The Center Family has Grown

Contributed by: Nick Defenthaler, CFP®

After 9 long months of waiting, my wife Robin and I welcomed our son, Brek Lee Defenthaler into the world on Friday, July 31st!  He really gave his mom a run for her money but she was a rock star and is a hero in my book after enduring almost 18 hours of labor.  Everyone tells you that nothing can prepare you for the moment you meet your child for the first time, and it is so true.  Seeing our son's face for the first time was an incredible memory that will remain vivid for our entire lives.  Robin and I have been home enjoying our new addition for the past week and half and have truly enjoyed introducing Brek to our family and friends.  We are beyond thankful and feel so blessed with everything God has given our family. 

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

What You Need to Know about Stock Options

Contributed by: Nick Defenthaler, CFP®

As a professional, there are various ways you can be compensated for your work.  Although not as prevalent as they once were, stock options still exist in many different companies and can often be negotiated into your overall compensation package.  Stock options are intended to give you motivation and incentive to perform at a high level to help increase the company’s stock price which will, in turn, have a positive impact on the value of your own stock options.  There are various forms of stock options and they can certainly be confusing and even intimidating.  If you’ve ever been offered options, your initial thought might have been, “I know these things can be great, but I really don’t have a clue what they are or know what to do with them!” For starters, there are two common forms of stock options NSOs & RSUs.

NSO: Non-qualified Stock Options

Non-qualified stock options, or NSOs, have been around and very popular for decades.  The mechanics, however, can be a bit tricky which is partly why you don’t see them quite as much as you used to.  There are various components to NSOs, but to keep things simple, the company’s stock price must rise above a certain price before your options have value.  Taxes are typically due on the difference between the market value of the stock upon “exercising” the stock option and what the stock price was when the option was “granted” to you.  Upside potential for NSOs can be significant but there’s also a downside. The options could expire making the stock worthless if it does not rise above a certain price during the specified time frame.

RSU: Restricted Stock Units

Restricted Stock Units, or RSUs, have become increasingly popular over the past 5 – 10 years and are now being used in place of or in conjunction with NSOs because they are a little more black and white.  Many feel that RSUs are far easier to manage and are a more “conservative” form of employee stock option compared to NSOs because the RSU will always have value, unless the underlying company stock goes to $0.  As the employee, you do not have to decide when to “exercise” the option like you would with an NSO.  When the RSUs “vest”, the value of the stock at that time is available to you (either in the form of cash or actual shares) and is then taxable.  Because you do not truly have any control over the exercising of the RSU, it makes it easier and less stressful for you during the vesting period.  However, because the RSUs vest when they vest, it does take away the opportunity to do the kind of pro-active planning available with NSOs.

Stock Options and Tax Planning

As you can see, stock options have some moving parts and can be tough to understand.  There are many other factors that go into analyzing stock options for our clients and we typically also like to coordinate with other experts, like your CPA because tax planning also plays a large part in stock option planning. If stock options are a part of your compensation package, it is imperative to have a plan and make the most of them because they can be extremely lucrative, depending on company performance and pro-active planning.  Please reach out if you ever have questions about your stock options – we work with many clients who own them and would be happy to help you as well!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

---

We're Sorry, This Page is No Longer Available

Checkout our current blog posts HERE. See you there!

6 Ways to Get Healthy AND Spend Less

Contributed by: Gerri Harmer

If you could choose one of these items in retirement, which would you pick?

1. A vacation home

2. Shiny red convertible

3. Good health

A younger version of yourself would have probably gone for option 1 or 2. But many of us find when we get to retirement, our priorities change.  Without good health, all the other choices are irrelevant if you can’t enjoy them. Many of us dream of living a very active lifestyle when we retire with some money in our pockets.  Wouldn’t it be amazing if we could have all the options? Wouldn’t it be even more amazing if it only took adapting just a few new habits to improve our long-term health?

Here are 6 ways to lean into better health while spending less:

1.     Start giving up that bad habit.  Most things that are bad for your health are bad for your wallet.  Smoking, junk food, fast food and pop can all be eliminated, adding money to your bottom line.

2.     Go outside.  Breathe the air and get fit by walking, gardening or bike riding.  Better yet, head to the park to toss a Frisbee, join in on a sport, or hit a trail. No need to pay fees for gym memberships during the summer.

3.     Buy local or grow your own.  Farmers markets usually have a great variety of organic fruits and vegetables.  You support your community and pay a fraction of the grocery store prices.  Better yet, start your own garden and save even more.

4.     Sleep 15 minutes more.  Give your body a little more time to repair itself.  Go to bed early or prep for your morning the night before so you can sleep an extra 15 minutes. 

5.     Drink water.  Experts recommend drinking 8 glasses a day. Before you allow yourself even a drop of anything else, drink a glass of water first. You’ll be surprised how much energy you gain while flushing all the bad stuff. Water is one of the least expensive beverage options especially when it comes from your filtered fridge instead of a bottle.

6.     Sit with nature.  Reset your stress levels by simply listening to the birds, taking in the scenery or feeling the breeze on your face.  It costs nothing and gives you peace and calm.

It might be difficult to change radically overnight, but leaning toward better habits may lead to a smoother, more permanent change in your health. And it doesn’t hurt that you’ll be saving money along the way!

Gerri Harmer is a Client Service Manager at Center for Financial Planning, Inc.

How to Apply for Social Security Retirement Benefits

Contributed by: Matt Trujillo, CFP®

There are a few different ways you can apply for social security retirement benefits. The easiest and most time efficient is simply to set up an account at https://secure.ssa.gov/iClaim/rib and apply for benefits online.  You can also apply over the phone by calling 800-772-1213 (or 800-325-0778 if you are hard of hearing). 

Of course, you can always stop down to a social security office and apply in person.  For some of the more advanced social security strategies like file and suspend and restricted application, you will have to stop into a branch as these options are not available online. You can find your local social security office by clicking this link.

If you are currently living outside of the United States you can apply for benefits by contacting the Office of International Operations. For more information visit their website here.

When to Apply for Social Security Benefits

It’s a good idea to apply for benefits a month or two earlier than you want your benefits to actually start. This is because social security benefits are paid the month after they are due.  For instance, if you want your benefits to start in July, you will receive your first benefit check in August. If you want to receive your first benefit check in July, you need to be eligible for benefits in June and tell the SSA that you want your benefits to start in the month of June so that you will actually receive a check in July.

Social security can be a very confusing topic. It’s a great idea to consult with a qualified professional before applying for benefits as your decisions in this area can be permanent and irreversible.

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.

---

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Matthew Trujillo, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

3 Tips on Setting Up a Trust from the RJ Trust School

Contributed by: Matt Trujillo, CFP®

I recently had the opportunity to attend Raymond James Trust School in Cleveland, Ohio with about 30 other financial professionals.  It was a great refresher, but I learned some new things as well. Below are three of my key take-aways from the RJ Trust School that may help guide you in making decisions about a trust.

3 Take-Aways from the RJ Trust School:

1. Sometimes to save money people will have a will drafted which calls for a trust to be set up at their death. This type of trust is called a “Testamentary Trust”. One of the issues with structuring your estate plan in this fashion is that with a Testamentary Trust the probate period will continue until the trust terminates which could be as much as 90 years in some states!  This is a long time for creditors to submit claims against an estate, and something to keep in mind when you are considering having documents drafted.

2. Trusts aren’t just about avoiding estate taxes! There are many other reasons to have assets held in trust name. Here are a few that were mentioned at RJ Trust School:

   • If the beneficiary is a spendthrift and you are worried they might spend all the assets in a short period of time

   • If the beneficiary just doesn’t understand money well and will struggle with financial management

   • If the beneficiary doesn’t have time to manage additional financial matters

   • If the beneficiary has potential credit problems and if they inherited assets outright their creditors could seize the assets

   • If the beneficiary is in a bad marriage and inherit assets outright, a soon to be ex-spouse might have a claim

   • If the beneficiary has special needs it might be better to have inheritance held in trust so they don’t lose government funding

3. If you’re married, you should strongly consider filing form 706 electing portability at the death of the first spouse, even if you don’t have a taxable estate at that time.  With the recent changes in estate tax law a lot of people think they automatically get their spouse’s estate tax exemption as well as their own. However, as the instructor at RJ Trust School pointed out, you only get both exemptions if you file the appropriate paperwork electing for “portability” at the first death.  For example, if an estate didn’t have estate tax issues at the first death, but grew significantly after the date of death, it could now be subject to estate taxes. That’s a situation that could have been avoided by filing form 706.

If you are considering implementing some estate planning documents or amending the one you currently have in place, you should meet with a qualified estate planning attorney first!

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.

---

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Matthew Trujillo and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. You should discuss any tax or legal matters with the appropriate professional.

Live Your Plan: 35 Years of Printmaking

Contributed by: Timothy Wyman, CFP®, JD

There’s nothing more satisfying than seeing a client turn a dream into reality. To me, that’s what financial planning is all about. My clients Norm and Susan Stewart are a shining example. They turned creative talents into a successful 35-year printmaking business in Bloomfield Hills. At Stewart & Stewart, Norm is the Master printer and partner Susan is the graphic designer. If you have ever driven down Wing Lake Road between Maple & Quarton, you may have seen their workshop. Their collection resides not only in Michigan, but all across America and Europe.  And now they’ve been featured in the Journal of the Print World. I’m proud to serve folks like the Stewarts each day. On behalf of everyone at The Center – Congrats!

For another inspirational story of clients living their plans, check out this blog about two more of my clients who authored “A Poetic Life”. Their insight on living each day to the fullest could have you thinking about intentional living.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a contributor to national media and publications such as Forbes and The Wall Street Journal and has appeared on Good Morning America Weekend Edition and WDIV Channel 4. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), mentored many CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

---

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

Raymond James is not affiliated with Stewart & Stewart.

Beyond Retirement: An End of Life Planning Lesson

Contributed by: Sandra Adams, CFP®

As we work with clients at The Center, we talk about how to “live your plan.” To us, that means focusing and achieving your financial goals so that you can you can live those goals that you have been envisioning within your planning.  To be honest, this phrase often arises in the context of conversations about living out dream retirement wishes, like traveling the world, writing that book you always dreamed of writing, or owning a second home on the beach – not in the context of end of life planning.

I recently witnessed a client “live” her end of life plan.  While you might not think this to be a very significant or exciting accomplishment, it brings me to tears and smiles (all at the same time) every time I think of it.

Communicating Your Wishes

“Ann” was in her early 90’s and quite a strong character. Although she suffered from a chronic disease, she was relatively active early on in our planning.  She needed to update her estate planning because she had outlived all of her blood relatives and needed to put plans in place for when she knew she might not be able to handle her own affairs.  What she did know was that she would NEVER want to go to a nursing home – she wanted to be cared for her in her own home and we needed to find to a way to make that happen.  Ann put her wishes in writing and communicated those wishes to everyone involved along the way.

Outlining Your Plan

Over the next several years, Ann’s health worsened and she needed to hire a geriatric care manager and caregivers. Toward the end, there were caregivers at her home nearly 24 hours a day with some Hospice care provided. With careful planning, Ann was able to support this with her financial resources. I do not tell you that this was easy. There were many times over the years when Ann became anxious, claimed she was living too long, and wasn’t sure what to do. But she was never willing to compromise on moving from her home.  Ann had specifically outlined how she wanted to live (and how she didn’t want to live – in a nursing home).  On one of her last days, Ann said, “I am happy.” To me, this confirmed that she had carried out her plan for her end of life to her satisfaction.  These are the types of situations that I help my clients with often.

End of Life Reading

Being Mortal by Atul Gawande is a book that I read recently on end of life issues.  It brings to light that most of us do a very poor job of planning for or thinking about our end of life, and we certainly don’t communicate our wishes to our families. We do a lot to plan for our ideal lives, our ideal retirements, so why not end our lives right?  By taking the next steps and planning for the end of our lives, as well, we can make this happen (even though it is not always the most pleasant topic to discuss).  My favorite takeaway from the book is this:

            “All we ask is to be allowed to remain the writers of our own story.  That story is ever changing. Over the course of our lives, we may encounter unimaginable difficulties. Our concerns and desires may shift.  But whatever happens, we want to retain the freedom to shape our lives in ways consistent with our character and loyalties.”  -Atul Gawande

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

---

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Sandra D. Adams, CFP®, and not necessarily those of Raymond James. Raymond James is not affiliated with and does not endorse the opinions of Atul Gawande. You should discuss any legal matters with the appropriate professional. The experience described here may not be representative of any future experience of our clients. Past performance is not indicative of future results.

Second Quarter Investment Pulse

Contributed by: Angela Palacios, CFP®

We’ve been busy meeting with investment managers this past quarter.  It’s always great to dig into the latest research and get a fresh perspective and some new ideas.  Angela Palacios shares some of the most notable take-aways from our second quarter meetings:

Scott Davis, Portfolio Manager Columbia Dividend Income

It is always a pleasure to receive a visit from Scott.  We have had the privilege to meet with him several times over the past years and each time we seem to glean interesting information.  He was pleased and flattered to be recently named by Morningstar as one of their “Ultimate Stock pickers.”  We discussed several top of mind topics, starting with the potential upcoming interest rate increase by the Federal Reserve.  Scott told us he wished they would just get it over with and do the first one soon.  He stated that markets move so quickly these days you want to be positioned for this happening well in advance.

Scott is also growing increasingly concerned over companies that are issuing debt at low rates today to buy back stock.  The concern isn’t necessarily for now, but in the future when they become dependent on this debt and need to refinance that debt at much higher rates.  Some companies could be in a lot of trouble at that point.

Heidi Richardson, Head of Investment Strategy for US iShares

Heidi was also talking about a rate hike, among other things.  She gave her list of things to know and do.

5 things to know:

1. Federal reserve should hike rates soon but she expects rates to remain low

2. Central Bank divergences (while US and England are raising interest rates, Japan, Canada and Europe are lowering rates)

3. She expects stocks to be a bumpy ride (low volatility of the past 5 years is over)

4. US economy is only inching upward slowly (they expect GDP growth of 2.5% this year)

5. Inflation is still very low and Europe will see deflation

5 things to do:

1. Prefer stocks over bonds (although bonds are still an important part of diversification)

2. Look overseas for investment opportunities

3. Watch your step in bonds (be choosy as many look fully to overvalued and liquidity may be sketchy)

4. Resist the urge to exit (fear of a bubble leads many to sit on the sidelines and wait to invest, but over time they expect the market to move higher)

5. Seek growth in a low growth world (low rates on cash continue to hurt those holding it)

Jeff Saut, Chief Investment Strategist and Managing Director of Equity Research for Raymond James

Jeff presented at the Raymond James conference in April and gave us his stages of a secular bull market (which he believes we are in now): 

1. Aftershock and rebuilding: this is the realization that you survived a bear market. Rebuilding is a sea change where stocks no longer react to negative news.

2. Guarded optimism: bear markets redistribute stocks to the rightful owners (this is the stage he thinks we are in).

3. Enthusiasm: fun stage of the bull market where generally everything you touch makes a profit.

4. Exuberance: feelings grow as nothing can go wrong, he feels we have a long way to go before we get to this stage.

5. Unreality: advanced stage of exuberance, frantic and chaotic, volumes pick up and there is a lot of turnover.

6. Cold Water and disillusionment: bursting of the bubble.

Angela Palacios, CFP® is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well as investment updates at The Center.

---

Raymond James is not affiliated with and does not endorse the opinions or services of Scott Davis, Heidi Richardson or the companies they represent. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Angela Palacios and not necessarily those of Raymond James. The information has been obtained from sources considered reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Investments mentioned may not be suitable for all investors. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Past performance is not a guarantee of future results.

Raymond James is not affiliated with and does not endorse the opinions or services of Scott Davis, Heidi Richardson or the companies they represent.  This material is being provided for information purposes only and is not a complete description, nor is it a recommendation.  Any opinions are those of Angela Palacios and not necessarily those of Raymond James.  The information has been obtained from sources considered reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.  Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Investments mentioned may not be suitable for all investors.  Prior to making an investment decision, please consult with your financial advisor about your individual situation. Past performance is  not a guarantee of future results.

How to Check Your Credit Report and What to Do if You See Something Unusual

Contributed by: Melissa Parkins

Back in April of this year, my husband and I finally decided we had waited long enough to refinance our mortgage. We contacted our lender, and he sent us a proposal that would allow us to drop our interest rate 0.625%. We were very pleased and agreed to move forward right away. Much to our dismay, our lender called the next day to inform us that our credit score had significantly dropped (100 points in 12 months!) and he wouldn't be able to get us approved for a rate any better than what we have now. He sent us our credit report that he had pulled, and we found a fraudulent claim showing a past due account balance on a PayPal credit card – which we do not have! He advised us to contact the credit reporting company that was showing this fraudulent claim. When we did, we found out that it was opened using my husband's name and social security number, but someone else's address living in New York! Neither of us has even been to New York! If you find yourself in my shoes, here’s what to do:

Tips for checking your credit report

1.    Visit annualcreditreport.com to request your free credit report from your choice of 3 different agencies: Equifax, Experian, and TransUnion. Utilize all three. You are entitled to a free report from each of the three companies every 12 months.

2.    Set a reminder to pull your report with each agency annually. Stagger each of the 3 reminders, so you can check your full report once every 4 months to keep a closer eye on it.

3.    Review all information, including the basics like addresses, phones numbers, employers, etc. looking for any errors or discrepancies.

4.    Make sure you recognize all accounts, loans, credit cards, etc. on your report.

Fixing or disputing errors

First, contact the credit reporting companies directly and let them know what information you believe is not correct. You may be asked to provide supporting documentation as to why you are disputing the claim as fraud. In some instances (like ours) it may be hard if not impossible to do. What documentation do we have to show we never opened a PayPal credit card?!

Second, contact the fraud/security department at the company that provided the fraudulent information to the credit reporting company. We had to get in touch with PayPal. They will send their dispute paperwork that you will need to submit with any supporting documentation. Make sure you provide them in writing that the account was opened or charged without your knowledge, explain why you are disputing the information, and that you are requesting it be removed or corrected. Keep a paper trail for yourself as well.

Another question to verify is if the debt has been sold to a collections agency or not. If it has, make sure they will be notifying the collections agency that the debit is being disputed. And brace yourself! It could be a 90-day review process (or more!) before anything gets resolved. Set a reminder to follow up if you have not heard anything within the given timeframe. Once you have received a confirmation letter that the fraudulent claim has been discharged, make sure they have also closed the account in your name.

About 60 days after we submitted our dispute paperwork to PayPal, we received a much welcomed letter in the mail saying our request was granted and the fraudulent debt would be removed from our credit report! After having to learn the hard way, we will be monitoring our credit reports unfailingly every 4 months. Hopefully regularly monitoring of your credit report will save you from the time and frustration it took us to fix the error on our credit report!

Melissa Parkins is a Registered Client Service Associate at Center for Financial Planning, Inc. Melissa is a contributor to the firm’s blogs.

---

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Melissa Parkins and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Raymond James is not affiliated with and does not endorse the opinions or services of Equifax, Experian, or Transunion. You should discuss any legal matters with the appropriate professional.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.