One question commonly faced by heirs who inherit real estate is what to do when there is a reverse mortgage loan on the property. Absent an eligible non-borrowing spouse or co-borrowers, the heirs are required to pay off the full loan balance should they wish to keep the property. Should the loan balance exceed the home’s value, selling it requires repaying the full balance, or at least 95 percent of its current appraised market value (applicable if prices have gone down).
The due and payable nature of a reverse mortgage loan after the last surviving borrower passes often leads to decisions as to whether to keep or sell the property, or simply keep the equity. Heirs can also choose to simply walk away, allowing the lender to dispose of the home and thus satisfy the debt. Whatever the decision, with the standard home equity conversion mortgage (HECM) in place, heirs only have 30 days to decide and take a course of action once the mortgage loan becomes due. If they decide to keep the home, the loan must be repaid through refinancing, either through available funds or a new financing arrangements. In certain cases, such as with HUD-approved housing, the timeline for obtaining financing for keeping the residence or selling it can be extended as much as 6 months.
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A Southern California financial executive, Lisa Detanna provides client-centered solutions at Raymond James. Lisa Detanna is experienced in multi-generational planning to help preserve and grow assets through the decades.
A long-term strategy, multi-generational planning is unique in bringing together various members of a family across the generations to work together to define their shared values, priorities, and objectives. The ideal framework engenders a sense of collaborative consensus-building. With personal and shared goals merged, family members work through the combination of wills and trusts that should be set up, each with its distinct purpose and advantage. Gifting strategies are part of the equation, as are insurance policies that grow funds and shield them from taxes. A comprehensive estate plan also encompasses healthcare directives and attorney documents. These ensure that a trusted relative or professional can make critical financial decisions on behalf of others in the family should incapacity strike. Assets must be titled and beneficiaries designated in detail to ensure that wealth transfers do not carry with them expensive court processes such as probate. In addition, beneficiary designations, as well as asset titling, should be regularly reviewed by family members to reflect current circumstances. Proper and comprehensive planning can help ensure that one does not join the 90 percent of families of wealth who lose that wealth in just three generations. A financial management executive with over two decades of experience, Lisa Detanna serves as managing director and senior vice president of investments at Raymond James in Beverly Hills. Her role involves crafting tailored financial strategies and protecting assets through insurance. Lisa Detanna co-authored a children's book titled "Treasures in the Winter Vault," which aims to promote financial education and responsibility among children.
Providing children with a strong foundation in financial education yields numerous benefits. It empowers them to become financially independent adults. It also equips them with essential life skills to navigate the complexities of money management, fostering self-sufficiency and resilience in the face of financial challenges, according to Empower.com. In practice, age-appropriate financial education can take various forms tailored to the child's developmental stage. For instance, parents can engage children under seven in everyday conversations about money, differentiating needs and wants, teaching the value of earning money, and instilling the importance of saving and charitable giving. As children grow older, introduce them to more advanced financial concepts like investing. By creating a supportive environment where financial education evolves with age and understanding, parents prepare their children to manage their finances when they reach adulthood. Furthermore, parents can openly share their financial experiences, successes, and mistakes to provide real-life lessons and insights that guide their children toward making sound financial choices. With over three decades of experience in wealth management and financial advisory, Lisa Detanna has been dedicated to assisting a diverse clientele of affluent individuals and families. Serving as a managing director and senior vice president of investments with Raymond James, Lisa Detanna offers a comprehensive range of services such as estate planning and tax planning.
Medium and high-income earners in the US typically need to be aware of the alternative minimum tax (AMT). The IRS introduced the AMT in the late 1960s to ensure that high-income individuals paid at the very least a minimum federal income tax. Unlike regular taxes, AMT has its own set of rules, deductions, exemptions, and tax rates (26 percent or 28 percent). It is applied when the calculated tax under the AMT system exceeds the tax calculated using regular tax rules. Several factors increase the likelihood of paying AMT, such as having a large family, living in areas with high real estate taxes, claiming significant miscellaneous itemized deductions (not deductible for AMT), and holding private activity bonds (which are considered for AMT calculations despite regular tax exemptions). To minimize AMT liability, taxpayers leverage strategies for lowering adjustable gross income. These strategies include participating in retirement plans (e.g., 401(k), 403(b), 457(b), SARSEP, and SIMPLE IRA). Making pre-tax contributions to flexible spending accounts (FSAs) for health coverage and dependent care can also help reduce adjusted gross income, as can repositioning investment holdings into tax-efficient mutual funds or tax-exempt bonds. Lisa Detanna brings over three decades of financial experience to her role as senior vice president of investments at Raymond James in Beverly Hills, California. Outside of her professional activities, she supports various nonprofit groups, including Rotary International. In recognition of her work with the organization, Lisa Detanna was named a Paul Harris Fellow.
Named after Rotary International's founder, the Paul Harris Fellow recognition acknowledges people who demonstrate a commitment to service and dedication to advancing Rotary's mission. Rotary established the award in 1957 to honor and recognize those who contributed substantially to the organization's Fellowships for Advanced Study. Today, recognition is given to Rotarians and non-Rotarians who contribute significantly to the Rotary Annual Fund, PolioPlus initiative, or an approved Rotary Foundation grant. The award itself is a certificate of appreciation and a wearable pin. Fellows can also request a Paul Harris Fellow medallion, which Rotary International introduced in 1969. The medallion features a profile of Paul Harris with the words "Paul Harris Fellow" inscribed above. Over the years, a number of notable people have received the Paul Harris Fellow recognition. Some include President Boris Yeltsin of Russia and President Jimmy Carter of the United States. Rotary International also named Jonas Salk, the polio vaccine developer, a Paul Harris Fellow. Retirement planning involves creating financial blueprints for life after paid work. Employees devise income targets to achieve after retirement and the necessary strategies. This planning involves identifying income sources, predicting retirement expenses, managing assets, minimizing risks, and implementing suitable savings programs.
Employees also assess nonfinancial aspects of retirement, such as where to stay, lifestyle choices, and when to quit working. Having a retirement plan offers financial backup in case of emergencies. After leaving paid work, retirees face an array of challenges due to life’s unpredictability. A sound retirement plan helps them tackle these issues with independence and peace of mind. Modern tax laws offer retirement plans with tax relief. These plans enable employees to make contributions with tax credits, meaning they can save significant costs and enjoy their money’s value after retirement. Retirement planning also boosts return on investments. Financial planners assist employees in identifying viable investment options and guide them in growing wealth after retirement. Employees take advantage of promising opportunities while managing various risks to their portfolios. Additionally, a sound retirement plan can protect retirees from inflation. The plan considers changes to the cost of living and average commodity prices and adjusts contributions to ensure retirees can sustain their lifestyles even during economic turmoil. Financial planners advise their clients on investments that can hedge against inflation, such as real estate. Legacy objectives can be achieved with a retirement plan. Retirees can plan what to pass on to their heirs in old age and how much to contribute to charity. This brings a sense of achievement and satisfaction in retirement. Moreover, retirement plans can help employees to retire early. Financial planners advise clients to create plans and make contributions as early as possible. This approach can help them achieve targets earlier than their official retirement age, freeing them from paid work. Businesses, similar to employees, can benefit from retirement planning. They can attract and retain the best talent by supporting their workforce in securing their lives after paid work. This creates a positive public image, giving them an upper hand in luring candidates ahead of competitors. Employees can choose between individual retirement accounts (IRAs) or employer-sponsored options. Individual plans require employees to contribute independently and include traditional and Roth IRAs. People with taxable income who wish to supplement their retirement savings can register for a traditional IRA. In this plan, employees’ contributions towards retirement are first deducted from their income before taxation. This lowers their taxable income. Notably, earnings from their retirement investments are tax-deferred and only subject to taxes after withdrawal. On the other hand, Roth IRA is suitable for those earning less than $ 144,000 in taxable income yearly. Unlike traditional IRAs, contributions toward Roth IRAs are subject to taxes. However, retirees can withdraw their savings from Roth IRAs tax-free, thus saving high costs. The traditional 401(k) and the 403(b) plans are examples of employer-sponsored options. The traditional 401(k) is suitable for employees working in for-profit organizations. Contributions are made before taxation, and earnings grow tax-free. In this plan, employers can match their employees’ contributions, meaning if a worker contributes three percent of their income to retirement savings, their bosses contribute a similar amount. Employees working in non-profit companies, such as schools and charities, can apply for the 403(b) plans. Similar to the 401(k), contributions are made on a pre-tax basis, earnings are tax-deferred, and employers can match their employees’ contributions to support their retirement. Investment management is the maintenance of clients’ asset portfolios. Investment managers evaluate their client’s assets, subdivide them into specific classes, such as stocks and bonds, and monitor their progress in achieving objectives. This portfolio diversification is imperative in risk distribution and in striking a balance between assets and liabilities.
Businesses and individuals set up investment accounts with managers or brokerages and grant them access to their assets. After understanding their profiles, managers devise strategies to achieve their client’s goals. They manage cashflows, suggest suitable insurance plans, and advise clients on minimizing taxes. Investment managers are also responsible for analyzing the market for their clients. They evaluate the performance of various asset classes in the target market and implement their professional experience to predict significant opportunities and threats to these portfolios. Clients can take advantage of the services of seasoned professionals to grow their wealth and their assets’ value. They learn about promising investments, such as low-cost shares that can generate high value in the future. They make these decisions with confidence and enjoy a consistent income. Additionally, clients can insulate their portfolios from inflation by hiring investment managers. Changes in commodity prices over the years erode principal and securities’ values, leaving owners poorer or unstable. Managers predict inflationary pressures and devise hedging strategies for their clients to ensure the achievement of long-term goals. Market volatility emanating from geopolitical issues, pandemics, and environmental changes can severely affect investments. Portfolio managers devise the appropriate strategies to mitigate losses, including minimizing leverage and maintaining liquidity at all times for their clients. The investment management process comprises four main steps. Managers begin with understanding their clients. They conduct interviews to understand clients’ wants, their risk-taking capacities, tax status, and possible restraints. Clients understand the role of their investments in current and future cash flows and their position in the accumulation-income generation-preservation-distribution cycle. This is imperative in harmonizing clients’ expectations with their financial reality. The next step involves allocating the clients’ assets to different investment classes. Managers can choose domestic or foreign investments and suggest options such as real estate, equity, and securities. Their micro-economic and macro-economic knowledge is important in this stage to predict outcomes and possible adjustments in the initial plans. Portfolio strategy selection is the third stage of the investment management process. It involves selecting an approach to meet the client’s objectives. Managers can choose between active and passive portfolio management strategies. Active portfolio management primarily aims to outperform the market by identifying low-cost options that may become overvalued. On the other hand, passive portfolio management strategies target to achieve returns that are characteristic of the target market. These strategies are reactionary since they rely on market conditions, meaning managers make decisions after the market responds. Monitoring and reporting is the last phase, involving comparing the anticipated and actual performance of the client’s assets. This information is essential in achieving the client’s specific goals since it helps devise counter-strategies in case of variations in asset performance. Investment managers charge clients management and performance fees for their services. These payments are agreed upon at the beginning of their cooperation. Management fees are compensations that reflect the manager’s efforts in maintaining their clients’ portfolios, regardless of the outcome. Performance fees are payable after generating impressive returns for their clients. Managers negotiate for a percentage of the assets under management to be paid after achieving or surpassing the client’s objectives. According to a November 2022 National Association of Plan Advisors (NAPA) article, company culture was a major barrier to the success of women advisors in the industry. Women also reported that balancing caregiving with work responsibilities, finding mentors, and prospecting for new clients as other challenges in advancing their careers. According to the Carson Group State of Women in Wealth Management Report, women experienced gender discrimination. However, some women advisors have successfully navigated these challenges to achieve success.
A series of articles published in April and May of 2021 in Barron's placed a spotlight on top female financial advisors who shared with readers some of the strategies they used to build their businesses and move past difficulties that female advisors face in a male-dominated field. One approach to building a career as a financial advisor is to focus on the client. Paying attention to the client's changing needs was very important for one woman featured in Barron's. Financial planning must cater to the evolving needs of clients. To help clients with their ever-changing needs, successful advisors developed a personalized approach. Here, female advisors who saw success emphasized creating portfolios aligned with what was important to their clients. Other successful female advisors focused on treating clients as family members. The purpose was to develop a close professional relationship between the advisor and client, which ultimately encouraged the client to trust the advisor. When sitting down with clients, getting to know their relatives created a level of trust integral to business growth. Getting to know clients is not limited to the office, either. One advisor encouraged trust by pairing clients with staff members to assist them with non-business-related affairs. For example, if there is an illness, a staff member might send some soup to the family member. In an office filled with men, one shy female advisor skipped cold-calling to recruit prospective clients. Instead, she focused on her ability to engage and meet clients in person. Here, she could look clients in the eye while explaining everything she could do to help them build their wealth management portfolio. Communication is certainly a part of building rapport with clients. One advisor stated that she also connects and collaborates with clients outside of the office. This advisor sent her family's favorite recipes, organized a flower arranging class, and hosted an online cooking class to create a community, which helped retain and attract new clients. Others focused on teambuilding and being aware of trends and products that might interest clients. Teambuilding, specifically, helped one advisor grow her firm to a staff of 23 with expertise in tax planning, investments, and estate planning. Knowing market trends is also a key attribute to attracting and retaining clients. Whether it involves reading financial news, studying market activity, and conversing with clients, staying current on what is happening in financial services and the markets helps the professional spot trends. In the case of one of the women featured in the 2021 Barron's article, this attitude helped the advisor remain competitive. Another female advisor became successful by focusing on networking through her clients and long-time associates in related fields. This strategy helped her move up Barron's ranking of Top Women Advisors from No. 64 to No. 43. Regardless of the strategy, most women reported that their success came from satisfied customers. According to a female advisor who made Barron's list, Happy customers are the best sources of referrals to others in search of an advisor. Financial planning is analyzing finances, understanding long-term financial goals, and devising strategies to achieve these objectives. The planning is an ongoing process in which a financial planner considers a client’s risk tolerance and expectations before offering professional advice. Financial planners review the client’s cash flow, income, assets, liabilities, investments, and retirement plans to customize a blueprint for achieving their financial goals.
The financial planning process has four steps. It starts with goal setting, in which financial planners help clients set specific, measurable, achievable, realistic, and time-bound (SMART) objectives. These targets help inform clients’ decisions and priorities for their finances. Next, planners gather, analyze, and report clients’ financial information. Planners use this information to understand clients’ income, assets, liabilities, expenses, and risk attitudes. Planners summarize clients’ information by using solvency, liquidity, savings, and debt service ratios. Plan presentation is the third step of the financial planning process. Planners advise clients on achieving their goals using their current financial resources. The plan also indicates clients’ net worth, annual tax figures, and annual cash flow. The last step is implementing and reviewing the financial plan. Planners review the plan in action and advise on appropriate adjustments, including changing debt providers, adding life insurance, and altering expenses. Financial planners also recommend professionals to clients, including accountants and investment managers, to help them achieve their goals. Financial planning helps clients create a budget to manage their cash outflow and ensure they have savings. This budget helps clients identify wasteful spending habits and adapt promptly when their finances or the financial landscape change. Financial planning also helps measure monetary progress. Clients can track their loan repayments or contributions to a project over time. This information may motivate them to keep working to achieve their long-term targets. A financial plan helps clients avoid bad debt. The plan breaks down an individual’s assets to reveal the attached liability. Clients can identify assets that bear excessive liability and learn from planners how to handle them to avoid financial burdens. Financial planners advise their clients about life after retirement, predicting post-retirement expenses and investment needs and sharing ideas on ways clients can fund worry-free lives after leaving work. Financial plans mandate planning for unforeseen events. Planners advise their clients to maintain highly liquid assets to cover these expenses. With this approach, investors can avert interruptions to their savings and investments or the unplanned sale of assets to raise cash. Financial planning combines tax planning, estate planning, education fund planning, insurance planning, and philanthropic planning. Tax planning includes optimizing tax refunds and minimizing liability. Some financial planners also help their clients file annual tax returns. Estate planning is designing plans for the distribution of assets by asset owners, also known as grantors, specifying who will own and manage their wealth in the event of their death or incapacitation. Financial planners advise grantors on suitable tax-shielding approaches for their assets. In education fund planning, clients receive advice on paying for their children’s education. Insurance planning is assessing clients’ insurance needs and suggesting appropriate products that fit their situation. Some clients require philanthropic planning. Financial planners help them achieve this objective tax-efficiently by advising them on the tax benefits. An experienced financial investment executive with an MBA from Pepperdine University, Lisa Detanna has served as a managing director with the Los Angeles offices of Raymond James Financial. One of Lisa Detanna’s areas of expertise is multigenerational financial planning.
Multigenerational planning is a specialized field of strategic financial advisement for people who want to give their children (and potential grandchildren and proceeding generations) the resources that they need to lead stable and successful lives. It differs from basic financial planning because it takes multiple generations into consideration before making any risk management or asset allocation decisions. The specific elements of multigenerational planning will differ substantially from client to client. However, most multigenerational financial plans will stress the relative ease and economic cost of bequeathing investments and other assets to heirs. Multigenerational planning can also ensure the smooth transfer a family business from one person to another. For families of high net worth who have complex investment portfolios, multigenerational planning is extremely valuable. However, even people of less extravagant means can benefit from multigenerational planning. |
AuthorLisa Detanna - Community Leader and Financial Advisor. Archives
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