Tax Matters Specialty Group Podcast with Gary Weiss—Frank Taylor

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Tax Matters Specialty Group Podcast with Gary Weiss

Gary Weiss, CPA and host, interviews Frank Taylor, Owner of Franklin J. Taylor Insurance & Financial Services.


About Frank Taylor
About Gary Weiss
About Echelon Business Development Network    


Click here to read the transcript

Announcer  00:00

The Echelon Radio Network present the Tax Matters Radio Podcast—a conversation about money for everyone with your host Gary Weiss.


Gary Weiss  00:18

Welcome to the Echelon Tax Matters Specialty Group podcast. I’m your host, Gary Weiss. Why should you listen to this podcast? Because it’s fun, informative, and easy to understand, and you’ll have the best time. In the interest of full transparency. I am a licensed CPA in California since 1996. And I practice in Woodland Hills with my partner, Quinton Staples. I also specialize in tax resolution services, hence my tagline, “I fight the fascist state of California and the evil empire known as the IRS.” Today’s guests is Frank Taylor, representing Frank J. Taylor Insurance and Financial Services. Very exciting. Frank, welcome to our podcast.


Frank Taylor  01:01

Thanks, Gary. Glad to be here.


Gary Weiss  01:03

All right, begin by telling the listeners a little bit more about your background, you as a man where you came from, and sort of how you got into the topic of the day, which you will reveal shortly.


Frank Taylor  01:15

Well, I was born and raised in Los Angeles, my parents, my mother came from Tennessee at one years old because my grandfather died in the great Spanish flu epidemic and the family migrated out here. And my father was raised in Portland, Oregon, and they bet met at a Stanford weekend over at USC in football and father came down and married and here I am. I have two brothers and I myself, went to USC, played volleyball there, stuck around and got my MBA and had several different jobs in management and figured out that I really want to be my own boss, and I liked to taking care of people.


Gary Weiss  01:56

First of all, let me congratulate you on choosing an excellent school to go to because we know that’s the real school in Southern California, as opposed to that other one in Westwood someplace.


Frank Taylor  02:09

Yes, I figured that out, too.


Gary Weiss  02:10

Thank you. All right, gone.


Frank Taylor  02:14

So met a man who was just a few years older me raised also in Hancock Park, that was really one of the large insurance agencies out there in the life insurance business, talked about the opportunities and that based on my background, that there was a lot of people that I knew that I could help and take care of and also support my family. So I started with that company. I was semi independent and they also provided training for me, which I think is very important because in your business, would you rather have a bookkeeper take care of your taxes or a CPA? In my business, would you rather have someone who just has an insurance license or someone who has a chartered life underwriter designation known as A CLU? So I got the CLU designation, also the chartered financial consultants designation and was one of the first people around to get a long term care designation, a cLTC, over 20 years ago.


Gary Weiss  03:15

Excellent. So I’m curious though, in school, what was your major in school?


Frank Taylor  03:20

I was actually an architect Major, the first two years and they have a great architecture school at USC. But it was changing. Dean’s got so so way out there that people were designing eggs to live in. And I went the more practical route and transferred over to business school.


Gary Weiss  03:36

Yes, sir. Cracks me up that they would do that. All right. So right. So then, after you decide to change, where did you go from there?


Frank Taylor  03:45

Well, being with the insurance agency that I was provided great training, and then I used a lot of social circles that I was raised in, went to school on the west side of Palisades high and had a lot of friends there. I was a Sigma Kai at USC had a lot of friends there, which is one of the big advantages of going to a place like USC and I also was raised at a beach college where I learned to play volleyball. And there were a lot of a lot of people there that were fairly affluent and would agree to talk to me for a few minutes. And there we go.


Gary Weiss  04:18

No, so your volleyball career sort of launched you into the insurance business?


Frank Taylor  04:24

Well, yes. And no, they helped the club, working with volleyball players on the public beaches, which I carry to be trained for over 20 years. There was a lot of opportunity on that end.


Gary Weiss  04:34

I bet there was and I bet you got some great stories for that. But that’s for another time. So let’s keep going on. So what is your topic of the day that you want to talk about?


Frank Taylor  04:41

Well, I’d like to talk about the need for long-term care. Okay. One of my Forte’s when I was younger was selling disability insurance because I knew that there were three times greater chances of someone getting hurt or sick, as opposed to having a premature death. And so I would do Take care of our clients, not only life insurance, but also disability insurance. I didn’t care if a life insurance was a whole life return, just so they were fully protected. Because if God forbid tragedy happened, I wanted to have the right coverage for the individual and their families.


Gary Weiss  05:14

So you have long term care, and you have short term care. And there’s all sorts of insurances. Briefly describe what’s the difference between those two? And what’s the target market for short term and long term?


Frank Taylor  05:25

Well, there’s not really a target market for short term. Typically, if you have a long term care need, you’re going to be laid up. You typically the average time is four years now. I got into the long term care market as my clients got older, and this became more of an issue. But the thing that was more troubling is that my mother came down with Alzheimer’s. And although my father had died of a sudden heart attack in his 80s, at prepared to take care of her, when he passed away, the look in her eyes when she was worried about what was going to happen to her when she was first diagnosed with the Alzheimer’s was just really troubling. And I knew there was a solution to that, taking care of people, and that’s doing a long term care policy, which just started to become popular out there. So it was an easy transition for me who sold a lot of disability insurance to move over to the long term care, it is different than disability. There’s a government definition that standard for all the tax qualified policies out there. So that was fairly easy to relate to the clients. But the need was more important. Typically, the people that are most interested in buying the product had that same situation, I had parents that are having health issues, and they weren’t sure how to take care of them. And they did not want them to be Ward’s of the local government or the state.


Gary Weiss  06:56

So for long term care who, who really needs Long Term Care, when should they get it? What’s the best time and define you said, like four years, but what you know what’s really the need, who really needs Long Term Care Insurance,


Frank Taylor  07:13

I would say just about everybody out there that can afford it. And it’s not inexpensive to buy long term care. The government does have a policy out there, if you’re on medical, that’ll help you if you have to go to a facility that they are involved with, which may or may not be to your liking, or in an area that’s convenient for your family to see you. What’s happened over time, though, Gary, is that the typical long term care policy is going away. Companies are at issue those in the past have had severe economic downfall on pain claims, because they just didn’t understand the market. They didn’t realize that people were going to live longer, which brought in dementia into the equation, we have the claims now for dementia, severe dementia. And they also did some other pricing is inaccuracies the actuaries did, which caused them to have higher claims. People that buy Long Term Care Insurance, do not lapse or policies, the actuaries assume that there’ll be a 4% lapse ratio, I don’t want to go on that tangent as we wait to comp. But the point being is that they blew it. And now it’s very hard to find that policy, what’s becoming more and more popular as it’s called a hybrid, which brings in younger people into the equation. Now you buy a permanent life insurance, but whether it be a universal life or whole life, and you attach a long term care rider on that policy, which allows you to take money when the need comes up. Hopefully, it’s not till the urinary 80s that there’ll be enough there to take care of home care or assisted living care. It will, it will lower the life insurance benefit. That’s how the insurance companies can protect their backside easier this these days. But it also has the advantage of using that money on a tax free basis.


Gary Weiss  09:11

Okay, so as you brought up an interesting point, homecare versus assisted living or outside of the home care. How does that work? And how do you recommend which they should do and what are sort of the criteria around using either or


Frank Taylor  09:27

most people do not want to go into assisted living care if they can help it. Some people may be single, and maybe they feel that’s the best option, but they’d rather have someone there at the house to take care of them. The definition of being eligible to for a long term care claim is the same for both. There’s something called activities of daily living which if you are unable to perform two of the six or physical activities like can you prepare your breakfast in the morning? Can you go up and down stairs but it also gets wasted You have severe dementia. So it’s really a choice of a family and the individual if they are going to have home care or go to an assisted living facility.


Gary Weiss  10:11

Okay. So, you know, as a professional and I truly as I’ve got to know you a caring man, when you deal with when people get in their 80s, and they find themselves in that position, you have to you have to find line, because you have to deal not only with the policyholder who’s now entering dementia, or is in dementia of some sort, but you have to deal with the families tell us about how you deal with that?


Frank Taylor  10:37

Well, the families, of course, want to make sure that the claim is going to get paid by the insurance carrier. So although the insurance companies get a little edgy when an agents get too much involved in the pain of claims, I can advise a client. This is where all the comp policies paid off. I can’t prove a claim. But you know, this is what they’re going to ask. And they’re going to want a doctor to verify it.


Gary Weiss  11:00

Right. But when the families when the families come to you, yes, Neko Hey, Frank, my, you know, my mom, this my mom, dad or my dad? And then what do I do? You know, they start to panic. How do you deal? How do you treat the family? What’s your interaction with the family personally,


Frank Taylor  11:17

I try to give them peace of mind that we’re going to do the best we can and take taken care of their their family members, you know, a parent or even a sibling. And that if they have any questions, we’ll do our best to answer them up to a certain point and try to assure them that things are gonna work out. Okay.


Gary Weiss  11:39

Okay. So, you know, legally, if a person becomes incapacitated mentally, a lot of times that requires a conservatorship or intervention from the courts or a third party, do you work with attorneys and Oh, in the family to help that?


Frank Taylor  11:54

No, unfortunately, I’m at a position that I would be violated my, my relationship with the insurance carrier if I got too involved in that respect.


Gary Weiss  12:05

So they so the faith you the family comes to you say, hey, look, you got to talk to your attorney do get, get the doctors involved? I can’t do that.


Frank Taylor  12:11

Well, I can I can give them some ideas of what to expect. But making promises No, I can’t do that.


Gary Weiss  12:18

Got it. All right. So you know, that’s real important. How when families come into this, to this state, for especially if there’s a lot of siblings, and there’s extended family, this can become very disruptive to everybody’s lives. It’s amazing how one person can cause ripples throughout the family of disruption. So in that happens, you know, how do how do families, what do you recommend to families that are all of a sudden their lives with the flip of a switch are turned upside down? How do you help them navigate that? And what is your job as an advisor in that capacity,


Frank Taylor  12:55

at the time of the claim, it’s a little difficult, based on on what my contractual obligations are with the insurance carrier. But the good news is, is that it’s a standard definition, with all the carriers of how they will collect on the claim. And assuming they claim is legitimate, and almost all our it really comes down to the doctor. And what the doctor is going to report is going to say, in order to approve a claim,


Gary Weiss  13:25

okay, so when this happens, you know, the families what I’ve learned as a CPA, because a lot of times I will get involved or become part of a team. So in when you see these happening even before a claims filed, but you see it coming, they come to you and say Hey, Frank, you’re my really good friend, Mike, you know, my dad can’t find his car keys three quarters of the time, and they’re right in front of him, you know, if this is the time when you need to start forming that team, so that the transition when they when they have that time comes in, they need to be put in to a facility or need the long term care. Who is that team? Who do you recommend that they put as a team together?


Frank Taylor  14:03

Well, their CPA is an obvious one. If they have a trust that’s involved, the trustee needs to get involved. The family attorney probably wants to be involved as well. And then you know, it’s smart to have communication with all the family members, but that there unfortunately, that ends my, my duties is what I can do in terms of helping helping that because if I say the wrong thing, and a claim for whatever reason is denied. They’re gonna fall back on me and then they’re gonna go to the carrier saying I should have known better and so I tried to help but I do have limitations.


Gary Weiss  14:47

Oh, absolutely. That is the purpose of having a team where one person has to stop and other person can start. Just a note for all the listeners and I do this in my practice with my clients. The trust Frank, we’re I mentioned a trust. This is one of the most important documents that every family should have. Trust is not just about avoiding probate, it’s when things like this happen when people come become incapacitated, who takes charge, who makes the decisions, who makes the medical decisions, the financial decisions, this is a real important thing, that all families whether you have wealth or not, but you need to understand that there’s that during that transition we were talking about, it can be chaos, and all of a sudden, everybody doesn’t know what to do, or everybody or everybody knows what to do, and everybody has an opinion. So if you have a living trusts in place, that is what it’s referred to as a living trust. It has things like durable power of attorneys for health care, and financial matters, which will help in that transition. So if you are listening, and you don’t have a living trust, get one, get to your get to a trust a trusted trust attorney and find yourself and get one today because as Frank saying that’s an integral part of the team is not just the attorney, but the trust itself. So there’s a there’s a essentially a pathway, you know, way that’s been predetermined, so that person isn’t left out having possibly third people make a third parties make a decision for them. Would you agree with that,


Frank Taylor  16:15

you certainly don’t want the courts to appoint someone to control your parents or perhaps your your estate on what’s going to be involved in your care. That trustee is really important to who you choose, a lot of times people will pick children, my only recommendation is stay with one child. When my mother passed, my mother in law passed away. In order to placate the family, they had two trustees, and it was difficult getting decisions done with the two children. They both had different ideas, and my wife was one of their sister. So if that person’s not around, or if the trustee that’s the other thing, too is you have to be aware of how old the trustee is when you put that into place over time, you may want to change that trustee. If you’re not sure, or have anybody around there are professionals out there that will be involved in there are professionals that are involved in health care and taking care of the seniors when they are involved with long term care needs.


Gary Weiss  17:21

No, absolutely one of the most important things in having a living trust. And I have clients who have have them that they formed them in 1969, and haven’t changed and the laws have changed, the tax laws have changed. So a lot of stuff has changed. It’s imperative that every few years, you take it out, read it, see if it needs to be changed, amended or updated. That’s a very essential if you want to protect protect your assets and protect your loved ones.


Frank Taylor  17:46

Well, that’s that’s true, I probably should be redoing my trust. Because in the meantime, I when I first did it, I’ve got a fairly substantial pension plan out there that may be subject to probate, because I don’t think it’s in the trust. And I’m going to take care of that right away.


Gary Weiss  18:00

Right. That is one thing that living trust to avoid is probate. But let’s go back to being back to insurance, long term long term care, we are talking about probate and we’re talking about trust and anything what happens when that person with dementia does pass on. And there’s these insurance policies or there’s long term care policies, and there’s leftover bills, who takes care of all of this?


Frank Taylor  18:24

Well, when the individual passes on, and again, unfortunately, a typical Long Term Care Claim is about four years. If there’s still big bills being paid, it’d be pretty much up to whoever’s handling the estate to settle with the insurance companies on the final bills.


Gary Weiss  18:41

They take care of that. And then there’s beneficiaries for insurance policy, so they have an insurance policy life insurance policy, and then the client comes to you or the surviving child child comes to you and says, Frank, my parents said that when I die, I’m gonna come and talk to you. So they come and talk to you. What life insurance policy, who’s the beneficiaries? How do they get paid as a taxable out, start coming all these questions that they didn’t understand, and nobody wrote down? So what do you how do you advise them? What is what are sort of the basic rules with life insurance payouts, policies and that kind of thing?


Frank Taylor  19:13

Life insurance benefits are tax free. Why? Because in almost every situation, you have to pay with an after tax dollar. And so based on that, when the when there is a death benefit, be paid, that money comes tax free, you do have to be careful over time, if that policy is transferred around, the business has it and they transfer it to another business. It’s good cause a taxable event. So we try to advise our clients on that as well. But the typical life insurance policy is going to come tax free. If you’re receiving disability insurance, you typically would pay that with after tax dollars, that benefit is going to be tax free while you’re on disability. And the same with long term care. That’s tax Free, but we also advise our clients. If they buy a policy, there are some tax advantages where they can write off the premiums on a long term care policy where they cannot on a life insurance or disability policy,


Gary Weiss  20:11

right. So I always advise my clients if they’re buying a disability policy, don’t deduct it, is if you deduct it on your taxes, then the benefits as I understand them become taxable if you don’t deduct it, you pay it by yourself or after tax dollars, and you don’t deduct it anywhere, then those benefits are not taxable. And I have one client that was a photographer, and he ended up collecting he had to he had a damage to his hands and couldn’t hold the camera anymore. Over time he collected $84,000 in tax free benefits. So again, before you purchase, long term care insurance short, either short term, disability long term anything when it comes to this stuff, seek an advisor, who is well skilled in this like Frank, right, Frank, because I think you’re gonna say, Hey, let me tell you how it really is not what you heard from your brothers, uncles, gardeners best friend.


Frank Taylor  21:04

We handle a lot of small businesses and their owners and there are tax advantages when they bought the long term care. Now, we don’t say they are out there, these those standalone policies. But depending on what the entity is, will determine if the client can write off the premium to pay for that long term care for them and their spouse. If you’re a sole proprietor or an S corp or a partnership, there’s going to be a scale that’s going to dictate what you can write off through the business, they’ll pass the income that they paid, it will be passed down to the individual and then the CPA will write that on their personal tax forms and take the deduction off of that. But for example, if you’re over age of 50, you’re going to be able to write off about $1,800 a year of premium for you and another 1800 for your spouse, assuming that they bought a policy as well. But then it jumps to age, when you’re age 60, that right off jumps to about $1,400 per person. That’s that should take care of most premiums for any long term care policies. Now, if you’re involved with a C Corp, and owner, they can write that whole premium off. And if the C Corp is a you’re an employee there, they can purchase that policy for you and write the premiums off as well. So there’s a lot of good advantages there.


Gary Weiss  22:27

Oh, so if anybody is interested, when Frank says a C Corp versus an S corp, best thing to do is give myself a call or give Frank a call, we’ll explain to you the differences. So before we end, our exciting journey here, just give us a little bit more about you. How many kids do you have? You know what, what are your some of your passions in life? What do you like to do?


Frank Taylor  22:49

Well, I obviously still play volleyball and play on Saturday mornings. When I’m in town. 10 years ago, I bought a house up in Lake Arrowhead. So every other weekend I’m involved in there and hiking trails and living the good life and lately I’ve been shoveling snow. I have three children. Two sons and a daughter. One son is involved in the high end furniture business. The other son works for a company that distributes and ships wine up in Northern California. We just were up there a couple of weeks ago to see him nice job. Am I my little girl? She’s not so little she’s six three and played volleyball and college indoor and beach volleyball and as a as a beach volleyball coach for high school.


Gary Weiss  23:45

Very nice. All right. So for our listeners, why don’t you tell us them how they reach you who you are, what your website is where you’re located?


Frank Taylor  23:53

Well, again, I’m Frank Taylor. I go by Franklin J. Taylor insurance and financial services. We’re located in Sherman Oaks, California. We do have a website, www.franklinjtaylorinsurance.com And our phone number is 818-990-0446. That’s 818900446 in your website. It’s Franklin J Taylor insurance.


Gary Weiss  24:19

Excellent. All right. Thank you very much. Well, then intrepid listeners. This is all the time we have for today. I would like to thank my guest, Frank Taylor. Please look forward to future podcast right here. same bat time, same bat channel. I guarantee you you will be entertained and enlightened at the same time. I’m your host Gary Weis. I look forward to spending time with you on our next tax matters specialty podcast. Y’all come back now you hear


Announcer  24:56

Presented by the Echelon Radio Network and Echelon Business Development. More than just networking. Way more!

Gary is a graduate of the Marshall School of the University of Southern California. He founded and operates a boutique accounting firm dedicated to bringing high - quality tax preparation, tax planning and tax resolution services to individuals, small businesses, small nonprofits, family owned businesses and start-ups, at an extremely affordable price. Visit Gary Weiss CPA.

Advisor to business owners, professionals, and their key advisors regarding family protection, tax advantaged retirement, succession planning, and estate protection, Buy-Sell, Key Person w/ Life, DI, Long Term Care, & Annuities. Also specializing in Group Benefits (i.e. Health Insurance) for closely held businesses. .Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Accredited Estate Planner (AEP), Certified Family Business Specialist (CFBS), MBA USC. Visit Franklin J. Taylor Insurance and Financial Services.