Archive for May, 2011

Coming Market Crash – Harry Dent

Senior Services ~ James B. Driscoll

via Coming Market Crash – Harry Dent.

Categories: Economic Update

Harry Dent! Upcoming Stock Market Crash!!!

The first quarter comes to a close today with major averages at or near multi-year highs. Expect “substantial” further gains for stocks before a “major top” occurs in late summer, says noted forecaster Harry Dent, founder of HS Dent and The Dent Method.

The good news, for those long, is Dent predicts the Dow will trade as high as 13,200 by mid-summer and the S&P 500 as high as 1430, or more-than 7% above current levels.

The bad news is “then we could see another major crash,” Dent says, forecasting the Dow could trade as low as 3300 in a worst-case scenario. “Bubbles go back to where they started or a little lower,” he says. “The stock market bubble started at (Dow) 3800 in late 1994.”

While Dent predicts the Dow’s crash will play out over several years, he sees clear and present danger in gold, silver, oil and other commodities. “All investors should lighten up on or sell oil, silver, and gold as the U.S. dollar looks like it has bottomed and should rise ahead,” he writes in the March issue of HS Dent Forecast.

In the accompanying video, Dent further explains his thinking for why commodities will stumble ahead of stocks, which is the opposite of what happened in 2007-08. In sum, he believes efforts by global central bankers to fight inflation — with the notable exception of the Fed — will hurt growth in emerging markets as well as demand for many commodities.

As for the Fed, they are “checkmated,” Dent says, suggesting the Ben Bernanke & Co. are damned if they do QE3 — because the bond market will freak out — and damned if they don’t — because the economy and financial markets are so dependent on easy money.

Stay tuned for additional segments to hear Dent’s views on the economy, housing and the deflationary pressures detailed in his latest book The Great Depression Ahead, a bookend to his 1992 best-seller The Great Boom Ahead.

Categories: Economic Update

Gold-is it the standard???

No Return to Gold Coming

What was once unthinkable for mainstream economists has now become irresponsible to dismiss: The dollar’s reserve status is in jeopardy, thanks to soaring U.S. deficits, political gridlock and the Fed’s super-easy policies.

The lack of a suitable replacement is probably the best thing the dollar has going for it right now. Europe’s debt crisis has revealed the euro’s structural flaws and China’s yuan remains immature and pegged to the greenback.

“The Chinese are as much a captive of their currency system as say the Germans and German banks are right now of the euro,” says economist Peter Morici, a business professor at the University of Maryland. “They’ve created a wonderful export contraption of which we are both hostage.”
Gold is most often cited as suitable alternative to the dollar, and its continued strength amid the dollar’s recent rally vs. the euro has only reinforced its adherence.

Morici is bullish on gold — “its downside risks are not large,” he says — but does not believe a return to the gold standard is likely or practical.
“The relative importance of the dollar will shrink [but] there’s not enough gold in the world to mint coins to support commerce,” he says. “A gold standard would require what we had in the late 19th century in the United States: chronic deflation and high unemployment that goes with it.”

Rather than abandoning the dollar in favor of gold, Morici foresees a “bi-metallic standard” in which gold is viewed as something akin to a co-reserve currency for global transactions.
“Contracts will be written to some degree for payment of gold or gold will be a contingent payment,” he says. Meanwhile, central banks are increasing their gold holdings rather than rely solely on Treasuries or other currencies backed by dollar.

“That’s not because it’s a good thing or a bad thing, it’s simply what is happening,” he says. “Unless the U.S. finds a way to lower unemployment to 6% and not experience significant inflation in the process, [the dollar] will diminish in importance and gold will be enhanced in importance.”
Until next time,

James B. Driscoll

Categories: Economic Update


United States = Bankrupt

Monday, May 16 was
D-Day for The United States — the day we hit the debt ceiling.

What does this really mean anyway?

Well,first…let’s define debt ceiling: “It is the level of government borrowing
allowed by Congress.” Think of the debt ceiling like the government’s
credit card limit… and it’s maxed out.

The current debt ceiling sits at $14.294 Trillion. This is the amount of money the government is legally allowed to borrow to fund all its functions – from defense to education to entitlement programs. But don’t worry just yet. Treasury Secretary Timothy Geithner says the government can continue to pay its debts until August 2nd thanks to higher-than-expected tax revenue and “extraordinary measures” such as stopping the issuance of State and Local Government Series bonds, which fund infrastructure and other projects.

In addition, Geithner says he is going to stop making contributions to the pension
plans of certain federal employees.

To put the debt ceiling in historical perspective: Congress has voted 10 times in
past decade to raise the debt ceiling, typically without much fuss. But this
year is different. Many House Republicans say they won’t vote to raise the debt
ceiling unless the Obama administration agrees to big spending cuts, or at
least tough restrictions on future spending. The White House says the debt
ceiling vote should be separate from the budget debate, so an All-American
standoff is occurring.

Failure to raise the debt ceiling could cause the government to default on its debt
payments, something unprecedented in U.S. history. In a statement
released Monday, Treasury Secretary Tim Geithner warned such an outcome will
result in “catastrophic economic consequences for citizens.” Government
officials Ben Bernanke, Austan Goolsbee and Defense Secretary Bill Gates agree,
as do Wall Street heavyweights like Bill Gross, Warren Buffett and Jamie Dimon.

But many in the GOP say that’s a bluff and the government can continue to make its
debt payments by selling assets such as its gold holdings or real estate, or by
cutting spending on other things, like Social Security and Medicare.

Hopefully we won’t find out who’s bluffing and who’s right.

Until next time, hang in there.

James B. Driscoll


Categories: Economic Update

Living Longer – 5/16/11

Living Longer

Solve for the need. Does that sound like a high school math problem? In fact, solving for the need is the top job for producers with baby boomer clients. These clients, many of whom will live into their eighties and nineties, are inadequately prepared for a post-retirement period that could last 20 years or more. Yesterday’s “retirement planning” has become today’s longevity planning.

Boomers have reason for concern. More than 50 percent of Americans will be at risk of being unable to maintain their standard of living in retirement, according to the Risk Retirement Index,1 from the Center for Retirement Research at Boston College.

Spooked by the very real prospect of outliving their assets, boomer clients are seeking a dependable lifetime income. The good news is that producers have an expanding array of products they can use to help clients develop a plan that includes income, growth and long term care elements. As the 70 million-plus boomers retire en masse over the next several decades, the need for combination products and strategies will only increase.

Some of the trends are already clear: Annuities that offer an optional guaranteed lifetime withdrawal benefit (GLWB) rider are very popular. For the second half of 2010, the GLWB purchase rate was 65 percent, according to LIMRA.2 That’s easy to understand. Fixed or variable annuities with GLWBs offer the insurance boomer clients what they want most—an income they can’t outlive, regardless of market performance.

Even if guaranteed withdrawals deplete the account value to zero, the client is guaranteed the benefit amount specified by the GLWB rider for life. For clients with long life spans, the return on annuities with GLWB riders can be very favorable.

A Solution for Setbacks
Annuities with GLWBs can also be a lifesaver for people whose financial plans have been derailed by a job loss or other unexpected events, which could include earlier-than-expected retirement, portfolios depleted by the financial crisis, or serious health problems.

A big selling point for both the annuity and the rider is the upside for growth if the market does well, which can be a good hedge against inflation. Since these are not direct investments in any market securities, the downside risk is minimized, which is important for people still shaken by the market meltdown.

GLWBs offer some other big advantages that resonate with boomers. The benefit base used to compute insurance fees and guaranteed withdrawals may increase through bonuses, step-ups and roll-ups, rewarding those who postpone taking income. This can be particularly attractive to younger clients who can afford to wait to begin taking withdrawals.

Prescription for Long Term Care Costs
With health care and long term care costs expected to rise sharply in the next few decades, clients are looking to producers for guidance on long term care insurance. In 2010, the national average cost of a private room in a Medicare-certified skilled nursing facility was $90,155 a year, according to a survey conducted last year by Univita Health, which provides independent living resources for seniors. A private room in an assisted living facility averages $3,294 a month. The survey included more than 2,000 nursing homes and 2,000 assisted living facilities nationwide.3

One option to address these or other potential costs is to layer a long term care rider on an annuity. This adds additional security, often providing a range of care options if they’re needed, and it may give clients access to a higher percentage of the account value or allow an accelerated payout, depending on the product’s design and timing. Also, under a 2010 provision of the Pension Protection Act, long term care benefits on a non-qualified annuity linked with a qualified long term care rider can be paid out tax-free.

The market has demanded and the industry has responded with multiple options. With their expanded toolbox, producers can approach each client’s situation with a solve for the need exercise. By adding up necessary and discretionary spending, then comparing it to income sources from pensions, 401(k)s, Social Security and other assets, producers can help identify where the client falls short and most likely identify an annuity, an annuity with GLWB, or a combination of products that can help fill in that gap.

Growing Boomer Demand
With post-employment periods that may span 20 to 30 years or more, boomers could be facing a significant shortfall if they don’t take action. With solve for the need planning help from producers, clients can find the right combination of products, including annuities, annuities with GLWBs and long term care options, to ensure they’re protected financially as they age.

The underlying need for products will continue to grow as longevity planning becomes the norm. It’s up to the insurance industry and producers to be innovative and forward-thinking to get ahead of the growing boomer demand.

1. The National Retirement Risk Index: After the Crash, Alicia H. Munnell, Anthony Webb, and Francesca Golub-Sass, The Center for Retirement Research at Boston College, 2009 Report, and click on “National Retirement Risk Index” in right column.

2. Data from LIMRA’s Q4 2010 Variable Annuity Guaranteed Living Benefit Election Tracking Survey, published in a March 8, 2011 LIMRA press release.

3. National Cost of Long Term Care Survey. Rep. Univita Health, Inc., June 2010,

Categories: Economic Update

Funeral Trusts


Why should anyone
obtain an Irrevocable Funeral Trust?

To protect and secure
a portion of their assets BEFORE the ravages of astronomical medical expenses
consumes their lifetime savings, leaving them with insufficient funds to pay
for their passing from this earth in a proper, dignified manner.


Who can be covered?

Anyone up to the age
of 99 years old can be covered by an IFT regardless of their health situation.
For prospects already residing in a nursing home, or any other kind of long
term care facility, commission are calculated on Guaranteed Issue rates. For
all other prospects, commissions are calculated based on Standard Issue rates.

What if the
Grantor/Insured passes away within the first 13 months?

‘chargebacks’ can be made by the Company depending on the circumstances
surrounding the passing of the grantor/insured within the first 13 months.
Refer to your ‘COMMISSION SCHEDULE’ for the specific terms and conditions
involving ‘chargebacks’ in your state.

What about

The plan is field
underwritten, which means that you, as the agent, makes certain observations
and decisions concerning the writing of a policy and the eventual creation of
the trust. (For example, you observe that the prospect is already residing in a
nursing home, and that they might pass away within a short period of time due
to natural causes, resulting in a commission chargeback to you, it might not be
prudent to pursue the issuance of a policy/trust.)

How long does it take
to get a policy issued?

Once the application
and any other required documentation is received at the home office of the
Company, a policy is usually issued in 5 to 7 business days.

What expenses are
paid for by an Irrevocable Funeral Trust?

  • Basic
    Services of Funeral Director & Staff
  • Other
    Professional Services
  • Embalming
  • Other
    Care of Deceased

    • Dressing /
      Cosmetology Casketing
  • Funeral
    Home Facilities and/or Staff Services

    • Viewing/Visitation
    • Funeral Service
    • Memorial Service
    • Graveside Service
    • Other
  • Other

    • Clergy Honorarium
    • Death Certificates
    • Musicians
    • Temporary Marker
    • Stationery Package
    • Obituary Notices
    • Flowers
    • Clothing
    • Open/Close
    • Other
  • Casket
    • Alternative
    • Outer Burial
    • Other Services
    • Transportation
      Equipment & Driver

      • Transfer of
      • Funeral
      • Car/Limousine
      • Utility/Service
      • Other
  • Cemetery


What is the maximum
amount a policy can be written for?

The maximum policy
amount is $15,000. However, most states restrict the amount to a maximum of
$12,500. This amount may be more or less in your state since each state
interprets the Medicaid laws differently.

What is the lowest
amount a policy can be written for?

The minimum policy
amount accepted is $1,000 for most states. In some states the minimum amount is

Do I have to deliver
a policy in person?

Not unless you choose
to do so. The Company will mail a Certificate of Coverage to the
grantor/insured once he/she signs the IFT agreement and the company receives
the signed forms and issues the policy and the trust.

Can the insured
obtain a copy of the IFT document if they choose?

Yes. Grantors of the
IFT can request a copy at anytime. Contact the home office in Elkhorn,
Wisconsin, if you would like a copy. There will be instructions on how to
request a copy of the IFT that is sent to the grantor/insured.


What is an
Irrevocable Funeral Trust?

The IFT is an
agreement between the grantor/insured and one or more Trustees named by the
Company, which is established to make funds available upon the death of the
grantor/insured, for the purpose of paying the final expenses, up to the limits
of the amount placed into the IFT, as defined in the IFT Agreement.

What is the
definition of an Irrevocable Funeral Trust?

is impossible to change or distribute the funds delivered into the IFT by the
grantor/insured until the terms stated in the IFT are met. Thus, none of the
terms of the agreement can be changed, amended or canceled by any person or
entity. The trust may not be terminated or liquidated except through the
distributions permitted by the terms stated in the IFT. i. e. the death of the

What is a Trustee?

The Company will
designate one or more Trustees to carry out the terms as specified in the IFT.
Upon proper notification that the insured has passed away, the Trustee,
appointed by the Company, will carry out the terms contained in the IFT.

What will the Trustee
do with the property [funds] that the grantor/insured has transferred into the

Under the terms of
the IFT, the Trustee shall have no duty to, and is expressly prohibited from,
changing, liquidating, or diversifying any trust assets contributed by
grantor/insured. Thus, the Trustee cannot surrender a policy to any person or
entity for its cash value. The Trustee can only make distributions according to
the trust indenture that states that distributions shall be made FIRST
to a service/product provider(s) in payment for the grantor/insured person’ s
final expenses. In the event that there are any remaining [excess] funds, the
Trustee is obligated to distribute them to any residual beneficiary so named,
or to the estate of the deceased.



Can the Trustee
change the beneficiary of the IFT?


Can the Trustee
change the owner or beneficiary of the life insurance policy?


It is my
understanding that Medicaid allows for a burial fund (of $1,500) or a prepaid
funeral or funeral trust. Does a life insurance policy purchased with a lump
sum payment, and transferred into the IFT, meet the qualifying rules for
exclusion for Medicaid eligibility? If so, is there any limit on the amount
that may be transferred and still remain excluded?

While Congress and
the federal Health Care Financing Administration set out the main rules under
which Medicaid operates, each state runs its own program and has its own
Medicaid laws. As a result, the rules and the limits on the amount of the
assets to be transferred, can be somewhat different in every state. And, while
the federally prescribed format is the same throughout the country, individual
state created Medicaid laws, and court cases interpreting those laws, are
constantly evolving. Remember, in no situation can any state supersede any
laws, rules or regulations, set down in the federal Medicaid program. However,
disputes sometimes arise when the state’s ‘interpretation’ differs from the
‘interpretation’ of the federal program.

The following paragraphs describe the basic rules, but check with your state’s
Division of Insurance, or a qualified Elder Law attorney practicing in your
state, for the up-to-date specific rules, regulations, and prior court
interpretations. Just about every state provides for the irrevocable set-aside
of funeral and burial funds in a trust or pre-need insurance. In most states
the limits as to the amounts that qualify for exclusion for Medicaid
eligibility are “unspecified”. For example, in the State of Indiana a
court ruled that a “valid irrevocable Indiana funeral trust” is
exempt regardless of its value (Id § 2615.20.15).

Do these transfers
qualify for exclusion, without penalty, regardless of any look-back period or
spend down provisions of Medicaid?

assignment of assets to an IFT is designed to qualify those assets for
exclusion, without penalty, regardless of any look-back period or spend down
provisions of Medicaid. However, since the rules are somewhat different in each
state, check the state of legal residence of the proposed grantor/insured for
the specific rules and regulations currently in effect.

Who can be named as a
residual beneficiary?

The servicing funeral
home will automatically be paid FIRST according to the terms of the IFT. If
there are any funds remaining [residual funds], the Company recommends that the
residual beneficiary be a family member of the grantor/insured.

Why shouldn’t a
spouse be named as a residual beneficiary?

The client can name
anyone they choose as a residual beneficiary. However, the Company recommends
that the grantor/insured name someone other than their spouse in order to avoid
the funds coming back into the estate and creating problems with potential
creditors, and estate taxes.



Can the residual
beneficiary be changed at a later date?

No. This is why it
would be best to name a much younger family member as the residual beneficiary.

If the residual
beneficiary is a family member, is the amount paid to the residual beneficiary
subject to the look-back period or spend down provisions of Medicaid?

Because the rules are
somewhat different in every state, check with the state of residence where the
proposed grantor/insured lives for the specific application. But generally
speaking the IRREVOCABLE assignment of assets to the IFT has been designed to
qualify those assets for exemption, without penalty, regardless of any
look-back period or spend down provisions of Medicaid, and regardless of
whether the residual beneficiary is a family member.

Are you allowed to
have more than one policy in the trust?

No. Each policy must
have its own IFT.

Can any individual
have more than one IFT?

Yes. However, the
aggregate amount of all IFTs cannot exceed the total exempted amount based on
Medicaid laws in any given state.

Can the money be
taken back once the assignment into the IFT made?

Yes. But ONLY during
the 30 day ‘free-look’ period. Should the grantor/insured decide not to
continue with the IFT, all assets will be returned to the grantor/insured and
the IFT is effectively cancelled. The 30 day ‘free-look’ period begins the day
after the grantor/insured receives the acceptance letter and Certificate of
Coverage from the Company. Once the 30 day ‘look-back’ period expires, the
funds will not be returned for any reason whatsoever.

Explain the Part A
and Part B mentioned in Article 4 of the trust agreement.

While Congress and
the Federal Health Care Financing Administration set out the main rules under
which Medicaid operates, each state runs its own program and has its own
Medicaid laws. As a result, the rules can be different in every state, although
the overall design of the Medicaid program is the same throughout the country.
Medicaid laws, and court cases interpreting those laws, are constantly

Because it is impossible to know how Medicaid laws will be interpreted in the
state of the grantor/insured residence for purposes of Medicaid qualification,
the Trustee shall divide the Trust Estate into two separate shares, trusts A
and B. Trust A shall be composed of cash in an amount equal to the lesser of
(1) the maximum amount that may be set aside in the state of the
grantor/insured’s residence for funeral expenses and qualify as Exempt Assets
for purposes of Medicaid qualification, less the aggregate amount of assets
designated for such purposes not owned by this Trust or (2) the
grantor/insured’s funeral expenses paid or payable by the Trustee in accordance
with and as specifically authorized by grantor/insured’s expense directive
attached to the Trust as Exhibit “A”. Trust “B” shall be
the balance of the Trust Estate after the assets have been allocated to Trust
“A”. This provision in the trust allows the grantor/insured to take
the maximum amount for funeral expenses and qualify as Exempt assets for
purposes of Medicaid qualification as determined in the grantor/insured’s state
of residence.




Is a specific funeral
home named anywhere in the application documents?

No. This is one of
the main attractions of an IFT. A person may pass away and have a funeral and
subsequent burial in any state. Those persons responsible to handle a deceased
grantor/insured burial arrangements will carry them out. The Trustee of the IFT
will distribute the funds in accordance with paying the servicing funeral home
that provides the products and services FIRST.

Can these funds be
attached by Medicaid, nursing homes, doctors, hospitals or other creditors?

No. The IFT is
designed to qualify these assets for exemption, without penalty, regardless of
any look-back period or spend down provisions of Medicaid. As such, assets
exempt from Medicaid would not be attachable by any other person or entity.

Can the client cash
in the policy/trust at a later date?

No. The
grantor/insured can only cancel this policy during the 30 day ‘free look’
period and have their fund returned. Once the client has assigned all rights of
the policy to the IFT, these assets are no longer under their control. They
cannot cash it in, borrow against the cash value, or implement any other
similar type of options that might be considered as an attachment or an attempt
at ‘breaking the trust’. This is the IRREVOCABLE portion of the title an
Irrevocable Funeral Trust. If the trust is not IRREVOCABLE, it would be subject
to attachment by any and all types of ‘creditors’, including nursing homes and
other entities. The grantor/insured’s signature on the IFT document is an
assignment and a complete severance of their control, or any other person or
entity’s ability to get access to these funds.

How long does it take
to get the funds distributed at the time of death?

The funeral home
providing the services will fax or mail a copy of the itemized bill, signed by
a family member, or an authorized representative of the family, along with a
copy of a certified death certificate to the Company. Within 1-2 day(s), the funds
of the IFT are distributed [paid out] to the servicing funeral home FIRST. Any
residual funds will be distributed to the Residual Beneficiary [Beneficiaries]
the following business day.

Who is officially
named as the owner and primary beneficiary of the policy?

The owner and primary
beneficiary will be the Trustee designated by the Company. The purpose of this
is to keep the funds in the IFT apart from the estate or spouse of the

Why does the
grantor/insured assign their policy ownership rights to the IFT?

The grantor/insured’s assigns their
rights to ownership of the policy to the IFT to remove the funds from their
control and permanently remove them from their estate. This further prevents
these funds from being pursued by any and all creditors.



For further information or to set up a Funeral Trust contact:


James B. Driscoll, Financial Advisor, Tax Advisor



Categories: Economic Update