Insurable Interest Canadian Insurance Blog

What You Need to Know The client faced home foreclosure after the advisor failed to make mortgage payments as promised, the DOJ says. The client had worked 40 years for an air conditioning company and couldn’t read. The advisor used his car, rather than his bank employer’s office, to meet with the client. A former Maryland financial advisor who lied about attempting suicide has been sentenced to 3 1/2 years in federal prison for stealing an elderly client’s life savings. Eddy Ray Blizzard, 45, who made a plea agreement, stole nearly $1 million from a now-deceased client, “R.M.,” over many years, causing the man’s home to go into foreclosure a few months before he died in 2020, the Justice Department announced earlier this month. R.M., who had a ninth grade education and couldn’t read or write, started investing and became Blizzard’s client shortly after taking a buyout and retiring in 2003 following a 40-year career as a commercial air conditioning installer in Maryland, according to the department. The client died in 2020 when he was roughly 75 years old, the year after his house was foreclosed on because Blizzard hadn’t made promised mortgage payments,. according to the Justice Department, which said...

What You Need to Know Clients often want to move retirement cash into IRAs. High employer stock prices may lead to capital gains tax headaches. An NUA election can ease the pain. Many 401(k) participants decide to roll their company retirement accounts into IRAs, with or without annuities, for greater investment flexibility. For some retirees, however, rolling over the entire 401(k) may be overlooking a key opportunity. Employees that have significant gains in company stock have another option: a net unrealized appreciation, or NUA, election. As markets trade at all-time highs, this is an election that should not be overlooked. A NUA election allows retirement plan holders to withdraw company stock and send it to a non-qualified investment account. The basics of a NUA transaction are relatively straightforward. The participant can withdraw the stock from the plan and pay ordinary income tax on the basis only. The difference between the basis and the market value at the time of the withdrawal is known as the net unrealized appreciation or NUA. When the stock is sold, the NUA is realized, and only then are gains taxed at the client’s capital gain rate. The difference between the individual’s ordinary income rate and...

The Federal Reserve’s delay of interest-rate cuts in a bid to temper inflation runs the risk of falling behind the curve, according to Mohamed El-Erian. “The Fed pivoted on the basis of data. It was the opposite of the pivot that they did in December — now they have to do a U-turn,”  El-Erian, the president of Queens’ College, Cambridge and a Bloomberg Opinion columnist, told Bloomberg Television on Friday. “As they are doing the U-turn and stay higher for longer, the market is going the other way,” he said. “The Fed is going to have to pivot — not on the basis of inflation numbers, but the basis of the real economy,” he added. Like other market watchers, El-Erian has previously raised the possibility that the U.S. central bank should look beyond its 2% inflation target in a new era of structurally higher pressures on price growth. “Is the inflation target the right target? We all talk about wanting to go back to 2%,” El-Erian said. “Two percent is totally arbitrary. If we are pursuing the wrong inflation target, the risk of a mistake — that mistake would mean sacrificing growth unnecessarily — the risk of a mistake is...

What You Need to Know While it’s important not to rush into discussions about finances after a spouse’s death, some tasks, like filing the final joint tax return, can be time-sensitive. Review the late spouse’s estate planning documents to ensure that no assets are overlooked. Help your client deal with any inherited IRAs and to retitle assets into their own name. You and your clients know the importance of estate planning. But your married clients may not be prepared for the financial planning tasks that await the survivor after the death of a spouse. Grief can be complicated and sometimes unpredictable, and it is important not to rush into discussions about finances after a spouse’s death. But working compassionately with your client through these issues can give them peace of mind and help solidify your relationship. Here is a look at some key planning priorities for the first year of widowhood that many of your clients will face. Priorities will vary widely from client to client based on their situation, including their age and whether the deceased spouse was working. One thing the widowed client will need at the outset is several copies of the death certificate in order to access or retitle certain accounts and...