Siller Law Firm, which focuses on serving Latin American businesses and individuals with assets in the United States. Mr. Siller has been working since 2006 on international corporate and business matters concerning international estate planning, and he routinely advises foreign investors on the legal aspects of doing business in the United States.
As noted, foreign nationals face a unique set of challenges when it comes to estate planning. They are exposed to different estate tax liabilities than American citizens, and navigating the rules that apply to their American and overseas assets can be a complicated process. Celeste’s expertise in this area, along with our partnership with industry experts like Gilberto, will allow us to provide continuity of service to an important and growing clientele in Texas: non-citizen families and individuals living or doing business in the United States.
The TFP team is excited to expand its area of expertise and depth of industry knowledge, and continue our commitment to the goal of client continuity.
To Contact Celeste or Gilberto:
Celeste C. Moya
Texas Financial Partners, Director
Gilberto A. Siller
Siller Law Firm, Founding Member
G1 TO G4 – Communication is the Key
The phrase “Family Business” can conjure up many images and ideas. Multiple generations working happily together to provide a livelihood and sense of security for each other. Each family member contributing his or her unique skills and abilities to a business they are all equally passionate about. Each generation taking up the mantle of hard work from the one before it, and paving the way for the next one.
While this is an achievable ideal, most family businesses will encounter many trials along the way. Find out how to overcome the obstacles that stand in front of every family business no matter the industry.
Click here to read the full article.
Dallas CAP-py Hour
Todd S. Healy, a TFP co-founder, and Carolyn J. Smith, Senior Director, both hold the CAP® designation. Philanthropic giving is an important part of many of our clients’ plans, and this designation gives us an added level of experience and knowledge when it comes to maximizing the benefit of philanthropy to all parties.
TFP looks forward to the next CAP® class in first quarter 2019.
If interested, contact Rebecca Bates at email@example.com.
Affluent individuals who can afford life insurance premiums but prefer not to liquidate assets or redirect cash flow to pay them, need to know about premium finance. So do advisors who want to help them make informed life insurance decisions.
Let’s say your client is a successful business owner, family estate owner, and investor, and understands the importance of life insurance. Beyond its asset protection value, life insurance funds buy-sell agreements, provides liquidity for wealth transfer taxes, supports asset equality for heirs, and expands charitable opportunities.
However, your client may hesitate to liquidate assets to pay the premiums, but understands how to utilize leverage to create wealth. That same principle can be applied to life insurance with premium finance. Premium finance is a financial tool with which life insurance coverage can be obtained without having to liquidate profitable investments by leveraging third party funds.
Breaking that last sentence down, premium finance consists of borrowing money from a bank or other third-party lender to pay life insurance premiums. These arrangements typically involve a long-term loan with a variable interest rate that is tied to the London Interbank Offered Rate (LIBOR).
Collateral is required for the loan, but in most cases the life insurance policy’s cash surrender value is utilized, with any deficit covered by additional collateral generally in the form of a letter of credit, cash, or marketable securities. Most premium finance arrangements consist of short term financing, usually 10 years or less. The loan interest is typically paid in cash, but alternative options, such as accruing interest, may be available. Additionally, premium finance clients need willingness to have some “skin in the game,” either through the pledging of collateral and/or the payment of loan interest.
It is extremely important that the arrangement also consider an exit strategy for repaying the loan other than just from the policy values. Should the insured die prior to the repayment of the loan, the outstanding loan is repaid from the policy death benefit proceeds.
Premium finance should not be thought of as a way to get “free insurance” or earn substantial returns. Additionally, it should not be the reason why someone purchases life insurance. It is a financial tool that allows clients to obtain the necessary life insurance coverage to provide for future obligations, such as estate taxes, while allowing them to leave more assets invested in their businesses and other investments.
As interest rates slowly rise, questions about premium finance also arises. Will premium finance become less efficient for paying life insurance premiums? It’s not a yes-no question. Policyholders do not opt to premium finance because of low interest rates. They do it because they understand the power of leverage and redirecting assets for higher earning returns.
In the 1990’s, when premium finance began to be more widely utilized, interest rates were significantly higher. During that time, the arbitrage between the loan interest rate and the policy crediting rate was not as attractive. But this did not stop life insurance clients from financing their premiums.
The banking and life insurance industry have made adjustments to accommodate the changing interest rate environment and continue to make premium finance an attractive option. Some banks that actively participate in premium finance have lowered lending rate spreads to combat the rising short-term interest rates. Other banks are offering longer term notes.
On the life insurance side, some life insurance companies are releasing new products that are better suited for premium finance, and some are adjusting their premium finance rules to make it available across varied client circumstances.
Premium finance does have some risks you need to consider in order to determine suitability. Among these risks are:
- Interest rate changes
- Policy performance
- Increased collateral requirements
- Loan term adjustments upon renewal
- Change in client’s financial conditions
Risk management is really more about expectation management, and it is important to create realistic expectations. The premium finance design must be stress tested and modeled based on various possible scenarios and outcomes. Additionally, premium finance clients should be prepared to pledge more collateral or make additional payments if necessary, and implement plans to facilitate back-up repayment sources. Once the plan is in place, ongoing monitoring is necessary to ensure the plan stays on track and to make necessary adjustments if issues arise or needs change.
Conversely, there are also significant risks with not purchasing the necessary amount of life insurance for effective planning. Premium finance can be a very efficient financial tool for the right situation, even in today’s rising interest rate environment, but it must be used appropriately and with detailed and careful preparation.
If you would like more information on this topic or other life insurance planning topics, please contact Celeste C. Moya:
Malinda Perryman poses with the Dallas Stars’ mascot, Victor E. Green.
Members of the Texas Financial Partners family walked in the recent 2018 Komen Dallas Race for the Cure in support of Malinda Perryman, a TFP member who is undergoing treatment for breast cancer. It was a moving and inspirational day, and we had impressive staff participation. Nine members of the TFP team came out to support Malinda and those fighting cancer everywhere, and we raised $2,463 in the fight for the cure. This was our first time to support the race and we were thrilled to come in 13th on the Top Corporate Sponsors leaderboard.
Malinda was diagnosed in January 2018, and we are heartened and warmed by the support the TFP family has shown her. TFP recently committed to do its part in the fight against cancer, and our participation in the Race for the Cure was part of that commitment. “I am incredibly proud of how my group has rallied behind Malinda since the very beginning of her diagnosis,” said TFP co-founder Todd S. Healy.
Other members of the TFP team were equally moved by the event. “I truly enjoyed sharing this experience with Malinda and the team,” noted Lisa Brown. “Seeing the joy on Malinda’s face as she crossed the finish line—truly an experience I will never forget!”
From left to right, Rebecca Bates, Kristi Kerr Leonard, Jennifer Perryman, Malinda Perryman, Suszanne Mutua, Lindsey Brown, and Lisa Brown.
Suszanne Mutua and Malinda Perryman wear their Komen “back signs” celebrating the cancer survivors close to each of them.
TFP staffer Suszanne Mutua commented that “Malinda has been my show of courage for the year 2018! Her strength, faith and endless will to fight has been incredible. I walked because I am so very proud to support Malinda and to race for the cure!”
Team member Rebecca Bates reflected on the experience of being part of a larger cause. “Seeing the happiness in Malinda’s eyes that we were together in a common goal to support those currently battling cancer, those that are in remission, and those that have passed. It was truly inspiring to see everyone together – whatever their situation.”
The support of her TFP family made a substantial impact on Malinda. “When I received the call in January that the results were positive for breast cancer, my work family was the first to know,” she said. “They have supported me since day one through prayer, words of encouragement, and many other ways. I had completed radiation the week before the race and it was a great opportunity to celebrate with everyone.”
Susan G. Komen for the Cure
Since 1982, Susan G. Komen for the Cure has funded cancer research, education, screening, and treatment, and offered resources to cancer patients, survivors and their loved ones. Texas Financial Partners encourages you to help us fight cancer by making a donation here.
“When it rains in Texas, 84% falls on farms and ranches.” This statistic, among others, demonstrates the importance of rural working lands in Texas, and the reason why the Texas Agricultural Land Trust (TALT) works hard to protect rural Texas lands. Celebrating their 10th anniversary this year, TALT’s mission is to conserve the Texas heritage of agricultural lands, wildlife habitats, and natural resources. Their motto: Protect. Conserve. Pass on.
As part of this mission, TALT hosted a conservation workshop as part of their “Saving Family Lands” seminar series on October 11th in Kingsville. Texas Financial Partners was pleased to participate in this workshop. Todd S. Healy (Principal), Carolyn J. Smith (Senior Director), and Jay F. Wheless (Director) shared insights and learned new tools for serving their clients who own family farms and ranches.
At the seminar, Dr. Roel Lopez of the Texas A&M Natural Resource Institute shared information from a study on the changes affecting rural working lands in Texas today. Population increases, rising land values, and continued fragmentation of rural working lands are impacting natural resources and food security in crucial ways. With these conditions in mind, landowners considering a transfer to the next generation are faced with unique opportunities and challenges.
Blair Fitzsimons, TALT Executive Director, said of TALT’s work, “As we travel the state and visit with landowners, common themes arise in conversation. Drought, cattle prices, eminent domain, energy development… the list is a familiar one. But the topic that surfaces more now than before is how to plan for the future. Landowners are asking: How do I foster my commitment to the land? Will the children come back to the ranch or farm? What if one does and the other doesn’t? What are my options if I don’t have heirs? How do I ensure a legacy for future generations?”
TALT Stewardship Director, Ken Cearley, commented that “Texas private farms and ranches provide food, fiber, drinking water, clean air, wildlife habitat, and the wide-open spaces that all Texans benefit from, so it is imperative that these lands stay in production for generations to come.”
At TALT Kingsville workshop “Saving Family Lands” Todd Healy, Principal, TFP; Carolyn Smith, Senior Director, TFP; Blair Fitzsimons, Chief Executive Officer, TALT; Ken Cearly, Stewardship Director, TALT; Jay Wheless, Director, TFP
Of particular prominence at the seminar was the topic of conservation easements, which allow landowners to voluntarily devote a portion of their working lands for natural or historical preservation, public access, or recreation, and could be a useful tool for landowning families who hope to maintain their estates across generations. “Conservation easements can be structured to protect specific conservation values of the landowner,” noted Wheless. “As Texans, we have a great opportunity to preserve and conserve our beautiful natural resources.”
Healy remarked that “Blair Fitzsimons opened the one-day conference by explaining that ‘land is what unites us.’ She and the other speakers went on to explain how much land has been taken over as our population in Texas grows. In describing a conservation easement, she explained how we may have the key to helping to curtail that challenge.”
During their opportunity to present at the event, the TFP team stressed the utility of life insurance as a tool for the stable transfer of family land across generations. Smith offered this analysis of the ways in which life insurance and conservation easements might be used as complementary tools in estate planning for working lands:
As landowners review their plans to transfer ownership to the next generation, a couple of situations may arise:
Not all family members are interested in future ownership.
Establishing a conservation easement has decreased the market value of the land, and thereby, the value of the assets going to the next generation.
Maintaining farm and ranch land requires liquidity to fund maintenance, repairs, operations, etc.
Landowners may have an income tax savings from the establishment of an easement.
Land owners may use life insurance as a tool in their estate plan. Even though they may be giving up the potential appreciation of the property, they may be able to make up the difference with life insurance being paid for by the income tax savings.
The Kingsville event is the latest in a series of workshops held in the Gulf Coast region that focused on providing tools to landowners for succession planning, generational transfer of land, and other land management topics. TFP was honored to participate in this event, knowing that landowning families across Texas will benefit from the insights shared between all participants.
Great brainstorming with the team on how TFP can implement the various ideas and strategies shared during Lion Street. Photo: Celeste C. Moya, Todd S. Healy, Jay F. Wheless and Carolyn J. Smith.
Texas Financial Partners was pleased to be represented at this year’s Indaba conference, hosted September 12-14, 2018 by Lion Street in Dallas. At this prestigious annual meeting, leaders of the insurance and estate planning industries from across the United States gather to share ideas, learn best practices, obtain industry updates, and network with their peers.
TFP attendees took away a great deal of insight and new thinking from the conference. Todd S. Healy noted that he was “reminded of the importance of understanding the industry cycles of our clients businesses. Their planning should take into account how many cycles they are prepared to ride out before considering an exit from their business.”
At the event, more than 30 Lion Street owners presented to 300+ attendees, including TFP principals and directors, on a variety of themes. Notable topics included: integrating life insurance into wealth transfer plans, post tax reform solutions, strategies for clients buying or selling a business, helping clients achieve their “preferred futures,” client continuity and creative sales concepts to maximize retirements plans and wealth transfer.
Todd S. Healy, Jay F. Wheless, Carolyn J. Smith, James Joyce, Senior Vice President, Sales and Marketing, Lion Street
Keynote speakers included Lewis Schiff, Chairman of the Board of Experts for Birthing of Giants, and Chris Erblich, Partner with Husch Blackwell. Lewis discussed the changing face of wealth and the mindset of an entrepreneur. Chris shared 15 different types of planning that wealthy families are actively engaging in now that the estate tax exemption is higher.
Director Jay F. Wheless had this to say about the event: “Speakers at Lion Street emphasized that planning techniques implemented today impact tomorrow’s options. As advisors we need to have those discussions with our clients so that they are properly positioned for the future.”
Every year the Lion Street Indaba conference brings together distinguished experts in estate planning to help them provide exceptional service to their clients. The TFP team is committed to using the insights we learned at this year’s event to provide unparalleled continuity of service to our clients.
Hear what the TFP team had to say about this year’s INDABA event:
Todd S. Healy remarks on how the Lion Street INDABA meeting addressed TFP’s central goal of continuity of service. ‘That was a big topic of discussion today, as we learned how other firms have tried to deal with that very, very difficult issue.’
The right answer to the wrong question can be very costly. TFP Director Celeste C. Moya reflects on one of the most important ideas she took away from this year’s INDABA presentations: that advisors too often jump to solutions before truly examining the obstacles their clients need to overcome.
“Today many of us will live 30 years longer than our grandparents did.”
Mindy Jones, Managing Principal at Dallas’ Pyxis Care, shared this stunning insight and others at Texas Financial Partners’ September Consume and Converse event, which focused on the challenges presented to families and wealth holders by increasing life expectancy.
In order to plan effectively for the future, it is crucial to factor in the impact of longevity. This impact is deepening as health care costs continue to outpace inflation. In fact, a recent Harvard University study found that medical expenses are now the leading cause of personal bankruptcies.
“An MIT professor at the Longevity Center said people born today have a 50/50 chance of living to 100 years old,” commented TFP Principal Todd S. Healy. “There are more adult diapers sold in Japan today than infant diapers.”
Todd’s comments drew a laugh from the crowd, but the implications were serious: people are living longer, and younger populations aren’t keeping pace. As Mindy added, the question now becomes, who will change the diaper? Who will provide the care? “Never before as advisors have we been in a position to influence 7 generations at once. Planning in a 7-generation world requires broad perspective and new thinking.”
It can be difficult for families to discuss “the plan” for their aging elders. Knowing where to start—and what to ask—can be emotionally overwhelming. As a result, many families, and heads of families, unfortunately do not effectively communicate their wishes for their estate.
Todd S. Healy, Mindy Jones, Carolyn J. Smith, Jay F. Wheless
What can be done? Adding a professional “care coordinator” to the advisory team early in the planning process is one answer. With this professional on the team, individuals and their families can communicate and plan for financial, legal, and personal care needs. While aging is not a choice, planning for impact of longevity can be.
In response to this dialogue, one event participant commented that they had “never really thought to think about this… Those difficult conversations were ones we didn’t really have as a family and that made it all more difficult.”
The knowledge gained at the event was eye-opening for many. TFP Senior Director, Carolyn J. Smith, remarked that “Mindy Jones shared examples of how longevity is impacting all phases of planning. This makes communication and coordination with your family and advisors more important than ever.”
TFP hosts regular events in its Consume and Converse series to bring together members of Texas’ life insurance and financial planning communities around various topics of professional import. About this latest event, Todd added, “We were proud to have Mindy Jones present on the impact of longer life expectancy on all our family members and clients, and to offer solutions to all the associated issues.”
Participants use the San Antonio Consume and Converse events to share questions and insights on these topics, as well as to strengthen connections. As one attendee noted about herself and a colleague, “We have gotten to know each other from the C&C, and now also share some clients.”
Mindy Jones is the Managing Principal at Dallas’ Pyxis Care Management, a firm that works with professional advisors to advocate for the health, well-being, and quality of life of their mutual clients. With more than ten years’ experience in health advocacy, she holds an MBA from the University of Texas at Dallas, as well as a BS from Indiana University and an MS from Purdue.
To view Mindy’s presentation, please download the attached PowerPoint:
To Contact Mindy Jones:
At Texas Financial Partners, we are pleased to affirm our commitment to supporting cancer research and helping those who are battling the disease. Too many families, including ours, are affected by cancer, and we aim to do everything we can to help.
Our mission is personal—in the last two years, two members of the TFP team, Tim Engelbert and Malinda Perryman, have been diagnosed with cancer and continue to undergo treatment with promising results. We are proud of the strength and bravery they have shown in the face of adversity, and we’re especially grateful of the support they have received from the community. Last year, the Dallas Stars hockey organization arranged a surprise one-on-one meeting between Malinda, a devoted Stars fan, and former Stars luminary Jamie Langenbrunner, after learning about her diagnosis. You can read about that meeting here.
We are proud of the of the support that TFP team members have given to their colleagues who are battling cancer. One TFP office took it upon themselves to sell pink cancer awareness bracelets to colleagues and friends in order to raise funds to help cover the multitude of out-of-pocket expenses that can accumulate during the treatment process.
Malinda and Tim have made clear how important their colleagues’ support has been to them. As Tim put it, “It was incredibly humbling to witness such a broad range of family, friends and coworkers that provided endless encouragement—my prayer warriors were relentless! The cancer had NO chance.”
“My treatment has had its ups and downs,” Malinda has said, “but I am making it through with the prayers and encouragement of my work family. Their support has allowed me to focus solely on fighting this disease.”
As of 2016, there were more than one million estimated cancer survivors in Texas and more than 15 million nationwide. As funding for research, education, and treatment has increased, and our understanding of the disease has improved, survival rates for cancer patients have risen substantially. For example, the mortality rate for women diagnosed with breast cancer in the United States declined by 39% between 1989 and 2015, thanks largely to expanded early screening and advances in treatment. Our efforts can make a difference.
Throughout the coming year, TFP staff will be looking for other opportunities in their respective communities for our business family to do its part—even in a small way—to contribute to the larger fight against cancer. We encourage you to join us in this fight by donating to Malinda’s and Tim’s preferred organizations below.
If you wish to donate, here are a couple of causes we support:
Donate to Malinda’s cause: Susan G. Komen for the Cure
Donate to Tim’s cause: North Texas Laryngectomy Society